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Item 7. Management’s Discussion and Analysis

2026-03-04 compared with 2025-03-04 · 140 added, 166 removed, 176 unchanged (63% of the section changed)

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Risk Factors and Cautionary Notice Regarding Forward-Looking Statements.

ChromaDex Corporation and its wholly owned subsidiaries, ChromaDex, Inc., ChromaDex International, Inc., ChromaDex Analytics, Inc., ChromaDex Asia Limited, Asia Pacific Scientific, Inc., ChromaDex Asia Pacific Ventures Limited, ChromaDex Europa B.V., ChromaDex Trading (Shanghai) Co., Ltd.

and ChromaDex Sağlik Ürünleri Anonim Şirketi (collectively, “ChromaDex”, the “Company” or, in the first person as “we” “us” and “our”) are a global bioscience company dedicated to healthy aging.

Our team, which includes world-renowned scientists, is pioneering research on nicotinamide adenine dinucleotide (NAD+), an essential coenzyme that is a key regulator of cellular metabolism and is found in every cell of the human body.

NAD+ levels in humans have been shown to decline by up to 65% between ages 30 and 70.

In addition to age, other factors linked to NAD+ depletion include poor diet, excess alcohol consumption and a number of disease states.

NAD+ levels may be increased with administration of NAD+ precursors, calorie restriction and moderate exercise.

We are at the forefront of exploring effective methods to increase NAD+ levels and support healthy aging.

In 2013, we commercialized food-grade Niagen®, a proprietary form of NRC, a novel form of vitamin B3, as both a dietary and food ingredient.

In 2024, we launched Niagen+, a product line for healthcare practitioners and clinics, featuring pharmaceutical-grade Niagen®.

Nicotinamide riboside chloride and other NAD+ precursors are protected by our patent and/or licensed rights portfolio.

We deliver Niagen® as the sole active ingredient in our consumer product Tru Niagen®.

We additionally offer consumer products containing Niagen® in combination with other nutrients, such as, but not limited to, Tru Niagen® Immune.

Our ingredients segment develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw material to the manufacturers of consumer products and U.S.

FDA-registered 503B outsourcing facilities.

Pharmaceutical-grade Niagen® products are available exclusively at clinics with a prescription.

Our Analytical Reference Standards and Services segment focuses on natural product fine chemicals, known as phytochemicals, and related research and development services.

Niagen Bioscience, Inc.

and its wholly owned subsidiaries, ChromaDex, Inc., ChromaDex International, Inc., ChromaDex Analytics, Inc., ChromaDex Asia Limited, Asia Pacific Scientific, Inc., ChromaDex Asia Pacific Ventures Limited, ChromaDex Europa B.V., and ChromaDex Trading (Shanghai) Co., Ltd.

(collectively, “Niagen Bioscience,” the “Company” or, in the first person as “we” “us” and “our”) are a global bioscience company dedicated to promoting healthy aging.

Our team, which includes world-renowned scientists, is pioneering research on nicotinamide adenine dinucleotide (NAD+), an essential coenzyme that regulates cellular metabolism and is present in every cell of the human body.

NAD+ levels naturally decline with age, by up to 65% between ages 30 and 70, and can also be impacted by poor diet, excess alcohol consumption, and certain disease states.

Increasing NAD+ levels through NAD+ precursors, calorie restriction, or moderate exercise has been shown to support healthy cellular function.

We are at the forefront of developing and commercializing effective methods to support NAD+ levels and promote healthy aging.

In 2013, we commercialized food-grade Niagen®, a proprietary form of nicotinamide riboside chloride (“NRC” or “NRCL,” commonly referred to as “NR”), a novel form of vitamin B3, as both a dietary and food ingredient.

In 2017, we expanded our offerings with the launch of Tru Niagen®, a finished dietary supplement featuring Niagen®, available directly to consumers.

In 2024, Niagen Plus products launched, which are products featuring pharmaceutical-grade Niagen®.

We supply pharmaceutical-grade Niagen® to U.S.

FDA-registered 503B outsourcing facilities, in addition to compound pharmacies abroad, which compound and distribute Niagen® intravenous (Niagen IV) and injectable Niagen® formulations for use under prescription.

Food-grade Niagen® is authorized for human consumption as a dietary supplement and is generally recognized as safe (GRAS), while pharmaceutical-grade Niagen® is permitted by the FDA for compounding by 503B outsourcing facilities.

Our operations are subject to regulation by various state and federal agencies.

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These regulations may in some cases, particularly with respect to those applicable to new ingredients, require a notification that must be submitted to the FDA along with evidence of safety and similar regulations exist related to food additives.

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles (GAAP).

The preparation of these financial statements requires making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported net sales and expenses during the reporting periods.

On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below.

We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

Recent Activities

Joint Venture

On September 27, 2024, we notified Hong Kong (China) Taikuk Group Ltd ("Taikuk") that we would not extend the Blue Hat registration period for our joint venture ("JV"), which expired on October 1, 2024.

As a result, Blue Hat Registration is no longer possible, and no amounts related to the Blue Hat Registration Fee or the 11% non-voting interest have been or will be recognized.

On December 16, 2024, we exercised our Right of Repurchase, buying back the 11% non-voting interest from Taikuk for $1, effectively terminating the Shareholders Agreement.

