PRECIGEN, INC. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Management, with the participation of our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on their evaluation of our disclosure controls and procedures as of December 31, 2021, our chief executive officer and chief financial officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Management's Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and Rule 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2021. Deloitte & Touche LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2021, as stated in their report, which is included in Part II Item 8 of this Annual Report. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 86 Table of Contents Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 87 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item is hereby incorporated by reference to our Definitive Proxy Statement relating to our 2022 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2021. Our board of directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors, and employees, which is available on our website ( investors.precigen.com ) under "Corporate Governance." We will provide a copy of this document, without charge, upon request, by writing to us at Precigen, Inc., 20374 Seneca Meadows Parkway, Germantown, Maryland 20876, Attention: Investor Relations. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics by posting such information on our website at the address and location specified above. Item 11. Executive Compensation The information required by this item is hereby incorporated by reference to our Definitive Proxy Statement relating to our 2022 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2021. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is hereby incorporated by reference to our Definitive Proxy Statement relating to our 2022 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2021. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item is hereby incorporated by reference to our Definitive Proxy Statement relating to our 2022 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2021. Item 14. Principal Accounting Fees and Services The information required by this item is hereby incorporated by reference to our Definitive Proxy Statement relating to our 2022 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2021. 88 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this Annual Report: 1. Financial Statements . Consolidated Financial Statements of Precigen, Inc. and Subsidiaries Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2021 and 2020 Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020, and 2019 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2021, 2020, and 2019 Consolidated Statements of Shareholders' and Total Equity for the Years Ended December 31, 2021, 2020, and 2019 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019 Notes to the Consolidated Financial Statements 2. Financial Statement Schedules . All financial statement schedules have been omitted because either the required information is not applicable or the information required is included in the consolidated financial statements and notes thereto included in this Annual Report. 3. Exhibits . The exhibits are listed in Item 15(b) below. (b) Exhibits The following exhibits are filed with this Annual Report or incorporated by reference: Exhibit No. Description 3.1* Amended and Restated Articles of Incorporation (16) 3.2* Amended and Restated Bylaws (19) 4.1* Specimen certificate evidencing shares of common stock (21) 4.2* Form of Second Amended and Restated Warrant to Purchase Shares of Common Stock (1) 4.3* Base Indenture, dated July 3, 2018, by and between the Company and The Bank of New York Mellon Trust Company, N.A. (10) 4.4* First Supplemental Indenture (including the form of 3.50% convertible senior notes due 2023), dated July 3, 2018, by and between the Company and The Bank of New York Mellon Trust Company, N.A. (10) 4.5 Description of Securities (17) 10.1†* Amended and Restated 2008 Equity Incentive Plan of the Company (1) 10.2†* Amended and Restated 2013 Omnibus Incentive Plan of the Company, effective as of June 9, 2014 (4) 10.2A†* Amended and Restated 2013 Omnibus Incentive Plan of the Company, Form of Restricted Stock Agreement (4) 10.2B†* Amended and Restated 2013 Omnibus Incentive Plan of the Company, Form of Incentive Stock Option Agreement (4) 89 Table of Contents 10.2C†* Amended and Restated 2013 Omnibus Incentive Plan of the Company, Form of Nonqualified Stock Option Agreement (4) 10.2D†* Amendment to the Amended and Restated 2013 Omnibus Incentive Plan of the Company, effective as of June 11, 2015 (5) 10.2E†* Amendment to the Amended and Restated 2013 Omnibus Incentive Plan of the Company, effective as of June 9, 2016 (6) 10.2F†* Amendment to the Amended and Restated 2013 Omnibus Incentive Plan of the Company, effective as of June 28, 2017 (7) 10.2G†* Amendment to the Amended and Restated 2013 Omnibus Incentive Plan of the Company, as amended, effective as of June 7, 2018 (9) 10.2H†* Amendment to the Amended and Restated 2013 Omnibus Incentive Plan of the Company, as amended, effective as of June 12, 2019 (13) 10.2I†* Amendment to the Amended and Restated 2013 Omnibus Incentive Plan of the Company, as amended, effective January 5, 2020 (18) 10.2J†* Amendment to the Amended and Restated 2013 Omnibus Incentive Plan of the Company, as amended, effective as of June 19, 2020 (20) 10.2K†* 2013 Amended and Restated Omnibus Incentive Plan of the Company, as amended, Form of Restricted Stock Unit Agreement for Officers (8) 10.2L†* 2013 Amended and Restated Omnibus Incentive Plan of the Company, as amended, Form of Restricted Stock Unit Agreement for Directors (8) 10.3* 2019 Incentive Plan of the Company for Non-Employee Service Providers, effective as of June 12, 2019 (13) 10.4†* Form of Continuing Employment Agreement (12) 10.5†* Employment Agreement, dated January 1, 2020, by and between the Company and Helen Sabzevari, Ph.D. (15) 10.6†* Executive Chairman Compensation Arrangement, by and between the Company and Randal J. Kirk (22) 10.7#* Exclusive Channel Collaboration Agreement, dated as of March 26, 2014, by and between the Company and Intrexon Energy Partners, LLC (2) 10.8#* Amended and Restated Limited Liability Company Agreement of Intrexon Energy Partners, LLC, dated as of March 26, 2014, by and among the Company and the parties thereto (2) 10.9* Securities Issuance Agreement by and among the Company, The University of Texas System Board of Regents on behalf of The University of Texas MD Anderson Cancer Center dated as of January 13, 2015 (3) 10.10#* Exclusive License Agreement, dated October 5, 2018, by and between Precigen, Inc. and ZIOPHARM Oncology, Inc. (11) 10.11* Share Lending Agreement, dated June 28, 2018, by and between the Company, J.P. Morgan Securities LLC and JPMorgan Chase Bank, National Association, New York Branch (10) 10.12* Stock and Asset Purchase Agreement, dated January 1, 2020, by and between the Company and TS Biotechnology Holdings, LLC (14) 21.1 List of Subsidiaries of Precigen, Inc. 23.1 Consent of Deloitte & Touche LLP 31.1 Certification of Helen Sabzevari, Chief Executive Officer (Principal Executive Officer) of Precigen, Inc., pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Harry Thomasian Jr., Chief Financial Officer (Principal Financial Officer) of Precigen, Inc., pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1** Certification of Helen Sabzevari, Chief Executive Officer (Principal Executive Officer) of Precigen, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2** Certification of Harry Thomasian Jr., Chief Financial Officer (Principal Financial Officer) of Precigen, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 90 Table of Contents 101** Interactive Data File (Precigen, Inc. and Subsidiaries Consolidated Financial Statements for the years ended December 31, 2021, 2020, and 2019, formatted in Inline XBRL (eXtensible Business Reporting Language)). Attached as Exhibit 101 are the following documents formatted in XBRL: (i) the Consolidated Balance Sheets as of December 31, 2021 and 2020, (ii) the Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019, (iii) the Consolidated Statements of Shareholders' and Total Equity for the years ended December 31, 2021, 2020, and 2019, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019 and (v) the Notes to the Consolidated Financial Statements. 104** Cover Page Interactive Data File (embedded within the Inline XBRL document) * Previously filed and incorporated by reference to the exhibit indicated in the following filings by the Company: (1) Amendment No. 1 to Registration Statement on Form S-1, filed with the Securities and Exchange Commission on July 29, 2013. (2) Current Report on Form 8-K/A, filed with the Securities and Exchange Commission on April 4, 2014. (3) Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 14, 2015. (4) Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 13, 2014. (5) Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 17, 2015. (6) Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 13, 2016. (7) Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 30, 2017. (8) Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 1, 2018. (9) Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 8, 2018. (10) Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 3, 2018. (11) Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 8, 2018. (12) Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 9, 2019. (13) Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 9, 2019. (14) Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 2, 2020. (15) Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 7, 2020. (16) Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 4, 2020. (17) Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 2, 2020. (18) Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 11, 2020. (19) Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2020. (20) Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 19, 2020. (21) Registration Statement on Form S-3, filed with the Securities and Exchange Commission on June 22, 2020. (22) Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 9, 2020. ** Furnished herewith † Indicates management contract or compensatory plan. # Portions of the exhibit (indicated by asterisks) have been omitted in compliance with Item 601 of Regulation S-K. (c) Financial Statement Schedules The response to Item 15(a)2 is incorporated herein by reference. 91 Table of Contents Item 16. Form 10-K Summary None. 92 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: March 1, 2022 PRECIGEN, INC. By: /S/ HELEN SABZEVARI Helen Sabzevari Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /S/ HELEN SABZEVARI Chief Executive Officer and Director (Principal Executive Officer) 3/1/2022 Helen Sabzevari /S/ HARRY THOMASIAN JR. Chief Financial Officer (Principal Accounting and Financial Officer) 3/1/2022 Harry Thomasian Jr. /S/ RANDAL J. KIRK Executive Chairman 3/1/2022 Randal J. Kirk /S/ CESAR L. ALVAREZ Director 3/1/2022 Cesar L. Alvarez /S/ STEVEN FRANK Director 3/1/2022 Steven Frank /S/ VINITA D. GUPTA Director 3/1/2022 Vinita D. Gupta /S/ FRED HASSAN Director 3/1/2022 Fred Hassan /S/ JEFFREY B. KINDLER Director 3/1/2022 Jeffrey B. Kindler /S/ DEAN J. MITCHELL Director 3/1/2022 Dean J. Mitchell /S/ ROBERT B. SHAPIRO Director 3/1/2022 Robert B. Shapiro /S/ JAMES S. TURLEY Director 3/1/2022 James S. Turley 93 Table of Contents Index to the Financial Statements and Schedules Page(s) Consolidated Financial Statements of Precigen, Inc. and Subsidiaries F- 2 Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) F- 3 Consolidated Balance Sheets as of December 31, 2021 and 2020 F- 6 Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020, and 2019 F- 8 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2021, 2020, and 2019 F- 9 Consolidated Statements of Shareholders' and Total Equity for the Years Ended December 31, 2021, 2020, and 2019 F- 10 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019 F- 13 Notes to the Consolidated Financial Statements F- 16 F-1 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Financial Statements December 31, 2021, 2020, and 2019 F-2 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Precigen, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Precigen, Inc. and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, shareholders' and total equity, and cash flows, for each of the three years ended December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Trans Ova Product and Services Revenue - Refer to Note 2 to the Financial Statements Critical Audit Matter Description Trans Ova generated product and services revenue by providing advanced reproductive technologies, including bovine embryo transfer and in vitro fertilization processes and from genetic preservation and sexed semen processes and application of such processes to other livestock, as well as sales of livestock and embryos produced using these processes and used in production. Trans Ova evaluates each promised product or service under its contracts and identifies performance obligations for each distinct product or service. The Company then allocates the transaction price of the contract to each performance obligation and recognizes the transaction price as revenue at a point in time when control of the promised product is transferred to the customer or when the promised service is rendered. Auditing product and service revenues required a higher degree of auditor judgment and an increased extent of audit effort to evaluate transaction price and performance obligations for contracts. F-3 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s revenue transactions included the following, among others: • We tested the operating effectiveness of the controls over the recording of product and service revenue transactions. • We evaluated the Company’s accounting policies for compliance with the applicable revenue recognition accounting guidance. • We selected a sample of recorded product and service revenue transactions and (1) obtained and read customer purchase orders and the underlying executed customer agreement for each selection to determine whether relevant contractual terms were identified by management, (2) compared management’s identified performance obligations to the executed customer agreement, invoice, price listing, and evidence of performance, and (3) recalculated the revenue amount. /s/ Deloitte & Touche LLP Baltimore, Maryland March 1, 2022 We have served as the Company’s auditor since 2019. F-4 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Precigen, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Precigen, Inc. and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated March 1, 2022, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Baltimore, Maryland March 1, 2022 F-5 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2021 and 2020 (Amounts in thousands, except share data) 2021 2020 Assets Current assets Cash and cash equivalents $ 42,920 $ 51,792 Short-term investments 72,240 48,325 Receivables Trade, less allowance for credit losses of $ 4,288 and $ 4,825 as of December 31, 2021 and 2020, respectively 20,832 16,487 Related parties, less allowance for credit losses of $ 1,509 as of December 31, 2021 and 2020 73 19 Notes — 3,689 Other 566 232 Inventory 13,261 11,359 Prepaid expenses and other 6,736 7,192 Current assets held for sale or abandonment — 9,853 Total current assets 156,628 148,948 Long-term investments 48,562 — Property, plant and equipment, net 34,315 34,924 Intangible assets, net 54,115 65,396 Goodwill 54,148 54,363 Right-of-use assets 10,900 9,353 Other assets 1,188 1,603 Total assets $ 359,856 $ 314,587 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2021 and 2020 (Amounts in thousands, except share data) 2021 2020 Liabilities and Shareholders' Equity Current liabilities Accounts payable $ 5,405 $ 4,598 Accrued compensation and benefits 11,223 8,097 Other accrued liabilities 11,595 9,549 Deferred revenue 4,442 2,800 Current portion of long-term debt 402 360 Current portion of lease liabilities 1,551 2,657 Related party payables 27 19 Current liabilities held for sale or abandonment — 14,047 Total current liabilities 34,645 42,127 Long-term debt, net of current portion 182,749 171,522 Deferred revenue, net of current portion, including $ 21,205 from related parties as of December 31, 2021 and 2020 23,023 23,023 Lease liabilities, net of current portion 9,502 7,744 Deferred tax liabilities 2,539 2,897 Other long-term liabilities 50 100 Total liabilities 252,508 247,413 Commitments and contingencies (Note 16) Shareholders' equity Common stock, no par value, 400,000,000 shares authorized as of December 31, 2021 and 2020; and 206,739,874 shares and 187,663,207 shares issued and outstanding as of December 31, 2021 and 2020, respectively — — Additional paid-in capital 2,022,701 1,886,567 Accumulated deficit ( 1,915,556 ) ( 1,823,390 ) Accumulated other comprehensive income 203 3,997 Total shareholders' equity 107,348 67,174 Total liabilities and shareholders' equity $ 359,856 $ 314,587 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Statements of Operations Years Ended December 31, 2021, 2020, and 2019 (Amounts in thousands, except share and per share data) 2021 2020 2019 Revenues Collaboration and licensing revenues, including $ 0 , $ 3,053 , and $ 11,832 from related parties in 2021, 2020, and 2019, respectively $ 506 $ 21,208 $ 14,059 Product revenues 27,295 24,349 23,780 Service revenues 75,570 56,899 51,803 Other revenues 502 722 1,080 Total revenues 103,873 103,178 90,722 Operating Expenses Cost of products 24,864 28,550 31,930 Cost of services 33,521 26,963 29,471 Research and development 50,141 41,644 66,666 Selling, general and administrative 74,122 91,704 98,634 Impairment of goodwill — — 29,820 Impairment of other noncurrent assets 543 920 990 Total operating expenses 183,191 189,781 257,511 Operating loss ( 79,318 ) ( 86,603 ) ( 166,789 ) Other Expense, Net Unrealized and realized appreciation in fair value of equity securities and preferred stock, net — — 8,291 Interest expense ( 18,891 ) ( 18,400 ) ( 17,666 ) Interest and dividend income 1,617 2,451 3,871 Other income (expense), net ( 330 ) ( 165 ) 3,445 Total other expense, net ( 17,604 ) ( 16,114 ) ( 2,059 ) Equity in net loss of affiliates ( 3 ) ( 1,138 ) ( 2,416 ) Loss from continuing operations before income taxes ( 96,925 ) ( 103,855 ) ( 171,264 ) Income tax benefit 160 82 930 Loss from continuing operations ( 96,765 ) ( 103,773 ) ( 170,334 ) Income (loss) from discontinued operations, net of income tax benefit 4,599 ( 66,748 ) ( 153,582 ) Net loss $ ( 92,166 ) $ ( 170,521 ) $ ( 323,916 ) Net loss attributable to the noncontrolling interests — — 1,592 Net loss attributable to Precigen $ ( 92,166 ) $ ( 170,521 ) $ ( 322,324 ) Amounts Attributable to Precigen Net loss from continuing operations attributable to Precigen $ ( 96,765 ) $ ( 103,773 ) $ ( 168,742 ) Net income (loss) from discontinued operations attributable to Precigen 4,599 ( 66,748 ) ( 153,582 ) Net loss attributable to Precigen $ ( 92,166 ) $ ( 170,521 ) $ ( 322,324 ) Net Loss per Share Net loss from continuing operations attributable to Precigen per share, basic and diluted $ ( 0.49 ) $ ( 0.62 ) $ ( 1.09 ) Net income (loss) from discontinued operations attributable to Precigen per share, basic and diluted 0.02 ( 0.40 ) ( 1.00 ) Net loss attributable to Precigen per share, basic and diluted $ ( 0.47 ) $ ( 1.02 ) $ ( 2.09 ) Weighted average shares outstanding, basic and diluted 197,759,900 167,065,539 154,138,774 The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Statements of Comprehensive Loss Years Ended December 31, 2021, 2020, and 2019 (Amounts in thousands) 2021 2020 2019 Net loss $ ( 92,166 ) $ ( 170,521 ) $ ( 323,916 ) Other comprehensive income (loss): Unrealized gain (loss) on investments ( 344 ) 6 68 Gain (loss) on foreign currency translation adjustments ( 3,450 ) 4,502 1,087 Release of cumulative foreign currency translation adjustments to net loss from discontinued operations — 26,957 — Comprehensive loss ( 95,960 ) ( 139,056 ) ( 322,761 ) Comprehensive loss attributable to the noncontrolling interests — — 1,581 Comprehensive loss attributable to Precigen $ ( 95,960 ) $ ( 139,056 ) $ ( 321,180 ) The accompanying notes are an integral part of these consolidated financial statements. F-9 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Statements of Shareholders' and Total Equity Years Ended December 31, 2021, 2020, and 2019 (Amounts in thousands, except share data) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Precigen Shareholders' Equity Noncontrolling Interests Total Equity Shares Amount Balances at December 31, 2018 160,020,466 $ — $ 1,722,012 $ ( 28,612 ) $ ( 1,330,545 ) $ 362,855 $ 15,867 $ 378,722 Stock-based compensation expense — — 18,881 — — 18,881 69 18,950 Shares issued upon vesting of restricted stock units and for exercises of stock options and warrants 1,028,144 — 63 — — 63 250 313 Shares issued for accrued compensation 150,908 — 1,102 — — 1,102 — 1,102 Shares issued as payment for services 2,075,362 — 10,446 — — 10,446 — 10,446 Shares and warrants issued in public offerings, net of issuance costs — — — — — — 6,611 6,611 Adjustments for noncontrolling interests — — ( 456 ) — — ( 456 ) 456 — Deconsolidation of subsidiary — — — — — — ( 21,672 ) ( 21,672 ) Net loss — — — — ( 322,324 ) ( 322,324 ) ( 1,592 ) ( 323,916 ) Other comprehensive income — — — 1,144 — 1,144 11 1,155 Balances at December 31, 2019 163,274,880 $ — $ 1,752,048 $ ( 27,468 ) $ ( 1,652,869 ) $ 71,711 $ — $ 71,711 The accompanying notes are an integral part of these consolidated financial statements. F-10 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Statements of Shareholders' and Total Equity Years Ended December 31, 2021, 2020, and 2019 (Amounts in thousands, except share data) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shareholders' Equity Shares Amount Balances at December 31, 2019 163,274,880 $ — $ 1,752,048 $ ( 27,468 ) $ ( 1,652,869 ) $ 71,711 Stock-based compensation expense — — 18,366 — — 18,366 Shares issued upon vesting of restricted stock units and for exercises of stock options 877,249 — 117 — — 117 Shares issued for accrued compensation 1,955,405 — 5,100 — — 5,100 Shares issued as payment for services 413,911 — 1,006 — — 1,006 Shares issued in private placement 5,972,696 — 35,000 — — 35,000 Shares issued upon conversion of long-term debt 13,051,802 — 56,827 — — 56,827 Shares issued in conjunction with settlement agreement 2,117,264 — 18,103 — — 18,103 Net loss — — — — ( 170,521 ) ( 170,521 ) Release of cumulative translation adjustment to loss from discontinued operations — — — 26,957 — 26,957 Other comprehensive income — — — 4,508 — 4,508 Balances at December 31, 2020 187,663,207 $ — $ 1,886,567 $ 3,997 $ ( 1,823,390 ) $ 67,174 The accompanying notes are an integral part of these consolidated financial statements. F-11 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Statements of Shareholders' and Total Equity Years Ended December 31, 2021, 2020, and 2019 (Amounts in thousands, except share data) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Shareholders' Equity Shares Amount Balances at December 31, 2020 187,663,207 $ — $ 1,886,567 $ 3,997 $ ( 1,823,390 ) $ 67,174 Stock-based compensation expense — — 13,904 — — 13,904 Shares issued upon vesting of restricted stock units and for exercises of stock options 1,751,896 — 608 — — 608 Shares issued as payment for services 74,771 — 577 — — 577 Shares issued in public offering, net of issuance costs 17,250,000 — 121,045 — — 121,045 Net loss — — — — ( 92,166 ) ( 92,166 ) Other comprehensive loss — — — ( 3,794 ) — ( 3,794 ) Balances at December 31, 2021 206,739,874 $ — $ 2,022,701 $ 203 $ ( 1,915,556 ) $ 107,348 The accompanying notes are an integral part of these consolidated financial statements. F-12 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2021, 2020, and 2019 (Amounts in thousands) 2021 2020 2019 Cash flows from operating activities Net loss $ ( 92,166 ) $ ( 170,521 ) $ ( 323,916 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 13,761 17,516 24,896 Loss on disposals of assets, net 150 4,442 3,071 Impairment of goodwill — 9,635 87,862 Impairment of other noncurrent assets 543 13,326 32,627 Gain on sale of discontinued operations — ( 672 ) — Loss on release of cumulative foreign currency translation adjustments to loss from discontinued operations — 26,957 — Loss on settlement agreement — 11,436 — Unrealized and realized (appreciation) depreciation on equity securities and preferred stock, net — 106 ( 7,833 ) Noncash dividend income — — ( 48 ) Amortization of premiums (discounts) on investments, net 1,232 ( 699 ) ( 1,005 ) Equity in net loss of affiliates 3 1,176 6,730 Stock-based compensation expense 13,904 18,366 18,950 Shares issued as payment for services 577 1,006 10,446 Provision for credit losses 1,268 899 3,242 Accretion of debt discount and amortization of deferred financing costs 11,735 10,587 9,459 Deferred income taxes ( 167 ) ( 156 ) ( 3,674 ) Noncash (gain) loss on termination of leases ( 5,831 ) 191 — Other noncash items 24 35 837 Changes in operating assets and liabilities: Receivables: Trade ( 6,176 ) 2,214 ( 262 ) Related parties ( 54 ) 258 967 Other ( 330 ) 1,853 ( 656 ) Inventory ( 1,903 ) 2,511 4,100 Prepaid expenses and other 520 ( 812 ) ( 2,262 ) Other assets 305 ( 142 ) 333 Accounts payable 420 ( 1,097 ) ( 5,349 ) Accrued compensation and benefits 2,853 ( 789 ) 5,186 Other accrued liabilities 1,850 ( 2,682 ) ( 5,516 ) Deferred revenue 1,656 ( 21,045 ) 7,423 Lease liabilities 97 ( 887 ) ( 995 ) Related party payables 8 ( 33 ) 45 Other long-term liabilities ( 50 ) — ( 585 ) Net cash used in operating activities ( 55,771 ) ( 77,021 ) ( 135,927 ) The accompanying notes are an integral part of these consolidated financial statements. F-13 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2021, 2020, and 2019 (Amounts in thousands) 2021 2020 2019 Cash flows from investing activities Purchases of investments ( 174,221 ) ( 171,360 ) ( 55,073 ) Sales and maturities of investments 100,168 133,000 166,495 Proceeds from sales of equity securities — — 23,456 Investments in affiliates — — ( 3,713 ) Decrease in cash from deconsolidation of subsidiary — — ( 7,244 ) Return of investment in affiliate — — 125 Purchases of property, plant and equipment ( 7,247 ) ( 7,527 ) ( 37,883 ) Proceeds from sale of assets 3,006 6,484 688 Proceeds from sale of discontinued operations, net of cash sold — 64,240 — Proceeds from repayment of notes receivable 3,754 2,942 — Net cash provided by (used in) investing activities ( 74,540 ) 27,779 86,851 Cash flows from financing activities Proceeds from issuance of shares and warrants, net of issuance costs 121,045 35,000 6,611 Advances from lines of credit — 10,005 11,757 Repayments of advances from lines of credit — ( 11,927 ) ( 10,301 ) Proceeds from long-term debt, net of issuance costs — — 376 Payments of long-term debt ( 466 ) ( 490 ) ( 618 ) Proceeds from stock option and warrant exercises 608 117 313 Net cash provided by financing activities 121,187 32,705 8,138 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 217 353 ( 810 ) Net decrease in cash, cash equivalents, and restricted cash ( 8,907 ) ( 16,184 ) ( 41,748 ) Cash, cash equivalents, and restricted cash Beginning of year 52,250 68,434 110,182 End of year $ 43,343 $ 52,250 $ 68,434 The accompanying notes are an integral part of these consolidated financial statements. F-14 Table of Contents Precigen, Inc. and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2021, 2020, and 2019 (Amounts in thousands) 2021 2020 2019 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 7,155 $ 7,202 $ 3,751 Cash paid during the period for income taxes 36 48 50 Significant noncash activities Fair value of stock received as consideration for collaboration agreements $ — $ — $ 4,530 Fair value of stock issued upon conversion of long-term debt — 56,827 — Fair value of stock issued in conjunction with settlement agreement — 18,103 — Accrued compensation paid in equity awards — 5,100 1,102 Purchases of property and equipment included in accounts payable and other accrued liabilities 820 277 694 Proceeds from sale of assets included in receivables 14 4,227 — The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of December 31, 2021 and 2020 as shown above: 2021 2020 Cash and cash equivalents $ 42,920 $ 51,792 Restricted cash included in other assets 423 458 Cash, cash equivalents, and restricted cash $ 43,343 $ 52,250 The accompanying notes are an integral part of these consolidated financial statements. F-15 Table of Contents Precigen, Inc. and Subsidiaries Notes to the Consolidated Financial Statements (Amounts in thousands, except share and per share data) 1. Organization and Basis of Presentation Precigen, Inc. ("Precigen"), a Virginia corporation, is a synthetic biology company with an increasing focus on its discovery and clinical stage activities to advance the next generation of gene and cellular therapies to target the most urgent and intractable challenges in immuno-oncology, autoimmune disorders, and infectious diseases. PGEN Therapeutics, Inc. ("PGEN Therapeutics") is a dedicated discovery and clinical stage biopharmaceutical company advancing the next generation of gene and cell therapies using precision technology to target urgent and intractable diseases in immuno-oncology, autoimmune disorders, and infectious diseases. PGEN Therapeutics is a wholly owned subsidiary of Precigen with primary operations in Maryland. Precigen ActoBio, Inc. ("ActoBio") is pioneering a proprietary class of microbe-based biopharmaceuticals that enable expression and local delivery of disease-modifying therapeutics and is a wholly owned subsidiary of Precigen with primary operations in Belgium. Exemplar Genetics, LLC, doing business as Precigen Exemplar ("Exemplar"), is committed to enabling the study of life-threatening human diseases through the development of MiniSwine Yucatan miniature pig research models and services, as well as enabling the production of cells and organs in its genetically engineered swine for regenerative medicine applications and is a wholly owned subsidiary of Precigen with primary operations in Iowa. Trans Ova Genetics, L.C., including its wholly owned subsidiary Progentus, L.C., are providers of reproductive technologies, including services and products sold to cattle breeders and other producers and are herein after collectively referred to as "Trans Ova." Trans Ova is a wholly owned subsidiary with primary operations in California, Iowa, Maryland, Missouri, Texas, Washington, and Wisconsin. Effective October 1, 2019, Precigen transferred substantially all of its proprietary methane bioconversion platform ("MBP") assets to a wholly owned subsidiary, MBP Titan LLC ("MBP Titan"). MBP Titan's proprietary technology is designed to convert natural gas into more valuable and usable energy and chemical products through novel, highly engineered bacteria that utilize specific energy feedstocks. Prior to October 1, 2019, the operation transferred to MBP Titan was an operating division within Precigen. Beginning in the second quarter of 2020, the Company suspended MBP Titan's operations and began the process to wind down MBP Titan's activities and had substantially completed the wind down by December 31, 2020, with the final disposition of certain property and equipment and the facility operating lease occurring in January 2021. With the exception of certain assets and obligations with which the Company has a continuing involvement after the wind down, MBP Titan has been presented as discontinued operations for all periods presented. See Note 3 for further discussion. Through April 8, 2019, Precigen consolidated AquaBounty Technologies, Inc. ("AquaBounty"), a company focused on improving productivity in commercial aquaculture and whose common stock is listed on the Nasdaq Stock Market. On April 9, 2019, AquaBounty completed an underwritten public offering that resulted in Precigen no longer having the contractual right to control AquaBounty's board of directors, and accordingly, Precigen deconsolidated AquaBounty resulting in a loss on deconsolidation of $ 2,648 , which is included in other income, net, on the accompanying consolidated statement of operations for the year ended December 31, 2019. After deconsolidating the entity in April 2019, Precigen held its AquaBounty equity securities, which was an equity method investment that the Company accounted for using the fair value option, until October 2019 when the independent members of the Company's board of directors, with the recommendation of the audit committee and an independent special committee of the Board, unanimously approved the sale of the Company's common shares held in AquaBounty to an affiliate of Third Security, LLC ("Third Security"), a related party, for $ 21,587 , resulting in the recognition of a realized gain of $ 7,348 which is included in unrealized and realized appreciation in fair value of equity securities and preferred stock, net, on the accompanying consolidated statement of operations for the year ended December 31, 2019. On January 31, 2020, Precigen completed the sale of the majority of its non-healthcare assets and operations to an affiliate of Third Security, which are presented as discontinued operations for all periods presented. See Notes 3 and 13 for further discussion. Precigen and its consolidated subsidiaries are hereinafter collectively referred to as the "Company." F-16 Table of Contents Liquidity Management believes that existing liquid assets as of December 31, 2021, will allow the Company to continue its operations for at least a year from the issuance date of these consolidated financial statements. These consolidated financial statements are presented in United States dollars and are prepared under accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Company is subject to a number of risks similar to those of other companies conducting high-risk, early-stage research and development of therapeutic product candidates. Principal among these risks are dependence on key individuals and intellectual property, competition from other products and companies, and the technical risks associated with the successful research, development, and clinical manufacturing of its therapeutic product candidates. Additionally, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the year ended December 31, 2021, the Company incurred a net loss of $ 92,166 and, as of December 31, 2021, had an accumulated deficit of $ 1,915,556 . Management expects operating losses and negative cash flows to continue for the foreseeable future and, as a result, the Company will require additional capital to fund its operations and execute its business plan. In the absence of a significant source of recurring revenue, the Company's long-term success is dependent upon its ability to continue to raise additional capital in order to fund ongoing research and development, adequately satisfy or renegotiate long-term debt obligations, obtain regulatory approval of its therapeutics product candidates, successfully commercialize its therapeutics product candidates, generate revenue, meet its obligations and, ultimately, attain profitable operations. 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements reflect the operations of Precigen and its subsidiaries. All intercompany accounts and transactions have been eliminated. Risks and Uncertainties COVID-19 has had and continues to have an extensive impact on the global health and economic environments. Commencing in the second half of March 2020, the Company's healthcare business began to experience delays to certain of its clinical trials as a result of COVID-19. For example, starting in March 2020, the Company temporarily suspended the last cohort of the Phase 1b/2a clinical trial for AG019 as a proactive measure to protect the welfare and safety of patients, caregivers, clinical site staff, its employees, and contractors. The temporary suspension of the AG019 trial was voluntary and was not related to any patient safety issues in the study. The voluntary suspension of the AG019 trial was lifted in June 2020, and recruitment in the study resumed. Additionally, from April to May 2020, enrollment of new patients in the Company's PRGN-3005 Phase 1 trial was temporarily suspended due to a mandated hold on certain early and late-stage clinical trials at the Fred Hutchinson Cancer Research Center in Seattle that was instituted in light of the COVID-19 pandemic. The temporary suspension of the PRGN-3005 trial was not related to safety issues in the studies, and in May 2020, recruitment resumed in the PRGN-3005 Phase 1 trial. Furthermore, there is uncertainty regarding the duration and severity of the ongoing pandemic, and the Company could experience further delays or other pandemic-related events that may adversely impact the Company's clinical as well as preclinical pipeline candidates in the future. The Company is closely monitoring the impact of COVID-19 on these and other aspects of its business, including Trans Ova and Exemplar. Given the dynamic nature of these circumstances, the full impact of the COVID-19 pandemic on the Company's ongoing business, results of operations, and overall financial performance in future periods cannot be reasonably estimated at this time, and it could have a material adverse effect on the Company's results of operations, cash flows, and financial position, including resulting impairments to goodwill and long-lived assets and additional credit losses. See Note 3 for further discussion of the impact of COVID-19 on MBP Titan. Revenue Recognition The Company recognizes revenue when its customer obtains control of the promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"), the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the promises and distinct performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligations. F-17 Table of Contents Collaboration and licensing revenues The Company has historically generated collaboration and licensing revenues through agreements with collaborators (known as exclusive channel collaborations or "ECCs") and licensing agreements whereby the collaborators or the licensee obtain exclusive access to the Company's proprietary technologies for use in the research, development and commercialization of products and/or treatments in a contractually specified field of use. Generally, the terms of these agreements provide that the Company receives some or all of the following: (i) upfront payments upon consummation of the agreement; (ii) reimbursements for costs incurred by the Company for research and development and/or manufacturing efforts related to specific applications provided for in the agreement; (iii) milestone payments upon the achievement of specified development, regulatory, and commercial activities; and (iv) royalties on sales of products arising from the collaboration or licensing agreement. The agreement typically continues in perpetuity unless terminated and each of the Company's collaborators retain a right to terminate the agreement upon providing the Company written notice a certain period of time prior to such termination, generally 90 days. The Company's collaboration and licensing agreements typically contain multiple promises, including technology licenses, research and development services and, in certain cases, manufacturing services. The Company determines whether each of the promises is a distinct performance obligation. As the nature of the promises in the Company's collaboration and licensing agreements are highly integrated and interrelated, the Company typically combines most of its promises into a single performance obligation. Because the Company is performing research and development services during early-stage development, the services are integral to the utilization of the technology license. Therefore, the Company has determined that the technology license and research and development services are typically inseparable from each other during the performance period of its collaboration and licensing agreements. Options to acquire