What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-03 compared with 2021-05-06 · 287 added, 145 removed, 443 unchanged (49% of the section changed)

1 unchanged sentence

ChromaDex Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

March 31, 2021 and December 31, 2020

(In thousands, except per share data)

Unaudited Condensed Consolidated Balance Sheets

Jun 30, 2021 Dec 31, 2020

(In thousands except par values, unless otherwise indicated)

Current assets

Cash, including restricted cash of $ 0.2 million and $ 0.2 million, respectively

Cash, including restricted cash of $ 0.2 million for both periods

$ 38,778 $ 16,697

Trade receivables, net of allowances of $ 0.1 million and $ 0.2 million, respectively;

Receivables from Related Party:

Including receivables from Related Party of:

$ 2.2 million and $ 0.9 million, respectively.

Inventories 12,183 11,683

Prepaid expenses and other assets 972 1,145

4 unchanged sentences

Other long-term assets 617 625

Total assets $ 65,842 $ 38,358

Liabilities and Stockholders' Equity

14 unchanged sentences

authorized 150,000 shares;

issued and outstanding March 31, 2021 67,702 shares and December 31, 2020 61,881 shares

68,009 shares and 61,881 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively.

Additional paid-in capital 196,848 158,190

3 unchanged sentences

Total liabilities and stockholders' equity $ 65,842 $ 38,358

See Notes to Consolidated Financial Statements.

See accompanying notes to consolidated financial statements.

ChromaDex Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

For the Three Month Periods Ended March 31, 2021 and March 31, 2020

Unaudited Condensed Consolidated Statements of Operations

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands, except per share data)

Sales, net $ 17,699 $ 15,287 $ 32,382 $ 29,632

Cost of sales 6,889 6,199 12,338 12,233

Gross profit 10,810 9,088 20,044 17,399

Operating expenses:

2 unchanged sentences

General and administrative 9,128 6,921 18,679 15,866

Operating expenses

Total operating expenses 16,364 12,775 32,960 26,976

Operating loss ( 5,554 ) ( 3,687 ) ( 12,916 ) ( 9,577 )

Nonoperating expense:

Interest expense, net ( 12 ) ( 24 ) ( 31 ) ( 36 )

Nonoperating expense

Net loss $ ( 5,566 ) $ ( 3,711 ) $ ( 12,947 ) $ ( 9,613 )

Basic and diluted loss per common share $ ( 0.08 ) $ ( 0.06 ) $ ( 0.20 ) $ ( 0.16 )

Basic and diluted weighted average common shares outstanding 67,986 60,906 66,086 60,344

See Notes to Consolidated Financial Statements.

See accompanying notes to consolidated financial statements.

ChromaDex Corporation and Subsidiaries

Condensed Consolidated Statement of Stockholders' Equity

For the Three Month Periods Ended March 31, 2021 and March 31, 2020

Unaudited Condensed Consolidated Statement of Stockholders' Equity

(In thousands)

Paid-in Capital

Three Months Ended June 30, 2021

Common Stock Additional

Paid-in Capital Accumulated

Deficit Cumulative

Adjustments Total

Stockholders'

Balance, January 1, 2021

$ ( 141,825 )

Shares Amount

Balance, March 31, 2021 67,702 $ 68 $ 192,972 $ ( 149,206 ) $ ( 2 ) $ 43,832

Issuance of common stock, net of offering costs of $ 0.3 million

213 — 1,869 — — 1,869

Exercise of stock options 94 — 391 — — 391

Share-based compensation — — 1,616 — — 1,616

Balance, March 31, 2021

$ ( 149,206 )

Paid-in Capital

Translation adjustment — — — — — —

Net loss — — — ( 5,566 ) — ( 5,566 )

Balance, June 30, 2021 68,009 $ 68 $ 196,848 $ ( 154,772 ) $ ( 2 ) $ 42,142

Six Months Ended June 30, 2021

Common Stock Additional

Paid-in Capital Accumulated

Deficit Cumulative

Adjustments Total

Stockholders'

Shares Amount

Balance, January 1, 2021 61,881 $ 62 $ 158,190 $ ( 141,825 ) $ ( 3 ) $ 16,424

Issuance of common stock, net of offering costs of $ 0.4 million

4,059 4 26,736 — — 26,740

1 unchanged sentence

Share-based compensation — — 2,900 — — 2,900

Translation adjustment — — — — 1 1

Net loss — — — ( 12,947 ) — ( 12,947 )

Balance, June 30, 2021 68,009 $ 68 $ 196,848 $ ( 154,772 ) $ ( 2 ) $ 42,142

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statement of Stockholders' Equity - (continued)

(In thousands)

Three Months Ended June 30, 2020

Common Stock Additional

Paid-in Capital Accumulated Deficit Cumulative Translation Adjustments Total Stockholders' Equity

Shares Amount

Balance, March 31, 2020 59,605 $ 60 $ 144,290 $ ( 127,802 ) $ — $ 16,548

Issuance of common stock, net of offering costs of $ 0.1 million

1,225 1 4,855 4,856

See Notes to Consolidated Financial Statements.