The JV was originally formed on September 30, 2022, through our indirect wholly owned subsidiary, Asia Pacific Scientific, Inc., to commercialize Tru Niagen® and other nicotinamide riboside-containing products in Mainland China.

Taikuk agreed to contribute $1.0 million in exchange for an 11% non-voting equity interest, while we retained an 89% equity interest and full voting control.

The agreement was contingent on securing Blue Hat registration within 24 months, with an option to repurchase Taikuk’s interest if registration was not obtained.

With the expiration of the registration period, we have now fully regained ownership of the JV.

Amendment to the At Market Issuance Sales Agreement

On November 20, 2024, we entered into an amendment (the “Amendment”) to the At Market Issuance Sales Agreement, dated as of June 12, 2020 (the “Sales Agreement”) governing the Company’s “at-the-market” equity offering program for its common stock, par value $0.001 per share, in order to, among other things, revise the list of Sales Agents under the program to include Roth Capital Partners, LLC (“Roth Capital Partners”) and remove B.

Riley Securities, Inc.

Riley FBR, Inc.) as Sales Agent.

As a result of the Amendment, Raymond James & Associates, Inc.

and Roth Capital Partners will continue as the Sales Agents pursuant to the Sales Agreement.

Supplemental Agreement - Royalties

On November 27, 2024, we entered into a Supplemental Agreement (the “Supplemental Agreement”) with the Trustees of Dartmouth College (“Dartmouth,” and together with ChromaDex, the “Parties”).

The Supplemental Agreement supplements the exclusive license agreements entered into between the Parties dated July 13, 2012 (as amended and restated as of March 13, 2017 and December 29, 2020, the “2012 Agreement”) and May 16, 2014 (together with the 2012 Agreement, the “Exclusive License Agreements”) pursuant to which we received an exclusive license under Dartmouth-owned U.S.

patents (the “Dartmouth Patents”).

Under the Supplemental Agreement, Dartmouth agreed, subject to certain conditions specified in the Supplemental Agreement and the fulfillment of our obligations under the Agreement, (i) to waive certain accrued but unpaid royalties, license fees, and maintenance expenses owed by us under the Exclusive License Agreements, which totaled an aggregate of $3.5 million, and (ii) that no additional royalties, license fees, maintenance or other expenses or other payments will be assessed by Dartmouth or payable by the us to Dartmouth for the Dartmouth Patents after the effective date of the Agreement.

The waiver was contingent upon us securing a bond (the “Appeal Bond”) for the amount of the fee judgement, if any, related to the Delaware patent infringement case against Elysium Health, Inc.

filed by us and Dartmouth relating to the Dartmouth Patents.

On November 21, 2024, the Appeal Bond was secured through a letter of credit issued on our behalf.

As a result, for the year ended December 31, 2024, we reversed $3.5 million of previously accrued royalties, license fees, and maintenance expenses under accrued expenses in our Consolidated Balance Sheets and recorded a reduction in royalty expense, license fees, and maintenance expenses in general and administrative expenses in our Consolidated Statements of Operations.

Information regarding the Delaware patent infringement case against Elysium Health, Inc.

is set forth under the heading “ Legal Proceedings ” in Note 16, Commitments and Contingencies , in Notes to the Consolidated Financial Statements in Item 8 of Part II of this Form 10-K,

Purchase Commitments

Effective January 1, 2025, the Company entered into a Tenth Amendment to the Manufacturing and Supply Agreement (the “Grace Manufacturing Agreement”), initially effective in January 2016.

In January 2019, Grace was issued patents related to the crystalline form of NR chloride which limit the Company’s ability to find alternatives for supply (Grace Patents).

Pursuant to the Tenth Amendment and the manufacturing and supply agreement with the aforementioned third party, the Company is committed to purchase approximately $4.8 million of total inventory between January 1, 2025 and March 31, 2025.

The Grace Manufacturing Agreement is set to expire on March 31, 2025, subject to further renewal of the Agreement to be negotiated by the parties.

Additionally, under the Tenth Amendment, the Company and Grace maintain a binding six-month rolling forecast, which is updated monthly.

As of December 31, 2024, this forecast obligates the Company to purchase approximately $11.2 million of total inventory between January 1, 2025 and June 30, 2025.

Any failure to extend the Grace Manufacturing Agreement on satisfactory terms could potentially have a material adverse impact on the Company’s financial results and strategic position, as outlined in Item 1A.

Risk Factors in this Annual Report on Form 10-K, " We rely on a single supplier, W.R.

Grace, for NRC and a limited number of third-party suppliers for the raw materials required to produce our products.

Queen’s University Belfast Agreement

Effective December 16, 2025, the Company entered into an assignment agreement with Queen’s University Belfast (QUB) that replaced the parties’ prior intellectual property arrangements (the “Assignment Agreement”).

Under the Assignment Agreement, QUB assigned to us all of its interest in certain patent rights that had been previously jointly owned with, or licensed from, QUB.

As a result of the transaction, we obtained full ownership of the applicable patent rights, terminated our prior royalty and license arrangements with QUB, and eliminated future royalty and sublicense obligations under those agreements.

