Company: PGEN
Filing Date: 2025-08-12
Form Type: 10-Q
Source: 0001356090-25-000024
Chunk: 74

Company: PRECIGEN, INC.
Filing Date: 2025-08-12
Form: 10-Q
Item: Part I, Item 8
Chunk 74
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. The Warrants and PIK Warrants (together the "Warrant liabilities") are measured at fair value at inception. The fair value of the outstanding Warrants is re-measured at the end of each reporting period, unless and until they are reclassified to equity. After the last PIK dividend payment date for the Series A Preferred Stock in January 2027, the Warrants will have a predominantly fixed settlement amount as there will be no further anticipated PIK dividends that would adjust the number of Warrants. At this point, assuming all other criteria are met for indexation, the Warrants will cease to fail the indexation guidance and will be classified within equity.The Company uses various option pricing models, such as the Black-Scholes option pricing model and the Monte Carlo simulation model, to estimate the fair value of the Warrant liabilities. In using these models, we make certain assumptions about risk-free interest rates, dividend yields, volatility, expected term of the Warrants and other assumptions. Risk-free interest rates are derived from the yield on U.S. Treasury debt securities. Dividend yields are based on our historical dividend payments, which have been zero to date. Volatility is estimated from the historical volatility of our common stock as traded on the Nasdaq Stock Market Exchange. The expected term of the Warrants is based on the time to expiration of the Warrants from the date of measurement.The fair value of the Warrants is estimated using a Black‑Scholes option-pricing model. The significant assumptions used in preparing the option pricing model for valuing the Warrant liabilities as of June 30, 2025, include (i) volatility of 87.1% (discounted for lack of marketability), (ii) risk free interest rate of 4.2%, (iii) strike price ($0.75), (iv) fair value of common stock ($1.42), and (v) expected life of 9 years, 6 months. As of December 31, 2024, the significant assumptions included (i) volatility of 86.2% (discounted for lack of marketability), (ii) risk free interest rate of 4.5%, (iii) strike price ($0.75), (iv) fair value of common stock ($0.93), and (v) expected life of 10 years.The fair value of the PIK Warrants is estimated using a Black-Scholes option pricing model within a Monte Carlo simulation model framework. The significant assumptions used