Exercise of stock options 591 — 2,180 — — 2,180

Share-based compensation — — 1,711 — — 1,711

Translation adjustment — — — — ( 3 ) ( 3 )

Net loss — — — ( 3,711 ) ( 3,711 )

Balance, June 30, 2020 61,421 $ 61 $ 153,036 $ ( 131,513 ) $ ( 3 ) $ 21,581

Six Months Ended June 30, 2020

Common Stock Additional

Paid-in Capital Accumulated Deficit Cumulative Translation Adjustments Total Stockholders' Equity

Shares Amount

Balance, January 1, 2020 59,562 $ 60 $ 142,285 $ ( 121,900 ) $ — $ 20,445

Issuance of common stock, net of offering costs of $ 0.1 million

1,225 1 4,855 4,856

Exercise of stock options 634 — 2,312 — — 2,312

Share-based compensation — — 3,584 — — 3,584

Translation adjustment — — — — ( 3 ) ( 3 )

Net loss — — — ( 9,613 ) ( 9,613 )

Balance, June 30, 2020 61,421 $ 61 $ 153,036 $ ( 131,513 ) $ ( 3 ) $ 21,581

See accompanying notes to consolidated financial statements.

ChromaDex Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Three Month Periods Ended March 31, 2021 and March 31, 2020

Unaudited Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

(In thousands)

Cash Flows From Operating Activities

Net loss $ ( 12,947 ) $ ( 9,613 )

Adjustments to reconcile net loss to net cash used in operating activities:

3 unchanged sentences

Share-based compensation expense 2,900 3,584

Allowance for doubtful trade receivables

Change in allowance for doubtful trade receivables 26 ( 2,730 )

Non-cash financing costs 57 51

1 unchanged sentence

Trade receivables ( 3,331 ) 952

Inventories ( 500 ) ( 804 )

Implementation costs for cloud computing arrangement ( 79 ) —

2 unchanged sentences

Accrued expenses ( 564 ) 830

Deferred revenue — ( 53 )

Customer deposits and other ( 68 ) 78

11 unchanged sentences

Net cash provided by financing activities 35,692 6,977

Net increase (decrease) in cash

Cash Beginning of Period, including restricted cash of $0.2 million for both 2021 and 2020

Cash Ending of Period, including restricted cash $0.2 million for both 2021 and 2020

Net increase in cash 22,081 78

Cash, including restricted cash of $ 0.2 million for both 2021 and 2020 - beginning of period

16,697 18,812

Cash, including restricted cash of $ 0.2 million for both 2021 and 2020 - end of period

$ 38,778 $ 18,890

Supplemental Disclosures of Cash Flow Information

Cash payments for interest on finance leases $ 1 $ 9

Supplemental Schedule of Noncash Operating Activity

Right-of-use assets and operating lease obligations incurred for entering into lease amendment $ 2,209 $ —

Supplemental Schedule of Noncash Investing Activity

Financing lease obligation incurred for purchase of computer equipment and software $ — $ 47

See Notes to Consolidated Financial Statements.

See accompanying notes to consolidated financial statements.

Interim Financial Statements

The accompanying financial statements of ChromaDex Corporation and its wholly-owned subsidiaries, ChromaDex, Inc., ChromaDex Analytics, Inc., ChromaDex Asia Limited and ChromaDex Europa B.V.

(collectively referred to herein as “ChromaDex” or the “Company” or, in the first person as “we”, “us” and “our”) include all adjustments, consisting of normal recurring adjustments and accruals, that, in the opinion of the management of the Company, are necessary for a fair presentation of the Company’s financial position as of March 31, 2021 and results of operations and cash flows for the three months ended March 31, 2021 and March 31, 2020.

(collectively referred to herein as “ChromaDex” or the “Company”) include all adjustments, consisting of normal recurring adjustments and accruals, that, in the opinion of the management of the Company, are necessary for a fair presentation of the Company’s financial position as of June 30, 2021 and results of operations and cash flows for the three and six months ended June 30, 2021 and June 30, 2020.

These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2020 appearing in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “Commission”) on March 12, 2021.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results to be achieved for the full year ending on December 31, 2021.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be achieved for the full year ending on December 31, 2021.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.

Actual results could differ from those estimates.

The balance sheet at December 31, 2020 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.

The balance sheet at December 31, 2020 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted.