In connection with the Assignment Agreement, we recorded $5.5 million of intangible assets and corresponding deferred consideration related to the patents acquired.

In addition, previously accrued royalty and license liabilities totaling approximately $3.5 million were settled for consideration of approximately $1.5 million.

As a result, we recognized a gain of approximately $2.0 million during the year ended December 31, 2025.

The settlement consideration relates solely to royalty and license obligations incurred prior to termination of the agreements and is separate from the consideration attributable to the acquisition of patent rights.

Intangible Assets, Net and Note 15.

Commitments and Contingencies for further information.

Assets Held for Sale - Analytical Reference Standards and Services Segment

During the year ended December 31, 2025, we committed to a plan to sell substantially all of the assets of our analytical reference standards and services operating segment.

As of December 31, 2025, the assets associated with this segment met the criteria to be classified as held for sale and were presented as assets held for sale in our consolidated balance sheets.

The assets held for sale primarily consist of inventory, certain long-lived assets, customer lists and contracts, and a trade name.

On February 24, 2026, we entered into a definitive asset purchase agreement with a third party to sell substantially all of the assets of this operating segment for total consideration of approximately $6.0 million, less working capital adjustments of approximately $0.2 million.

The buyer will assume operating liabilities arising after the closing date, while we will retain accounts receivable and accounts payable incurred prior to the date of the sale, related to the disposed assets.

In connection with the disposition, we entered into a transition services agreement pursuant to which we will continue to provide certain operational and administrative services to the buyer for a period of up to six months following the closing date.

We will receive a service fee for these services, which will be recognized as the services are provided.

The results of operations of the analytical reference standards and services operating segment are included in continuing operations for all periods presented, as the disposition does not represent a strategic shift that will have a major effect on our operations or financial results, , therefore it does not meet the criteria for discontinued operations treatment.

Results of Operations

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Gross profit 83,189 61,586

Operating expenses

Operating expenses (income)

Sales and marketing 35,506 29,469

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General and administrative 27,057 18,375

Nonoperating expenses:

Gain on settlement of royalty obligation (1,983) —

Nonoperating income (expenses):

Interest income, net 2,127 1,129

IRS ERTC disallowance (214) —

Income before provision for income taxes 18,192 8,855

Provision for income taxes 810 305

Net income (loss) $ 8,550 $ (4,938)

Our income (loss) per share applicable to common stockholders for the years indicated is calculated as follows:

Net income $ 17,382 $ 8,550

Our income per share applicable to common stockholders for the years indicated is calculated as follows:

Year Ended December 31,

(In thousands, except per share data) 2025 2024

Net income (loss) 8,550 (4,938)

Net income 17,382 8,550

Weighted average common shares outstanding for basic earnings per share (1) 79,178 75,929

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Adjusted weighted average common shares outstanding for diluted earnings per share 85,436 78,125

Earnings (Loss) Per Share:

Basic net income (loss) per common share $ 0.11 $ (0.07)

Diluted net income (loss) per common share $ 0.11 $ (0.07)

(1) Includes a weighted average of approximately 167,000 and 174,000 nonvested shares of restricted stock for the years ended December 31, 2024 and 2023, respectively, which are participating securities that feature voting and dividend rights.

(2) Options and restricted stock outstanding, which are anti-dilutive and therefore not factored into the weighted average common shares amount above, for the years ended December 31, 2024 and 2023 were as follows:

Earnings Per Share:

Basic net income per common share $ 0.22 $ 0.11

Diluted net income per common share $ 0.20 $ 0.11

(1) Includes a weighted average of approximately 167,000 nonvested shares of restricted stock for each of the years ended December 31, 2025 and 2024, which are participating securities that feature voting and dividend rights.

(2) For the years ended December 31, 2025 and 2024, the Company had outstanding restricted stock awards and stock options.

Restricted stock awards were dilutive and included in the calculation of diluted earnings per share, while certain stock options outstanding were anti-dilutive and, accordingly, were excluded from the calculation of weighted-average common shares outstanding.

The following table presents the anti-dilutive stock options for the periods presented:

Year Ended December 31,

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Stock options 1,682 4,087

Restricted stock units — 589

Net sales consist of gross sales less discounts and returns.

Our total net sales grew from $59.3 million in 2020 to $99.6 million in 2024, representing a 14% compound annual growth rate.

Our total net sales grew from $67.4 million in 2021 to $129.4 million in 2025, representing a compound annual growth rate of 18%.

Total net sales by reportable segment for the years ended December 31, 2025 and 2024 are as follows:

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In 2025, our total net sales increased 30%, up $29.8 million, from 2024.

The pharmaceutical segment did not generate revenue during the periods presented.

• In 2025, Tru Niagen® sales increased by $20.9 million, or 27%, compared to 2024.

This growth was primarily driven by a $6.7 million increase in sales from our e-commerce business, along with higher sales to distributor partners.

These gains were partially offset by a decline of approximately $0.3 million in sales to A.S.

Watson, which was considered a related party for part of the year.

• In 2024, total ingredient sales were the primary driver of overall sales growth, increasing by $8.7 million, or 78%, compared to 2023.

This growth was primarily attributed to the expansion of new partnerships and the strengthening of existing ones, particularly within our food-grade Niagen® ingredient business, which contributed $7.0 million in higher net sales.