additional services are considered to determine if they constitute material rights. Contingent manufacturing services that may be provided under certain of the Company's agreements are considered to be a separate future contract and not part of the current collaboration or licensing agreement. At contract inception, the Company determines the transaction price, including fixed consideration and any estimated amounts of variable consideration. The upfront payment received upon consummation of the agreement is fixed and nonrefundable. Variable consideration is subject to a constraint and amounts are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration may include reimbursements for costs incurred by the Company for research and development efforts; milestone payments upon the achievement of certain development, regulatory, and commercial activities; and royalties on sales of products arising from the collaboration or licensing agreement. The Company determines the initial transaction price and excludes variable consideration that is otherwise constrained pursuant to the guidance in ASC 606. The transaction price is allocated to the performance obligations in the agreement based on the standalone selling price of each performance obligation. The Company typically groups the promises in its collaboration and licensing agreements into one performance obligation so the entire transaction price relates to this single performance obligation. The technology license included in the single performance obligation is considered a functional license. However, it is typically combined into a single performance obligation as the Company provides interrelated research and development services along with other obligations over an estimated period of performance. The Company utilizes judgment to determine the most appropriate method to measure its progress of performance under the agreement, primarily based on inputs necessary to fulfill the performance obligation. The Company evaluates its measure of progress to recognize revenue each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company's measure of performance and revenue recognition involves significant judgment and assumptions, including, but not limited to, estimated costs and timelines to complete its performance obligations. The Company evaluates modifications and amendments to its contracts to determine whether any changes should be accounted for prospectively or on a cumulative catch-up basis. Payments received for cost reimbursements for research and development efforts are recognized as revenue as the services are performed, in connection with the single performance obligation discussed above. The reimbursements relate specifically to the Company's efforts to provide services and the reimbursements are consistent with what the Company would typically charge other collaborators for similar services. The Company assesses the uncertainty of when and if the milestone will be achieved to determine whether the milestone is included in the transaction price. The Company then assesses whether the revenue is constrained based on whether it is probable that a significant reversal of revenue would not occur when the uncertainty is resolved. Royalties, including sales-based milestones, received under the agreements will be recognized as revenue when sales have occurred because the Company applies the sales- or usage-based royalties recognition exception provided for under ASC 606. F-18 Table of Contents The Company determined the application of this exception is appropriate because at the time the royalties are generated, the technology license granted in the agreement is the predominant item to which the royalties relate. As the Company receives upfront payments in its collaboration and licensing agreements, it evaluates whether any significant financing components exist in its collaboration and licensing agreements. Based on the nature of its collaboration and licensing agreements, there are no significant financing components as the purpose of the upfront payment is not to provide financing. The purpose is to provide the collaborator with assurance that the Company will complete its obligations under the contract or to secure the right to a specific product or service at the collaborator's discretion. In addition, the variable payments generally align with the timing of performance or the timing of the consideration varies on the basis of the occurrence or nonoccurrence of a future event that is not substantially within the control of the collaborator or the Company. From time to time, the Company and certain collaborators may cancel their agreements, relieving the Company of any further performance obligations under the agreement. Upon such cancellation or when the Company has determined no further performance obligations are required of the Company under an agreement, the Company recognizes any remaining deferred revenue as revenue. Product and service revenues The Company's product and service revenues are generated primarily through Trans Ova and include sales of advanced reproductive technologies, including the Company's bovine embryo transfer and in vitro fertilization processes and from genetic preservation and sexed semen processes and applications of such processes to other livestock, as well as sales of livestock and embryos produced using these processes and used in production. Exemplar also generates product and service revenues through the development and sale of genetically engineered miniature swine models. The Company evaluates each promised product or service under its contracts and identifies performance obligations for each distinct product or service. The Company then allocates the transaction price of the contract to each performance obligation, recognizing the transaction price as revenue at a point in time when control of the promised product is transferred to the customer or when the promised service is rendered. Payment terms are typically due within 30 days of invoicing, which occurs prior to or when revenue is recognized. Research and Development The Company considers that regulatory requirements inherent in the research and development of new products preclude it from capitalizing such costs. Research and development expenses include salaries and related costs of research and development personnel, including stock-based compensation expense, costs to acquire or reacquire technology rights, contract research organizations and consultants, facilities, materials and supplies associated with research and development projects as well as various laboratory studies. Costs incurred in conjunction with collaboration and licensing arrangements are included in research and development. Indirect research and development costs include depreciation, amortization, and other indirect overhead expenses. The Company has research and development arrangements with third parties that include upfront and milestone payments. As of December 31, 2021 and 2020, the Company had research and development commitments with third parties that had not yet been incurred totaling $ 22,301 and $ 12,054 , respectively. The commitments are generally cancellable by the Company at any time upon written notice. Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less at the date of purchase are considered to be cash equivalents. Cash balances at a limited number of banks may periodically exceed insurable amounts. The Company believes that it mitigates its risk by investing in or through major financial institutions. Recoverability of investments is dependent upon the performance of the issuer. As of December 31, 2021 and 2020, the Company had cash equivalent investments in highly liquid money market accounts at major financial institutions of $ 20,697 and $ 30,164 , respectively, which is included in cash and cash equivalents in the accompanying consolidated balance sheets. Short-term and Long-Term Investments As of December 31, 2021, short-term and long-term investments include United States government debt securities and certificates of deposit. The Company determines the appropriate classification as short-term or long-term at the time of purchase based on original maturities and management's reasonable expectation of sales and redemption. The Company reevaluates such classification at each balance sheet date. The Company's written investment policy requires investments to be F-19 Table of Contents explicitly rated by two of Standard & Poor's, Moody's or Fitch and to have a minimum rating of A1, P1 or F-1, respectively, from those agencies. In addition, the investment policy limits the amount of credit exposure to any one issuer. Equity Securities The Company historically held equity securities of private and publicly traded companies, including investments received and/or purchased from certain collaborators. The Company evaluated whether to elect the fair value option on an individual investment basis. The Company elected the fair value option to account for its equity securities held in publicly traded companies. These equity securities were recorded at fair value at each reporting date and were subject to market price volatility. Unrealized gains and losses resulting from fair value adjustments were reported in the consolidated statements of operations. The Company accounts for its investments in private companies using either the equity method, as discussed below, or the measurement alternative method for equity securities without readily determinable fair values, which represented cost and any adjustments for impairment or observable price changes in certain transactions. See Notes 3 and 17 for additional discussion of certain equity securities. For equity securities received pursuant to a collaboration agreement, the Company recorded the fair value of securities received on the date the collaboration was consummated or the milestone was achieved using the fair value of the collaborator's security on that date, assuming the transfer of consideration was considered perfunctory. If the transfer of the consideration was not considered perfunctory, the Company considered the specific facts and circumstances to determine the appropriate date on which to evaluate fair value. The Company also evaluated whether any discounts for trading restrictions or other basis for lack of marketability should be applied to the fair value of the securities at inception of the collaboration. In the event the Company concluded that a discount should be applied to securities accounted for under the fair value option, the fair value of the securities was adjusted at inception of the collaboration and re-evaluated at each reporting period thereafter. Fair Value of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset and liability. As a basis for considering such assumptions, the Company uses a three-tier fair value hierarchy that prioritizes the inputs used in its fair value measurements. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1: Quoted prices in active markets for identical assets and liabilities; Level 2: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available. Concentrations of Risk Due to the Company's mix of fixed and variable rate securities holdings, the Company's investment portfolio is susceptible to changes in interest rates. As of December 31, 2021, gross unrealized losses on the Company's short-term and long-term investments were not material. From time to time, the Company may liquidate some or all of its investments to fund operational needs or other activities, such as capital expenditures or business acquisitions, or distribute its equity securities to shareholders as a stock dividend. Depending on which investments the Company liquidates to fund these activities, the Company could recognize a portion, or all, of the gross unrealized losses. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade and related party receivables. The Company manages credit risk through credit approvals, credit limits, and monitoring procedures. The Company performs ongoing credit evaluations of its customers but generally does not require collateral to support accounts receivable. Equity Method Investments The Company accounts for its investments in each of its joint ventures ("JVs") and accounted for its investments in start-up entities backed by the Harvest Intrexon Enterprise Fund I, LP ("Harvest"), all of which are related parties, using the equity F-20 Table of Contents method of accounting based upon relative ownership interest. See additional discussion related to certain of the Company's JVs in Note 4 and additional discussion related to certain of the Harvest start-up entities in Note 17. Variable Interest Entities The Company identifies entities that (i) do not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support or (ii) in which the equity investors lack an essential characteristic of a controlling financial interest as variable interest entities ("VIEs"). The Company performs an initial and on-going evaluation of the entities with which the Company has variable interests to determine if any of these entities are VIEs. If an entity is identified as a VIE, the Company performs an assessment to determine whether the Company has both (i) the power to direct activities that most significantly impact the VIE's economic performance and (ii) have the obligation to absorb losses from or the right to receive benefits of the VIE that could potentially be significant to the VIE. If both of these criteria are satisfied, the Company is identified as the primary beneficiary of the VIE. As of December 31, 2021 and 2020, the Company determined that certain of its collaborators and JVs were VIEs. The Company was not the primary beneficiary for these entities since it did not have the power to direct the activities that most significantly impact the economic performance of the VIEs. As of December 31, 2021 and 2020, the Company had no risk of loss related to the identified VIEs. See Note 4 for discussion of the Company's future funding commitments for its significant JVs. Accounts Receivable The Company is exposed to credit losses primarily through sales of products and services by Trans Ova and Exemplar in the normal course of business. The Company's expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions, and a review of the current status of customers' accounts receivables. The Company's monitoring activities include timely account reconciliation, routine follow-up on past due accounts, and consideration of customers' financial condition, as well as macroeconomic conditions. Past due status is determined based upon contractual terms. Balances are written off at the point when collection attempts have been exhausted. Estimates are used to determine the loss allowance, which is based on assessment of anticipated payment and other historical, current, and future information that is reasonably available. The following table shows the activity in the allowance for credit losses for the years ended December 31, 2021, 2020, and 2019: 2021 2020 2019 Beginning balance $ 6,334 $ 7,513 $ 4,991 Charged to operating expenses 1,268 899 3,384 Write offs of accounts receivable, net of recoveries ( 1,805 ) ( 2,078 ) ( 862 ) Ending balance $ 5,797 $ 6,334 $ 7,513 Inventory The Company's inventory primarily includes adult female cows that are used in Trans Ova's production processes and are recorded at acquisition cost using the first-in, first-out method or net realizable value, whichever is lower. Work-in-process inventory includes allocations of production costs and facility costs for products currently in production and is recorded at the lower of cost or net realizable value. Significant declines in the price of cows could result in unfavorable adjustments to inventory balances. Property, Plant and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Major additions or betterments are capitalized and repairs and maintenance are expensed as incurred. Depreciation and amortization is calculated using the F-21 Table of Contents straight-line method over the estimated useful lives of the assets. The estimated useful lives of these assets from continuing operations are as follows: Years Land improvements 4 – 15 Buildings and building improvements 3 – 23 Furniture and fixtures 1 – 7 Equipment 1 – 9 Breeding stock 1 – 4 Computer hardware and software 1 – 7 Leasehold improvements are amortized over the shorter of the useful life of the asset or the applicable lease term, generally one to fourteen years . Operating Leases The Company determines if an arrangement is a lease at inception. Operating leases are included as right-of-use assets ("ROU Assets") and lease liabilities on the consolidated balance sheets. The Company has elected not to recognize ROU Assets or lease liabilities for leases with lease terms of one year or less. Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The initial measurement of the ROU Asset also includes any lease payments made, adjusted for lease incentives. For leases that contain fixed non-lease payments, the Company accounts for the lease and non-lease components as a single lease component. Variable lease payments, which primarily include payments for non-lease components such as maintenance costs, are excluded from the ROU Assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As the Company's operating leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate at the lease commencement date, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease, in determining the present value of future payments. The lease term for all of the Company's leases includes the noncancelable period of the lease plus any additional periods covered by options that the Company is reasonably certain to exercise, either to extend or to not terminate the lease. Lease expense is recognized on a straight-line basis over the lease term. Goodwill Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually. The Company may elect to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount prior to performing the goodwill impairment test. If this is the case, the quantitative goodwill impairment test is required. If it is more-likely-than-not that the fair value of a reporting unit is greater than the carrying amount, the quantitative goodwill impairment test is not required. If the quantitative goodwill impairment test is performed, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, the entity must record the impairment charge for the excess carrying amount, which is limited to the amount of goodwill allocated to the reporting unit. If the fair value of the reporting unit exceeds its carrying amount, no goodwill impairment charge is necessary. The Company performs its annual impairment review of goodwill in the fourth quarter, or sooner if a triggering event occurs prior to the annual impairment review. When the Company performs quantitative evaluations, the fair value of the reporting units are primarily determined based on the income approach. The income approach is a valuation technique in which fair value is based from forecasted future cash flows, discounted at the appropriate rate of return commensurate with the risk as well as current rates of return for equity and debt capital as of the valuation date. The forecast used in the Company's estimation of fair value was developed by management based on historical operating results, incorporating adjustments to reflect management's planned changes in operations and market considerations. The discount rate utilizes a risk adjusted weighted average cost of capital. To assess the reasonableness of the calculated reporting unit fair values, the Company compares the sum of the reporting units' fair values to its market capitalization (per share stock price times the number of shares outstanding) and calculates an implied control premium (the F-22 Table of Contents excess of the sum of the reporting units' fair values over the market capitalization) and then assesses the reasonableness of its implied control premium. See Notes 3 and 10 for additional discussion regarding goodwill impairment charges recorded in the years ended December 31, 2020 and 2019. Intangible Assets