What changed in this filing

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Item 1. Financial Statements

2021-11-03 compared with 2021-08-03 · 187 added, 230 removed, 500 unchanged (45% of the section changed)

2 unchanged sentences

Unaudited Condensed Consolidated Balance Sheets

Jun 30, 2021 Dec 31, 2020

Sep 30, 2021 Dec 31, 2020

(In thousands except par values, unless otherwise indicated)

2 unchanged sentences

$ 33,102 $ 16,697

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

Trade receivables, net of allowances of $ 37 and $ 189 , respectively;

Including receivables from Related Party of:

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authorized 150,000 shares;

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

68,094 shares and 61,881 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively.

Additional paid-in capital 199,011 158,190

6 unchanged sentences

Unaudited Condensed Consolidated Statements of Operations

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

17 unchanged sentences

(In thousands)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Common Stock Additional

4 unchanged sentences

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

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

Exercise of stock options 85 — 341 — — 341

Share-based compensation — — 1,822 — — 1,822

Translation adjustment — — — — — —

Net loss — — — ( 8,856 ) — ( 8,856 )

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

Six Months Ended June 30, 2021

Balance, September 30, 2021 68,094 $ 68 $ 199,011 $ ( 163,628 ) $ ( 2 ) $ 35,449

Nine Months Ended September 30, 2021

Common Stock Additional

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Net loss — — — ( 21,803 ) — ( 21,803 )

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

Balance, September 30, 2021 68,094 $ 68 $ 199,011 $ ( 163,628 ) $ ( 2 ) $ 35,449

ChromaDex Corporation and Subsidiaries

1 unchanged sentence

(In thousands)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Common Stock Additional

1 unchanged sentence

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

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

Exercise of stock options 166 1 546 — — 547

Share-based compensation — — 1,574 — — 1,574

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

Net loss — — — ( 4,215 ) ( 4,215 )

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

Six Months Ended June 30, 2020

Balance, September 30, 2020 61,587 $ 62 $ 155,156 $ ( 135,728 ) $ ( 3 ) $ 19,487

Nine Months Ended September 30, 2020

Common Stock Additional

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Net loss — — — ( 13,828 ) ( 13,828 )

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

Balance, September 30, 2020 61,587 $ 62 $ 155,156 $ ( 135,728 ) $ ( 3 ) $ 19,487

See accompanying notes to consolidated financial statements.

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Unaudited Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands)

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Purchases of leasehold improvements and equipment ( 407 ) ( 147 )

Purchases of intangible assets — ( 18 )

Investment in other long-term assets — ( 16 )

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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”) 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 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.

(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 September 30, 2021 and results of operations and cash flows for the three and nine months ended September 30, 2021 and September 30, 2020.

Operating results for the three and nine months ended September 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.

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ChromaDex is the innovator behind NAD+ precursor nicotinamide riboside (NR), commercialized as the flagship ingredient NIAGEN®.

Nicotinamide riboside and other NAD+ precursors are protected by ChromaDex’s patent portfolio.

Nicotinamide riboside and other NAD+ precursors are protected by ChromaDex’s patent and/or licensed rights portfolio.

ChromaDex delivers NIAGEN® as the sole active ingredient in its consumer product TRU NIAGEN®.

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 $ 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 also has an 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 $ 19.2 million for the nine months ended September 30, 2021.

As of September 30, 2021, cash and cash equivalents totaled approximately $ 33.1 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.

The Company’s line of credit currently expires on November 12, 2021.

The Company is actively working with Western Alliance Bank to extend this line of credit prior to its expiration.

The line of credit is an additional source of liquidity available to the Company, however any inability to access any portion of the amount available under this line will not have an adverse effect on the Company’s ability to satisfy its obligations or support operations.

The Company does not believe any delays in or inability to obtain an extension of this line of credit will impact its ability to meet its operating objectives.

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

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

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and Raymond James & Associates, Inc.

(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.

(ATM Facility).

During the second quarter of 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.

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

Significant Accounting Policies

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The Company’s fiscal year ends on December 31.

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

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):

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

Measurement of Credit Losses on Financial Instruments.

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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 and six months ended June 30, 2021 and June 30, 2020:

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

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

Three Months Ended September 30, Nine Months Ended September 30,

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

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Restricted stock units 116 — 116 —

(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.

(1) Includes approximately 0.2 million nonvested shares of restricted stock for the three and nine months ended September 30, 2021 and September 30, 2020 which are participating securities that feature voting and dividend rights.

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

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Net Sales Trade Receivable as of

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

Three Months Ended September 30, Nine Months Ended September 30, September 30, December 31,

2021 2020 2021 2020 2021 2020

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Horizon Ventures* (1)

— $ 1.6 million — $ 1.6 million — —

— — — $ 1.6 million — —

Total $ 2.6 million $ 2.5 million $ 7.1 million $ 7.2 million $ 2.3 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

(1) During the nine months ended September 30, 2020, Horizon Ventures made purchases to donate to the healthcare workers in Hong Kong hospitals.