Additionally, the launch of our pharmaceutical-grade Niagen® ingredient in 2024 generated $1.7 million in new sales.

• Net sales for our analytical reference standards and services segment increased slightly by $0.1 million in 2024 compared to 2023, primarily due to higher sales of quality-control reference standard products.

Sales in this segment fluctuate based on the timing of customer projects.

This growth was primarily driven by a $16.2 million increase in sales from our e-commerce business, reflecting continued growth in consumer demand and effective digital marketing initiatives.

The remaining increase was attributable to higher sales to distributor partners of approximately $5.6 million.

These increases were partially offset by a decline of approximately $0.9 million in sales to A.S.

• In 2025, total ingredient sales increased by $8.9 million, or 45%, compared to 2024.

This growth was primarily driven by higher sales to existing food-grade Niagen® partners, which contributed approximately $6.6 million.

In addition, sales of pharmaceutical-grade Niagen® ingredient increased by $2.1 million, reflecting the inclusion of a full year of post-launch sales activity compared to 2024.

• Net sales for our analytical reference standards and services segment increased slightly by approximately $0.1 million in 2025 compared to 2024.

Cost of Sales.

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• Cost of sales, as a percentage of net sales, for our consumer products segment can fluctuate due to business mix, product mix, inflationary costs, and optimization efforts in our supply chain, among other factors.

For the year ended December 31, 2024, our consumer products segment maintained a stable cost of sales, as a percentage of net sales, at 36% compared to the same period in 2023.

For the year ended December 31, 2025, cost of sales as a percentage of net sales improved by 200 basis points compared to the same period in 2024.

The improvement was attributable to a favorable shift in business mix and the use of lower-cost inventory purchases.

• Cost of sales as a percentage of net sales in our ingredients segment is influenced by various factors, including inventory purchase costs, fixed supply chain overhead, and transportation and storage expenses.

In 2024, cost of sales as a percentage of net sales improved by 600 basis points compared to 2023, primarily due to better labor and overhead utilization rates driven by higher sales, as well as shifts in product mix following the launch of our pharmaceutical-grade Niagen®.

For the year ended December 31, 2025, cost of sales for our ingredients segment as a percentage of net sales remained at 39%, unchanged from the prior year.

• Cost of sales as a percentage of net sales in our analytical reference standards and services segment is influenced by various factors, including inventory purchase costs, fixed supply chain overhead, and transportation and storage expenses.

In 2024, cost of sales as a percentage of net sales improved by 1,400 basis points compared to 2023, primarily due to a restructuring of supply chain overhead costs related to reference standards, which resulted in cost efficiencies.

This realignment also impacted sales and marketing expense.

Gross Profit (Loss).

Gross profit (loss) is net sales less the cost of sales and is affected by a number of factors, including business and product mix, competitive pricing and costs of products, labor, overhead, services and delivery.

Since 2020, total gross profit grew from $35.3 million to $61.6 million in 2024, representing a 15% compound annual growth rate.

In 2025, cost of sales as a percentage of net sales improved by 1,500 basis points compared to 2024.

Due to the segment’s smaller scale, relatively small changes in cost structure have historically resulted in significant percentage variability.

Net sales were relatively stable, while cost of sales declined modestly compared to the same period in 2024.

Gross Profit.

Gross profit represents net sales less cost of sales and is affected by a number of factors, including business and product mix, pricing and costs of materials, labor, overhead, services and delivery.

Since 2021, total gross profit increased from $41.5 million to $83.2 million in 2025, representing a compound annual growth rate of approximately 19%.

For fiscal year 2025, gross profit increased $21.6 million, or 35%, compared to 2024.

Our overall gross margin percentage remained strong at 61.8% for fiscal year 2024, increasing 100 basis points compared to 2023.

The following table sets forth our total gross profit (loss) by reportable segment:

Our overall gross margin percentage was 64.3% for fiscal year 2025, an increase of 250 basis points compared to 2024.

The following table sets forth our total gross profit by reportable segment:

Year Ended December 31,

($ In thousands) 2025 2024 % Change

Gross profit (loss):

Gross profit:

Consumer Products $ 64,888 $ 49,294 32 %

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Total gross profit $ 83,189 $ 61,586 35 %

For details supporting year-over-year changes in gross profit (loss) refer to the discussions above surrounding changes in our net sales and cost of sales for each segment.

For details supporting year-over-year changes in gross profit refer to the discussions above surrounding changes in our net sales and cost of sales for each segment.

Operating Expenses - Sales and Marketing.

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Consumer Products $ 12,655 13 % $ 11,102 14 % (100)

Ingredients — — — — 0

Analytical reference standards and services — — — — 0

Total advertising expenses $ 12,655 10 % $ 11,102 11 % (100)

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Total sales and marketing expenses increased by $6.0 million, or 20%, to $35.5 million in 2025 compared to $29.5 million in 2024.

As a percentage of net sales, total sales and marketing expenses improved by 200 basis points to 30% in 2024 from 32% in 2023.

As a percentage of net sales, total sales and marketing expenses improved to 27% in 2025 from 30% in 2024, reflecting improved operating leverage.