Intangible assets subject to amortization consist of patents, developed technologies and know-how; customer relationships; and trademarks acquired as a result of mergers and acquisitions. These intangible assets are subject to amortization, were recorded at fair value at the date of acquisition, and are stated net of accumulated amortization. The Company amortizes long-lived intangible assets to reflect the pattern in which the economic benefits of the intangible asset are expected to be realized. The intangible assets are amortized over their estimated useful lives, ranging from three to eighteen years for the patents, developed technologies, and know-how; customer relationships; and trademarks. Impairment of Long-Lived Assets Long-lived assets to be held and used, including property, plant and equipment, ROU Assets, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. See Notes 3 and 9 for additional discussion of impairment of long-lived assets for the years ended December 31, 2021, 2020, and 2019. Convertible Notes The Company allocated the proceeds received in July 2018 from the issuance of Precigen's 3.50 % convertible senior notes due 2023 (the "Convertible Notes") between long-term debt (liability component) and additional paid-in capital (equity component) within the consolidated balance sheet. The original value assigned to long-term debt was the estimated fair value as of the issuance date of a similar debt instrument without a conversion option. The original value assigned to additional paid-in capital represented the value of the conversion option and was calculated by deducting the fair value of the long-term debt from the principal amount of the Convertible Notes and is not remeasured as long as it continues to meet the requirements for equity classification. The original value of the conversion option will accrete to the carrying value of the long-term debt and result in additional noncash interest expense over the expected life of the Convertible Notes using the effective interest method. Debt issuance costs related to the Convertible Notes were also allocated between long-term debt and additional paid-in capital based on the original value assigned to each. Debt issuance costs allocated to long-term debt reduced the original carrying value and accrete to the carrying value of the long-term debt and result in additional noncash interest expense over the expected life of the Convertible Notes using the effective interest method. Debt issuance costs allocated to additional paid-in capital were recorded as reduction of the original value assigned to the conversion option. See Note 11 for the further discussion of the Convertible Notes. Foreign Currency Translation The assets and liabilities of foreign subsidiaries, where the local currency is the functional currency, are translated from their respective functional currencies into United States dollars at the exchange rates in effect at the balance sheet date, with resulting foreign currency translation adjustments recorded in the consolidated statement of comprehensive loss. Revenue and expense amounts are translated at average rates during the period. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to both differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are F-23 Table of Contents expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of the change. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company identifies any uncertain income tax positions and recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest, if any, related to unrecognized tax benefits as a component of interest expense. Penalties, if any, are recorded in selling, general and administrative expenses. The Company accounts for the minimum tax on global intangible low-taxed income ("GILTI") as a period charge in the period in which the tax arises. There was no impact from GILTI to the accompanying consolidated financial statements. Share-Based Payments Precigen uses the Black-Scholes option pricing model to estimate the grant-date fair value of all stock options. The Black-Scholes option pricing model requires the use of assumptions for estimated expected volatility, estimated expected term of stock options, risk-free rate, estimated expected dividend yield, and the fair value of the underlying common stock at the date of grant. Through 2019, since Precigen did not have sufficient history to estimate the expected volatility of its common stock price, expected volatility was based on a blended approach that utilized the volatility of Precigen's common stock and the volatility of peer public entities that were similar in size and industry. Beginning in 2020, for stock options with an expected term where there is sufficient history available, expected volatility is based on the volatility of Precigen's common stock. For any stock options where sufficient history is not available for the expected term, expected volatility is based on the blended approach discussed above. Precigen estimates the expected term of options based on previous history of exercises unless certain terms of the stock option require a different expected term that more appropriately reflects the estimated life of the stock option. The risk-free rate is based on the United States Treasury yield curve in effect at the time of grant for the expected term of the option. The expected dividend yield is 0 % as Precigen does not expect to declare cash dividends in the near future. The fair value of the underlying common stock is determined based on the quoted market price on the Nasdaq Global Select Market ("Nasdaq"). Forfeitures are recorded when incurred. The assumptions used in the Black-Scholes option pricing model for the years ended December 31, 2021, 2020, and 2019 are set forth in the table below: 2021 2020 2019 Valuation assumptions Expected dividend yield 0 % 0 % 0 % Expected volatility 87 %– 90 % 59 %– 90 % 58 %– 64 % Expected term (years) 6.00 6.00 – 10.00 6.25 Risk-free interest rate 0.61 %– 1.33 % 0.36 %– 1.80 % 1.53 %– 2.58 % Grant date fair value for the Company's restricted stock units ("RSUs") is based on the fair value of the underlying common stock as determined based on the quoted market price on the Nasdaq on the date of grant. Net Loss per Share Basic net loss per share is calculated by dividing net loss attributable to common shareholders by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, using the treasury-stock method. For purposes of the diluted net loss per share calculation, shares to be issued pursuant to convertible debt, stock options, RSUs, and warrants are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and, therefore, basic and diluted net loss per share were the same for all periods presented. F-24 Table of Contents The following potentially dilutive securities as of December 31, 2021, 2020, and 2019, have been excluded from the computations of diluted weighted average shares outstanding for the years then ended as they would have been anti-dilutive: December 31, 2021 2020 2019 Convertible debt 11,732,440 11,732,440 21,323,068 Options 12,260,187 11,255,896 9,022,282 Restricted stock units 468,481 1,727,712 1,781,982 Warrants 121,888 133,264 133,264 Total 24,582,996 24,849,312 32,260,596 Segment Information The Company's chief operating decision maker ("CODM") regularly reviews disaggregated financial information for various operating segments. Starting in 2021, the financial information regularly reviewed by the CODM was revised, and the operating segments, which were determined to be operating and reportable segments, were (i) Biopharmaceuticals; (ii) Exemplar; and (iii) Trans Ova. The Biopharmaceuticals reportable segment is primarily comprised of the Company's legal entities of PGEN Therapeutics and ActoBio. All of Precigen's consolidated subsidiaries and operating divisions that did not meet the quantitative thresholds to report separately are combined and reported in a single category, All Other. See Note 1 for a description of PGEN Therapeutics, ActoBio, Exemplar, and Trans Ova. Corporate expenses, which are not allocated to the segments and are managed at a consolidated level, include costs associated with general and administrative functions, including the Company's finance, accounting, legal, human resources, information technology, corporate communication, and investor relations functions. Corporate expenses exclude interest expense, depreciation and amortization, gain or loss on disposals of assets, stock-based compensation expense, loss on settlement agreement, and equity in net loss of affiliates and include unrealized and realized gains and losses on the Company's securities portfolio as well as dividend income. As a result of the revision of the reportable segments, the Company has restated its historical segment presentation to conform to the revised segment determination. See Note 18 for further discussion of the Company's segments. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The provisions of ASU 2019-12 are intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities. The Company adopted this standard effective January 1, 2021, and there was no material impact to the accompanying consolidated financial statements. Recently Issued Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06" ) . The provisions of ASU 2020-06 simplify accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception. ASU 2020-06 also simplifies the diluted net income per share calculation in certain areas. The Company will adopt this standard effective January 1, 2022 on a modified retrospective basis. The Company expects the adoption of ASU 2020-06 will have an impact to its consolidated balance sheet as of January 1, 2022, increasing long-term debt, net of current portion, by approximately $ 18,200 to reflect the full principal amount of the Convertible Notes outstanding, net of unamortized issuance costs, with an offsetting decrease to shareholders' equity of the same amount. The adoption of ASU 2020-06 is expected to reduce non-cash interest expense by approximately F-25 Table of Contents $ 11,800 and $ 6,400 for the years ending December 31, 2022 and 2023, respectively. There will not be any impact to the Company's cash flows as a result of the adoption of this new standard. 3. Discontinued Operations MBP Titan As a result of market uncertainty driven by the COVID-19 pandemic and the state of the energy sector raising significant challenges for the strategic alternatives pursued by MBP Titan, beginning in the second quarter of 2020 and throughout the remainder of 2020, the Company suspended MBP Titan's operations, preserved certain of MBP Titan's intellectual property, terminated all of its personnel, and undertook steps to dispose of its other assets and obligations. The wind down of MBP Titan's activities was substantially completed by December 31, 2020, with the final disposition of certain property and equipment and the facility operating lease occurring in January 2021. This discontinuation of operations represented the continuation of a strategic shift to becoming primarily a healthcare company advancing technologies and products that address complex healthcare challenges that the Company commenced as part of the Transactions defined and discussed below. The assets, liabilities, and expenses related to the discontinued operations of MBP Titan are classified and presented as discontinued operations in the accompanying consolidated financial statements for all periods. The January 2021 sale of property and equipment resulted in a gain on disposal of assets of $ 464 , which is included in income from discontinued operations in the accompanying consolidated statement of operations for the year ended December 31, 2021. In January 2021, the Company executed termination and recapture agreements with the landlord of the leased facility used in MBP Titan's operations, thereby relieving the Company of all of its obligations related to the facility that were originally due to expire in July 2025. This lease termination resulted in a gain of $ 4,602 , which is also included in income from discontinued operations in the accompanying consolidated statement of operations for the year ended December 31, 2021. After the wind down of MBP Titan, certain assets and contractual obligations which were previously managed by MBP Titan continue to be managed at the Precigen corporate level. These remaining assets and contractual obligations include the Company's equity interest in and collaboration agreements with Intrexon Energy Partners, LLC ("Intrexon Energy Partners") and Intrexon Energy Partners II, LLC ("Intrexon Energy Partners II"), including the associated deferred revenue remaining under each collaboration agreement (Notes 4 and 5), as well as the associated intellectual property developed by MBP Titan to date. These assets, liabilities, and related historical revenue and equity losses are included in the Company's operating results from continuing operations in the accompanying consolidated financial statements for all periods presented as a result of the Company's continuing involvement. The carrying values of the major classes of assets and liabilities included in assets and liabilities held for sale or abandonment related to MBP Titan as of December 31, 2021 and 2020, are as follows: December 31, 2021 2020 Assets Property, plant and equipment, net $ — $ 586 Right-of-use assets — 9,131 Other assets — 136 Total assets held for sale or abandonment $ — $ 9,853 Liabilities Lease liabilities, current $ — $ 1,890 Other current liabilities — 619 Lease liabilities, net of current portion — 11,538 Total liabilities held for sale or abandonment $ — $ 14,047 F-26 Table of Contents The following table presents the financial results of discontinued operations related to MBP Titan: Year Ended December 31, 2021 2020 2019 Operating (gains) expenses (1) $ ( 4,599 ) $ 40,692 $ 37,423 Operating income (loss) 4,599 ( 40,692 ) ( 37,423 ) Income (loss) before income taxes 4,599 ( 40,692 ) ( 37,423 ) Income (loss) from discontinued operations $ 4,599 $ ( 40,692 ) $ ( 37,423 ) (1) Includes a goodwill impairment charge of $ 9,635 and an impairment charge on property, plant and equipment and ROU Assets of $ 12,406 in 2020 in conjunction with the suspension of MBP Titan's operations discussed above. The following table presents the significant noncash items, purchases of property, plant and equipment, and proceeds from sales of assets for the discontinued operations related to MBP Titan that are included in the accompanying consolidated statements of cash flows. Year Ended December 31, 2021 2020 2019 Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization $ — $ 2,474 $ 3,647 Impairment of goodwill — 9,635 — Impairment of other noncurrent assets — 12,406 — (Gain) loss on disposal of assets, net ( 464 ) 67 ( 316 ) Stock-based compensation expense — ( 34 ) 1,345 Noncash gain on termination of leases ( 4,602 ) — — Cash flows from investing activities Purchases of property, plant and equipment — ( 88 ) ( 2,114 ) Proceeds from sales of assets 1,083 3,952 29 Transactions with TS Biotechnology Holdings, LLC and Darling Ingredients, Inc. On January 1, 2020, the Company and TS Biotechnology Holdings, LLC ("TS Biotechnology"), a related party and an entity managed by Third Security, entered into a Stock and Asset Purchase Agreement pursuant to which the Company agreed to sell a majority of the Company's non-healthcare assets and operations to TS Biotechnology for $ 53,000 and certain contingent payment rights (the "TS Biotechnology Sale"). The TS Biotechnology Sale closed on January 31, 2020. The assets and operations sold in the TS Biotechnology Sale included the following wholly owned subsidiaries, as well as certain equity securities that were directly related to the subsidiaries sold: • Intrexon Produce Holdings, Inc., the parent company of two companies focused on the development and sale of non-browning apples, Okanagan Specialty Fruits, Inc. and Fruit Orchard Holdings, Inc.; • Intrexon UK Holdings, Inc., the parent company of Oxitec Limited and its subsidiaries, which focused on biological insect solutions; • ILH Holdings, Inc., a company focused on the production of certain fine chemicals focused primarily on microbial production of therapeutic compounds; and • Blue Marble AgBio LLC which was formed in January 2020 and included certain agriculture biotechnology assets and operations that were previously an operating division within Precigen. Additionally, on January 2, 2020, the Company sold its equity interest in EnviroFlight, LLC ("EnviroFlight"), a JV with Darling Ingredients, Inc. ("Darling"), and related intellectual property rights to Darling for $ 12,200 (the "EnviroFlight Sale"). F-27 Table of Contents Unless referenced separately, the TS Biotechnology Sale and the EnviroFlight Sale are collectively referred to as the "Transactions". The Transactions were approved by the Company's independent members of the board of directors in December 2019. The Transactions represented a strategic shift of the Company towards the Company becoming primarily a healthcare company advancing technologies and products that address complex healthcare challenges. The operations related to the Transactions have been classified and presented as discontinued operations in the accompanying consolidated financial statements for all periods. Immediately prior to the reclassification to discontinued operations in 2019, the Company evaluated goodwill, long-lived assets, and the equity method investment included in the Transactions for impairment. The Company recorded an impairment charge of $ 79,396 , including $ 58,042 and $ 21,354 related to goodwill and other long-lived assets, respectively, at the Okanagan, Oxitec, Fine Chemicals, and AgBio reporting units. Additionally, the Company recorded a $ 10,283 impairment charge for the write down of the equity method investment and related intangible assets included in the EnviroFlight Sale. These impairment charges are included in loss from discontinued operations in the accompanying consolidated statement of operations for the year ended December, 31, 2019. Upon the closing of the TS Biotechnology Sale in January 2020, the cumulative foreign currency translation losses totaling $ 26,957 were released to earnings and included in loss from discontinued operations. See further discussion below regarding this out-of-period adjustment. The following tables present the financial results of discontinued operations related to the Transactions for the year ended December 31, 2020 and 2019. There were no discontinued operations related to the Transactions for the year ended December 31, 2021. Year Ended December 31, 2020 TS Biotechnology Sale EnviroFlight Sale Total Revenues (1) $ 1,294 $ — $ 1,294 Operating expenses 896 — 896 Operating income 398 — 398 Gain on sale of discontinued operations 633 39 672 Loss on release of cumulative foreign currency translation adjustment ( 26,957 ) — ( 26,957 ) Other expense, net ( 129 ) — ( 129 ) Equity in net loss of affiliates — ( 38 ) ( 38 ) Income (loss) before income taxes ( 26,055 ) 1 ( 26,054 ) Income tax expense ( 2 ) — ( 2 ) Income (loss) from discontinued operations $ ( 26,057 ) $ 1 $ ( 26,056 ) (1) Includes revenue recognized from related parties of $ 436 . Year Ended December 31, 2019 TS Biotechnology Sale EnviroFlight Sale Total Revenues (1) $ 12,307 $ — $ 12,307 Operating expenses (2) 116,091 10,794 126,885 Operating loss ( 103,784 ) ( 10,794 ) ( 114,578 ) Other expense, net ( 272 ) — ( 272 ) Equity in net loss of affiliates — ( 4,314 ) ( 4,314 ) Loss before income taxes ( 104,056 ) ( 15,108 ) ( 119,164 ) Income tax benefit 3,005 — 3,005 Loss from discontinued operations $ ( 101,051 ) $ ( 15,108 ) $ ( 116,159 ) (1) Includes revenue recognized from related parties of $ 3,042 . (2) Includes the impairment charge of $ 89,679 related to the Transactions discussed above. F-28 Table of Contents The following table presents the significant noncash items, investments in EnviroFlight and purchases of property, plant and equipment for the discontinued operations for the Transactions that are included in the accompanying consolidated statements of