Nature of Business

5 unchanged sentences

The Company also has analytical reference standards and services segment, which focuses on natural product fine chemicals (known as “phytochemicals”) and related chemistry services.

The Company's net cash outflow from operating activities was approximately $ 5.4 million for the three-month period ended March 31, 2021.

As of March 31, 2021, cash and cash equivalents totaled approximately $ 44.7 million, which includes restricted cash of approximately $ 0.2 million.

The Company's net cash outflow from operating activities was approximately $ 13.3 million for the six months ended June 30, 2021.

As of June 30, 2021, cash and cash equivalents totaled approximately $ 38.8 million, which includes restricted cash of approximately $ 0.2 million.

The Company anticipates that its current cash, cash equivalents, and available line of credit up to $ 7.0 million from Western Alliance Bank will be sufficient to meet its projected operating plans through at least the next twelve months from the issuance date of these financial statements.

The Company may, however, seek additional capital within the next twelve months, both to meet its projected operating plans within the next twelve months and/or to fund its longer-term strategic objectives.

In June 2020, we filed a $ 125.0 million registration statement on Form S-3 with the Commission, utilizing a “shelf” registration process.

Under this shelf registration process, we may sell securities from time to time, including up to $ 50.0 million pursuant to the At Market Issuance Sales Agreement, dated as of June 12, 2020, with B.

In June 2020, the Company filed a $ 125 million registration statement on Form S-3 with the Commission, utilizing a “shelf” registration process.

Under this shelf registration process, the Company may sell securities from time to time, including up to $ 50 million pursuant to the At Market Issuance Sales Agreement, dated as of June 12, 2020, with B.

Riley FBR, Inc.

1 unchanged sentence

(the “ATM Facility”).

As of March 31, 2021, we have not sold any securities pursuant to the ATM Facility.

During the three months ended June 30, 2021, the Company sold an aggregate of 0.2 million shares of its common stock under the ATM Facility resulting in proceeds of $ 1.9 million, net of offering costs of $ 0.3 million.

The shares sold at an average price of $ 10.56 per share.

As of June 30, 2021, approximately $ 47.8 million remains available under the ATM Facility.

Significant Accounting Policies

3 unchanged sentences

The Company’s fiscal year ends on December 31.

Recent accounting standards :

In June 2016, the Financial Accounting Standards Board issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Reclassifications — Certain prior period results have been reclassified to be consistent with the current period presentation.

Recent Accounting Pronouncements:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

9 unchanged sentences

Public entities that qualify as a smaller reporting company can elect to defer compliance effective for fiscal years beginning after December 15, 2022.

We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our consolidated financial statements.

The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements.

Earnings Per Share Applicable to Common Stockholders

The following table sets forth the computations of earnings per share amounts applicable to common stockholders for the three months ended March 31, 2021 and March 31, 2020:

Three Months Ended

The following table sets forth the computations of earnings per share amounts applicable to common stockholders for the three and six months ended June 30, 2021 and June 30, 2020:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands, except per share data) 2021 2020 2021 2020

Net loss $ ( 5,566 ) $ ( 3,711 ) $ ( 12,947 ) $ ( 9,613 )

Basic and diluted loss per common share $ ( 0.08 ) $ ( 0.06 ) $ ( 0.20 ) $ ( 0.16 )

Basic and diluted weighted average common shares outstanding (1):

67,986 60,906 66,086 60,344

Potentially dilutive securities (2):

1 unchanged sentence

Restricted stock units 92 — 92 —

______________

(1) Includes approximately 0.2 million and 0.2 million nonvested shares of restricted stock for the periods ending Mar.

31, 2021 and Mar.

31, 2020, respectively, which are participating securities that feature voting and dividend rights.

(1) Includes approximately 0.2 million and 0.2 million nonvested shares of restricted stock for the periods ending June 30, 2021 and June 30, 2020, respectively, which are participating securities that feature voting and dividend rights.

(2) Excluded from the computation of loss per share as their impact is antidilutive.

Related Party Transactions

Sale of consumer products

Three months ended

Trade receivable at

$ 1.6 million

$ 1.8 million

$ 1.3 million

$ 0.9 million

Watson Group is a related party through common ownership of an enterprise that beneficially owns more than 10% of the common stock of the Company.

The amounts of major classes of inventory as of March 31, 2021 and December 31, 2020 are as follows:

(In thousands)

The sale of consumer products to related parties during the periods indicated are as follows:

Net Sales Trade Receivable as of

Three Months Ended June 30, Six Months Ended June 30, June 30, December 31,

2021 2020 2021 2020 2021 2020

Watson Group* $ 2.9 million $ 1.3 million $ 4.5 million $ 3.1 million $ 2.2 million $ 0.9 million

Horizon Ventures (1)

— $ 1.6 million — $ 1.6 million — —

Total $ 2.9 million $ 2.9 million $ 4.5 million $ 4.7 million $ 2.2 million $ 0.9 million

Watson Group and Horizon Ventures are related parties through common ownership of an enterprise that beneficially owns more than 10% of the common stock of the Company.