Changes in sales and marketing expense, as a percentage of net sales, were primarily driven by the following:

• For our consumer products segment, sales and marketing expenses increased by $2.7 million to $28.7 million in 2024 compared to $26.0 million in 2023, remaining at 37% of net sales in both years.

◦ Advertising expenses increased by $0.8 million to $11.1 million in 2024 from $10.3 million in 2023.

However, as a percentage of net sales, advertising expenses declined by 100 basis points to 14% in 2024, reflecting a higher return on advertising spend.

◦ Marketing expenses increased by $1.0 million to $8.3 million in 2024 compared to $7.4 million in 2023, while remaining at 11% of net sales in both years.

The increase was driven by higher investments in public relations, headcount, website developments and promotional activities.

• For our consumer products segment, sales and marketing expenses increased by $6.2 million to $34.9 million in 2025 compared to $28.7 million in 2024.

As a percentage of net sales, these expenses decreased to 36% of net sales in 2025 from 37% in 2024.

The increase in spending was primarily driven by higher marketing investments, including public relations activities, personnel-related costs, professional services, and promotional initiatives, as well as increased advertising spend.

Advertising expenses increased by $1.6 million compared to 2024;

however, advertising expense as a percentage of net sales improved by 100 basis points to 13%, reflecting improved efficiency of advertising spend.

Selling expenses increased by $1.5 million to $10.8 million in 2025 compared to $9.3 million in 2024.

As a percentage of net sales, selling expenses remained at 12%, consistent with 2023.

• For our ingredients segment, sales and marketing expense increased to $235,000 in 2024 from $52,000 in 2023, reflecting increased promotional activities as well as the launch of the pharmaceutical-grade Niagen® ingredient.

As a percentage of net sales, sales and marketing expenses remained low at 1%.

◦ Marketing expenses increased to $195,000 in 2024 due to efforts in building brand awareness for the Niagen Plus product line featuring pharmaceutical-grade Niagen®.

◦ Selling expenses decreased in 2024 from 2023, though they remained minimal in absolute dollars and as a percentage of net sales.

• For our analytical reference standards and services segment, sales and marketing expense increased to $501,000 in 2024 from $372,000 in 2023.

As a percentage of net sales, these expenses increased by 400 basis points to 17% in 2024 from 13% in 2023.

◦ Marketing expenses decreased in 2024 from 2023, though they remained minimal in absolute dollars and as a percentage of net sales.

◦ Selling expenses increased by $135,000 to $497,000 in 2024 from $362,000 in 2023.

As a percentage of net sales, selling expenses increased by 500 basis points, primarily due to realignment of internal employee structures.

This realignment also contributed to improvements in cost efficiencies in cost of sales.

As a percentage of net sales, selling expenses decreased by 100 basis points to 11%, reflecting leverage from higher sales volumes.

• For our ingredients segment, sales and marketing expense remained approximately stable year-over-year at $0.2 million.

As a percentage of net sales, sales and marketing expenses remained nominal at 1%.

Year-over-year changes in sales and marketing expenses primarily reflected the timing of marketing activities, including higher marketing investment in 2024 related to the launch of our pharmaceutical-grade Niagen® ingredient.

Selling expenses increased modestly in 2025 compared to 2024 but remained minimal in absolute dollars and as a percentage of net sales.

• For our analytical reference standards and services segment, sales and marketing expense decreased to approximately $0.3 million in 2025 from $0.5 million in 2024.

As a percentage of net sales, these expenses decreased to 11% in 2025 from 17% in 2024.

The decrease was primarily driven by lower selling expenses, reflecting more efficient allocation of sales resources.

Marketing expenses also declined year-over-year and remained minimal in absolute dollars and as a percentage of net sales.

For our pharmaceuticals segment, no sales and marketing expenses were incurred in 2025 and 2024, as the segment remains in the research and development stage and has not yet commenced commercial activities.

Operating Expenses - Research and Development.

Research and development (R&D) expenses consist primarily of headcount, clinical trials, product development and process development expenses.

Research and development expenses by reportable segment were as follows:

Research and development (R&D) expenses consist primarily of personnel-related costs, clinical trials, product development, and process development expenses.

Prior-period amounts have been recast to conform to the current period segment presentation.

R&D expenses by reportable segment were as follows:

Year Ended December 31,

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Ingredients 930 873 7

Pharmaceuticals 2,234 1,759 27

Total R&D expenses $ 6,330 $ 6,016 5 %

• We allocate R&D expenses related to our Niagen® branded ingredient to the consumer products and ingredients segments based on recorded revenues.

For the year ended December 31, 2024, total R&D expenses increased by $1.1 million compared to 2023, reflecting increased investment in key R&D initiatives, including support for the launch of the Niagen Plus product line featuring pharmaceutical-grade Niagen®.

This increase was partially offset by a $0.3 million refund related to a discontinued R&D project.

• R&D expenses in our pharmaceuticals segment increased by $0.5 million for the year ended December 31, 2025 compared to 2024.

This increase primarily reflects continued research and development of an NAD+ precursor-based candidate for potential therapeutic applications in rare diseases.

• The remaining R&D expenses related to our Niagen® branded ingredient are allocated to the consumer products and ingredients segments based on recorded revenues.