cash flows. Year Ended December 31, 2020 2019 Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization $ — $ 5,107 Impairment of goodwill — 58,042 Impairment of other noncurrent assets — 31,637 Gain on sale of discontinued operations ( 672 ) — Loss on release of cumulative foreign currency translation adjustment 26,957 — Unrealized and realized depreciation on equity securities and preferred stock, net 106 458 Equity in net loss of EnviroFlight 38 4,314 Stock-based compensation expense ( 1,346 ) 2,507 Deferred income taxes — ( 2,710 ) Cash flows from investing activities Investments in EnviroFlight — ( 2,000 ) Purchases of property, plant and equipment ( 382 ) ( 23,326 ) Also see Note 13. Equity Method Investments The Company accounted for its investment in EnviroFlight using the equity method of accounting. Summarized financial data for EnviroFlight are shown in the following tables for the periods in which the Company held the equity method investment. Year Ended December 31, 2020 2019 Revenues $ 16 $ 510 Operating expenses 92 9,159 Operating loss ( 76 ) ( 8,649 ) Other, net — 21 Net loss $ ( 76 ) $ ( 8,628 ) Out-of-Period Adjustment During the year ended December 31, 2020, the Company recorded an out-of-period adjustment of $ 26,572 to loss from discontinued operations which relates to the effect of cumulative foreign translation losses associated with the entities sold in the TS Biotechnology Sale. This charge, which is entirely noncash, should have been recorded in the year ended December 31, 2019 as an additional impairment charge included in loss from discontinued operations. There was no impact to net loss from continuing operations, cash and short-term investments, cash flows, or Segment Adjusted EBITDA. The error also had no impact on the cash consideration received upon closing of the TS Biotechnology Sale nor the representations and warranties made by the Company in the transaction. The Company evaluated the effects of this out-of-period adjustment, both qualitatively and quantitatively, and concluded that this adjustment was not material to the Company's results of operations for the years ended December 31, 2020 and 2019. F-29 Table of Contents 4. Investments in Joint Ventures Intrexon Energy Partners In 2014, the Company and certain investors (the "IEP Investors"), including an affiliate of Third Security, entered into a Limited Liability Company Agreement that governs the affairs and conduct of business of Intrexon Energy Partners, a JV formed to optimize and scale-up the Company's MBP technology for the production of certain fuels and lubricants. The Company also entered into an ECC with Intrexon Energy Partners providing exclusive rights to the Company's technology for the use in bioconversion for the production of certain fuels and lubricants, as a result of which the Company received a technology access fee of $ 25,000 while retaining a 50 % membership interest in Intrexon Energy Partners. The IEP Investors made initial capital contributions, totaling $ 25,000 in the aggregate, in exchange for pro rata membership interests in Intrexon Energy Partners totaling 50 %. In addition, Precigen committed to make capital contributions of up to $ 25,000 , and the IEP Investors, as a group and pro rata in accordance with their respective membership interests in Intrexon Energy Partners, committed to make additional capital contributions of up to $ 25,000 , at the request of Intrexon Energy Partners' board of managers (the "Intrexon Energy Partners Board") and subject to certain limitations. As of December 31, 2021, the Company's remaining commitment was $ 4,225 . Intrexon Energy Partners is governed by the Intrexon Energy Partners Board, which has five members. Two members of the Intrexon Energy Partners Board are designated by the Company and three members are designated by a majority of the IEP Investors. The Company and the IEP Investors have the right, but not the obligation, to make additional capital contributions above the initial limits when and if solicited by the Intrexon Energy Partners Board. The Company's investment in Intrexon Energy Partners was $( 428 ) and $( 425 ) as of December 31, 2021 and 2020, respectively, and is included in other accrued liabilities in the accompanying consolidated balance sheets, which represents the Company's equity in losses for contractually committed contributions to Intrexon Energy Partners. See Notes 3 and 16 for additional discussion regarding the Company's investment in Intrexon Energy Partners. Intrexon Energy Partners II In 2015, the Company and certain investors (the "IEPII Investors"), including Harvest, entered into a Limited Liability Company Agreement that governs the affairs and conduct of business of Intrexon Energy Partners II, a JV formed to utilize the Company's MBP technology for the production of 1,4-butanediol, an industrial chemical used to manufacture spandex, polyurethane, plastics, and polyester. The Company also entered into an ECC with Intrexon Energy Partners II that provides exclusive rights to the Company's technology for use in the field, as a result of which the Company received a technology access fee of $ 18,000 while retaining a 50 % membership interest in Intrexon Energy Partners II. The IEPII Investors made initial capital contributions, totaling $ 18,000 in the aggregate, in exchange for pro rata membership interests in Intrexon Energy Partners II totaling 50 %. Also in 2015, the owners of Intrexon Energy Partners II made a capital contribution of $ 4,000 , half of which was paid by the Company. Precigen committed to make additional capital contributions of up to $ 10,000 , and the IEPII Investors, as a group and pro rata in accordance with their respective membership interests in Intrexon Energy Partners II, committed to make additional capital contributions of up to $ 10,000 , at the request of Intrexon Energy Partners II's board of managers (the "Intrexon Energy Partners II Board") and subject to certain limitations. As of December 31, 2021, the Company's remaining commitment was $ 10,000 . Intrexon Energy Partners II is governed by the Intrexon Energy Partners II Board, which has five members. One member of the Intrexon Energy Partners II Board is designated by the Company and four members are designated by a majority of the IEPII Investors. The Company and the IEPII Investors have the right, but not the obligation, to make additional capital contributions above the initial limits when and if solicited by the Intrexon Energy Partners II Board. The Company's investment in Intrexon Energy Partners II was $( 435 ) as of December 31, 2021 and 2020, and is included in other accrued liabilities in the accompanying consolidated balance sheets, which represents the Company's equity in losses for contractually committed contributions to Intrexon Energy Partners II. See Notes 3, 16, and 17 for additional discussion regarding the Company's investment in Intrexon Energy Partners II. 5. Collaboration and Licensing Revenue The Company's collaborations and licensing agreements may provide for multiple promises to be satisfied by the Company and typically include a license to the Company's technology platforms, participation in collaboration committees, and performance of certain research and development services. Based on the nature of the promises in the Company's collaboration and licensing agreements, the Company typically combines most of its promises into a single performance obligation because the promises are highly interrelated and not individually distinct. Options to acquire additional services are considered to determine if they constitute material rights. At contract inception, the transaction price is typically the upfront payment received and is allocated F-30 Table of Contents to the performance obligations. The Company has determined the transaction price should be recognized as revenue based on its measure of progress under the agreement primarily based on inputs necessary to fulfill the performance obligation. See Note 2 for additional discussion of the Company's revenue recognition policy related to collaboration and licensing payments. The Company determines whether collaborations and licensing agreements are individually significant for disclosure based on a number of factors, including total revenue recorded by the Company pursuant to collaboration and licensing agreements, collaborators or licensees with equity method investments, or other qualitative factors. Collaboration and licensing revenues generated from consolidated subsidiaries are eliminated in consolidation. The following table summarizes the amounts recorded as revenue in the consolidated statements of operations for each significant counterparty to a collaboration or licensing agreement for the years ended December 31, 2021, 2020, and 2019. Year Ended December 31, 2021 2020 2019 Alaunos Therapeutics, Inc. $ 100 $ 200 $ 2,171 Oragenics, Inc. — 3,053 ( 564 ) Intrexon Energy Partners, LLC — — 2,596 Intrexon Energy Partners II, LLC — — 1,217 Castle Creek Biosciences, Inc. 388 17,810 3,713 Harvest start-up entities (1) — — 4,862 Other 18 145 64 Total (2) $ 506 $ 21,208 $ 14,059 (1) For the year ended December 31, 2019, revenue recognized from collaborations with Harvest start-up entities include Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; and AD Skincare, Inc. (2) Collaboration and licensing revenues recognized for the years ended December 31, 2021, 2020, and 2019, include the recognition of $ 397 , $ 20,205 , and $ 7,505 , respectively, associated with upfront and milestone payments which were previously deferred. The following is a summary of the terms of the Company's significant collaborations and licensing agreements from continuing operations. Alaunos Collaborations In 2018, the Company, through its wholly owned subsidiary PGEN Therapeutics, entered into a license agreement (the "Alaunos License Agreement") with Alaunos Therapeutics, Inc., formerly known as ZIOPHARM Oncology, Inc. ("Alaunos"), which terminated and replaced the terms of the ECC agreement entered into between the Company and Alaunos in 2011, including the amendments thereto. Contemporaneously with the execution of the license agreement, Alaunos ceased to be a related party. Pursuant to the terms of the Alaunos License Agreement, the Company granted Alaunos an exclusive, worldwide, royalty-bearing, sub-licensable license to research, develop and commercialize (i) products utilizing the Company's RheoSwitch gene switch ("RTS") to express IL-12 (the "IL-12 Products") for the treatment of cancer, (ii) chimeric antigen receptor ("CAR") products directed to (a) CD19 for the treatment of cancer (the "CD19 Products"), and (b) a second target, subject to certain rights as discussed in the agreement, and (iii) T-cell receptor ("TCR") products (the "TCR Products") designed for neoantigens for the treatment of cancer or the treatment and prevention of human papilloma virus ("HPV") to the extent that the primary reason for such treatment or prevention is to prevent cancer, which is referred to as the HPV Field. The Company has also granted Alaunos an exclusive, worldwide, royalty-bearing, sub-licensable license for certain patents relating to the Company's Sleeping Beauty technology to research, develop and commercialize TCR Products for both neoantigens and shared antigens for the treatment of cancer and in the HPV Field. Alaunos will be solely responsible for all aspects of the research, development and commercialization of the exclusively licensed products for the treatment of cancer. Alaunos is required to use commercially reasonable efforts to develop and commercialize IL-12 Products, CD19 Products, and the TCR Products. The Company also granted Alaunos an exclusive, worldwide, royalty-bearing, sub-licensable license to research, develop and commercialize products utilizing an additional construct that expresses RTS IL-12 (the "Gorilla IL-12 Products") for the treatment of cancer and in the HPV Field. Alaunos is responsible for all development costs associated with each of the licensed products, other than F-31 Table of Contents Gorilla IL-12 Products. Alaunos and the Company will share the development costs and operating profits for Gorilla IL-12 Products, with Alaunos responsible for 80 % of the development costs and receiving 80 % of the operating profits, as defined in the Alaunos License Agreement, and the Company responsible for the remaining 20 % of the development costs and receiving 20 % of the operating profits, except that Alaunos will bear all development costs and the Company will share equally in operating profits for Gorilla IL-12 Products in the HPV Field (the "Gorilla Program"). Under the Alaunos License Agreement, Alaunos will pay the Company an annual license fee of $ 100 and, in 2019, reimbursed the Company $ 1,000 with respect to historical Gorilla IL-12 Products. Alaunos will make milestone payments, payable upon the initiation of later stage clinical trials and upon the approval of exclusively licensed programs in various jurisdictions, totaling up to an additional $ 52,500 for each of four exclusively licensed programs, up to an aggregate of $ 210,000 . In addition, Alaunos will pay the Company tiered royalties ranging from low-single digits to high-single digits on the net sales derived from the sales of any approved IL-12 Products and CAR products. Alaunos will also pay the Company royalties ranging from low-single digits to mid-single digits on the net sales derived from the sales of any approved TCR Products, up to maximum royalty amount of $ 100,000 in the aggregate. Alaunos will also pay the Company 20 % of any sublicensing income received by Alaunos relating to the licensed products. Under the Alaunos License Agreement, the Company reacquired rights previously held by Alaunos to research, develop and commercialize CAR products for all other targets. In addition, the Company may research, develop and commercialize products for the treatment of cancer, outside of the products exclusively licensed to Alaunos. The Company will pay Alaunos royalties ranging from low-single digits to mid-single digits on the net sales derived from the sale of the Company's CAR products, up to $ 50,000 . The Company also received from Alaunos reimbursement of costs incurred to transition the necessary knowledge and materials for Alaunos programs for a period of one year from the effective date (the "Transition Services"). The Company is entitled to receive all rights and financial considerations with respect to all other CAR products, subject to the CAR royalties due to Alaunos for such products. The Alaunos License Agreement will terminate on a product-by-product and/or country-by-country basis upon the expiration of the later to occur of (i) the expiration of the last to expire patent claim for a licensed product, or (ii) 12 years after the first commercial sale of a licensed product in such country. In addition, Alaunos may terminate the Alaunos License Agreement on a country-by-country or program-by-program basis following written notice to the Company, and either party may terminate the Alaunos License Agreement following notice of a material breach. Replacement of the original ECC with the Alaunos License Agreement was a contract modification under ASC 606 that represented the termination of the original agreement and the creation of a new agreement as the remaining rights, obligations, and services to be exchanged, which were limited to the Transition Services, were distinct from those under the ECC. The Company determined the new agreement had a transaction price of $ 1,855 , the majority of which related to a portion of the deferred revenue remaining from the original ECC. The annual license payments, excluding the first such payment which was included in the transaction price, and potential milestone payments were constrained at the modification date and will only be recognized when the payments become probable of being received. Royalty payments from sales of Alaunos products developed pursuant to the Alaunos License Agreement will be recognized when the sales occur. The Company recognized payments from Transition Services as those services were performed and recognized the transaction price as it performed the Transition Services required under the Alaunos License Agreement. The Company determined that the Gorilla Program represented a separate collaboration agreement under the scope of ASC 808, Collaborative Arrangements, ("ASC 808") and was not included in the accounting for the Alaunos License Agreement under ASC 606. The development costs and operating profits from the Gorilla Program will be recognized in accordance with ASC 808. Oragenics Collaboration In 2015, the Company entered into an ECC with Oragenics, a related party at the time. Pursuant to the ECC, at the transaction effective date, Oragenics received a license to the Company's technology platform within the field of biotherapeutics for use in certain treatments of oral mucositis and other diseases and conditions of the oral cavity, throat, and esophagus. Upon execution of the ECC, the Company received a technology access fee of a $ 5,000 convertible promissory note, which was subsequently converted to shares of Oragenics' common stock. These shares were sold in the TS Biotechnology Sale in 2020 (Note 3). The Company received reimbursement payments for research and development services provided pursuant to the agreement during the ECC and manufacturing services for Company materials provided to Oragenics during the ECC. In July 2020, the Company and Oragenics mutually agreed to terminate the ECC, and accordingly, the Company recognized the remaining balance of deferred revenue associated with the ECC totaling $ 2,823 . Following the termination of the ECC, Oragenics is no longer a related party. F-32 Table of Contents Intrexon Energy Partners Collaboration In March 2014, the Company entered into an ECC with Intrexon Energy Partners, a JV between the Company and certain investors and a related party. The ECC grants Intrexon Energy Partners an exclusive license to the Company's technology platform to optimize and scale-up the Company's MPB technology for the production of certain fuels and lubricants. Upon execution of the ECC, the Company received a technology access fee of $ 25,000 as upfront consideration. The Company receives reimbursement payments for research and development services as provided for in the ECC agreement. The term of the ECC commenced in March 2014 and continues until March 2034 unless terminated prior to that date by either party in the event of certain material breaches defined in the agreement and may be terminated voluntarily by Intrexon Energy Partners upon 90 days written notice to the Company. The ECC is not active while the IEP Investors evaluate the status of the project and their desired future development activities. See Note 16 for additional discussion related to Intrexon Energy Partners. Intrexon Energy Partners II Collaboration In December 2015, the Company entered into an ECC with Intrexon Energy Partners II, a JV between the Company and certain investors and a related party. Pursuant to the ECC, Intrexon Energy Partners II received an exclusive license to the Company's technology platform to optimize and scale-up the Company's MBP technology for the production of 1,4-butanediol (BDO), a key chemical intermediate that is used to manufacture spandex, polyurethane, plastics, and polyester. Upon execution of the ECC, the Company received a technology access fee of $ 18,000 and is entitled to reimbursement of research and development services as provided for in the ECC agreement. The term of the ECC commenced in December 2015 and continues until December 2035; termination prior to that date may be initiated (i) by either party in the event of certain material breaches defined in the agreement or (ii) may be terminated voluntarily by Intrexon Energy Partners II upon 90 days written notice to the Company. The ECC is not active while the IEPII Investors evaluate the status of the project and their desired future development activities. See Note 16 for additional discussion related to Intrexon