(5) Litigation and Environmental

The Company records a liability on its consolidated financial statements for loss contingencies when a loss is known or considered probable, and the amount can be reasonably estimated. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. The Company recognizes legal expenses in connection with loss contingencies as incurred.

Department of Justice and Environmental Protection Agency Investigation. On October 25, 2024, the U.S. District Court for the Southern District of Alabama approved, and entered a plea agreement pursuant to which the Company had entered a plea of guilty to one count of transporting hazardous waste without a waste manifest. This matter arose from the reimportation of used, substantially empty containers in 2014. Under the terms of the plea agreement, the Company paid a fine and entered into a three-year probation during which it will be subject to an environmental compliance plan, the form of which is currently before the court for its approval.

 

 

DBCP Cases

Over the course of the past 30 years, AMVAC and/or the Company have been named or otherwise implicated in a number of lawsuits concerning injuries allegedly arising from either contamination of water supplies or personal exposure to 1, (“DBCP”). DBCP was manufactured by several chemical companies, including Dow Chemical Company, Shell Oil Company and AMVAC (which ceased manufacture in about 1980) and was approved by the USEPA to control nematodes. DBCP was also applied on banana farms in Latin America. The USEPA suspended registrations of DBCP in October 1979, except for use on pineapples in Hawaii. That suspension was partially based on 1977 studies by other manufacturers that indicated a possible link between male fertility and exposure to DBCP among their factory production workers involved with producing the product.

Delaware DBCP Cases

. Two cases were filed independently in 2012 by the same law firm (HendlerLaw, P.C.) in Louisiana and Delaware involving claims on behalf of banana workers for personal injury allegedly arising from exposure to DBCP. Through several years of law and motion practice, the number of plaintiffs in the actions has been reduced from about 2,750 to 290 banana workers from Costa Rica, Ecuador, Guatemala and Panama, and both cases have been consolidated before the United States District Court for the District of Delaware (USDC DE No. & 00697). Discovery commenced in 2018 and has consisted largely of seeking medical examinations from the remaining plaintiffs. In December 2022, defendants in this matter filed a motion for summary judgment against the Ecuadorian plaintiffs under the theory that the statute of limitations for negligence barred the action. In January 2024, the court denied defendants’ motion for summary judgment on the basis of “the most analogous case” doctrine. After further dismissals by plaintiffs’ counsel, about 40 claimants remain in the action. Trial dates have been tentatively scheduled for the first half of 2026 in groups of ten. On December 21, 2025, defendants, including AMVAC, brought motions for summary judgment against all claimants for various reasons, including, in the case of AMVAC, that no claimant had been able to testify under oath that he had ever heard of AMVAC or had been exposed to the Company’s product. At this stage in the proceedings, the Company does not believe that a loss is probable or reasonably estimable and has not recorded a loss contingency for these matters.

Other Matters

On February 11, 2022, a strawberry grower named Les Enterprises Pitre, Inc. filed a complaint in the Superior Court, District of Labelle, Province of Quebec, Canada, entitled , seeking damages in the amount of approximately $5,000 arising from stunted growth of, and reduced yield from, its strawberry crop allegedly from the application of Amvac’s soil fumigant, Vapam, in spring of 2021. Examinations of plaintiff were held in 2022, during which plaintiff in effect confirmed that he had planted his seedlings before expiration of the full time interval following product application (as per the product label), that he had failed to follow the practice of planting a few test seedlings before planting an entire farm, and that he had placed his blind trust in his application adviser on all manner of timing and rate. An examination of the Company’s most knowledgeable witness took place in April 2024. undertakings (discovery requests) continued thereafter. A trial date has been set to take place in about three years. The Company believes that the claims have no merit and intends to defend the matter. At this stage in the proceedings, there is not sufficient information to form a judgment as to either the probability or amount of loss; thus, the company has not set aside a reserve in connection with this matter.

Beginning early in the second quarter of 2025, the Company received customer complaints alleging injury to ornamental plants from the application of up to four lots (having a value of about $350) of granular insecticide sold by Company subsidiary OHP Inc. for use on potted plants and hanging baskets. As acknowledged by the third-party formulator, Turf Care Supply (“TCS”), the lots in question, or a subset thereof, were out of specification and (although not known to the Company at time of sale or use) contained trace amounts of herbicide residues from a contaminated production line at that formulator’s facility. After having issued a stop sale and stop use notice for the subject lots to the distribution channel, the Company began a process of aggregating and validating customer claims and recalling unused products. At this stage, 272 parties have submitted claims, totaling $9,063 in estimated damages. To date, the Company has validated 57 claims amounting to approximately $2,050, starting with those for which the most complete support had been provided by claimants. The Company made payments in the amount of approximately $1,414 as of December 31, 2025. Based upon the adequacy of documentation for claims validated to date, we believe that the remaining unvalidated claims are likely to be validated and that a loss related to these claims is probable and can be reasonably estimated. As a result, the Company recorded a liability in the amount of $7,649 at December 31, 2025 related to unpaid claims received.

 

 

Both the Company and the third-party formulator have notified their insurance carriers of the claim. The Company’s product liability policy includes a $5,000 deductible, while the formulator’s policy has a $0 deductible. It is not yet clear to the Company which types of claims will be compensable by the insurance carriers or the extent to which either or both carriers might respond to these claims. The parties met in a mediation that was held on January 7, 2026, which did not lead to a resolution. Consequently, the Company has filed an action against TCS and its private equity sponsor in the Court of Common Pleas, County of Medina, Ohio seeking damages for, among other things, breach of contract and negligent misrepresentation.

On November 25, 2024, EPA Region IX issued to American Vanguard Chemical Corporation a letter requesting that AMVAC show cause why a civil penalty should not be assessed with respect to allegations that, from 2020 through 2023, AMVAC violated Section 12(a)(2)(N) of FIFRA by exporting 18 unregistered pesticides to foreign purchasers in 14 countries without submitting a Foreign Purchaser Acknowledgement Statement (“FPAS”) from each foreign purchaser to EPA, as required by 40 C.F.R. § 168.75(c). The Company continues to discuss this matter with EPA and has entered into a tolling agreement with the agency to extend the time for resolution through March 2026. At this stage, the Company believes that a loss is probable and has set a reserve in an amount that is not material to its financial statements.