PRECIGEN, INC. 10-Q

Item 1A. Risk Factors As disclosed in "Summary of Risk Factors" and "Item 1A. Risk Factors" in our Annual Report, there are a number of risks and uncertainties that may have a material effect on the operating results of our business and our financial condition. There are no additional material updates or changes to our risk factors since the filing of our Annual Report, except as discussed below. In evaluating our risks, readers also should carefully consider the risk factors discussed in our Annual Report and the risk factor included in this Quarterly Report on Form 10-Q, which could materially affect our business, financial condition, or operating results, in addition to the other information set forth in this report and in our other filings with the SEC. The proceeds received from the sale of our subsidiary, Trans Ova, together with certain additional funds, were placed in a segregated account upon the closing of the Transaction and must be used for certain permitted purposes, including resolution of our outstanding convertible bonds, and therefore we have limited discretion in the use of proceeds and the additional funds we put in. On July 1, 2022, we entered into an agreement (the “Purchase Agreement”) to sell 100% of the outstanding membership interests of Trans Ova Genetics, L.C., an Iowa limited liability company (“Trans Ova”), our wholly-owned subsidiary, to Spring Bidco LLC, a Delaware limited liability company (the “Buyer”) in exchange for $170.0 million in cash payable at the closing of the transaction (subject to a working capital adjustment mechanism) and up to $10.0 million in cash in earn-out payments over two years (the “Transaction”). In connection with the closing of the Transaction, as of September 30, 2022, we held a total of $82.4 million, in a segregated account and will use such funds for certain permitted purposes, including resolution of our outstanding convertible bonds. Therefore, we have limited discretion in the use of proceeds in the segregated account, which may have a negative impact on our liquidity and ability to satisfy our capital requirements and we may be prevented from using the cash opportunistically for other purposes. There is substantial doubt about our ability to continue as a going concern . During the nine months ended September 30, 2022, we incurred a loss from continuing operations of $57.6 million and used $49.7 million of cash in our operations, and as of September 30, 2022, had an accumulated deficit of $1,846 million. Given the our current cash position and forecasted negative cash flows from operating activities for the foreseeable future, as well as convertible notes with a face value of $82.4 million that are due on July 1, 2023, management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern.Our ability to fund our operations is dependent upon our management’s plans, which include raising additional capital in the near term. This additional capital could be raised through a combination of non-dilutive financings (including collaborations, strategic alliances, monetization of non-core assets, marketing, distribution or licensing arrangements), dilutive financings (including equity and/or debt financings) and, in the longer term, from revenue related to product sales, to the extent its product candidates receive marketing approval and can be commercialized. There can be no assurance that new financings or other transactions will be available to us on commercially acceptable terms, or at all, and such financings may adversely affect the holdings or rights of our stockholders and may cause significant dilution to existing stockholders. Further, the doubt regarding our potential ability to continue as a going concern may adversely affect our ability to obtain new financing on reasonable terms or at all. Also, any collaborations, strategic alliances, monetization of non-core assets or 52 marketing, distribution or licensing arrangement may require us to give up some or all of our rights to a product or technology, which in some cases may be at less than the full potential value of such rights. If we are unable to obtain additional capital, we will assess our capital resources and may be required to delay, reduce the scope of, or eliminate some or all of our operations, which may include research and development and clinical trials. This may have a material adverse effect on our business, financial condition, results of operations and ability to operate as a going concern. The accompanying unaudited financial statements do not include any adjustments that might be necessary if we are not able to continue as a going concern. Additionally, if we are unable to continue as a going concern, our stockholders may lose some or all of their investment in us. See also “Notes to Condensed Consolidated Financial Statement (Unaudited) – Note 2” appearing elsewhere in this Quarterly Report for additional discussion of our liquidity and ability to continue as a going concern. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults on Senior Securities None. Item 4. Mine Safety Disclosures Not applicable.