Energy Partners II. Exotech Bio, AD Skincare, and Thrive Agrobiotics Collaborations In 2015 and 2016, the Company entered into three separate ECCs with Exotech Bio, Inc. ("Exotech Bio"), AD Skincare, Inc. ("AD Skincare"), and Thrive Agrobiotics, Inc. ("Thrive Agrobiotics"), all affiliates of Harvest and related parties at the time. The total upfront consideration received for the three collaborations was $ 11,000 , which consisted of equity interests in each of these entities. The Company also received reimbursements for research and development services provided pursuant to the ECCs. In conjunction with a settlement agreement with Harvest (Note 17), these ECCs were terminated in December 2020, and the previously licensed technology rights reverted to the Company pursuant to the ECCs. The Company wrote off the remaining balance of deferred revenue associated with these ECCs in 2020 totaling $ 6,993 as an offset to the loss recognized on the settlement agreement. Castle Creek Collaborations In October 2012, the Company entered into an ECC (the "2012 Castle Creek ECC") with Castle Creek Biosciences, Inc. ("Castle Creek", formerly known as Fibrocell Science, Inc.). Castle Creek was a publicly traded cell and gene therapy company focused on diseases affecting the skin and connective tissue and a related party until it was acquired in December 2019 by Castle Creek Pharmaceutical Holdings, Inc. ("Castle Creek Pharmaceutical"), a privately held company focused on developing medicine for rare genetic disorders. Pursuant to the 2012 Castle Creek ECC, at the transaction effective date, Castle Creek received a license to the Company's technology platform to develop and commercialize genetically modified and non-genetically modified autologous fibroblasts and autologous dermal cells in the United States of America. The Company received (i) upfront consideration upon execution of the ECC in the form of Castle Creek common stock valued at $ 7,576 , (ii) shares of Castle Creek common stock valued at $ 7,612 as consideration for a 2013 amendment which expanded the field of use defined in the agreement, (iii) sublicensing fees totaling $ 3,750 in the form of cash in 2019, and (iv) reimbursements for research and development services performed during the ECC. In March 2020, the Company and Castle Creek terminated the 2012 Castle Creek ECC by mutual agreement ("Termination Agreement") with the parties agreeing that the two drug product candidates, FCX-007 and FCX-013, pursuant to the ECC would be treated as "Retained Products" under the terms of the 2012 Castle Creek ECC. As Retained Products, Castle Creek retains a license under the 2012 Castle Creek ECC to continue to develop and commercialize the Retained Products within the field of use of the 2012 Castle Creek ECC for so long as Castle Creek continues to pursue such development and commercialization. No further licenses to the Company's technology within the field of use are provided to Castle Creek. On a quarterly basis, Castle Creek will pay the Company royalties of 7 % of net sales up to $ 25,000 and 14 % of net sales above $ 25,000 on each Retained Product from the 2012 Castle Creek ECC, as defined in the agreement. Additionally, the Termination Agreement provides for the Company to perform certain drug product manufacturing activities related to the Retained Products. F-33 Table of Contents The Termination Agreement was accounted for as a new contract, and the remaining deferred revenue from the 2012 Castle Creek ECC was recognized prospectively through 2021 as the manufacturing activities were performed. In December 2015, the Company entered into a second ECC with Castle Creek (the "2015 Castle Creek ECC"). Pursuant to the ECC, at the transaction effective date, Castle Creek received a license to the Company's technology platform to develop and commercialize genetically-modified fibroblasts to treat chronic inflammatory and degenerative diseases of the joint, including arthritis and related conditions. In February 2020, the Company and Castle Creek mutually agreed to terminate the 2015 Castle Creek ECC, and accordingly, the Company recognized the remaining balance of deferred revenue associated with the 2015 Castle Creek ECC totaling $ 10,000 in 2020. Deferred Revenue Deferred revenue primarily consists of consideration received for the Company's collaboration and licensing agreements. Deferred revenue consisted of the following: December 31, 2021 2020 Collaboration and licensing agreements $ 23,023 $ 23,420 Prepaid product and service revenues 4,229 2,126 Other 213 277 Total $ 27,465 $ 25,823 Current portion of deferred revenue $ 4,442 $ 2,800 Long-term portion of deferred revenue 23,023 23,023 Total $ 27,465 $ 25,823 Revenue is recognized under collaboration and licensing agreements as services are performed. Certain of the arrangements are not active while the other party evaluates the status of the project and its desired future development activities. The following table summarizes the remaining balance of deferred revenue associated with upfront and milestone payments for each significant counterparty to a collaboration or licensing agreement as of December 31, 2021 and 2020, as well as the estimated remaining performance period as of December 31, 2021. Average Remaining Performance Period (Years) December 31, 2021 2020 Intrexon Energy Partners, LLC 2.2 8,362 8,362 Intrexon Energy Partners II, LLC 2.9 12,843 12,843 Castle Creek Biosciences, Inc. 0.0 — 379 Other 2.8 1,818 1,836 Total $ 23,023 $ 23,420 6. Short-term and Long-term Investments The Company's investments are classified as available-for-sale. The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of available-for-sale investments as of December 31, 2021: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value United States government debt securities $ 121,036 $ — $ ( 331 ) $ 120,705 Certificates of deposit 97 — — 97 Total $ 121,133 $ — $ ( 331 ) $ 120,802 F-34 Table of Contents The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of available-for-sale investments as of December 31, 2020: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value United States government debt securities $ 48,048 $ 14 $ ( 1 ) $ 48,061 Certificates of deposit 264 — — 264 Total $ 48,312 $ 14 $ ( 1 ) $ 48,325 See Notes 2 and 7 for further discussion on the Company's method for determining the fair value of its assets. The estimated fair value of available-for-sale investments classified by their contractual maturities as of December 31, 2021 was: Due within one year $ 72,240 After one year through two years 48,562 Total $ 120,802 Changes in market interest rates and bond yields cause certain investments to fall below their cost basis, resulting in unrealized losses on investments. The unrealized losses of the Company's debt security investments are not significant as of December 31, 2021. 7. Fair Value Measurements The carrying amount of cash and cash equivalents, receivables, accounts payable, accrued compensation and benefits, other accrued liabilities, and related party payables approximate fair value due to the short maturity of these instruments. Assets The following table presents the placement in the fair value hierarchy of financial assets that are measured at fair value on a recurring basis as of December 31, 2021: Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2021 Assets United States government debt securities $ — $ 120,705 $ — $ 120,705 Certificates of deposit — 97 — 97 Total $ — $ 120,802 $ — $ 120,802 The following table presents the placement in the fair value hierarchy of financial assets that are measured at fair value on a recurring basis as of December 31, 2020: Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2020 Assets United States government debt securities $ — $ 48,061 $ — $ 48,061 Certificates of deposit — 264 — 264 Total $ — $ 48,325 $ — $ 48,325 F-35 Table of Contents The method used to estimate the fair value of the Level 2 short-term and long-term debt investments in the tables above is based on professional pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Liabilities The carrying values of the Company's long-term debt, excluding the Convertible Notes, approximates fair value due to the length of time to maturity and/or the existence of interest rates that approximate prevailing market rates. The calculated fair value of the Convertible Notes (Note 11) was approximately $ 160,000 and $ 165,000 as of December 31, 2021 and 2020, respectively, and is based on the recent third-party trades of the instrument as of the balance sheet date. The fair value of the Convertible Notes is classified as Level 2 within the fair value hierarchy as there is not an active market for the Convertible Notes, however, third-party trades of the instrument are considered observable inputs. The Convertible Notes are reflected on the accompanying consolidated balance sheets at amortized cost, which was $ 179,882 and $ 168,147 as of December 31, 2021 and 2020, respectively. During the year ended December 31, 2020, the Company's contingent consideration liability related to the 2017 Agreement and Plan of Merger of GenVec, Inc., which was $ 585 as of December 31, 2019, was reduced to $ 0 as the period for potential payment of this contingent consideration expired without payment in June 2020. The contingent consideration liability was remeasured to fair value at each reporting date until the contingency was resolved, and those changes in fair value were recognized in earnings. There were no Level 3 liabilities during the year ended December 31, 2021. The changes in the fair value of the Level 3 liability during the year ended December 21, 2020 were as follows: Balance at December 31, 2019 $ 585 Change in fair value of contingent consideration recognized in selling, general, and administrative expenses ( 585 ) Balance at December 31, 2020 $ — See Notes 9 and 10 for discussion of non-recurring fair value estimates used in calculating impairment charges recorded during the years ended December 31, 2021, 2020, and 2019. 8. Inventory Inventory consists of the following: December 31, 2021 2020 Supplies, embryos and other production materials $ 2,588 $ 2,060 Work in process 2,564 2,348 Livestock 6,310 5,047 Feed 1,799 1,904 Total inventory $ 13,261 $ 11,359 F-36 Table of Contents 9. Property, Plant and Equipment, Net Property, plant and equipment consist of the following: December 31, 2021 2020 Land and land improvements $ 11,118 $ 9,844 Buildings and building improvements 12,896 12,088 Furniture and fixtures 1,162 1,228 Equipment 33,584 31,150 Leasehold improvements 4,822 6,260 Breeding stock 1,000 868 Computer hardware and software 5,131 5,684 Construction and other assets in progress 3,824 2,754 73,537 69,876 Less: Accumulated depreciation and amortization ( 39,222 ) ( 34,952 ) Property, plant and equipment, net $ 34,315 $ 34,924 Depreciation expense was $ 6,202 , $ 7,449 , and $ 8,222 for the years ended December 31, 2021, 2020, and 2019, respectively. During the year ended December 31, 2021, the Company recorded impairment losses of $ 543 , which is included in impairment of other noncurrent assets on the accompanying consolidated statement of operations, primarily related to a right-of-use asset at one of the Company's leased locations. During the year ended December 31, 2020, the Company recorded impairment losses of $ 920 , which is included in impairment of other noncurrent assets on the accompanying consolidated statement of operations, primarily related to right-of-use assets at certain of the Company's leased locations. During the year ended December 31, 2019, the Company recorded impairment losses of $ 448 , which is included in impairment of other noncurrent assets on the accompanying consolidated statement of operations, related to the impairment of property, plant and equipment in conjunction with the closing of two of its operating units during the third quarter of 2019. 10. Goodwill and Intangible Assets, Net The changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020, are as follows: 2021 2020 Beginning of year $ 54,363 $ 54,119 Foreign currency translation adjustments ( 215 ) 244 End of year $ 54,148 $ 54,363 The Company had $ 43,643 of cumulative goodwill impairment losses as of December 31, 2021 and 2020. For the year ended December 31, 2019, during the Company's annual goodwill impairment test, the Company determined it was more-likely-than-not that the fair value of the Trans Ova reporting unit was less than its carrying amount. As a result, the Company compared the carrying amount of the Trans Ova reporting unit to the fair value and determined the carrying amount exceeded the fair value resulting in a $ 29,642 goodwill impairment charge for the excess carrying value. Additionally, the Company recorded $ 178 of goodwill impairment in conjunction with the closing of two of its reporting units during the third quarter of 2019. F-37 Table of Contents See Note 18 for information regarding goodwill by reportable segment. Intangible assets consist of the following as of December 31, 2021: Weighted Average Useful Life (Years) Gross Carrying Amount Accumulated Amortization Net Patents, developed technologies and know-how 15.9 $ 91,373 $ ( 38,630 ) $ 52,743 Customer relationships 6.4 10,850 ( 10,252 ) 598 Trademarks 8.4 5,900 ( 5,126 ) 774 Total $ 108,123 $ ( 54,008 ) $ 54,115 Intangible assets consist of the following as of December 31, 2020: Gross Carrying Amount Accumulated Amortization Net Patents, developed technologies and know-how $ 96,927 $ ( 34,412 ) $ 62,515 Customer relationships 10,850 ( 9,340 ) 1,510 Trademarks 5,900 ( 4,529 ) 1,371 Total $ 113,677 $ ( 48,281 ) $ 65,396 Amortization expense was $ 7,559 , $ 7,593 , and $ 7,920 for the years ended December 31, 2021, 2020, and 2019, respectively. Estimated aggregate amortization expense for definite lived intangible assets is expected to be as follows: 2022 $ 6,597 2023 5,431 2024 5,121 2025 5,108 2026 5,108 Thereafter 26,750 Total $ 54,115 11. Lines of Credit and Long-Term Debt Lines of Credit Trans Ova has a $ 5,000 revolving line of credit with First National Bank of Omaha that matures on April 1, 2022. The line of credit bears interest at the greater of the United States Prime Rate or 3.00 %, and the actual rate was 3.25 % as of December 31, 2021. As of December 31, 2021 and December 31, 2020, there was no outstanding balance. The amount available under the line of credit is based on eligible accounts receivable and inventory up to the maximum principal amount and was $ 5,000 as of December 31, 2021. The line of credit is collateralized by certain of Trans Ova's assets and contains certain restricted covenants that include maintaining minimum tangible net worth and working capital and maximum allowable annual capital expenditures. Exemplar has a $ 700 revolving line of credit with American State Bank that matures on October 31, 2022. As of December 31, 2021, the line of credit bore interest at 4.00 % per annum. As of December 31, 2021 and December 31, 2020, there was no outstanding balance. F-38 Table of Contents Long-Term Debt Long-term debt consists of the following: December 31, 2021 2020 Convertible debt $ 179,882 $ 168,147 Notes payable 3,217 3,655 Other 52 80 Long-term debt 183,151 171,882 Less current portion 402 360 Long-term debt, less current portion $ 182,749 $ 171,522 Convertible Debt Precigen Convertible Notes In July 2018, Precigen completed a registered underwritten public offering of $ 200,000 aggregate principal amount of Convertible Notes and issued the Convertible Notes under an indenture (the "Base Indenture") between Precigen and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by the First Supplemental Indenture (together with the Base Indenture, the "Indenture"). Precigen received net proceeds of $ 193,958 after deducting underwriting discounts and offering expenses of $ 6,042 . The Convertible Notes are senior unsecured obligations of Precigen and bear interest at a rate of 3.50 % per year, payable semiannually in arrears on January 1 and July 1 of each year beginning on January 1, 2019. The Convertible Notes mature on July 1, 2023 and are repayable in cash, unless earlier repurchased or converted. Upon conversion by the holders, the Convertible Notes are convertible into cash, shares of Precigen's common stock or a combination of cash and shares, at Precigen's election. The initial conversion rate of the Convertible Notes is 58.6622 shares of Precigen common stock per $ 1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $ 17.05 per share of common stock). The conversion rate is subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date as defined in the Indenture, Precigen will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event in certain circumstances. Prior to April 1, 2023, the holders may convert the Convertible Notes at their option only upon the satisfaction of the following circumstances: • During any calendar quarter commencing after the calendar quarter ended on September 30, 2018, if the last reported sales price of Precigen's common stock for at least 20 trading days (whether or not consecutive) during the last 30 consecutive trading days of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; • During the five business day period after any five consecutive trading day period in which the trading price, as defined in the Indenture, for the Convertible Notes is less than 98 % of the product of the last reported sales price of Precigen's common stock and the conversion rate for the Convertible Notes on each such trading day; or • Upon the occurrence of specified corporate events as defined in the Indenture. None of the above events allowing for conversion prior to April 1, 2023 occurred during the year ended December 31, 2021. On or after April 1, 2023 until June 30, 2023, holders may convert their Convertible Notes at any time. Precigen may not redeem the Convertible Notes prior to the maturity date. If Precigen undergoes a fundamental change, as defined in the Indenture, holders of the Convertible Notes may require Precigen to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Indenture contains customary events of default, as defined in the agreement, and, if any of the events occur, could require repayment of a portion or all of the Convertible Notes, including accrued and unpaid interest. Additionally, the Indenture provides that Precigen shall not consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to, another entity, unless (i) the surviving entity is organized under the laws of the United States and such entity expressly assumes all of Precigen's obligations under the Convertible Notes F-39 Table of Contents and the Indenture; and (ii) immediately after such transaction, no default or event of default has occurred and is continuing under the Indenture. The net proceeds received from the issuance of the Convertible Notes were initially allocated between long-term debt, the liability component, in the amount of $ 143,723 , and additional paid-in capital, the equity component, in the amount of $ 50,235 . Additional paid-in capital was further reduced by $ 13,367 of deferred taxes resulting from the difference between the carrying amount and the tax basis of the Convertible Notes that is created by the equity component, which also resulted in deferred tax benefit recognized from the reversal of valuation allowances on the then current year domestic operating losses in the same amount. As of December 31, 2021, the outstanding principal balance on the Convertible Notes was $ 200,000 and the carrying value of long-term debt was $ 179,882 . The effective interest rate on the Convertible Notes, including amortization of the long-term debt discount and debt issuance costs, is 11.02 %. As of December 31, 2021, the unamortized long-term debt discount and debt issuance costs totaled $ 20,118 . The components of interest expense related to the Convertible Notes were as follows: Year Ended December 31, 2021 2020 2019 Cash interest expense $ 7,000 $ 7,000 $ 7,000 Non-cash interest expense 11,735 10,587 9,459 Total interest expense $ 18,735 $ 17,587 $ 16,459 Accrued interest of $ 3,500 is included in other