(1) During the second quarter of 2020, Horizon Ventures made purchases to donate to the healthcare workers in Hong Kong hospitals.

Horizon Ventures had insignificant sales during the second quarter of 2021.

The Company's major classes of inventory and corresponding balances as of June 30, 2021 and December 31, 2020 are as follows:

(In thousands) Jun 30, 2021 Dec 31, 2020

Consumer Products - Finished Goods $ 4,259 $ 2,358

2 unchanged sentences

Reference standards 518 542

$ 12,183 $ 11,683

Stock Issuance

On February 20, 2021, the Company entered into a Securities Purchase Agreement with EverFund (the "Financing”) pursuant to which the Company agreed to sell and issue approximately 3.8 million of common stock at a price of $ 6.50 per share.

During June 2021, the Company sold an aggregate of 0.2 million shares of common stock under the ATM Facility and received proceeds of $ 1.9 million, net of offering costs and commissions, at an average price of $ 10.56 per share.

For additional information related to the ATM facility transaction see Note 3, Liquidity .

On February 23, 2021, the Company closed the Financing and received proceeds of $ 24.9 million, net of offering costs.

Operating Leases

As of March 31, 2021, the Company had right of use assets stemming from operating leases of approximately $ 1.1 million, and corresponding operating lease liabilities of approximately $ 1.4 million.

For the three months ended March 31, 2021 and March 31, 2020, the following were expenses incurred in connection with our operating leases:

During the second quarter of 2021, the Company amended its existing lease in Los Angeles, California.

In accordance with ASC 842, the amended lease agreement is considered to be modified and subject to lease modification guidance.

The right-of-use ("ROU") asset and lease liability related to the agreement were remeasured based on the change in the lease conditions such as rent payment and lease terms.

The fair value of the increase in related lease liability and ROU asset is estimated to be approximately $ 2.2 million.

The amended lease now extends through March 31, 2027 and provides one option to extend for an additional five years .

As of June 30, 2021, the Company had ROU assets and corresponding operating lease liabilities of approximately $ 3.2 million and $ 3.5 million, respectively.

For the three and six months ended June 30, 2021 and 2020, the components of operating lease expense are as follows:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 2021 2020

5 unchanged sentences

Total expense $ 269 $ 249 $ 524 $ 501

At Jun 30, 2021

Weighted-average remaining lease term (years) operating leases 4.9

Weighted-average discount rate operating leases 6.5 %

Minimum future lease payments under operating leases as of March 31, 2021 are as follows:

(In thousands)

Nine Months Ending December 31, 2021

Year Ending December 31, 2022

Year Ending December 31, 2023

Year Ending December 31, 2024

Year Ending December 31, 2025

Future minimum lease payments under operating leases as of June 30, 2021 are as follows:

Year (In thousands)

2021 (Remainder)

Thereafter 144

Less present value discount ( 646 )

Operating lease liabilities

Present value of total operating lease liabilities 3,484

Less current portion ( 467 )

1 unchanged sentence

Share-Based Compensation

At the discretion of the compensation committee of the Board of Directors (the “Compensation Committee”), the Company may grant options to purchase the Company’s common stock, restricted stock units and other equity awards to certain individuals from time to time.

Management and the Compensation Committee determine the terms of awards which include the exercise price, vesting conditions and expiration dates at the time of grant.

Expiration dates for stock options are not to exceed 10 years from their date of issuance.

The Company grants awards to recipients through the 2017 Equity Incentive Plan, as amended (the “2017 Plan”), which was approved by stockholders and the Board of Directors.

As of March 31, 2021, under the 2017 Plan, the Company is authorized to issue shares subject to awards that total no more than the sum of (i) 14,500,000 new shares, (ii) approximately 384,000 unallocated shares remaining available for the grant of new awards under the Second Amended and Restated 2007 Equity Incentive Plan, (iii) any returning shares such as forfeited, cancelled, or expired shares and (iv) 500,000 shares pursuant to an inducement award.

The remaining number of shares available for issuance under the 2017 Plan totaled approximately 5.6 million shares at March 31, 2021.

The 2017 Plan provided for the issuance of shares that total no more than the sum of (i) 14,500,000 new shares, (ii) approximately 384,000 unallocated shares remaining available for the grant of new awards under the Second Amended and Restated 2007 Equity Incentive Plan, (iii) any returning shares such as forfeited, cancelled, or expired shares and (iv) 500,000 shares pursuant to an inducement award.