Horizon Ventures had insignificant sales during the nine months ended September 30, 2021.

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

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

Consumer Products - Finished Goods $ 5,998 $ 2,358

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Stock Issuance

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 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 shares of common stock at a price of $ 6.50 per share.

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

On February 23, 2021, the Company closed the Financing and received proceeds of $ 24.9 million, net of offering costs of $ 0.1 million .

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

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.

In accordance with Accounting Standards Codification (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.

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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,

As of September 30, 2021, the Company had ROU assets and corresponding operating lease liabilities of approximately $ 3.0 million and $ 3.3 million, respectively.

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

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Total expense $ 266 $ 188 $ 791 $ 689

At Jun 30, 2021

At Sep 30, 2021

Weighted-average remaining lease term (years) operating leases 4.8

Weighted-average discount rate operating leases 6.4 %

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

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

Year (In thousands)

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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.

As of September 30, 2021, there were approximately 5.0 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.

The Company’s stock options 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.

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

Stock Options

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:

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

Weighted Average:

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Expected term 5.8 years

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Service Period Based Stock Options

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

The following table summarizes activity of service period-based stock options during the nine months ended September 30, 2021 :

Weighted Average

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Options Forfeited ( 747 ) 4.49

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.

Outstanding at September 30, 2021 9,499 $ 4.66 6.7 $ 19,690 *

Exercisable at September 30, 2021 6,372 $ 3.71 5.5 $ 16,367 *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 6.27 , which is the closing price of the Company’s stock on the last day of business for the period ended September 30, 2021.

Performance Based Stock Options

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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 June 30, 2021 and changes during the six months ended:

The following table summarizes performance based stock options activity during the nine months ended September 30, 2021 :

Weighted Average

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Options Forfeited — —

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 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.

Outstanding at September 30, 2021 41 $ 4.34 2.3 $ 79 *

Exercisable at September 30, 2021 41 $ 4.34 2.3 $ 79 *

Restricted Stock Units

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 June 30, 2021 and changes during the six months ended:

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

The following table summarizes activity of restricted stock units during the nine months ended September 30, 2021 :

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

Unvested shares at December 31, 2020 — $ —

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Forfeited ( 7 ) 11.83

Unvested shares at June 30, 2021 92 $ 11.83

Expected to vest at June 30, 2021 92 $ 11.83

Unvested shares at September 30, 2021 116 $ 10.90

Expected to vest at September 30, 2021 116 $ 10.90

Total Share-Based Compensation

Total share-based compensation expense was as follows:

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

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Total $ 1,822 $ 1,574 $ 4,722 $ 5,158

In future periods, the Company expects to recognize approximately $ 10.7 million and $ 1.1 million in share-based compensation expense for unvested options and unvested restricted stock units, respectively, that were outstanding as of September 30, 2021.

Future share-based compensation expense will be recognized over 2.1 and 2.6 weighted average years for unvested options and restricted stock units, respectively.

Business Segments

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

This structure reflects its current operational and financial management and provides the best structure to maximize the Company's objectives and investment strategy, while maintaining financial discipline.

The Company's Chief Executive Officer, who is its chief operating decision maker (CODM), reviews financial information for each operating segment to evaluate performance and allocate resources.

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

The Company's CODM does not review assets by segment in his evaluation and therefore assets by segment are not disclosed below.

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

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

(In thousands)

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Operating income (loss) $ 1,557 $ 946 $ ( 142 ) $ ( 11,202 ) $ ( 8,841 )

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

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

(In thousands)

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Operating income (loss) $ 1,699 $ 806 $ ( 115 ) $ ( 6,586 ) $ ( 4,196 )

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

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

(In thousands)

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Operating income (loss) $ 5,695 $ 2,369 $ 60 $ ( 29,881 ) $ ( 21,757 )

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

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

(In thousands)

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Operating income (loss) $ 5,317 $ 3,697 $ ( 335 ) $ ( 22,452 ) $ ( 13,773 )

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

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See details in the tables below.

Three Months Ended June 30, 2021 Consumer

Three Months Ended September 30, 2021 Consumer

Segment Ingredients

Segment Analytical Reference Standards

Segment Total

Segment Analytical Reference

Standards and Services Segment Total

(In thousands)

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Total Net Sales $ 14,772 $ 1,789 $ 747 $ 17,308

Three Months Ended June 30, 2020 Consumer

Three Months Ended September 30, 2020 Consumer

Segment Ingredients

Segment Analytical Reference Standards

Segment Total

Segment Analytical Reference

Standards and Services Segment Total

(In thousands)

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Total Net Sales $ 11,904 $ 1,510 $ 766 $ 14,180

Six Months Ended June 30, 2021 Consumer

Nine Months Ended September 30, 2021 Consumer

Segment Ingredients

Segment Analytical Reference Standards

Segment Total

Segment Analytical Reference

Standards and Services Segment Total

(In thousands)

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Total Net Sales $ 42,605 $ 4,608 $ 2,477 $ 49,690

Six Months Ended June 30, 2020 Consumer

Nine Months Ended September 30, 2020 Consumer

Segment Ingredients

Segment Analytical Reference Standards

Segment Total

Segment Analytical Reference

Standards and Services Segment Total

(In thousands)

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Disclosure of Major Customers

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

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

Major customers are defined as customers whose sales or accounts receivables individually consist of more than ten percent of total sales or total trade receivables, respectively.