accrued liabilities on the accompanying consolidated balance sheet as of December 31, 2021. See Note 2 for additional discussion regarding the Convertible Notes. ActoBio Convertible Notes In September 2018, ActoBio issued $ 30,000 of convertible promissory notes (the "ActoBio Notes") to a related party in conjunction with an asset acquisition with Harvest. The ActoBio Notes, which accrued interest at 3.0 % compounded annually ("accrued PIK interest"), matured in September 2020. The Company issued 6,293,402 shares of Precigen common stock upon conversion of the outstanding principal balance and accrued PIK interest at maturity. Interest expense was $ 616 and $ 921 for the years ended December 31, 2020 and 2019, respectively. Precigen and PGEN Therapeutics Convertible Note In December 2018, in conjunction with the Securities Purchase, Assignment and Assumption Agreement with Ares Trading S.A. ("Ares Trading"), Precigen and PGEN Therapeutics jointly and severally issued a $ 25,000 convertible note (the "Merck Note") to Ares Trading in exchange for cash. In October 2020, pursuant to the terms of the Merck Note, Ares Trading voluntarily elected to convert the entire $ 25,000 outstanding into 6,758,400 shares of Precigen common stock. Notes Payable Trans Ova has a note payable to American State Bank that matures in April 2033 and had an outstanding principal balance of $ 3,217 as of December 31, 2021. Trans Ova pays monthly installments of $ 39 , which includes interest at 3.95 %. The note payable is collateralized by certain of Trans Ova's real estate and non-real estate assets. F-40 Table of Contents Future Maturities Future maturities of long-term debt as of December 31, 2021 are as follows: 2022 $ 402 2023 200,364 2024 379 2025 394 2026 410 Thereafter 1,320 Total $ 203,269 12. Income Taxes The components of loss from continuing operations before income taxes are presented below: Year Ended December 31, 2021 2020 2019 Domestic $ ( 93,540 ) $ ( 97,313 ) $ ( 167,990 ) Foreign ( 3,385 ) ( 6,542 ) ( 3,274 ) Loss from continuing operations before income taxes $ ( 96,925 ) $ ( 103,855 ) $ ( 171,264 ) The components of income tax benefit from continuing operations are presented below: Year Ended December 31, 2021 2020 2019 United States federal income taxes: Deferred $ 37 $ 37 $ ( 561 ) Foreign income taxes: Current 7 74 34 Deferred ( 215 ) ( 204 ) ( 230 ) State income taxes: Deferred 11 11 ( 173 ) Income tax benefit from continuing operations $ ( 160 ) $ ( 82 ) $ ( 930 ) F-41 Table of Contents Income tax benefit from continuing operations for the years ended December 31, 2021, 2020, and 2019 differed from amounts computed by applying the applicable United States federal corporate income tax rate of 21% to loss before income taxes as a result of the following: 2021 2020 2019 Computed statutory income tax benefit from continuing operations $ ( 20,354 ) $ ( 21,810 ) $ ( 35,965 ) State and provincial income tax benefit, net of federal income taxes ( 3,993 ) ( 5,167 ) ( 5,494 ) Nondeductible stock based compensation 832 5,709 10,303 Nondeductible officer compensation 1,459 728 595 Impairment of goodwill — — 273 Research and development tax incentives ( 958 ) ( 524 ) ( 1,772 ) Acquisition and internal restructuring transaction costs — — 260 United States-foreign rate differential ( 32 ) ( 21 ) ( 76 ) Other, net ( 46 ) ( 306 ) ( 72 ) ( 23,092 ) ( 21,391 ) ( 31,948 ) Change in valuation allowance for deferred tax assets 22,932 21,309 31,018 Total income tax benefit from continuing operations $ ( 160 ) $ ( 82 ) $ ( 930 ) The tax effects of temporary differences that comprise the deferred tax assets and liabilities included in continuing operations as of December 31, 2021 and 2020, are as follows: 2021 2020 Deferred tax assets Allowance for doubtful accounts $ 1,506 $ 1,816 Inventory 370 289 Equity securities and investments in affiliates 570 570 Property, plant and equipment — 1,882 Intangible assets 69,679 74,981 Accrued liabilities 3,090 1,834 Lease liabilities 2,839 6,140 Stock-based compensation 15,227 16,402 Deferred revenue 7,300 7,423 Research and development tax credits 11,168 10,210 Net operating, capital loss, and interest expense carryforwards 301,791 275,519 Total deferred tax assets 413,540 397,066 Less: Valuation allowance 408,396 387,348 Net deferred tax assets 5,144 9,718 Deferred tax liabilities Property, plant and equipment 250 — Right-of-use assets 2,735 5,011 Long-term debt 4,698 7,604 Total deferred tax liabilities 7,683 12,615 Net deferred tax liabilities included in continuing operations $ ( 2,539 ) $ ( 2,897 ) F-42 Table of Contents Activity within the valuation allowance for deferred tax assets included in continuing operations during the years ended December 31, 2021, 2020, and 2019 was as follows: 2021 2020 2019 Valuation allowance at beginning of year $ 387,348 $ 349,008 $ 292,217 Increase (decrease) in valuation allowance as a result of Deconsolidation of AquaBounty — — ( 3,504 ) Establishment of deferred taxes for subsidiaries included in discontinued operations — — 8,592 Current year continuing operations 22,932 21,309 31,018 Discontinued operations treated as asset sales — 7,977 10,585 Discontinued operations related to MBP Titan ( 1,186 ) 8,019 9,663 Adoption of ASC 842 — — 512 Foreign currency translation adjustment ( 698 ) 1,035 ( 75 ) Valuation allowance at end of year $ 408,396 $ 387,348 $ 349,008 In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Due to the Company and its subsidiaries' histories of net losses incurred from inception, any corresponding net domestic and certain foreign deferred tax assets have been fully reserved as the Company and its subsidiaries cannot sufficiently be assured that these deferred tax assets will be realized. The components of the deferred tax assets and liabilities as of the date of the mergers and acquisitions by the Company prior to consideration of the valuation allowance are substantially similar to the components of deferred tax assets presented herein. The Company's past issuances of stock and mergers and acquisitions have resulted in ownership changes as defined in Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382"). As a result, utilization of portions of the net operating losses may be subject to annual limitations, however as of December 31, 2021, all such limited losses applicable to Precigen, other than losses inherited via acquisition, have been fully utilized. As of December 31, 2021, approximately $ 42,100 of the Company's domestic net operating losses were inherited via acquisition and are limited based on the value of the target at the time of the transaction. As of December 31, 2021, the Company has net operating loss carryforwards for United States federal income tax purposes of approximately $ 856,400 available to offset future taxable income, including approximately $ 603,700 generated after 2017, United States capital loss carryforwards of approximately $ 212,500 , and federal and state research and development tax credits of approximately $ 11,100 , prior to consideration of annual limitations that may be imposed under Section 382. Net operating loss carryforwards generated prior to 2018 will begin to expire in 2022, and capital loss carryforwards will expire if unutilized beginning in 2024. As of December 31, 2021, the Company's foreign subsidiaries have foreign loss carryforwards of approximately $ 75,700 , most of which do not expire. As of December 31, 2021, the Company's direct foreign subsidiaries included in continuing operations had accumulated deficits of approximately $ 23,100 . Future distributions of accumulated earnings of the Company's direct foreign subsidiaries may be subject to United States income and foreign withholding taxes. The Company and its subsidiaries do not have material unrecognized tax benefits as of December 31, 2021. The Company does not anticipate significant changes in the amount of unrecognized tax benefits in the next 12 months. The Company's tax returns for years 2004 and forward are subject to examination by federal or state tax authorities due to the carryforward of unutilized net operating and capital losses and research and development tax credits. 13. Shareholders' Equity Issuances of Precigen Common Stock In January 2021, the Company closed a public offering of 17,250,000 shares of its common stock, resulting in net proceeds of $ 121,045 , after deducting underwriting discounts and capitalizable offering expenses. F-43 Table of Contents Concurrent with entering into the TS Biotechnology Sale on January 1, 2020 (Note 3), the Company also entered into a subscription agreement with TS Biotechnology pursuant to which TS Biotechnology purchased 5,972,696 shares of the Company's common stock for $ 35,000 on January 31, 2020. See Notes 11 and 17 for discussion regarding additional issuances of Precigen common stock. Share Lending Agreement Concurrently with the offering of the Convertible Notes (Note 11), Precigen entered into a share lending agreement (the "Share Lending Agreement") with J.P. Morgan Securities LLC (the "Share Borrower") pursuant to which Precigen loaned and delivered 7,479,431 shares of its common stock (the "Borrowed Shares") to the Share Borrower. The Share Lending Agreement will terminate, and the Borrowed Shares will be returned to Precigen within five business days of such termination, upon (i) termination by the Share Borrower or (ii) the earliest to occur of (a) October 1, 2023 and (b) the date, if any, on which the Share Lending Agreement is either mutually terminated or terminated by one party upon a default by the other party. The Share Borrower maintains collateral in the form of cash or certain permitted non-cash collateral with a market value at least equal to the market value of the Borrowed Shares as security for the obligation of the Share Borrower to return the Borrowed Shares when required by the terms above. The Borrowed Shares were offered and sold to the public at a price of $ 13.37 per share under a registered offering (the "Borrowed Shares Offering"). Precigen did not receive any proceeds from the sale of the Borrowed Shares to the public or any lending fees from the Share Lending Agreement. The Share Borrower or its affiliates received all the proceeds from the sale of the Borrowed Shares to the public. Affiliates of Third Security purchased all of the shares of common stock in the Borrowed Shares Offering. The Share Lending Agreement was entered into at fair value and met the requirements for equity classification. Therefore, the value is netted against the issuance of the Borrowed Shares in additional paid-in capital. Additionally, the Borrowed Shares are not included in the denominator for loss per share attributable to Precigen shareholders unless the Share Borrower defaults on the Share Lending Agreement. Issuances of AquaBounty Common Stock In March 2019, AquaBounty completed an underwritten public offering that resulted in net proceeds of $ 6,611 after deducting discounts, fees, and expenses. See Note 1 for additional discussion of issuances of AquaBounty common stock in April 2019, which resulted in the deconsolidation of AquaBounty. Components of Accumulated Other Comprehensive Income The components of accumulated other comprehensive income are as follows: December 31, 2021 2020 Unrealized gain (loss) on investments $ ( 331 ) $ 13 Income on foreign currency translation adjustments 534 3,984 Total accumulated other comprehensive income $ 203 $ 3,997 See Note 3 for further discussion of the release of cumulative losses on foreign currency translation adjustments upon the closing of the TS Biotechnology Sale. 14. Share-Based Payments The Company measures the fair value of stock options and RSUs issued to employees and nonemployees as of the grant date for recognition of stock-based compensation expense. Stock-based compensation expense for employees and nonemployees is recognized over the requisite service period, which is typically the vesting period. Stock-based compensation costs included in the consolidated statements of operations are presented below: F-44 Table of Contents Year Ended December 31, 2021 2020 2019 Cost of products $ 30 $ 10 $ 20 Cost of services 172 134 220 Research and development 2,735 1,815 3,478 Selling, general and administrative 10,967 17,787 11,380 Discontinued operations — ( 1,380 ) 3,852 Total $ 13,904 $ 18,366 $ 18,950 Precigen Stock Option Plans In April 2008, Precigen adopted the 2008 Equity Incentive Plan (the "2008 Plan") for employees and nonemployees pursuant to which Precigen's board of directors granted share based awards, including stock options, to officers, key employees and nonemployees. Upon the effectiveness of the 2013 Omnibus Incentive Plan (the "2013 Plan"), no new awards may be granted under the 2008 Plan. As of December 31, 2021, there were 29,683 stock options outstanding under the 2008 Plan. Precigen adopted the 2013 Plan for employees and nonemployees pursuant to which Precigen's board of directors may grant share-based awards, including stock options, and shares of common stock, to employees, officers, consultants, advisors, and nonemployee directors. The 2013 Plan became effective in August 2013, and as of December 31, 2021, there were 27,000,000 shares authorized for issuance under the 2013 Plan, of which 11,164,186 stock options and 306,360 RSUs were outstanding and 5,813,233 shares were available for grant. In April 2019, Precigen adopted the 2019 Incentive Plan for Non-Employee Service Providers (the "2019 Plan"), which became effective upon shareholder approval in June 2019. The 2019 Plan permits the grant of share-based awards, including stock options, restricted stock awards, and RSUs, to non-employee service providers, including board members. As of December 31, 2021, there were 5,000,000 shares authorized for issuance under the 2019 Plan, of which 1,066,318 stock options and 162,121 RSUs were outstanding and 1,974,662 shares were available for grant. Stock options may be granted with an exercise price equal to or greater than the stock's fair market value at the date of grant. Stock options may be granted with an exercise price less than the stock's fair market value at the date of grant if the stock options are replacement options in accordance with certain United States Treasury regulations. Virtually all stock options have ten -year terms and vest four years from the date of grant. F-45 Table of Contents Stock option activity was as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Balances at December 31, 2018 11,093,063 $ 27.95 6.81 Granted 1,556,575 6.52 Exercised ( 19,887 ) ( 3.17 ) Forfeited ( 1,236,326 ) ( 24.92 ) Expired ( 2,371,143 ) ( 38.53 ) Balances at December 31, 2019 9,022,282 21.94 6.10 Granted 5,693,498 10.03 Exercised ( 30,061 ) ( 3.88 ) Forfeited ( 976,324 ) ( 15.47 ) Expired ( 2,453,499 ) ( 26.53 ) Balances at December 31, 2020 11,255,896 15.53 7.25 Granted 2,058,820 7.59 Exercised ( 127,883 ) ( 4.75 ) Forfeited ( 305,293 ) ( 7.02 ) Expired ( 621,353 ) ( 24.61 ) Balances at December 31, 2021 12,260,187 14.06 6.79 Exercisable at December 31, 2021 7,078,840 16.69 5.59 Total unrecognized compensation costs related to unvested awards as of December 31, 2021 were $ 15,745 and are expected to be recognized over a weighted-average period of approximately 2.50 years. The weighted average grant date fair value of options granted during 2021, 2020, and 2019 was $ 5.57 , $ 2.98 , and $ 3.79 , respectively. The aggregate intrinsic value of options exercised during 2021, 2020, and 2019 was $ 225 , $ 51 , and $ 66 , respectively. The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of Precigen's common stock for those shares where the exercise price was lower than the fair value of Precigen's common stock on the date of exercise. In February 2022, the Company granted a total of 3,103,500 options to employees with a total grant date fair value of approximately $ 5,300 . These options were issued from the 2013 Plan. The following table summarizes additional information about stock options outstanding as of December 31, 2021: Options Outstanding Options Exercisable Range of Exercise Prices Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Aggregate Intrinsic Value Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Aggregate Intrinsic Value $ 1.55 — $ 5.95 3,290,348 $ 4.64 8.18 $ 1,329 2,031,348 $ 4.15 7.98 $ 1,327 $ 6.01 — $ 11.90 3,568,102 9.69 8.46 — 833,104 9.79 7.90 — $ 12.01 — $ 20.94 3,068,340 18.59 6.09 — 1,880,991 19.16 4.93 — $ 21.13 — $ 45.69 2,332,393 28.06 3.22 — 2,332,393 28.06 3.22 — $ 47.35 1,004 47.35 3.51 — 1,004 47.35 3.51 — 12,260,187 $ 14.06 6.79 $ 1,329 7,078,840 $ 16.69 5.59 $ 1,327 F-46 Table of Contents The following table summarizes additional information about stock options outstanding as of December 31, 2020: Options Outstanding Options Exercisable Range of Exercise Prices Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Aggregate Intrinsic Value Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Aggregate Intrinsic Value $ 1.55 — $ 5.95 3,259,685 $ 4.63 8.92 $ 18,157 1,271,310 $ 3.11 8.73 $ 9,018 $ 6.06 — $ 15.09 2,261,216 11.01 8.23 1,325 345,788 9.09 4.76 689 $ 15.80 — $ 20.94 3,028,309 18.85 7.38 — 1,216,258 19.82 5.62 — $ 21.13 — $ 36.84 2,303,371 26.33 4.32 — 2,200,996 26.52 4.22 — $ 37.88 — $ 47.35 403,315 42.26 4.01 — 403,315 42.26 4.01 — 11,255,896 $ 15.53 7.25 $ 19,482 5,437,667 $ 19.61 5.61 $ 9,707 RSU activity was as follows: Number of Restricted Stock Units Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Balances at December 31, 2018 970,341 $ 13.82 1.43 Granted 2,278,460 6.59 Vested ( 1,159,165 ) ( 8.74 ) Forfeited ( 307,654 ) ( 8.99 ) Balances at December 31, 2019 1,781,982 8.71 1.24 Granted 3,157,390 3.09 Vested ( 2,802,593 ) ( 3.99 ) Forfeited ( 409,067 ) ( 8.59 ) Balances at December 31, 2020 1,727,712 6.11 0.42 Granted 462,019 7.87 Vested ( 1,624,013 ) ( 5.76 ) Forfeited ( 97,237 ) ( 8.96 ) Balances at December 31, 2021 468,481 8.47 0.33 Total unrecognized compensation costs related to unvested RSU awards as of December 31, 2021 were $ 1,145 and are expected to be recognized over a weighted-average period of approximately 0.50 years. Precigen currently uses authorized and unissued shares to satisfy share award exercises. The Company's Executive Chairman ("Executive Chairman"), who previously served as an employee and executive officer until September 24, 2020, received a base salary of $ 200 per month through March 31, 2020, payable in fully-vested shares of Precigen common stock with such shares subject to a three-year lock-up on resale. In September 2020, the Company's board of directors, upon the recommendation of the compensation committee of the board, approved a new compensation arrangement for the Executive Chairman consisting of (i) an annual retainer of $ 100 payable in cash or, at the Executive Chairman's election, shares of Precigen common stock; (ii) an annual grant of fully vested stock options having a grant date fair value of $ 250 ; and (iii) an annual grant of RSUs having a grant date fair value of $ 250 vesting over one year. The new compensation arrangement began in calendar year 2021 and was prorated for the nine months of 2020 not covered by the Executive Chairman's previous compensation arrangement discussed above. Expense associated with the arrangements above is included in selling, general, and administrative expenses in the Company's consolidated statements of operations and totaled $ 680 , $ 767 , and $ 1,868 for the years ended December 31, 2021, 2020, and 2019, respectively. F-47 Table of Contents 15. Operating Leases The Company leases certain facilities and equipment under operating leases. Leases with a lease term of twelve months or less are considered short-term leases and are not recorded on the balance sheet, and expense for these leases is recognized over the term of the lease. All other leases have remaining terms of less than one year to nine years , some of which may include options to extend the lease and some of which may include options to terminate the lease within one year . The Company uses judgment to determine whether it is reasonably possible to extend the lease beyond the initial term or terminate