For the year ended December 31, 2025, total R&D expenses allocated to consumer products and ingredients segments decreased by $0.2 million compared to 2024.

Operating Expenses - General and Administrative.

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General and administrative $ 27,057 $ 18,375 47 %

Total general and administrative expenses decreased by $6.6 million, or 26%, for the year ended December 31, 2024, compared to 2023.

This decrease was primarily driven by a $3.7 million net reduction in royalty expenses due to the reversal of previously recognized royalties, a $2.2 million reduction in credit loss expense resulting from a recovery of credit losses compared to higher provisions in the prior year, and a $1.5 million decrease in executive and administrative wages.

These reductions were partially offset by a $0.8 million increase in professional and consulting service expenses.

For additional details regarding the reversed royalty expense and recovery of credit losses see Note 16, Commitments and Contingencies, under the headings Royalties and Legal Proceedings, respectively in the Notes to the Consolidated Financial Statements, included in Part II, Item 8 of this Form 10-K.

Nonoperating income - Interest Income, net.

Total general and administrative expenses increased by $8.7 million, or 47%, for the year ended December 31, 2025, compared to 2024.

The increase was primarily driven by $3.8 million in higher employee-related expenses and share-based compensation, $1.5 million in increased professional and consulting fees, and $2.9 million in higher royalty expense, with the remainder attributable to increases across various general and administrative cost categories.

The increase in royalty expense was primarily due to the absence of a $3.5 million reversal of previously accrued royalties and license maintenance fees recognized in the year ended December 31, 2024.

Operating income - Gain on settlement of royalty obligation.

Operating income for the year ended December 31, 2025 consisted of a gain of approximately $2.0 million related to the settlement of royalty and license obligations in connection with the Assignment Agreement with Queen’s University Belfast.

Nonoperating income (expenses).

Interest income, net consists of interest earned from bank deposit accounts and investments in money market funds managed by banks less interest expenses from the line of credit arrangement and finance leases.

Interest income, net totaled $2.1 million and $1.1 million for the years ended December 31, 2025 and 2024, respectively.

Additionally, nonoperating expenses included approximately $0.2 million related to the disallowance of previously claimed Employee Retention Tax Credits.

Net Income (Loss).

Net income (loss) is gross profit (loss) less total operating expenses plus nonoperating income, net.

Net income (loss) is gross profit less total operating expenses plus nonoperating income, net.

Since 2021, total net loss has improved from $(27.1) million to a net income of $17.4 million in 2025.

For the year ended December 31, 2024, net income (loss) improved $13.5 million, or 273%, compared to prior year ended December 31, 2023.

For the year ended December 31, 2025, net income improved $8.8 million, or 103%, compared to prior year ended December 31, 2024.

Depreciation and Amortization.

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The useful life of subsequent milestone payments that are capitalized match the remaining useful life of the initial licensing payment that was originally capitalized.

During the year ended December 31, 2023, we identified intangible assets which were impaired due to the cessation of use of certain intellectual properties, resulting in an impairment charge of $3,000 and the removal of the intangible balances from the gross asset and accumulated amortization amounts approximating $630,000 and $627,000, respectively.

Amortization expense of right-of-use assets for the year ended December 31, 2024 was $670,000 compared to $677,000 for the year ended December 31, 2023.

Noncash lease expense related to right-of-use assets for the year ended December 31, 2025 was $665,000 compared to $670,000 for the year ended December 31, 2024.

Income Taxes.

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Trade Receivables.

As of December 31, 2024, we had approximately $7.8 million in trade receivables, reflecting an increase from approximately $5.2 million as of December 31, 2023.

The increase in trade receivables is primarily attributed to variations in the timing of customer orders and collections.

As of December 31, 2025, we had approximately $9.7 million in trade receivables, compared to approximately $7.8 million as of December 31, 2024.

The increase in trade receivables is primarily attributable to higher net sales during the year ended December 31, 2025.

As of December 31, 2025, we had approximately $20.4 million in inventory, compared to approximately $9.2 million as of December 31, 2024.

As of December 31, 2024, our inventory consisted of approximately $7.9 million of consumer products, $0.8 million of bulk ingredients and $0.5 million of reference standards.

The increase in inventory is primarily due to higher inventory levels maintained to support business growth and to build adequate reserves to meet increased demand.

As of December 31, 2025, our inventory consisted of approximately $13.0 million of consumer products and $7.5 million of bulk ingredients.

Consumer products inventory consists of Tru Niagen® branded finished bottles of dietary supplement products and related work-in-process inventory.

Bulk ingredients are proprietary compounds sold to customers in larger quantities, typically in kilograms.

These ingredients are used by our customers in the dietary supplement, food and beverage industries to manufacture their final products and 503B outsourcing facilities which are able to compound our ingredient into intravenous and injectable forms.

Reference standards are small quantities of plant-based compounds typically used to research an array of potential attributes or for quality control purposes.

The Company boasts an extensive catalog featuring a wide array of phytochemicals and botanical reference materials.

Our on hand inventory includes a variety of these substances, stocked in small quantities predominantly measured in grams and milligrams.

The Company regularly reviews inventories on hand and reduces the carrying value for slow-moving and obsolete inventory, inventory not meeting quality standards and inventory subject to expiration.

