What changed in this filing

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Item 1. Financial Statements

2022-05-12 compared with 2021-11-03 · 215 added, 304 removed, 383 unchanged (58% of the section changed)

2 unchanged sentences

Unaudited Condensed Consolidated Balance Sheets

Sep 30, 2021 Dec 31, 2020

(In thousands except par values, unless otherwise indicated)

Mar 31, 2022 Dec 31, 2021

Current assets

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

Cash, including restricted cash of $ 0.2 million as of both dates

$ 20,993 $ 28,219

20 unchanged sentences

Operating lease obligations, less current maturities 4,013 4,154

Finance lease obligations, less current maturities 11 20

Total liabilities 27,053 26,113

Commitments and Contingencies

Commitments and Contingencies (Note 10)

Stockholders' Equity

1 unchanged sentence

authorized 150,000 shares;

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

68,149 shares and 68,126 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively.

Additional paid-in capital 202,502 200,614

3 unchanged sentences

Total liabilities and stockholders' equity $ 52,930 $ 57,840

See accompanying notes to consolidated financial statements.

See accompanying notes to condensed consolidated financial statements.

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

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

2021 2020 2021 2020

(In thousands, except per share data)

Three Months Ended March 31,

Sales, net $ 17,259 $ 14,683

11 unchanged sentences

Basic and diluted weighted average common shares outstanding 68,314 64,164

See accompanying notes to consolidated financial statements.

See accompanying notes to condensed consolidated financial statements.

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statement of Stockholders' Equity

(In thousands)

Three Months Ended September 30, 2021

Common Stock Additional

Paid-in Capital Accumulated

Deficit Cumulative

Adjustments Total

Stockholders'

Shares Amount

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

Net loss — — — ( 8,856 ) — ( 8,856 )

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

Nine Months Ended September 30, 2021

Common Stock Additional

Paid-in Capital Accumulated

Deficit Cumulative

Adjustments Total

Stockholders'

(In thousands, unless otherwise indicated)

Three Months Ended March 31, 2022

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

Shares Amount

Balance, January 1, 2022 68,126 $ 68 $ 200,614 $ ( 168,953 ) $ ( 2 ) $ 31,727

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

4,059 4 26,736 — — 26,740

Exercise of stock options 2,154 2 9,363 — — 9,365

Issuance of restricted stock 23 — — —

Share-based compensation — — 1,888 — — 1,888

1 unchanged sentence

Net loss — — — ( 7,740 ) — ( 7,740 )

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

ChromaDex Corporation and Subsidiaries

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

(In thousands)

Three Months Ended September 30, 2020

Common Stock Additional

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

Shares Amount

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

Net loss — — — ( 4,215 ) ( 4,215 )

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

Nine Months Ended September 30, 2020

Common Stock Additional

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

Balance, March 31, 2022 68,149 $ 68 $ 202,502 $ ( 176,693 ) $ — $ 25,877

Three Months Ended March 31, 2021

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

Shares Amount

2 unchanged sentences

3,846 4 24,867 24,871

Exercise of stock options 800 1 2,858 — — 2,859

Issuance of common stock resulting from the exercise of stock options 1,975 2 8,631 — — 8,633

Share-based compensation — — 1,284 — — 1,284

1 unchanged sentence

Net loss — — — ( 7,381 ) — ( 7,381 )

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

See accompanying notes to consolidated financial statements.

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

See accompanying notes to condensed consolidated financial statements.

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

(In thousands)

(In thousands, unless otherwise indicated)

Three Months Ended March 31,

Cash Flows From Operating Activities

5 unchanged sentences

Share-based compensation expense 1,888 1,284

Change in allowance for doubtful trade receivables ( 152 ) ( 2,737 )

Provision for doubtful trade receivables 10 14

Non-cash financing costs 18 28

6 unchanged sentences

Accrued expenses 1,645 1,196

Deferred revenue ( 95 ) ( 53 )

Customer deposits and other ( 18 ) ( 47 )

Principal payments on operating leases ( 472 ) ( 440 )

Operating lease liabilities ( 39 ) ( 154 )

Net cash used in operating activities ( 7,198 ) ( 5,405 )

1 unchanged sentence

Purchases of leasehold improvements and equipment ( 25 ) ( 46 )

Purchases of intangible assets — ( 18 )

Investment in other long-term assets — ( 16 )