before the initial term ends and the length of the possible extension or early termination . The leases are renewable at the option of the Company and do not contain residual value guarantees, covenants, or other restrictions. The components of lease costs were as follows: Year Ended December 31, 2021 2020 2019 Operating lease costs $ 3,264 $ 3,578 $ 3,821 Short-term lease costs 1,949 1,763 2,042 Variable lease costs 853 842 845 Lease costs $ 6,066 $ 6,183 $ 6,708 As of December 31, 2021, maturities of lease liabilities, excluding short-term and variable leases, for continuing operations were as follows: 2022 $ 2,680 2023 2,304 2024 2,355 2025 2,263 2026 1,787 Thereafter 4,638 Total 16,027 Present value adjustment ( 4,974 ) Total $ 11,053 Current portion of operating lease liabilities $ 1,551 Long-term portion of operating lease liabilities 9,502 Total $ 11,053 Other information related to operating leases in continuing operations was as follows: December 31, 2021 2020 Weighted average remaining lease term (years) 6.65 4.21 Weighted average discount rate 10.99 % 10.27 % Year Ended December 31, 2021 2020 2019 Supplemental disclosure of cash flow information Cash paid for operating lease liabilities $ 3,598 $ 4,012 $ 3,877 Operating lease right-of-use assets obtained in exchange for new lease liabilities (includes new leases or modifications of existing leases) 4,868 417 1,137 F-48 Table of Contents 16. Commitments and Contingencies Contingencies On December 1, 2020, Trans Ova settled one of two patent infringement lawsuits brought by XY, LLC ("XY"). The lawsuit, originally filed in 2012, was tried and appealed between 2016 and 2020. On December 1, 2020, the parties reached a settlement resolving all remaining disputes. As part of that settlement, Trans Ova remitted to XY a settlement payment, which, in addition to all the other monies Trans Ova had previously paid XY, constituted full payment and satisfaction of the judgment, including pre-judgment interest, post-judgment interest, costs, and all past, current and future royalty obligations under the judgment. In exchange, XY released and forever discharged Trans Ova from all obligations arising out of the judgment. A second patent infringement lawsuit brought on by XY was filed in December 2016. There are currently five patents remaining at issue in the case. The Company expects the trial to occur sometime in early 2023. While this patent infringement lawsuit is pending, Trans Ova shall continue to utilize the technology consistent with the determinations of the court proceedings. Nonetheless, these disputes remain subject to a number of uncertainties, including the outcome of district court and appellate proceedings, the possibility of further claims by XY, and the impact of these matters on Trans Ova's ability to utilize the technology. Trans Ova and the Company could elect to enter into a settlement agreement in order to avoid the further costs and uncertainties of litigation. In September 2020, the Company reached a final settlement with the SEC with respect to an investigation concerning the Company's disclosures regarding its MBP program in the first three quarters of 2017. Under the terms of the settlement, the Company, without admitting or denying the allegations of the SEC, consented to the entry of an administrative order requiring that the Company: (i) cease and desist from committing or causing any violations and future violations under Section 13(a) of the Securities Exchange Act of 1934, as amended, and Rules 13a-11 and 12b-20 promulgated thereunder; and (ii) pay a $ 2,500 civil money penalty to the SEC. In October 2020, several purported shareholder class action lawsuits were filed in the United States District Court for the Northern District of California on behalf of certain purchasers of the Company's common stock. The complaints name as defendants the Company and certain of its current and former officers. The plaintiffs' claims track the allegations in the SEC's administrative order described above but challenge disclosures about the MBP program through September 2020, i.e., the date of the SEC administrative order. The plaintiffs seek compensatory damages, interest, and an award of reasonable attorneys' fees and costs. In April 2021, the court granted an order consolidating the claims and appointed a lead plaintiff and lead counsel in the case, captioned Abailla v. Precigen, Inc., F/K/A Intrexon Corp., et al . In May 2021, the lead plaintiff filed an amended complaint. The defendants moved to dismiss that complaint. In September 2021, the court issued an order mooting the defendants' motion to dismiss in light of the lead plaintiff's stated intent to file a second amended complaint in response to the motion to dismiss. On September 27, 2021, the lead plaintiff filed a second amended complaint. The defendants intend to move to dismiss that complaint. 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. asserting similar claims under state law against Precigen's current directors and certain officers. 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 demands inspection of certain books and records of the Company pursuant to Virginia statutory and common law. On December 9, 2021, the Company filed a demurrer to the plaintiff's amended petition in that action. The parties have completed briefing on the demurrer and argument is scheduled for April 1, 2022. The Company intends to defend the class action lawsuit and derivative actions vigorously; however, there can be no assurances regarding the ultimate outcome of these lawsuits. The Company has previously entered into strategic collaborations, including ECCs and JVs, to fund and develop products enabled by its technologies. These relationships involve complex interests, and the Company's interests may diverge with those of its collaborators, which can occur as a result of operations under those collaborations, business or technological developments, or as the Company transitions away from, or terminates, certain strategic collaborations. The Company has had, and has, disagreements and disputes with certain collaborators and JV partners, including certain IEP Investors and IEPII Investors. While the Company believes it is entitled to payment for work performed per its collaborations and JVs, consistent with its policy for accounting for accounts receivable, in 2019, the Company fully reserved the amount of any disputed accounts receivable that remained outstanding. F-49 Table of Contents On December 29, 2021, the Company received a letter from a group of investors in each of Intrexon Energy Partners and Intrexon Energy Partners II, purporting to refer certain issues to arbitration pursuant to the arbitration provisions of the Amended and Restated Limited Liability Company Agreements of Intrexon Energy Partners and Intrexon Energy Partners II. No specific damages amount is alleged or demanded. On January 25, 2022, the Company filed a petition in the Court of Chancery for the State of Delaware seeking to join the arbitration proceeding. A hearing on the petition is scheduled for March 3, 2022, and the Company expects a decision from the Court of Chancery thereafter. Such disagreements and disputes result in management distraction and may result in further litigation, arbitration, unfavorable settlements, or concessions by the Company, or adverse regulatory action, any of which could harm the Company's business or operations. The Company does not believe that any potential losses related to disputes with collaborators and JV partners are probable, nor estimable, at this time and has not accrued for any potential future losses, although such potential future losses could be material. In the course of its business, the Company is involved in litigation or legal matters, including governmental investigations. 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, 2021, 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. 17. Related Party Transactions Third Security and Affiliates The Company's Executive Chairman is also the Senior Managing Director and Chairman of Third Security and owns 100 % of the equity interests of Third Security. Through December 2019, the Company was party to a Services Agreement ("Services Agreement") with Third Security pursuant to which Third Security provided the Company with certain professional, legal, financial, administrative, and other support services necessary to support the Company and its Executive Chairman. Under the Services Agreement, as consideration for providing these services, Third Security was entitled to a fee paid in the form of fully-vested shares of Precigen common stock that approximated $ 800 per month. In 2019, the number of shares of common stock was calculated based on the volume weighted average of the closing price of the Company's common stock over the 30-day period ending on the 15th day of the calendar month when the applicable services were provided. During the year ended December 31, 2019, the Company issued 1,606,062 shares, with a value of $ 8,233 , to Third Security as payment for services rendered pursuant to the Services Agreement. Following the expiration of the Services Agreement, the Company entered into a new agreement with Third Security under which the Company reimburses Third Security for certain tax-related services performed by Third Security as requested by the Company which expired on December 31, 2021. As the Company evaluates its alternatives, it continues to utilize these services on a limited basis under the terms of the original agreement. The Company also reimburses Third Security for certain out-of-pocket expenses incurred on the Company's behalf prior to and after the expiration of the Services Agreement under a separate agreement. The total expenses incurred by the Company under these arrangements were $ 100 , $ 159 , and $ 26 for the years ended December 31, 2021, 2020, and 2019, respectively. See also Note 14 regarding compensation arrangements between the Company and its Executive Chairman. Through November 2021, the Company also subleased certain administrative offices to Third Security. The significant terms of the lease mirrored the terms of the Company's lease with the landlord, and the Company recorded sublease income of $ 75 , $ 83 , and $ 89 for the years ended December 31, 2021, 2020, and 2019, respectively. During November 2021, in conjunction with the early termination of the sublease, Third Security paid the Company $ 143 which represented a pro rata portion of the early termination fee the Company paid the landlord. See Notes 1, 3, and 13 regarding additional transactions with affiliates of Third Security. Transactions with ECC Parties Collaborators in which the Company holds more than a de minimis equity interest, including interests received as upfront or milestone payments through collaborations, are considered related parties. The Company held Series A Convertible Preferred Stock (the "Convertible Preferred Shares"), a convertible note, common shares of Castle Creek, and warrants to purchase shares of Castle Creek common stock previously acquired through F-50 Table of Contents collaborations and other transactions. As a result of the acquisition of Castle Creek by Castle Creek Pharmaceutical in December 2019, the Company received $ 1,280 in December 2019 for its shares of Castle Creek common stock and received a total of $ 3,311 in January 2020 for the Convertible Preferred Shares and the convertible note, including accrued interest thereon. The Company recognized a total gain of $ 3,222 on the change in fair value of these instruments, which is included in total other expense, net, in the accompanying consolidated statement of operations for the year ended December 31, 2019. Subsequent to the acquisition by Castle Creek Pharmaceutical, Castle Creek is no longer a related party. Other Related Parties In December 2020, the Company entered into an agreement with Harvest to resolve matters related to the parties' contractual and equity relationships and to settle all claims made in connection with the notice of arbitration noted above. Pursuant to the settlement agreement, the Company issued 2,117,264 shares of its common stock to Harvest valued at $ 18,103 in consideration of (i) the termination of the ECC agreements with Thrive Agrobiotics, Exotech Bio, and AD Skincare, which the Company had $ 6,993 of deferred revenue remaining related to these ECCs prior to the settlement agreement; (ii) the return of the Company's ownership interest in these Harvest start-up entities that had a total value of $ 326 prior to the settlement agreement; (iii) the commitment of Harvest (which is still ongoing) to take reasonable commercial efforts to transfer to the Company its membership interests in Intrexon Energy Partners II; and (iv) mutual irrevocable and unconditional releases of claims. The Company wrote off the investment balances and netted the deferred revenue balances associated with the eliminated service obligation against the consideration paid, resulting in a loss on the settlement agreement of $ 11,436 which is included in selling, general and administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2020. Outstanding receivables from these Harvest start-up entities related to research and development services performed by the Company under the ECC agreements, which had been fully reserved in 2019, were also forgiven as part of the settlement agreement and written off by the Company. Following the settlement agreement, these Harvest start-up entities are no longer related parties. 18. Segments The Company's CODM assesses the operating performance of and allocates resources for several operating segments using Segment Adjusted EBITDA. Management believes this financial metric is a key indicator of operating results since it excludes noncash revenues and expenses that are not reflective of the underlying business performance of an individual enterprise. The Company defines Segment Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) income tax expense or benefit, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) loss on settlement agreements where noncash consideration is paid, (vi) adjustments for accrued bonuses paid in equity awards, (vii) gain or loss on disposals of assets, (viii) loss on impairment of goodwill and other noncurrent assets, (ix) equity in net loss of affiliates, and (x) recognition of previously deferred revenue associated with upfront and milestone payments as well as cash outflows from capital expenditures and investments in affiliates but includes proceeds from the sale of assets in the period sold. During the year ended December 31, 2021, the Company modified the current period definition of Segment Adjusted EBITDA to exclude the gain or loss on disposals of assets and include proceeds from the sale of assets in the period sold. Segment Adjusted EBITDA for the years ended December 31, 2020 and 2019, were restated to reflect this change. Because the Company uses Segment Adjusted EBITDA as its primary measure of segment performance, it has included this measure in its discussion of segment operating results. The Company has also disclosed revenues from external customers and intersegment revenues for each reportable segment. Corporate expenses are not allocated to the segments and are managed at a consolidated level. The CODM does not use total assets by segment to evaluate segment performance or allocate resources, and accordingly, these amounts are not required to be disclosed. The Company's segment presentation excludes amounts related to the businesses included in the Transactions and the operations of MBP Titan which are reported as discontinued operations (Note 3). For the year ended December 31, 2021, the Company's reportable segments were (i) Biopharmaceuticals, (ii) Exemplar, and (iii) Trans Ova. These identified reportable segments met the quantitative thresholds to be reported separately for the year ended December 31, 2021. See Note 2 for a description of Biopharmaceuticals. See Note 1 for a description of Exemplar and Trans Ova. The All Other category as reported below reflects Precigen's other operating segments that do not meet the quantitative thresholds to be reported separately. F-51 Table of Contents Segment Adjusted EBITDA by reportable segment was as follows: Year Ended December 31, 2021 2020 2019 Biopharmaceuticals $ ( 45,754 ) $ ( 35,378 ) $ ( 44,552 ) Exemplar 6,898 4,004 ( 1,586 ) Trans Ova 17,420 13,530 ( 2,836 ) All Other — — ( 3,501 ) Segment Adjusted EBITDA for operating segments $ ( 21,436 ) $ ( 17,844 ) $ ( 52,475 ) The table below reconciles Segment Adjusted EBITDA for reportable segments to consolidated net loss from continuing operations before income taxes: Year Ended December 31, 2021 2020 2019 Segment Adjusted EBITDA for reportable segments $ ( 21,436 ) $ ( 17,844 ) $ ( 48,974 ) All Other Segment Adjusted EBITDA — — ( 3,501 ) Remove cash paid for capital expenditures, net of proceeds from sale of assets, and cash paid for investments in affiliates 5,774 389 11,886 Add recognition of previously deferred revenue associated with upfront and milestone payments 2,034 25,005 14,721 Other expenses: Interest expense ( 18,891 ) ( 18,400 ) ( 17,666 ) Depreciation and amortization ( 13,761 ) ( 15,042 ) ( 16,142 ) Loss from disposals of assets ( 614 ) ( 4,375 ) ( 3,018 ) Impairment losses ( 543 ) ( 920 ) ( 30,810 ) Loss on settlement agreement — ( 11,436 ) — Stock-based compensation expense ( 13,904 ) ( 19,746 ) ( 15,098 ) Adjustment related to accrued bonuses paid in equity awards — 2,833 — Equity in net loss of affiliates ( 3 ) ( 1,138 ) ( 2,416 ) Other ( 19 ) 11 67 Unallocated corporate costs ( 33,506 ) ( 37,479 ) ( 46,007 ) Eliminations ( 2,056 ) ( 5,713 ) ( 14,306 ) Consolidated net loss from continuing operations before income taxes $ ( 96,925 ) $ ( 103,855 ) $ ( 171,264 ) Revenues by reportable segment were as follows: Year Ended December 31, 2021 Biopharmaceuticals Exemplar Trans Ova Total Revenues from external customers $ 922 $ 13,345 $ 89,606 $ 103,873 Intersegment revenues 1,637 — 429 2,066 Total segment revenues $ 2,559 $ 13,345 $ 90,035 $ 105,939 Year Ended December 31, 2020 Biopharmaceuticals Exemplar Trans Ova Total Revenues from external customers $ 21,780 $ 10,158 $ 71,186 $ 103,124 Intersegment revenues 4,797 — 340 5,137 Total segment revenues $ 26,577 $ 10,158 $ 71,526 $ 108,261 F-52 Table of Contents Year Ended December 31, 2019 Biopharmaceuticals Exemplar Trans Ova All Other Total Revenues from external customers $ 6,259 $ 6,958 $ 68,672 $ 4,873 $ 86,762 Intersegment revenues 12,908 7 1,361 11 14,287 Total segment revenues $ 19,167 $ 6,965 $ 70,033 $ 4,884 $ 101,049 The table below reconciles total segment revenues from reportable segments to total consolidated revenues: Year Ended December 31, 2021 2020 2019 Total segment revenues from reportable segments $ 105,939 $ 108,261 $ 96,165 Other revenues, including from other operating segments — 54 9,064 Elimination of intersegment revenues ( 2,066 ) ( 5,137 ) ( 14,507 ) Total consolidated revenues $ 103,873 $ 103,178 $ 90,722 Goodwill by reportable segment was as follows: Biopharmaceuticals Exemplar Trans Ova Total Goodwill Balances at December 31, 2019 $ 17,449 $ 20,076 $ 16,594 $ 54,119 Foreign currency translation adjustments 244 — — 244 Balances at December 31, 2020 17,693 20,076 16,594 54,363 Foreign currency translation adjustments ( 215 ) — — ( 215 ) Balances at December 31, 2021 $ 17,478 $ 20,076 $ 16,594 $ 54,148 As of December 31, 2021 and 2020, the Company had $ 4,463 and $ 5,908 , respectively, of long-lived assets in foreign countries. The Company recognized revenues derived in foreign countries totaling $ 530 , $ 595 , and $ 1,401 for the years ended December 31, 2021, 2020, and 2019, respectively. 19. Defined Contribution Plans The Company sponsors defined contribution plans covering employees who meet certain eligibility requirements. The Company makes contributions to the plans in accordance with terms specified in the plan agreement. The Company's contributions to the plans were $ 887 , $ 873 , and $ 1,186 for the years ended December 31, 2021, 2020, and 2019, respectively. F-53