The reduction of the carrying value for slow-moving and obsolete inventory is based on current estimates of future product demand, market conditions and related management judgment.

Bulk ingredients are proprietary compounds sold to customers in larger quantities, typically in kilograms, for use in the dietary supplement, food and beverage industries, as well as by 503B outsourcing facilities that compound our pharmaceutical-grade ingredient into intravenous and injectable forms.

We regularly review inventories on hand and reduce the carrying value for slow-moving and obsolete inventory, inventory not meeting quality standards, and inventory subject to expiration.

Reductions in carrying value are based on current estimates of future product demand, market conditions and related management judgment.

Any significant unanticipated changes in future product demand or market conditions that vary from current expectations could have an impact on the value of inventories.

We strive to optimize our supply chain as we constantly search for better and more reliable sources and suppliers.

By doing so, we believe we can lower the costs of our inventory and yield higher gross profit.

In addition, we continuously work with our suppliers and partners to develop more efficient manufacturing methods in an effort to lower the costs of our inventory.

We continuously evaluate our supply chain and work with suppliers and manufacturing partners to improve sourcing and manufacturing efficiency, which we believe supports inventory cost management and gross margin performance.

Accounts Payable.

As of December 31, 2024, we had $8.5 million in accounts payable compared to approximately $10.2 million as of December 31, 2023 driven by the timing of purchases and payments to our vendors.

As of December 31, 2025, we had $10.8 million in accounts payable compared to approximately $8.5 million as of December 31, 2024.

The increase was primarily driven by higher accounts payable to inventory suppliers, reflecting increased inventory purchases, as well as changes in the timing of purchases and payments to our vendors.

Liquidity and Capital Resources

For the year ended December 31, 2025, we recorded a net income of approximately $17.4 million and operating activities provided cash of $13.5 million.

However, from inception through December 31, 2024, we have incurred aggregate losses of $181.9 million.

These losses are primarily due to expenses associated with the development and expansion of our operations and investments to protect our intellectual property, including litigation-related expenses.

Historically, these operations have been financed through capital contributions, primarily through the issuance of common stock in private placements, and cash generated from sales.

Our board of directors periodically reviews our capital requirements in light of our proposed business plan.

Our future capital requirements will be influenced by several factors, including cash flows from operations, sales growth, optimized gross profit margins, reduced selling and marketing expense as a percentage of net sales, continued customer relationship development, and the ability to successfully market new and existing products.

However, based on our results from operations, we may determine that we need additional financing to implement our long-term business plan.

There can be no assurance that any such financing will be available on terms favorable to us or at all.

Without adequate financing we may have to delay or terminate product and service expansion and curtail certain selling, general and administrative expenses.

Any inability to raise additional financing would have a material adverse effect on us.

While from inception through December 31, 2025 we have incurred aggregate losses of $164.5 million, these losses were primarily due to expenses associated with the development and expansion of our operations and investments to protect our intellectual property, including litigation-related expenses.

Historically, our operations were financed primarily through capital contributions, including the issuance of common stock in private placements, as well as cash generated from sales.

As our operating results and cash generation have improved, our liquidity profile has strengthened.

Our board of directors periodically reviews our capital requirements in light of our operating performance, growth initiatives, and long-term business objectives.

Our future capital requirements will be influenced by several factors, including cash flows from operations, sales growth, gross margin performance, planned investments in research and development and commercialization activities, and the timing and scale of potential strategic initiatives.

While we currently expect to fund our operations primarily through existing cash resources and cash generated from operations, we may, from time to time, consider additional financing to support strategic investments or growth opportunities.

Any such financing may include equity or debt financings, collaborative arrangements, or other sources of capital.

As of December 31, 2025, our cash and cash equivalents totaled approximately $64.8 million, including $152,000 of restricted cash.

Our cash and cash equivalents as of December 31, 2025 consisted of bank deposits and short-term investments of highly liquid investment-grade debt instruments with an original maturity of three months or less.

Additionally, as of December 31, 2024, we had purchase obligations of approximately $11.2 million related to inventory purchase commitments and approximately $2.9 million related to future minimum lease obligations to be paid over six months and four years, respectively.

In addition, as of December 31, 2025, we had purchase obligations of approximately $23.4 million related to inventory purchase commitments and approximately $3.2 million related to future minimum lease obligations to be paid over twelve months and five years, respectively, as well as fixed, unconditional deferred consideration obligations of approximately $9.5 million and £0.4 million payable through 2038 in connection with the assignment of certain patent rights.

As of December 31, 2025 and 2024, we had no material off-balance sheet arrangements and no borrowings outstanding under our line of credit.

We anticipate that our current unrestricted cash and cash equivalents and cash to be generated from net sales will be sufficient to meet our financial obligations as they become due over at least the next twelve months and beyond.

However, we may seek additional funds to support both our short-term and long-term operating objectives, either through additional equity or debt financings or collaborative agreements or from other sources.

As a result of various macroeconomic factors such as rising interest rates, inflation, bank failures and geopolitical uncertainties, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability.

There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur.

If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

We believe that our current unrestricted cash and cash equivalents, together with cash expected to be generated from operations will be sufficient to meet our financial obligations as they become due over at least the next twelve months and beyond.

Net cash provided by operating activities.

Cash provided by operating activities is net income (loss) adjusted for certain non-cash items and changes in operating assets and liabilities.

Net cash provided by operating activities was $12.1 million for the year ended December 31, 2024, compared to $7.1 million for the year ended December 31, 2023, representing an increase of $5.0 million.

This improvement was primarily driven by a $13.5 million increase in net income, partially offset by a $3.5 million reversal of previously accrued royalties, a $2.2 million reduction in credit loss expense due to a recovery of credit losses compared to higher provisions in the prior year, and a $3.5 million relative increase in trade receivables.

We expect operating cash flows to fluctuate in future periods due to variations in operating results, shipment schedules, trade receivable collections, inventory management, and payment timing, among other factors.

Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities.

Net cash provided by operating activities was $13.5 million for the year ended December 31, 2025, compared to $12.1 million for the year ended December 31, 2024, increasing $1.4 million.

Operating cash flow for the year ended December 31, 2025 was driven by improved operating results, partially offset by increased investment in working capital.

Net income for the year ended December 31, 2025 was $17.4 million, compared to $8.6 million in 2024.

Net income was adjusted for several non-cash items, including $6.1 million of share-based compensation expense and a $2.0 million gain on the settlement of previously accrued royalty obligations related to the Queen’s University Belfast patent assignment.

In addition, the reversal of previously accrued royalty and license maintenance fees in 2024 did not recur in 2025.

Changes in working capital resulted in a net use of cash during 2025, primarily driven by inventory and accounts payable.

Increased inventory purchases resulted in an $11.6 million use of cash during the year, reflecting higher inventory levels maintained to support business growth.

This compares to a $5.3 million source of cash in 2024, when inventory balances declined.

The increase in inventory was partially offset by a $2.3 million source of cash from higher accounts payable balances, primarily related to inventory suppliers.

Changes in prepaid expenses, deferred revenue, and other operating assets and liabilities had a less significant impact on operating cash flows.

Net cash used in investing activities.

Investing cash flows consist primarily of capital expenditures and investment activities.

Net cash used in investing activities was approximately $0.1 million for each of the years ended December 31, 2024 and 2023.

Net cash used in investing activities was approximately $0.3 million for the years ended December 31, 2025, compared to $0.1 million for the years ended December 31, 2024.

Net cash provided by financing activities.

Financing cash flows consist primarily of exercise of stock options through employee equity incentive plans and repayment of short-term and long-term debt.

Net cash provided by financing activities was $5.4 million for the year ended December 31, 2024, compared to net cash used in financing activities of $0.1 million for the year ended December 31, 2023.

The increase was primarily driven by $5.4 million in proceeds from stock option exercises in 2024, compared to no exercise activity in 2023.

Financing cash flows consist primarily of exercise of stock options through employee equity incentive plans and shares repurchases.

Net cash provided by financing activities was $6.9 million for the year ended December 31, 2025, compared to $5.4 million for the year ended December 31, 2024, representing an increase of $1.5 million.

The increase in net cash provided by financing activities was primarily driven by a $1.8 million increase in proceeds from stock option exercises in 2025, partially offset by a $0.3 million of common stock repurchase in 2025.

Dividend Policy

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Any change in our dividend policy is within the discretion of our board of directors and will depend, among other things, on our earnings, debt service and capital requirements, restrictions in financing agreements, if any, business conditions, legal restrictions and other factors that our board of directors deems relevant.

Stock Repurchase Program

On November 6, 2025, our board of directors approved a share repurchase program (the “Share Repurchase Program”) authorizing the Company to repurchase up to $10.0 million of its common stock.

The Share Repurchase Program expires October 31, 2027, and may be modified, suspended, or discontinued at any time.

During the three months ended December 31, 2025, the Company repurchased 35,840 shares of common stock under the Share Repurchase Program for aggregate purchases of approximately $0.3 million.

Critical Accounting Estimates

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As of December 31, 2025 and 2024, we held deferred revenue balances of $2.7 million and $2.6 million, respectively.

We may periodically enter into bill-and-hold arrangements upon request by certain customers according to the terms in the contract.

Under the terms, the customer makes a fixed commitment to purchase our goods, however the customer delays the physical transfer of the goods until a later date.

In such instances, revenue is recognized when a customer obtains control of the promised goods and we have satisfied all of our performance obligations.

We consider indicators of the transfer of control, which include, but are not limited to, the following:

(i) we have a present right to payment for the asset, (ii) the customer has legal title to the asset, (iii) we have transferred physical possession of the asset, (iv) the customer has the significant risks and rewards of ownership of the asset and (v) the customer has accepted the asset.

In addition, all of the following criteria in a bill-and-hold arrangement must be met to further indicate a customer has obtained control of the goods:

(i) the reason for the bill-and-hold arrangement must be substantive, (ii) the requested goods must be identified separately as belonging to the customer, (iii) the requested goods must be ready for physical transfer to the customer, and (iv) we cannot have the ability to use the goods or direct the goods to another customer.

We recognized no revenue under bill-and-hold arrangements during each of the years ended December 31, 2024 and 2023.

Quantitative and Qualitative Disclosures About Market Risk

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What changed 10-K

Item 7. Management’s Discussion and Analysis