Net cash used in investing activities ( 25 ) ( 46 )

4 unchanged sentences

Principal payments on finance leases ( 3 ) ( 15 )

Net cash provided by financing activities 36,031 7,469

Net increase in cash 16,405 ( 3,334 )

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

Net cash (used in) provided by financing activities ( 3 ) 33,445

Net (decrease) increase in cash ( 7,226 ) 27,994

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

28,219 16,697

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

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

$ 20,993 $ 44,691

1 unchanged sentence

Cash payments for interest on finance leases $ — $ 1

Supplemental Schedule of Noncash Operating Activity

Right-of-use assets and operating lease obligations incurred for entering into lease amendment $ 2,209 $ 716

Supplemental Schedule of Noncash Investing Activity

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

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”) 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.

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 (Commission) on March 12, 2021.

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.

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.

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

Cash payments for principal on operating lease liabilities $ 58 $ 154

See accompanying notes to condensed consolidated financial statements.

Nature of Business

ChromaDex is a global bioscience company dedicated to healthy aging.

The ChromaDex team, which includes world-renowned scientists, is pioneering research on nicotinamide adenine dinucleotide (NAD+), levels of which decline with age.

ChromaDex Corporation and its wholly owned subsidiaries, ChromaDex, Inc., ChromaDex Analytics, Inc., ChromaDex Asia Limited, ChromaDex Europa B.V.

and ChromaDex Sağlik Ürünleri Anonim Şirketi (collectively, “ChromaDex”, the “Company”) are a global bioscience company dedicated to healthy aging.

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

NAD+ levels in humans have been shown to decline with age, among other factors, and may be increased through supplementation with NAD+ precursors.

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 and/or licensed rights portfolio.

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

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’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.

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.

and Raymond James & Associates, Inc.

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

Significant Accounting Policies

The Company delivers Niagen® as the sole active ingredient in its consumer product Tru Niagen®.

The Company further develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw materials to the manufacturers of consumer products.

The Company also offers natural product fine chemicals, known as phytochemicals, and related research and development services.

Basis of Presentation and Significant Accounting Policies

Basis of Presentation:

The financial statements and accompanying notes have been prepared on a consolidated basis and reflect the consolidated financial position of the Company and its wholly owned subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “GAAP”) for interim financial information and the instructions to Form 10-Q and Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, the interim condensed consolidated financial statements include all adjustments (including normal recurring adjustments) necessary for a fair presentation of the financial condition, results of operations and cash flows for such periods.

Results of operations for any interim period are not necessarily indicative of results for any other interim period or for the full year.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2021 Annual Report on Form 10-K filed with the SEC.

Basis of Consolidation :

The accompanying unaudited condensed financial statements and notes thereto have been prepared on a consolidated basis and reflect the consolidated financial position of the Company and its wholly owned subsidiaries.

All significant intercompany balances and transactions have been eliminated from these financial statements.

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.

Significant Accounting policies :

There have been no changes to the Company’s significant accounting policies described in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2022, that have had a material impact on the Company’s condensed financial statements and related notes.

Recent Accounting Pronouncements:

12 unchanged sentences

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

Evaluation of Ability to Maintain Current Level of Operations

In connection with the preparation of these condensed consolidated financial statements for the three months ended March 31, 2022, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about the Company’s ability to meet its obligations as they became due over the next twelve months from the date of issuance of the Company’s first quarter of 2022 interim condensed consolidated financial statements.

Management assessed that there were such conditions and events, including a history of recurring operating losses, negative cash flows from operating activities and the continued impact of the COVID-19 pandemic.

The Company incurred a net loss of $ 7.7 million and used net cash in operating activities of $ 7.2 million for the three months ended March 31, 2022.

Management evaluated these conditions and anticipates that its current cash and cash equivalents of $ 21.0 million, including restricted cash of approximately $ 0.2 million, and cash to be generated from net sales 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 has an available line of credit up to $ 10.0 million, subject to certain terms and conditions, from Western Alliance Bank which had no outstanding borrowings as of March 31, 2022.

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

Riley FBR, Inc.

and Raymond James & Associates, Inc.

(ATM Facility).

As of March 31, 2022, approximately $ 47.8 million remains available under the ATM Facility.

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 nine months ended September 30, 2021 and September 30, 2020:

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

The following table sets forth the computations of earnings per share amounts applicable to common stockholders for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

(In thousands, except per share data) 2022 2021

6 unchanged sentences

Restricted stock units 356 —

(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.

(1) Includes approximately 0.2 million nonvested shares of restricted stock for the three months ended March 31, 2022 and 2021 which are participating securities that feature voting and dividend rights.

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

Business Segments

The Company has the following three reportable segments:

• Consumer Products segment:

provides finished dietary supplement products that contain the Company's proprietary ingredients directly to consumers as well as to distributors;

• Ingredients segment :

develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw materials to the manufacturers of consumer products;

• Analytical Reference Standards and Services segment:

offers the supply of phytochemical reference standards and other research and development services.

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

This structure reflects the Company’s 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.

There are no intersegment sales that require elimination.

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

The following tables set forth financial information by segment:

Three months ended March 31, 2022 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

Net sales $ 14,937 $ 1,427 $ 895 $ — $ 17,259

Cost of sales 5,252 722 753 — 6,727

Gross profit 9,685 705 142 — 10,532

Operating expenses:

Sales and marketing 8,074 24 139 — 8,237

Research and development 1,002 76 — — 1,078

General and administrative — — — 8,949 8,949

Operating expenses 9,076 100 139 8,949 18,264

Operating income (loss) $ 609 $ 605 $ 3 $ ( 8,949 ) $ ( 7,732 )

Three months ended March 31, 2021 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

Net sales $ 12,437 $ 1,315 $ 931 $ — $ 14,683

Cost of sales 4,203 563 683 — 5,449

Gross profit 8,234 752 248 — 9,234

Operating expenses:

Sales and marketing 6,111 10 137 — 6,258

Research and development 718 69 — — 787

General and administrative — — — 9,551 9,551

Operating expenses 6,829 79 137 9,551 16,596

Operating income (loss) $ 1,405 $ 673 $ 111 $ ( 9,551 ) $ ( 7,362 )

Disaggregation of Revenue

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.

Disaggregated revenues are as follows:

Three Months Ended March 31, 2022 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

Tru Niagen®, Consumer Product $ 14,937 $ — $ — $ 14,937

Niagen® Ingredient

— 1,131 — 1,131

Subtotal Niagen® Related $ 14,937 $ 1,131 $ — $ 16,068

Other Ingredients — 296 — 296

Reference Standards — — 883 883

Consulting and Other — — 12 12

Subtotal Other Goods and Services $ — $ 296 $ 895 $ 1,191

Total Net Sales $ 14,937 $ 1,427 $ 895 $ 17,259

Three Months Ended March 31, 2021 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

Tru Niagen®, Consumer Product $ 12,437 $ — $ — $ 12,437

Niagen® Ingredient

— 1,203 — 1,203

Subtotal Niagen® Related $ 12,437 $ 1,203 $ — $ 13,640

Other Ingredients — 112 — 112

Reference Standards — — 800 800

Consulting and Other — — 131 131

Subtotal Other Goods and Services $ — $ 112 $ 931 $ 1,043

Total Net Sales $ 12,437 $ 1,315 $ 931 $ 14,683

Disclosure of Major Customers

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

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

Three Months Ended March 31,

Major Customers 2022 2021

Watson Group - Related Party 14.8 % 10.6 %

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

Major Customers At Mar 31, 2022 At Dec 31, 2021

Watson Group - Related Party 36.5 % 39.6 %

10.1 % 10.3 %

Life Extension * 22.1 %

Amazon Marketplaces 15.0 % *

* Represents less than 10%

Related Party Transactions

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

The Company has two related parties, A.S.

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

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

Net Sales Trade Receivable as of

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

Three Months Ended March 31, March 31, December 31,

2022 2021 2022 2021

Watson Group* $ 2.6 million $ 2.5 million $ 7.1 million $ 5.6 million $ 2.3 million $ 0.9 million

Horizon Ventures* (1)

— — — $ 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 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

Watson Group - Related Party $ 2.6 million $ 1.6 million $ 2.3 million $ 2.1 million

Total $ 2.6 million $ 1.6 million $ 2.3 million $ 2.1 million

The Company's major classes of inventory and corresponding balances as of March 31, 2022 and December 31, 2021 are as follows:

(In thousands) Mar 31, 2022 Dec 31, 2021

Consumer Products - Finished Goods $ 7,383 $ 6,823

2 unchanged sentences

Reference standards 530 516

$ 12,676 $ 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 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 of $ 0.1 million .

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 of $ 0.3 million, at an average price of $ 10.56 per share.

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

Total Inventory $ 15,307 $ 13,601

The Company accounts for its leases in accordance with ASU No.

2016-02 (Topic 842) which requires that a lessee recognize the assets and liabilities that arise from operating leases.

The ASU requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use (ROU) asset on the balance sheet.

The Company leases office space facilities and a research and development laboratory under non-cancelable operating leases with varying expirations extending through fiscal year 2028.

The lease agreements provide for renewal options and rent escalation over the lease term as well as require the Company to pay maintenance, insurance and property taxes.

Lease expense is recognized on a straight-line basis over the term of the lease.

Operating Leases

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

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.

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 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,

As of March 31, 2022, the Company had right-of-use assets and corresponding operating lease liabilities of approximately $ 4.1 million and $ 4.6 million, respectively.

For the three months ended March 31, 2022 and 2021, the components of operating lease expense are as follows:

Three Months Ended March 31,

(In thousands) 2022 2021

5 unchanged sentences

Total expense $ 360 $ 256

At Sep 30, 2021

At March 31, 2022

Weighted-average remaining lease term (years), operating leases 5.0

Weighted-average discount rate, operating leases 5.8 %

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

Future minimum lease payments under operating leases as of March 31, 2022 are as follows:

Year (In thousands)

9 unchanged sentences

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 September 30, 2021, there were approximately 5.0 million remaining shares available for issuance under this plan.

As of March 31, 2022, there were approximately 3.1 million remaining shares available for issuance under this plan.

Options expire 10 years from the date of grant.

4 unchanged sentences

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 nine months ended September 30, 2021:

The Company used the following weighted average assumptions for options granted during the three months ended March 31, 2022:

Weighted Average:

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Expected term 5.7 years

3 unchanged sentences

Service Period Based Stock Options

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

Weighted Average

(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 1,527 9.08

Options Exercised ( 2,114 ) 4.35 $ 13,236

Options Forfeited ( 747 ) 4.49

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

The Company also grants stock option awards that are performance based and vest based on the achievement of certain criteria established from time to time by the Compensation Committee.

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 during the nine months ended September 30, 2021 :

The following table summarizes activity of service period-based stock options during the three months ended March 31, 2022 :

Weighted Average

7 unchanged sentences

Options Forfeited ( 326 ) 4.83

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

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

Outstanding at March 31, 2022 10,914 $ 4.33 6.5 $ 95 *

Exercisable at March 31, 2022 7,261 $ 3.93 5.0 $ 95 *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 2.46 , which is the closing price of the Company’s stock on the last day of business for the period ended March 31, 2022.

Restricted Stock Units

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

The following table summarizes activity of restricted stock units during the three months ended March 31, 2022 :

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

1 unchanged sentence

Granted 272 2.66

Vested ( 23 ) 11.83

Forfeited ( 8 ) 11.83

Unvested shares at September 30, 2021 116 $ 10.90

Expected to vest at September 30, 2021 116 $ 10.90

Unvested shares at March 31, 2022 356 $ 4.28

Expected to vest at March 31, 2022 356 $ 4.28

Total Share-Based Compensation

Total share-based compensation expense was as follows:

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

Three Months Ended March 31,

(In thousands) 2022 2021

5 unchanged sentences

Total $ 1,888 $ 1,284

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.

In future periods, the Company expects to recognize approximately $ 10.1 million and $ 1.4 million in share-based compensation expense for unvested options and unvested restricted stock units, respectively, that were outstanding as of March 31, 2022.

Future share-based compensation expense will be recognized over 2.1 and 2.5 weighted average years for unvested options and restricted stock units, respectively.

Business Segments

The Company has the following three reportable segments:

• Consumer products segment:

provides finished dietary supplement products that contain the Company's proprietary ingredients directly to consumers as well as to distributors.

• Ingredients segment:

develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw materials to the manufacturers of consumer products.

• Analytical reference standards and services segment:

includes supply of phytochemical reference standards and other research and development services.

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

Additionally, there are no intersegment sales that require elimination.

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

(In thousands)

Net sales $ 14,772 $ 1,789 $ 747 $ — $ 17,308

Cost of sales 5,253 732 745 — 6,730

Gross profit 9,519 1,057 2 — 10,578

Operating expenses:

Sales and marketing 7,067 10 144 — 7,221

Research and development 895 101 — — 996

General and administrative — — — 11,202 11,202

Operating expenses 7,962 111 144 11,202 19,419

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

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

(In thousands)

Net sales $ 11,904 $ 1,510 $ 766 $ — $ 14,180

Cost of sales 4,404 599 723 — 5,726

Gross profit 7,500 911 43 — 8,454

Operating expenses:

Sales and marketing 5,018 47 158 — 5,223

Research and development 783 58 — — 841

General and administrative — — — 6,586 6,586

Operating expenses 5,801 105 158 6,586 12,650

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

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

(In thousands)

Net sales $ 42,605 $ 4,608 $ 2,477 $ — $ 49,690

Cost of sales 15,003 1,970 2,095 — 19,068

Gross profit 27,602 2,638 382 — 30,622

Operating expenses:

Sales and marketing 19,368 21 322 — 19,711

Research and development 2,539 248 — — 2,787

General and administrative — — — 29,881 29,881

Operating expenses 21,907 269 322 29,881 52,379

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

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

(In thousands)

Net sales $ 34,768 $ 6,835 $ 2,209 $ — $ 43,812

Cost of sales 13,045 2,790 2,124 — 17,959

Gross profit 21,723 4,045 85 — 25,853

Operating expenses:

Sales and marketing 14,170 39 420 — 14,629

Research and development 2,236 309 — — 2,545

General and administrative — — — 22,452 22,452

Operating expenses 16,406 348 420 22,452 39,626

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

Disaggregation of Revenue

See details in the tables below.

Three Months Ended September 30, 2021 Consumer

Segment Ingredients

Segment Analytical Reference

Standards and Services Segment Total

(In thousands)

TRU NIAGEN®, Consumer Product $ 14,772 $ — $ — $ 14,772

NIAGEN® Ingredient — 1,665 — 1,665

Subtotal NIAGEN® Related $ 14,772 $ 1,665 $ — $ 16,437

Other Ingredients — 124 — 124

Reference Standards — — 735 735

Consulting and Other — — 12 12

Subtotal Other Goods and Services $ — $ 124 $ 747 $ 871

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

Three Months Ended September 30, 2020 Consumer

Segment Ingredients

Segment Analytical Reference

Standards and Services Segment Total

(In thousands)

TRU NIAGEN®, Consumer Product $ 11,904 $ — $ — $ 11,904

NIAGEN® Ingredient — 879 — 879

Subtotal NIAGEN® Related $ 11,904 $ 879 $ — $ 12,783

Other Ingredients — 631 — 631

Reference Standards — — 695 695

Consulting and Other — — 71 71

Subtotal Other Goods and Services $ — $ 631 $ 766 $ 1,397

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

Nine Months Ended September 30, 2021 Consumer

Segment Ingredients

Segment Analytical Reference

Standards and Services Segment Total

(In thousands)

TRU NIAGEN®, Consumer Product $ 42,605 $ — $ — $ 42,605

NIAGEN® Ingredient — 4,149 — 4,149

Subtotal NIAGEN® Related $ 42,605 $ 4,149 $ — $ 46,754

Other Ingredients — 459 — 459

Reference Standards — — 2,230 2,230

Consulting and Other — — 247 247

Subtotal Other Goods and Services $ — $ 459 $ 2,477 $ 2,936

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

Nine Months Ended September 30, 2020 Consumer

Segment Ingredients

Segment Analytical Reference

Standards and Services Segment Total

(In thousands)

TRU NIAGEN®, Consumer Product $ 34,768 $ — $ — $ 34,768

NIAGEN® Ingredient — 4,835 — 4,835

Subtotal NIAGEN® Related $ 34,768 $ 4,835 $ — $ 39,603

Other Ingredients — 2,000 — 2,000

Reference Standards — — 2,054 2,054

Consulting and Other — — 155 155

Subtotal Other Goods and Services $ — $ 2,000 $ 2,209 $ 4,209

Total Net Sales $ 34,768 $ 6,835 $ 2,209 $ 43,812

Disclosure of Major Customers

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 %

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 %

Matakana Health 13.1 % 11.1 %

Life Extension 11.0 % 17.7 %

Amazon Marketplaces 12.5 % 12.0 %

Commitments and Contingencies

43 unchanged sentences

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.

Elysium’s opposition brief was filed on January 24, 2022, and ChromaDex, Inc.’s reply brief was filed on January 31, 2022.

On February 10, 2022, the court denied ChromaDex Inc.’s motion for prejudgment interest.

On February 18, 2022, ChromaDex, Inc.

and Elysium jointly filed a notice informing the court that ChromaDex, Inc.

had filed in the U.S.

District Court for the Southern District of New York (SDNY Court) a motion to enforce a settlement agreement between ChromaDex, Inc.

and Elysium that ChromaDex, Inc.

asserts would materially affect the California Action.

On April 22, 2022, ChromaDex, Inc.

and Elysium jointly filed a notice informing the court that the SDNY Court had granted ChromaDex, Inc.’s motion to enforce the settlement agreement.

On April 29, 2022, ChromaDex, Inc.

filed a notice informing the court that the SDNY Court had dismissed the SDNY action with prejudice pursuant to the settlement agreement.

(B) Southern District of New York Action

49 unchanged sentences

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 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 January 10, 2022, both parties appeared for oral argument on the dispositive and Daubert motions.

On February 3, 2022, ChromaDex reached a settlement in order to resolve the SDNY action in its entirety as well as the claims tried to the jury in the Central District of California (the “Settlement Agreement”).

Shortly thereafter, before the parties could notify the Court, the Court issued a ruling on the pending dispositive and Daubert motions, dismissing ChromaDex’s SDNY complaint in its entirety on the grounds that ChromaDex’s damages were uncertain, and dismissing some of Elysium’s claims.

Elysium then asserted that a settlement had not been reached.

ChromaDex thereafter filed a motion to enforce the Settlement Agreement in its entirety on February 16, 2022.

Elysium’s opposition to that motion was filed on March 2, 2022, and ChromaDex’s reply was filed on March 9, 2022.

On April 19, 2022, the Court concluded that a settlement had been reached and granted ChromaDex’s motion to enforce the Settlement Agreement.

On April 28, 2022, pursuant to the Settlement Agreement, the Court dismissed the entire action with prejudice.

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

As of March 31, 2022, 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.

41 unchanged sentences

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.

ChromaDex’s opening brief was filed on February 2, 2022.

Elysium’s response brief was filed on April 11, 2022.

ChromaDex’s reply brief was filed on May 9, 2022.

Oral argument has not yet been scheduled.

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

Thorne Research, Inc .

8 unchanged sentences

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

On December 21, 2021, Thorne filed its reply.

Oral argument was held on March 15, 2022.

A final written decision has not yet been rendered.

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

1 unchanged sentence

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.

On November 9, 2021, Dartmouth filed its Patent Owner Response.

On February 15, 2022, Thorne filed its reply.

Oral argument will be held on May 17, 2022.

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

13 unchanged sentences

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.

The parties have settled this matter and the request for dismissal, with prejudice, of Martinez’s claims was entered on January 25, 2022.

(A) Florida Action

On April 18, 2022, Lynda Power, a citizen of the state of Florida, filed a complaint in the United States District Court for the Middle District of Florida, Orlando Division alleging claims against ChromaDex for (1) product liability (2) personal injury (3) strict liability and (4) negligence.

Power's allegations are based primarily upon Power's claim that she suffered an adverse event after consuming the Company’s products.

As of May 12, 2022, the Company has not been served with the Summons and Complaint.

The Company believes these claims are without merit, will aggressively defend itself, and does not anticipate that the ultimate resolution of this matter will be material to the Company’s operations, financial condition or cash flows.

(A) Rejuvenation Therapeutics

1 unchanged sentence

(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 September 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 March 31, 2022, 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 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 filed a demurrer on September 3, 2021.

On February 1, 2022, the Court sustained ChromaDex’s demurrer in its entirety with leave to amend as to the claims for Concealment and Negligent Misrepresentation, and without leave to amend as to the claim for Declaratory Relief.

On February 16, 2022, Rejuvenation filed a Second Amended Complaint, asserting causes of action for Fraud and Negligent Misrepresentation.

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

16 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.

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 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.

The Company has evaluated subsequent events through the filing date of this Form 10-Q with the SEC, to ensure that this filing includes all appropriate footnote disclosure of events both recognized in the financial statements as of March 31, 2022 , and events which occurred subsequently but were not recognized in the financial statements.

There were no subsequent events which required recognition, adjustment to or disclosure in the financial statements.

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