The number of shares available to be issued under the 2017 Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) 1.5 shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award).

As of June 30, 2021, there were approximately 5.1 million remaining shares available for issuance under this plan.

Options expire 10 years from the date of grant.

General Vesting Conditions

The stock option and restricted stock unit awards are generally subject to a one-year cliff vesting period after which 1/3 of the shares vest with the remaining shares vesting ratably over a two-year period subject to the passage of time.

However, some stock option awards are market or performance based and vest based on certain triggering events established by the Compensation Committee.

The fair value of the Company’s stock options that are not market based is estimated at the date of grant using the Black-Scholes option pricing model.

The table below outlines the weighted average assumptions for options granted during the three months ended March 31, 2021.

Three months Ended March 31, 2021

Expected term

Additionally, certain stock option awards are market or performance based and vest based on certain triggering events established by the Compensation Committee.

The fair value of the Company’s stock options that are not market based are estimated at the grant date using the Black-Scholes option pricing model.

The Company used the following weighted average assumptions for options granted during the six months ended June 30, 2021:

Weighted Average:

Six Months Ended June 30, 2021

Expected term 5.8 years

Expected volatility 74.2 %

2 unchanged sentences

Service Period Based Stock Options

The following table summarizes activity of service period-based stock options at March 31, 2021 and changes during the three months then ended (in thousands except per-share data and remaining contractual term):

The following table summarizes activity of service period-based stock options at June 30, 2021 and changes during the six months ended:

Weighted Average

Outstanding at Dec.

(In thousands except per-share data and remaining contractual term) Number of

Options Exercise

Price Remaining

Term (Years) Aggregate

Outstanding at December 31, 2020 10,833 $ 3.96 6.8

Options Granted 1,172 9.64

1 unchanged sentence

Options Forfeited ( 482 ) 4.42

Outstanding at Mar.

Exercisable at Mar.

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 9.34 , which is the closing price of the Company’s stock on the last day of business for the period ended March 31, 2021.

Outstanding at June 30, 2021 9,494 $ 4.55 6.9 $ 51,253 *

Exercisable at June 30, 2021 6,041 $ 3.66 5.6 $ 37,427 *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 9.86 , which is the closing price of the Company’s stock on the last day of business for the period ended June 30, 2021.

Performance Based Stock Options

1 unchanged sentence

If these performance criteria are not met, the compensation expenses are not recognized and the expenses that have been recognized will be reversed.

The following table summarizes performance based stock options activity at March 31, 2021 and changes during the three months then ended (in thousands except per share data and remaining contractual term):

The following table summarizes performance based stock options activity at June 30, 2021 and changes during the six months ended:

Weighted Average

Outstanding at Dec.

(In thousands except per share data and remaining contractual term) Number of

Options Exercise

Price Remaining

Term (Years) Aggregate

Outstanding at December 31, 2020 81 $ 4.34 3.1

Options Granted — —

1 unchanged sentence

Options Forfeited — —

Outstanding at Mar.

Exercisable at Mar.

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $9.34, which is the closing price of the Company’s stock on the last day of business for the period ended March 31, 2021.

Outstanding at June 30, 2021 41 $ 4.34 2.6 $ 226 *

Exercisable at June 30, 2021 41 $ 4.34 2.6 $ 226 *

Total Remaining Unamortized Compensation for Stock Options

As of March 31, 2021, there was approximately $ 10.0 million of total unrecognized compensation expense related to non-vested stock options granted under the plans.

As of June 30, 2021, there was approximately $ 11.5 million of total unrecognized compensation expense related to non-vested stock options granted under the plans.

That cost is expected to be recognized over a weighted average period of 2.1 years.

1 unchanged sentence

Restricted stock unit awards are generally subject to a one-year cliff vesting period after which 1/3 of the shares vest with the remaining shares vesting ratably over a two-year period subject to the passage of time.

The following table summarizes activity of restricted stock unit awards granted at March 31, 2021 and changes during the three months then ended (in thousands except per share fair value):

Unvested shares at Dec.

Unvested shares at Mar.

Expected to Vest as of Mar.

The following table summarizes activity of restricted stock unit awards granted at June 30, 2021 and changes during the six months ended:

(In thousands except per share fair value) Number of RSUs Weighted

Unvested shares at December 31, 2020 — $ —

Granted 92 11.83

Forfeited — —

Unvested shares at June 30, 2021 92 $ 11.83

Expected to vest at June 30, 2021 92 $ 11.83

Total Share-Based Compensation

Total share-based compensation expenses were as follows:

Three months ending

Total share-based compensation expense was as follows:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 2021 2020

4 unchanged sentences

General and administrative 884 1,293 1,602 2,763

Total $ 1,616 $ 1,711 $ 2,900 $ 3,584

Business Segments

The Company has the following three reportable segments for the three-month period ended March 31, 2021:

The Company has the following three reportable segments:

• Consumer products segment:

5 unchanged sentences

The “Corporate and other” classification includes corporate items not allocated by the Company to each reportable segment.