Percentage of revenues from major customers of the Company’s consumer products segment for the periods indicated were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Major Customers 2021 2020 2021 2020

Watson Group - Related Party 15.2 % 17.7 % 14.3 % 12.9 %

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 At June 30,

2021 At December 31,

The percentage of the amounts due from major customers to total accounts receivable, net for the periods indicated were as follows:

Major Customers At Sep 30, 2021 At Dec 31, 2020

Watson Group - Related Party 43.6 % 31.9 %

Walmart ™ (1)

Matakana Health 13.1 % 11.1 %

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Amazon Marketplaces 12.5 % 12.0 %

* 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

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(A) California Action

On December 29, 2016, ChromaDex, Inc.

filed a complaint in the United States District Court for the Central District of California, naming Elysium Health, Inc.

(together with Elysium Health, LLC, “Elysium”) as defendant (the “Complaint”).

On December 29, 2016, ChromaDex filed a complaint in the United States District Court for the Central District of California, naming Elysium Health, Inc.

(together with Elysium Health, LLC, “Elysium”) as defendant (Complaint).

On January 25, 2017, Elysium filed an answer and counterclaims in response to the Complaint (together with the Complaint, the “California Action”).

Over the course of the California Action, the parties have each filed amended pleadings several times and have each engaged in several rounds of motions to dismiss and one round of motion for judgment on the pleadings with respect to various claims.

Most recently, on November 27, 2018, ChromaDex, Inc.

filed a fifth amended complaint that added an individual, Mark Morris, as a defendant.

Elysium and Morris (“the Defendants”) moved to dismiss on December 21, 2018.

Most recently, on November 27, 2018, ChromaDex filed a fifth amended complaint that added an individual, Mark Morris, as a defendant.

Elysium and Morris (Defendants) moved to dismiss on December 21, 2018.

The court denied Defendants’ motion on February 4, 2019.

Defendants filed their answer to ChromaDex, Inc.’s fifth amended complaint on February 19, 2019.

ChromaDex, Inc.

filed an answer to Elysium’s restated counterclaims on March 5, 2019.

Defendants filed their answer to ChromaDex’s fifth amended complaint on February 19, 2019.

ChromaDex filed an answer to Elysium’s restated counterclaims on March 5, 2019.

Discovery closed on August 9, 2019.

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On ChromaDex’s motion, the court granted summary judgment in favor of ChromaDex on Elysium’s counterclaims for (i) breach of contract related to manufacturing NIAGEN® according to the defined standard, selling NIAGEN and ingredients that are substantially similar to pterostilbene to other customers, distributing the NIAGEN® product specifications, and failing to provide information concerning the quality and identity of NIAGEN®, and (ii) breach of the implied covenant of good faith and fair dealing.

The court denied summary judgment on Elysium’s counterclaims for (i) fraudulent inducement of the Trademark License and Royalty Agreement, dated February 3, 2014, by and between ChromaDex, Inc.

and Elysium (the “License Agreement”), (ii) patent misuse, and (iii) unjust enrichment.

On Elysium’s motion, the court granted summary judgment in favor of Elysium on ChromaDex’s claim for damages related to $ 110,000 in avoided costs arising from documents that Elysium used in violation of the Supply Agreement, dated February 3, 2014, by and between ChromaDex, Inc.

and Elysium, as amended (the “NIAGEN® Supply Agreement”).

The court denied summary judgment on Elysium’s counterclaims for (i) fraudulent inducement of the Trademark License and Royalty Agreement, dated February 3, 2014, by and between ChromaDex and Elysium (License Agreement), (ii) patent misuse, and (iii) unjust enrichment.

The court denied summary judgment on Elysium’s counterclaim for breach of contract related to certain refunds or credits to Elysium.

The court also denied summary judgment on ChromaDex’s breach of contract claim against Morris and claims for disgorgement of $ 8.3 million in Elysium’s resale profits, $ 600,000 for a price discount received by Elysium, and $ 684,781 in Morris’s compensation.

Following the court’s January 16, 2020 order, the claims that ChromaDex, Inc.

presently asserts in the California Action, among other allegations, are that (i) Elysium breached the Supply Agreement, dated June 26, 2014, by and between ChromaDex, Inc.

and Elysium (the “pTeroPure® Supply Agreement”), by failing to make payments to ChromaDex, Inc.

for purchases of pTeroPure® and by improper disclosure of confidential ChromaDex, Inc.

information pursuant to the pTeroPure® Supply Agreement, (ii) Elysium breached the NIAGEN® Supply Agreement, by failing to make payments to ChromaDex, Inc.

for purchases of NIAGEN®, (iii) Defendants willfully and maliciously misappropriated ChromaDex, Inc.

trade secrets concerning its ingredient sales business under both the California Uniform Trade Secrets Act and the Federal Defend Trade Secrets Act, (iv) Morris breached two confidentiality agreements he signed by improperly stealing confidential ChromaDex, Inc.

documents and information, (v) Morris breached his fiduciary duty to ChromaDex, Inc.

by lying to and competing with ChromaDex, Inc.

while still employed there, and (vi) Elysium aided and abetted Morris’s breach of fiduciary duty.

ChromaDex, Inc.

is seeking damages and interest for Elysium’s alleged breaches of the NIAGEN® Supply Agreement and pTeroPure® Supply Agreement and Morris’s alleged breaches of his confidentiality agreements, compensatory damages and interest, punitive damages, injunctive relief, and attorney’s fees for Defendants’ alleged willful and malicious misappropriation of ChromaDex, Inc.’s trade secrets, and compensatory damages and interest, disgorgement of all benefits received, and punitive damages for Morris’s alleged breach of his fiduciary duty and Elysium’s aiding and abetting of that alleged breach.

The claims that Elysium presently alleges in the California Action are that (i) ChromaDex, Inc.

breached the NIAGEN® Supply Agreement by not issuing certain refunds or credits to Elysium, (ii) ChromaDex, Inc.

fraudulently induced Elysium into entering into the License Agreement, (iv) ChromaDex, Inc.’s conduct constitutes misuse of its patent rights, and (v) ChromaDex, Inc.

was unjustly enriched by the royalties Elysium paid pursuant to the License Agreement.

Elysium is seeking damages for ChromaDex, Inc.’s alleged breaches of the NIAGEN® Supply Agreement, and compensatory damages, punitive damages, and/or rescission of the License Agreement and restitution of any royalty payments conveyed by Elysium pursuant to the License Agreement, and a declaratory judgment that ChromaDex, Inc.

has engaged in patent misuse.

Following the court’s January 16, 2020 order, ChromaDex’s claims asserted in the California Action, among other allegations, were that (i) Elysium breached the Supply Agreement, dated June 26, 2014, by and between ChromaDex and Elysium (pTeroPure® Supply Agreement), by failing to make payments to ChromaDex for purchases of pTeroPure® and by improper disclosure of confidential ChromaDex information pursuant to the pTeroPure® Supply Agreement, (ii) Elysium breached the NIAGEN® Supply Agreement, by failing to make payments to ChromaDex for purchases of NIAGEN®, (iii) Defendants willfully and maliciously misappropriated ChromaDex trade secrets concerning its ingredient sales business under both the California Uniform Trade Secrets Act and the Federal Defend Trade Secrets Act, (iv) Morris breached two confidentiality agreements he signed by improperly stealing confidential ChromaDex documents and information, (v) Morris breached his fiduciary duty to ChromaDex by lying to and competing with ChromaDex while still employed there, and (vi) Elysium aided and abetted Morris’s breach of fiduciary duty.

ChromaDex sought damages and interest for Elysium’s alleged breaches of the NIAGEN® Supply Agreement and pTeroPure® Supply Agreement and Morris’s alleged breaches of his confidentiality agreements, compensatory damages and interest, punitive damages, injunctive relief, and attorney’s fees for Defendants’ alleged willful and malicious misappropriation of ChromaDex’s trade secrets, and compensatory damages and interest, disgorgement of all benefits received, and punitive damages for Morris’s alleged breach of his fiduciary duty and Elysium’s aiding and abetting of that alleged breach.

Elysium’s claims alleged in the California Action were that (i) ChromaDex breached the NIAGEN® Supply Agreement by not issuing certain refunds or credits to Elysium, (ii) ChromaDex fraudulently induced Elysium into entering into the License Agreement, (iv) ChromaDex’s conduct constitutes misuse of its patent rights, and (v) ChromaDex was unjustly enriched by the royalties Elysium paid pursuant to the License Agreement.

Elysium sought damages for ChromaDex’s alleged breaches of the NIAGEN® Supply Agreement, and compensatory damages, punitive damages, and/or rescission of the License Agreement and restitution of any royalty payments conveyed by Elysium pursuant to the License Agreement, and a declaratory judgment that ChromaDex has engaged in patent misuse.

On January 17, 2020, Elysium moved to substitute its counsel.

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On December 11, 2020, Elysium filed a “Notice of Correction of Depositions” related to the depositions of its chief executive officer, Eric Marcotulli, and chief operating officer, Daniel Alminana, both taken in March 2019.

On March 8, 2021, based in part on information that Elysium submitted under seal with that notice, ChromaDex, Inc.

filed a motion for sanctions or, in the alternative, reconsideration of the court’s January 16, 2020 order regarding summary judgment, in which ChromaDex, Inc.

moved to dismiss Elysium’s third, fourth, and fifth counterclaims.

On March 8, 2021, based in part on information that Elysium submitted under seal with that notice, ChromaDex filed a motion for sanctions or, in the alternative, reconsideration of the court’s January 16, 2020 order regarding summary judgment, in which ChromaDex moved to dismiss Elysium’s third, fourth, and fifth counterclaims.

Elysium’s opposition brief was filed on March 22, 2021.

ChromaDex, Inc.

filed its reply brief on March 29, 2021.

ChromaDex filed its reply brief on March 29, 2021.

On April 27, 2021, the court denied ChromaDex, Inc’s motion for terminating sanctions, but concluded that the evidence at issue in the motion will be admissible at trial.

The jury trial portion of the case commenced on September 21, 2021.

The jury returned a verdict on September 27, 2021.

The verdict found (i) Elysium liable for breaches of the NIAGEN® and pTeroPure® Supply Agreements for failing to pay for purchases of the ingredients totaling approximately $ 3.0 million, (ii) Mark Morris liable for breach of a confidentiality agreement, requiring him to disgorge approximately $ 17,307 , (iii) ChromaDex liable for breaching the NIAGEN® Supply Agreement for not issuing certain refunds or credits to Elysium in the amount of $ 625,000 , and (iv) ChromaDex liable for fraudulent inducement of the Licensing Agreement in the amount of $ 250,000 , along with $ 1,025,000 in punitive damages arising from the same counterclaim.

On October 25, 2021, ChromaDex informed the court that it would request prejudgment interest on the approximately $ 3.0 million in damages awarded by the jury for Elysium’s breaches of the NIAGEN® and pTeroPure® Supply Agreements.

As a result of the outcome of this litigation, the Company may be subject to a contingent payment to counsel.

The Company is currently evaluating the potential payment amount.

(B) Southern District of New York Action

On September 27, 2017, Elysium Health Inc.

(“Elysium Health”) filed a complaint in the United States District Court for the Southern District of New York, against ChromaDex, Inc.

(the “Elysium SDNY Complaint”).

Elysium Health alleged in the Elysium SDNY Complaint that ChromaDex, Inc.

made false and misleading statements in a citizen petition to the Food and Drug Administration it filed on or about August 18, 2017.

Among other allegations, Elysium Health averred that the citizen petition made Elysium Health’s product appear dangerous, while casting ChromaDex, Inc.’s own product as safe.

(Elysium Health) filed a complaint in the United States District Court for the Southern District of New York, against ChromaDex (Elysium SDNY Complaint).

Elysium Health alleged in the Elysium SDNY Complaint that ChromaDex made false and misleading statements in a citizen petition to the Food and Drug Administration it filed on or about August 18, 2017.

Among other allegations, Elysium Health averred that the citizen petition made Elysium Health’s product appear dangerous, while casting ChromaDex’s own product as safe.

The Elysium SDNY Complaint asserted four claims for relief:

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and (iv) tortious interference with prospective economic relations.

On October 26, 2017, ChromaDex, Inc.

moved to dismiss the Elysium SDNY Complaint on the grounds that, inter alia, its statements in the citizen petition are immune from liability under the Noerr-Pennington Doctrine, the litigation privilege, and New York’s Anti-SLAPP statute, and that the Elysium SDNY Complaint failed to state a claim.

On October 26, 2017, ChromaDex moved to dismiss the Elysium SDNY Complaint on the grounds that, inter alia, its statements in the citizen petition are immune from liability under the Noerr-Pennington Doctrine, the litigation privilege, and New York’s Anti-SLAPP statute, and that the Elysium SDNY Complaint failed to state a claim.

Elysium Health opposed the motion on November 2, 2017.

ChromaDex, Inc.

filed its reply on November 9, 2017.

On October 26, 2017, ChromaDex, Inc.

filed a complaint in the United States District Court for the Southern District of New York against Elysium Health (the “ChromaDex SDNY Complaint”).

ChromaDex, Inc.

alleges that Elysium Health made material false and misleading statements to consumers in the promotion, marketing, and sale of its health supplement product, Basis, and asserts five claims for relief:

ChromaDex filed its reply on November 9, 2017.

On October 26, 2017, ChromaDex filed a complaint in the United States District Court for the Southern District of New York against Elysium Health (ChromaDex SDNY Complaint).

ChromaDex alleges that Elysium Health made material false and misleading statements to consumers in the promotion, marketing, and sale of its health supplement product, Basis, and asserts five claims for relief:

(i) false advertising under the Lanham Act, 15 U.S.C.

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On November 16, 2017, Elysium Health moved to dismiss for failure to state a claim.

ChromaDex, Inc.

opposed the motion on November 30, 2017 and Elysium Health filed a reply on December 7, 2017.

ChromaDex opposed the motion on November 30, 2017 and Elysium Health filed a reply on December 7, 2017.

On November 3, 2017, the Court consolidated the Elysium SDNY Complaint and the ChromaDex SDNY Complaint actions under the caption In re Elysium Health-ChromaDex Litigation, 17-cv-7394, and stayed discovery in the consolidated action pending a Court-ordered mediation.

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The Court otherwise denied the motion to dismiss.

On January 3, 2019, the Court granted ChromaDex, Inc.’s motion for summary judgment under the Noerr-Pennington Doctrine and dismissed all claims in the Elysium SDNY Complaint.

On January 3, 2019, the Court granted ChromaDex’s motion for summary judgment under the Noerr-Pennington Doctrine and dismissed all claims in the Elysium SDNY Complaint.

Elysium moved for reconsideration on January 17, 2019.

The Court denied Elysium’s motion for reconsideration on February 6, 2019, and issued an amended final order granting ChromaDex, Inc.’s motion for summary judgment on February 7, 2019.

The Court denied Elysium’s motion for reconsideration on February 6, 2019, and issued an amended final order granting ChromaDex’s motion for summary judgment on February 7, 2019.

The Court granted in part and denied in part Elysium’s motion to dismiss, sustaining three grounds for ChromaDex’s Lanham Act claims while dismissing two others, sustaining the claim under New York General Business Law § 349, and dismissing the claims under New York General Business Law § 350 and for tortious interference.

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ChromaDex answered Elysium’s counterclaims on November 2, 2018.

ChromaDex, Inc.

filed an amended complaint on March 27, 2019, adding new claims against Elysium Health for false advertising and unfair competition under the Lanham Act, 15 U.S.C.

On April 10, 2019, Elysium Health answered the amended complaint and filed amended counterclaims, also adding new claims against ChromaDex, Inc.

for false advertising and unfair competition under the Lanham Act, 15 U.S.C.

ChromaDex filed an amended complaint on March 27, 2019, adding new claims against Elysium Health for false advertising and unfair competition under the Lanham Act, 15 U.S.C.

On April 10, 2019, Elysium Health answered the amended complaint and filed amended counterclaims, also adding new claims against ChromaDex for false advertising and unfair competition under the Lanham Act, 15 U.S.C.

On July 1, 2019, Elysium Health filed further amended counterclaims, adding new claims under the Copyright Act §§ 106 & 501.

On February 9, 2020, ChromaDex, Inc.

filed a motion for leave to amend its complaint to add additional claims against Elysium Health for false advertising and unfair competition.

On February 9, 2020, ChromaDex filed a motion for leave to amend its complaint to add additional claims against Elysium Health for false advertising and unfair competition.

On February 10, 2020, Elysium Health filed a motion for leave to amend its counterclaims to identify allegedly false and misleading statements in ChromaDex’s advertising.

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On March 12, 2020, Elysium Health answered the second amended complaint.

On March 13, 2020, ChromaDex, Inc.

filed an answer and objection to Elysium Health’s third amended counterclaims.

On March 13, 2020, ChromaDex filed an answer and objection to Elysium Health’s third amended counterclaims.

On December 14, 2020, Elysium Health filed a motion to supplement and amend its counterclaims to add claims regarding alleged advertising related to COVID, to add an allegation about a change to the ChromaDex website, and to remove its copyright infringement claim under the Copyright Act.

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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.

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 date will be rescheduled in 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 June 30, 2021, ChromaDex, Inc.

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

believes that the allegations are without merit and thus it is not probable that a liability has been incurred.

The Company is unable to predict the outcome of the Elysium SDNY Complaint and, at this time, cannot reasonably estimate the possible loss or range of loss with respect to the legal proceeding discussed herein.

As of September 30, 2021, ChromaDex did not accrue a potential loss for the Elysium SDNY Complaint because ChromaDex believes that the allegations are without merit and thus it is not probable that a liability has been incurred.

On September 17, 2018, ChromaDex, Inc.

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.

On September 17, 2018, ChromaDex 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 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.

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

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

On November 7, 2018, Elysium filed a motion to stay the patent infringement proceedings pending resolution of (1) the inter partes review of the ‘807 Patent and the ‘086 Patent before the Patent Trial and Appeal Board (PTAB) and (2) the outcome of the litigation in the California Action.

ChromaDex, Inc.

filed an opposition brief on November 21, 2018 detailing the issues with Elysium’s motion to stay.

In particular, ChromaDex, Inc.

argued that given claim 2 of the ‘086 Patent was only included in the PTAB’s inter partes review for procedural reasons the PTAB was unlikely to invalidate claim 2 and therefore litigation in Delaware would continue regardless.

In addition, ChromaDex, Inc.

argued that the litigation in the California Action is unlikely to have a significant effect on the ongoing patent litigation.

After the PTAB released its written decision upholding claim 2 of the ‘086 Patent, proving right ChromaDex, Inc.’s prediction, ChromaDex, Inc.

informed the Delaware court of the PTAB’s decision on January 17, 2019.

ChromaDex filed an opposition brief on November 21, 2018 detailing the issues with Elysium’s motion to stay.

In particular, ChromaDex argued that given claim 2 of the ‘086 Patent was only included in the PTAB’s inter partes review for procedural reasons the PTAB was unlikely to invalidate claim 2 and therefore litigation in Delaware would continue regardless.

In addition, ChromaDex argued that the litigation in the California Action is unlikely to have a significant effect on the ongoing patent litigation.

After the PTAB released its written decision upholding claim 2 of the ‘086 Patent, proving right ChromaDex’s prediction, ChromaDex informed the Delaware court of the PTAB’s decision on January 17, 2019.

On June 19, 2019, the Delaware court granted in part and denied in part Elysium’s motion, ordering that the case was stayed pending the resolution of Elysium’s patent misuse counterclaim in the California Action.

On November 1, 2019, ChromaDex, Inc.

filed a motion to lift the stay due to changed circumstances in the California Action, among other reasons.

On November 1, 2019, ChromaDex filed a motion to lift the stay due to changed circumstances in the California Action, among other reasons.

Briefing on the motion was completed on November 22, 2019.

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The joint status report was submitted on January 30, 2020.

On February 4, 2020, the Delaware court issued an order granting ChromaDex, Inc.’s motion to lift the stay and setting a scheduling conference for March 10, 2020.

On February 4, 2020, the Delaware court issued an order granting ChromaDex’s motion to lift the stay and setting a scheduling conference for March 10, 2020.

On March 19, 2020, the Delaware court entered a scheduling order, which, among other things, set the claim-construction hearing for December 17, 2020 and trial for the week of September 27, 2021.

On April 17, 2020, ChromaDex, Inc.

served infringement contentions.

On April 17, 2020, ChromaDex served infringement contentions.

Elysium filed a Second Amended Answer on July 10, 2020.

On April 24, 2020, ChromaDex, Inc.

moved for leave to amend the complaint to add Healthspan Research, LLC as a plaintiff.

On May 5, 2020, Elysium filed its opposition to ChromaDex, Inc.’s motion for leave to amend and moved to dismiss ChromaDex, Inc.

for alleged lack of standing.

ChromaDex, Inc.

filed its opposition to Elysium’s motion to dismiss and reply in support of its motion to amend on May 19, 2020.

On April 24, 2020, ChromaDex moved for leave to amend the complaint to add Healthspan Research, LLC as a plaintiff.

On May 5, 2020, Elysium filed its opposition to ChromaDex’s motion for leave to amend and moved to dismiss ChromaDex for alleged lack of standing.

ChromaDex filed its opposition to Elysium’s motion to dismiss and reply in support of its motion to amend on May 19, 2020.

Elysium filed its reply in support of its motion to dismiss on May 26, 2020.

The Court held a hearing on the motion for leave to amend the complaint and Elysium’s motion to dismiss on September 16, 2020.

On December 15, 2020, the Court entered orders (i) granting in part and denying in part Elysium’s motion to dismiss ChromaDex, Inc.

for alleged lack of standing;

and (ii) denying ChromaDex, Inc.’s motion for leave to amend.

ChromaDex, Inc.

filed a motion for reargument on December 29, 2020.

On December 15, 2020, the Court entered orders (i) granting in part and denying in part Elysium’s motion to dismiss ChromaDex for alleged lack of standing;

and (ii) denying ChromaDex’s motion for leave to amend.

ChromaDex filed a motion for reargument on December 29, 2020.

Elysium filed a response to the motion for reargument on January 28, 2021.

ChromaDex, Inc.

filed a motion for leave to file a reply on February 8, 2021.

ChromaDex filed a motion for leave to file a reply on February 8, 2021.

Elysium filed a response to the motion for leave to file a reply on February 12, 2021.

ChromaDex, Inc.

filed a reply to the motion for leave to file a reply on February 19, 2021.

ChromaDex filed a reply to the motion for leave to file a reply on February 19, 2021.

The Court granted the motion for leave to file the reply on April 26, 2021, and denied the motion for reargument on April 27, 2021.

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Both parties filed dispositive and Daubert motions on April 27, 2021.

Trial is scheduled for September 27-30, 2021.

On September 21, 2021, the Court granted Elysium’s motion for summary judgment that the claims of the ‘807 and ‘086 patents are invalid based on patent-ineligible subject matter.

ChromaDex filed a notice of appeal on November 2, 2021.

If the appeal is unsuccessful or if on remand the Court dismisses ChromaDexs’ claims for some other reason, that could reduce or eliminate any competitive advantage the Company may otherwise have had.

Thorne Research, Inc .

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

A discussion between ChromaDex 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.

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

On September 21, 2021, Dartmouth filed its Patent Owner Response.

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.

On August 12, 2021, the Patent Trial and Appeal Board (PTAB) issued a decision instituting an IPR on the ‘807 Patent.

Dartmouth’s Patent Owner Response is presently due on November 9, 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.

On May 12, 2021, ChromaDex and Trustees of Dartmouth College filed a patent infringement complaint in the United States District Court for the Southern District of New York.

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

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

(A) Employee Dispute

On September 25, 2020, the Company received a demand letter from a former employee, alleging a series of employment-related claims against the Company after the employee was laid off as part of a company restructuring.

The employee alleges she was harassed and, ultimately, terminated in retaliation for taking intermittent leave, under the Family and Medical Leave Act.

No lawsuit has been filed to date.

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

On August 19, 2021, the parties filed a proposed stipulation and order staying the matter pending issuance of final written decisions in the IPRs.

On August 20, 2021, the Court granted the stipulation and order to stay.

Erica Martinez

(A) California Action

On October 1, 2021, Erica Martinez, a former employee of ChromaDex, filed a complaint in the Orange County Superior Court alleging claims against ChromaDex for:

(1) disability discrimination, (2) failure to accommodate a disability, (3) failure to engage in the interactive process, (4) retaliation for taking California Family Rights Act leave, and (5) failure to prevent discrimination and harassment.

Martinez’s allegations are based primarily upon Martinez’s claim that her son was allegedly diagnosed with Autism Spectrum Disorder in or around July 17, 2019, and ChromaDex allegedly retaliated against, and ultimately terminated, her for taking time off to care for her son and attend his doctors’ appointments.

ChromaDex has not been served with the Summons and Complaint.

ChromaDex is attempting to engage in informal settlement discussions with Martinez before service is effectuated and a responsive pleading is due.

The Company believes these claims are without merit and will aggressively defend itself if a reasonable settlement cannot be reached.

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.

(B) Rejuvenation Therapeutics

(A) Rejuvenation Therapeutics

On September 15, 2020, the Company received a letter from a customer, Rejuvenation Therapeutics Corp.

(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.

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.

As of September 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 filed a demurrer on September 3, 2021, which is set for hearing on February 1, 2022.

Rejuvenation’s current counsel, Matthew V.

Herron, filed a motion to be relieved as counsel, which is scheduled for hearing on November 9, 2021, however, Mr.

Herron has moved to withdraw that motion because Rejuvenation has substituted in new counsel.

The Company believes these claims are without merit and will aggressively defend itself if a reasonable settlement cannot be reached.

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.

Contingencies

(A) In September 2019, the Company received a letter from a licensor stating that the Company owed the licensor $ 1.6 million plus interest of sublicense fees as a result of the Company entering into the supply agreement with a customer.

(A) In September 2019, the Company received a letter from a licensor stating that the Company owed the licensor $ 1.6 million plus interest for sublicense fees as a result of the Company entering into a supply agreement with a customer.

After reviewing the relevant facts and circumstances, the Company believes that the Company does not owe any sublicense fees to the licensor and has corresponded with the licensor to resolve the matter.

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The statements were included in press releases and referenced in social media posts.

On November 18, 2020, the Company provided a response to the Letter stating that the Company disagrees with the assertion in the Letter that the Company’s products are intended to mitigate, prevent, treat, diagnose or cure COVID-19 in violation of certain sections of the FD&C Act or that they were unsubstantiated under the FTC Act, but rather accurately reflected the state of the science and the results of scientific research.

On November 18, 2020, the Company provided a response to the Letter stating that the Company disagrees with the assertion in the Letter that the Company’s products are intended to mitigate, prevent, treat, diagnose or cure COVID-19 in violation of certain sections of the Federal Food, Drug, and Cosmetic Act or that they were unsubstantiated under the FTC Act, but rather accurately reflected the state of the science and the results of scientific research.

Nonetheless, the Company also responded that it had deleted social media references to the studies and removed related press releases from its website.

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The Company stated that the press release identified in the Second Letter is appropriate and not a deceptive act or practice under applicable law.

The Company affirmed its belief in the need to accurately report on the scientific results of its studies to its investors, and welcomed the opportunity to discuss its R&D program with the FTC, and receive guidance on future releases.

The Company affirmed its belief in the need to accurately report on the scientific results of its studies to its investors and welcomed the opportunity to discuss its research and development program with the FTC and receive guidance on future releases.

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.

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

In January 2019, Grace was issued patents related to the manufacturing of the crystalline form of NR (Grace Patents).

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.

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

Subsequent Events

On October 19, 2021, Tony Lau notified the Company of his intention to resign from the board of directors of the Company (the “Board”) and as a member of the Compensation Committee of the Board.

His resignation will be effective November 2, 2021.

Lau indicated that his resignation is not due to any disagreement with the Company on any matter relating to its operations, policies or practices.

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