Further, there are no intersegment sales that require elimination.

Additionally, there are no intersegment sales that require elimination.

The Company’s three reportable segments are significant operating segments that offer differentiated services.

The Company evaluates performance and allocates resources based on reviewing gross margin by reportable segment.

Three months ended

Analytical Reference

March 31, 2021

Standards and

The following tables set forth financial information for the segments:

Three months ended June 30, 2021 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

Services segment

Net sales $ 15,396 $ 1,504 $ 799 $ — $ 17,699

Cost of sales 5,547 675 667 — 6,889

Gross profit 9,849 829 132 — 10,810

Operating expenses:

4 unchanged sentences

Operating income (loss) $ 2,733 $ 750 $ 91 $ ( 9,128 ) $ ( 5,554 )

Three months ended

Analytical Reference

March 31, 2020

Standards and

Three months ended June 30, 2020 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

Services segment

Net sales $ 11,720 $ 2,850 $ 717 $ — $ 15,287

Cost of sales 4,339 1,135 725 — 6,199

Gross profit 7,381 1,715 ( 8 ) — 9,088

Operating expenses:

4 unchanged sentences

Operating income (loss) $ 1,873 $ 1,509 $ ( 148 ) $ ( 6,921 ) $ ( 3,687 )

Analytical Reference

At March 31, 2021

Standards and

Six Months Ended June 30, 2021 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

Services segment

Analytical Reference

At December 31, 2020

Standards and

Net sales $ 27,833 $ 2,819 $ 1,730 $ — $ 32,382

Cost of sales 9,750 1,238 1,350 — 12,338

Gross profit 18,083 1,581 380 — 20,044

Operating expenses:

Sales and marketing 12,301 11 178 — 12,490

Research and development 1,644 147 — — 1,791

General and administrative — — — 18,679 18,679

Operating expenses 13,945 158 178 18,679 32,960

Operating income (loss) $ 4,138 $ 1,423 $ 202 $ ( 18,679 ) $ ( 12,916 )

Six Months Ended June 30, 2020 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

Services segment

Net sales $ 22,864 $ 5,325 $ 1,443 $ — $ 29,632

Cost of sales 8,641 2,191 1,401 — 12,233

Gross profit 14,223 3,134 42 — 17,399

Operating expenses:

Sales and marketing 9,152 ( 8 ) 262 — 9,406

Research and development 1,453 251 — — 1,704

General and administrative — — — 15,866 15,866

Operating expenses 10,605 243 262 15,866 26,976

Operating income (loss) $ 3,618 $ 2,891 $ ( 220 ) $ ( 15,866 ) $ ( 9,577 )

At June 30, 2021 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

Total assets $ 16,510 $ 2,216 $ 832 $ 46,284 $ 65,842

At December 31, 2020 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

Total assets $ 11,567 $ 3,701 $ 802 $ 22,288 $ 38,358

Disaggregation of Revenue

We disaggregate our revenue from contracts with customers by type of goods or services for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

The Company disaggregates its revenue from contracts with customers by type of goods or services for each of its segments, as the Company believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

See details in the tables below.

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021 Consumer

Segment Ingredients

Segment Analytical Reference Standards

Segment Total

(In thousands)

Analytical Reference Standards

TRU NIAGEN , Consumer Product $ 15,396 $ — $ — $ 15,396

6 unchanged sentences

Total Net Sales $ 15,396 $ 1,504 $ 799 $ 17,699

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020 Consumer

Segment Ingredients

Segment Analytical Reference Standards

Segment Total

(In thousands)

Analytical Reference Standards

TRU NIAGEN , Consumer Product $ 11,720 $ — $ — $ 11,720

6 unchanged sentences

Total Net Sales $ 11,720 $ 2,850 $ 717 $ 15,287

Six Months Ended June 30, 2021 Consumer

Segment Ingredients

Segment Analytical Reference Standards

Segment Total

(In thousands)

TRU NIAGEN , Consumer Product $ 27,833 $ — $ — $ 27,833

NIAGEN Ingredient — 2,484 — 2,484

Subtotal NIAGEN Related $ 27,833 $ 2,484 $ — $ 30,317

Other Ingredients — 335 — 335

Reference Standards — — 1,495 1,495

Consulting and Other — — 235 235

Subtotal Other Goods and Services $ — $ 335 $ 1,730 $ 2,065

Total Net Sales $ 27,833 $ 2,819 $ 1,730 $ 32,382

Six Months Ended June 30, 2020 Consumer

Segment Ingredients

Segment Analytical Reference Standards

Segment Total

(In thousands)

TRU NIAGEN , Consumer Product $ 22,864 $ — $ — $ 22,864

NIAGEN Ingredient — 3,956 — 3,956

Subtotal NIAGEN Related $ 22,864 $ 3,956 $ — $ 26,820

Other Ingredients — 1,369 — 1,369

Reference Standards — — 1,359 1,359

Consulting and Other — — 84 84

Subtotal Other Goods and Services $ — $ 1,369 $ 1,443 $ 2,812

Total Net Sales $ 22,864 $ 5,325 $ 1,443 $ 29,632

Disclosure of Major Customers

Major customers who accounted for more than 10% of the Company’s total sales were as follows:

Three months ended

Three Months Ended June 30, Six Months Ended June 30,

Major Customers 2021 2020 2021 2020

Watson Group - Related Party 16.5 % * 13.8 % 10.6 %

Life Extension

Horizon Ventures - Related Party (1)

* Represents less than 10%.

(1) During the second quarter of 2020, Horizon Ventures made purchases to donate to the healthcare workers in Hong Kong hospitals.

Major accounts which had more than 10% of the Company’s total trade receivables were as follows:

Percentage of the Company's Total Trade Receivables

Major Customers

Major Customers At June 30,

2021 At December 31,

Watson Group - Related Party 37.5 % 31.9 %

Walmart ™ (1)

Matakana Health 11.5 % 11.1 %

2 unchanged sentences

* Represents less than 10%.

(1) The Company began retail distribution of Tru Niagen® in Walmart™ stores across the United States beginning in June 2021.

Commitments and Contingencies

48 unchanged sentences

On January 23, 2020, the court issued a scheduling order that, among other things, set trial on the remaining claims to begin on May 12, 2020.

On March 19, 2020, in light of the global COVID-19 pandemic and ongoing private mediation efforts, the parties jointly stipulated to adjourn the trial date.

On March 19, 2020, in light of the global 2019 coronavirus disease ("COVID-19" or "COVID") pandemic and ongoing private mediation efforts, the parties jointly stipulated to adjourn the trial date.

The court vacated the trial date on March 20, 2020.

68 unchanged sentences

Pursuant to the Court’s order, Elysium filed fourth amended counterclaims on April 21, 2021.

All discovery closed on April 23, 2021 and the deadline to submit the Joint Pretrial Report is June 22, 2021.

The Court vacated a previously scheduled trial date because of COVID-19, and the Court has informed the Parties that trial will be rescheduled for November or December 2021.

All discovery closed on April 23, 2021.

The Court vacated a previously scheduled joint pretrial order and trial date because of COVID-19, and the Court has informed the Parties that trial will be rescheduled for November or December 2021.

Both parties filed dispositive and Daubert motions on June 4, 2021.

Opposition papers were filed by both parties on June 25, 2021, and reply papers were filed on July 9, 2021.

The Company is unable to predict the outcome of these matters and, at this time, cannot reasonably estimate the possible loss or range of loss with respect to the legal proceedings discussed herein.

As of March 31, 2021, ChromaDex, Inc.

As of June 30, 2021, ChromaDex, Inc.

did not accrue a potential loss for the California Action or the Elysium SDNY Complaint because ChromaDex, Inc.

3 unchanged sentences

and Trustees of Dartmouth College filed a patent infringement complaint in the United States District Court for the District of Delaware against Elysium Health, Inc.

The complaint alleges that Elysium’s BASIS® dietary supplement violates U.S.

Patents 8,197,807 (the “‘807 Patent”) and 8,383,086 (the “‘086 Patent”) that comprise compositions containing isolated nicotinamide riboside held by Dartmouth and licensed exclusively to ChromaDex, Inc.

The complaint alleges that Elysium’s BASIS® dietary supplement infringes U.S.

8,197,807 (“‘807 Patent”) and 8,383,086 (“‘086 Patent”) that comprise compositions containing isolated nicotinamide riboside held by Dartmouth and licensed exclusively to ChromaDex, Inc.

On October 23, 2018, Elysium filed an answer to the complaint.

50 unchanged sentences

Trial is scheduled for September 27-30, 2021.

Thorne Research, Inc.

(A) Inter Partes Review Proceedings

On or around September 28, 2020, Thorne Research, Inc.

(“Thorne”) provided notice to ChromaDex, Inc.

that it intended to terminate its March 25, 2019 Supply Agreement and subsequent amendments with ChromaDex, Inc., effective as of December 31, 2020.

A discussion between ChromaDex, Inc.

and Thorne followed, and Thorne asserted that it could challenge the ‘086 Patent in an inter partes review (“IPR”) proceeding on the basis of prior art, but would be willing to enter into a mutual existence agreement that would permit Thorne to source NR from a third party.

Thorne did not offer substantive information supporting a prior art claim or about the nature of the threatened IPR.

On December 1, 2020, Thorne filed a petition for IPR of the ‘086 Patent.

Dartmouth’s preliminary response to the petition was filed on March 15, 2021.

On June 10, 2021, the Patent Trial and Appeal Board (“PTAB”) issued a decision instituting an IPR on the ‘086 Patent.

On February 1, 2021, Thorne filed a petition for IPR of the ‘807 Patent.

Dartmouth’s preliminary response to the petition was filed on May 18, 2021.

The PTAB’s institution decision is expected to be issued by August 18, 2021.

(B) Southern District of New York – Patent Infringement Action

On May 12, 2021, ChromaDex, Inc.

and Trustees of Dartmouth College filed a patent infringement complaint in the United States District Court for the Southern District of New York.

The complaint alleges that certain of Thorne’s dietary supplements containing isolated NR infringe the ‘807 and ‘086 Patents, which claim compositions containing isolated nicotinamide riboside and are held by Dartmouth and licensed exclusively to ChromaDex, Inc.

On July 6, 2021, Thorne filed an answer and counterclaims to the complaint.

The answer asserts various affirmative defenses and denies that Plaintiffs are entitled to any relief.

The counterclaims seek declaratory judgment of patent invalidity for the ‘807 and ‘086 Patents.

On July 8, 2021, the parties filed a proposed stipulation and order staying the matter pending issuance of the institution decision in the ‘807 Patent IPR.

On July 9, 2021, the Court granted the stipulation and order to stay.

(A) Employee Dispute

7 unchanged sentences

(“Rejuvenation”), and has received subsequent correspondence, requesting a full refund of approximately $ 1.6 million of NIAGEN® it purchased, alleging breaches of the supply agreement between the parties.

The Company believes these claims are without merit and is seeking to amicably resolve the matter pre-lawsuit.

As of March 31, 2021, the Company has recorded a return liability of approximately $ 0.5 million, which the Company has offered to settle in good faith.

As of June 30, 2021, the Company has recorded a return liability of approximately $ 0.5 million, which the Company offered to settle in good faith.

On May 13, 2021, Rejuvenation filed a complaint in the Superior Court of the State of California, County of Orange, asserting causes of action for Concealment and Negligent Misrepresentation.

On July 20, 2021, Rejuvenation filed an amended complaint adding a claim for Declaratory Relief.

The Company’s response to the amended complaint is due August 20, 2021.

The Company believes these claims are without merit and will aggressively defend itself.

The Company does not anticipate that the ultimate resolution of this matter will be material to the Company’s operations, financial condition or cash flows.

On or around September 28, 2020, Thorne Research, Inc.

(“Thorne”) provided notice to ChromaDex, Inc.

that it intended to terminate its March 25, 2019 Supply Agreement and subsequent amendments with ChromaDex, Inc., effective as of December 31, 2020.

A discussion between ChromaDex, Inc.

Thorne did not offer substantive information supporting a prior art claim or about the nature of the threatened IPR.

On December 1, 2020, Thorne filed a petition for IPR of the ‘086 Patent.

Dartmouth’s preliminary response to the petition was filed on on March 15, 2021.

On February 1, 2021, Thorne filed a petition for IPR of the ‘807 Patent.

Dartmouth’s preliminary response to the petition is due on May 18, 2021.

From time to time we are involved in legal proceedings arising in the ordinary course of our business.

We believe that there is no other litigation pending that is likely to have, individually or in the aggregate, a material adverse effect on our financial condition or results of operations.

Contingencies

14 unchanged sentences

The Company does not believe that the ultimate resolution of this matter will be material to the Company’s results of operations, financial condition or cash flows.

Subsequent Event Commitments

Effective as of August 2, 2021, the Company entered into a Seventh Amendment (the “Seventh Amendment”) to the Manufacturing and Supply Agreement (such agreement as amended, the “Grace Manufacturing Agreement”), originally effective in January 2016, with W.R.

Pursuant to the Seventh Amendment, the Company is obligated to purchase approximately $ 18.0 million of total inventory between January 1, 2022 and December 31, 2022 and $ 3.5 million of inventory from January 1, 2023 through June 30, 2023.

The Grace Manufacturing Agreement will expire on June 30, 2023, subject to renewal periods to be negotiated by the parties.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements