What changed in this filing

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Item 1A. Risk Factors

2022-08-10 compared with 2022-05-12 · 53 added, 47 removed, 613 unchanged (14% of the section changed)

36 unchanged sentences

Future sales of these shares could adversely affect the market price of our common stock.

▪ We have a limited operating history in China and we face risks with respect to conducting business in connection with our joint venture in China due to certain legal, political, economic and social uncertainties relating to China.

▪ We may become involved in securities class action litigation that could divert management’s attention and harm our business.

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In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders, vaccine mandates and recommendations to practice social distancing.

The duration of these measures is unknown, may be extended and additional measures may be imposed, in light of the recent surge in cases, which could negatively impact our sales volumes.

The duration of these measures is unknown, may be extended and additional measures may be imposed, in light of the varied surge in cases, which could negatively impact our sales volumes.

The potential effects of COVID-19 include, but are not limited to, the following:

• Reduced consumer and investor confidence, instability in the credit and financial markets, volatile corporate profits, and reduced business and consumer spending due to economic uncertainty, which may adversely affect our results of operations by reducing our sales, margins and/or net income as a result of a slowdown in customer orders.

• Reduced demand for our products due to store closures and reduced operating hours of our customers.

• Reduced demand for our products due to store closures and reduced operating hours of our customers, leading to declines in our production volumes which may negatively impact any economies of scale we previously benefited from.

• Disruptions in supply chain, leading to inadequate levels of inventory that may lower our sales and/or rising inflationary pressures that may increase our cost of goods.

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We have a history of operating losses, may need additional financing to meet our future long-term capital requirements and may be unable to raise sufficient capital on favorable terms or at all.

We have recorded a net loss of approximately $7.7 million for the three months ended March 31, 2022 and we have a history of losses and may continue to incur operating and net losses for the foreseeable future.

We have recorded a net loss of approximately $14.1 million for the six months ended June 30, 2022 and we have a history of losses and may continue to incur operating and net losses for the foreseeable future.

We incurred net losses of approximately $27.1 million and $19.9 million for the years ended December 31, 2021 and December 31, 2020, respectively.

As of March 31, 2022, our accumulated deficit was approximately $176.7 million.

As of June 30, 2022, our accumulated deficit was approximately $183.1 million.

We have not achieved profitability on an annual basis.

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If our revenues grow slower than anticipated, or if operating expenses exceed expectations, then we may not be able to achieve and sustain profitability in the near future or at all, which may depress our stock price.

As of March 31, 2022, our cash and cash equivalents totaled approximately $21.0 million and we had no borrowings outstanding under our line of credit up to $10.0 million with Western Alliance Bank.

While we anticipate that our current cash, cash equivalents and cash to be generated from net sales will be sufficient to meet our projected operating plans through at least the next twelve months, we may require additional funds, either through additional equity or debt financings, including pursuant to the At Market Issuance Sales Agreement, dated as of June 12, 2020, with B.

As of June 30, 2022, our cash and cash equivalents totaled approximately $17.1 million, of which $16.9 million was unrestricted, and we had no borrowings outstanding under our line of credit up to $10.0 million, subject to certain terms and conditions, with Western Alliance Bank.

We may require additional funds, either through additional equity or debt financings, including pursuant to the At Market Issuance Sales Agreement, dated as of June 12, 2020, with B.

Riley FBR, Inc.

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Interruptions in our relationships or declines in our business with major customers could materially harm our business and financial results.

Watson Group accounted for approximately 14.8% of our sales during the three months ended March 31, 2022.

Watson Group accounted for approximately 12.0% of our sales during the six months ended June 30, 2022.

Any interruption in our relationship or decline in our business with this customer or other customers upon whom we become highly dependent could cause harm to our business.

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Our future success largely depends on sales of our Tru Niagen® product.

In connection with our strategic shift from an ingredient and testing company to a consumer-focused company, we expect to generate a significant percentage of our future revenue from sales of our Tru Niagen® product.

As a result, the market acceptance of Tru Niagen® is critical to our continued success, and if we are unable to expand market acceptance of Tru Niagen®, our business, results of operations, financial condition, liquidity and growth prospects would be materially adversely affected.

As a consumer-focused company, we expect to generate a significant percentage of our future revenue from sales of our Tru Niagen® product.

As a result, the market acceptance of Tru Niagen® is critical to our continued success, and if we are unable to expand market acceptance and increase consumer awareness of Tru Niagen® our business, results of operations, financial condition, liquidity and growth prospects would be materially adversely affected.

Decline in the state of the global economy and financial market conditions could adversely affect our ability to conduct business and our results of operations .

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We depend on key personnel, the loss of any of which could negatively affect our business .

We depend greatly on the collective services of Frank L.

Jaksch Jr., Robert N.

Fried and Kevin M.

Farr, who are our Executive Chairman of the Board, Chief Executive Officer and Chief Financial Officer, respectively.

We depend greatly on the services of Robert N.

Fried, who is our Chief Executive Officer.

We also depend greatly on other key employees, including key scientific and marketing personnel.

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Other states have enacted data privacy laws.

For example, Virginia passed the Consumer Data Protection Act, Colorado passed the Colorado Privacy Act and Utah passed the Utah Consumer Privacy Act all three of which differ from the CPRA and become effective in 2023.

For example, Virginia passed the Consumer Data Protection Act, Colorado passed the Colorado Privacy Act, Connecticut passed the Connecticut Data Privacy Act and Utah passed the Utah Consumer Privacy Act all four of which differ from the CPRA and become effective in 2023.

Each of these state laws adds potential compliance and risk for us with respect to data necessary to operate our business.

A United States federal privacy bill advanced to the U.S.

House of Representatives on July 21, 2022.

There remains considerable uncertainty regarding its path to become law.

If we become subject to new data privacy laws, at the state level, the risk of enforcement action against us could increase because we may become subject to additional obligations, and the number of individuals or entities that can initiate actions against us may increase (including individuals, via a private right of action, and state actors).

In addition, data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts.

In addition, other data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts.

Our obligations related to data privacy and security are quickly changing in an increasingly stringent fashion, creating some uncertainty as to the effective future legal framework.

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Future sales of these shares could adversely affect the market price of our common stock.

As of March 31, 2022, we had outstanding options for an aggregate of approximately 12.0 million shares of common stock at a weighted average exercise price of $4.32 per share and unvested restricted stock units of approximately 0.4 million shares.

As of June 30, 2022, we had outstanding options for an aggregate of approximately 11.9 million shares of common stock at a weighted average exercise price of $4.22 per share and unvested restricted stock units of approximately 0.6 million shares.

The holders may sell many of these shares in the public markets from time to time, without limitations on the timing, amount or method of sale.

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If a court were to find this choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

We have a limited operating history in China and we face risks with respect to conducting business in connection with our joint venture in China due to certain legal, political, economic and social uncertainties relating to China.

On May 19, 2022, the Company entered into an agreement to form a joint venture to expand the Company’s market strategy to include opportunities in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan.

The joint venture has not yet launched.

Our participation in the joint venture in China is subject to general, as well as industry-specific, economic, political and legal developments and risks in China.

The Chinese government exercises significant control over the Chinese economy, including but not limited to, controlling capital investments, allocating resources, setting monetary policy, controlling and monitoring foreign exchange rates, implementing and overseeing tax regulations, providing preferential treatment to certain industry segments or companies and issuing necessary licenses to conduct business.

In addition, we could face additional risks resulting from changes in China’s data privacy and cybersecurity requirements.

Accordingly, any adverse change in the Chinese economy, the Chinese legal system or Chinese governmental, economic or other policies could have a material adverse effect on our joint venture in China and our prospects generally.

We face additional risks in China due to China’s historically limited recognition and enforcement of contractual and intellectual property rights.

We may experience difficulty enforcing our intellectual property rights in China.

Unauthorized use of our technologies and intellectual property rights by partners or competitors may dilute or undermine the strength of our brands.

If we cannot adequately monitor the use of our technologies and products, or enforce our intellectual property rights in China or contractual restrictions relating to use of our intellectual property by Chinese companies, our revenue could be adversely affected.

Our joint venture will be subject to laws and regulations applicable to foreign investment in China.

There are uncertainties regarding the interpretation and enforcement of laws, rules and policies in China.

Because many laws and regulations are relatively new, the interpretations of many laws, regulations and rules are not always uniform.

Moreover, the interpretation of statutes and regulations may be subject to government policies reflecting domestic political agendas.

Enforcement of existing laws or contracts based on existing law may be uncertain and sporadic.

As a result of the foregoing, it may be difficult for us to obtain swift or equitable enforcement of laws ostensibly designed to protect companies like ours, which could have a material adverse effect on our business and results of operations.

There is no guarantee that we will be able to successfully launch our joint venture.

General Risks

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In addition, the issuance of shares of our common stock upon the exercise of outstanding options or warrants may result in dilution to our stockholders.

Environmental, social and governance matters may impact our business and reputation.

Companies across many industries are facing increased scrutiny, including by consumers, investors, employees and other stakeholders, as well as by governmental and non-governmental organizations surrounding environmental, social and governance (ESG) practices.

This increased scrutiny and changing expectations with respect to the Company’s ESG practices may result in additional costs or risks.

For example, standards and research regarding ESG practices could change and become more onerous for both us and our third-party suppliers and vendors to meet successfully.

If we are unable to satisfy such new criteria, investors may conclude that our policies with respect to corporate responsibility are inadequate.

We risk damage to our brand and reputation in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies.

There can be no assurance that investors will not publicly advocate for us to not make corporate governance changes or engage in corporate actions and responding to challenges could be costly and time consuming.

Developing and achieving ESG initiatives may result in increased costs in our supply chain, fulfillment, and/or corporate business operations, and could deviate from our initial estimates and have a material adverse effect on our business and financial condition.

Furthermore, if our competitors’ corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our competitors instead.

Investor advocacy groups, certain institutional investors, investment funds and other influential investors are increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts of their investments.

Topics taken into account in such assessments include, among others, the company’s efforts and impacts on climate change and human rights, ethics and compliance with law and the role of the Company’s board of directors in supervising various sustainability issues.

In light of investors’ and other stakeholders’ increased focus on ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet our investors’ or society’s ESG expectations.

While our mission is to promote healthy aging, if our ESG practices do not meet investor or other industry stakeholder expectations, which continue to evolve, we may incur additional costs and our brand’s ability to attract and retain qualified employees and business may be harmed.

Description of Exhibits

Agreement and Plan of Merger, dated as of May 21, 2008, by and among Cody Resources, Inc., CDI Acquisition, Inc.

and ChromaDex, Inc., as amended on June 10, 2008 (incorporated by reference to, and filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K (File No.

333-140056) filed with the Commission on June 24, 2008) (1)

Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to, and filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K (File No.

4 unchanged sentences

001-37752) filed with the Commission on March 15, 2022)

Form of Stock Certificate representing shares of the Registrant’s Common Stock (incorporated by reference to, and filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K (File No.

000-53290) filed with the Commission on April 3, 2009)

Investor’s Rights Agreement, effective as of December 31, 2005, by and between The University of Mississippi Research Foundation and the Registrant (incorporated by reference to, and filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No.

333-140056) filed with the Commission on June 24, 2008)

Tag-Along Agreement effective as of December 31, 2005, by and among the Registrant, Frank Louis Jaksch, Snr.

& Maria Jaksch, Trustees of the Jaksch Family Trust, Margery Germain, Lauren Germain, Emily Germain, Lucie Germain, Frank Louis Jaksch, Jr., and the University of Mississippi Research Foundation (incorporated by reference to, and filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No.

333-140056) filed with the Commission on June 24, 2008)

Form of Stock Certificate representing shares of the Registrant’s Common Stock effective as of January 1, 2016 (incorporated by reference to, and filed as Exhibit 4.4 to the Registrant’s Annual Report on Form 10-K (File No.

001-37752) filed with the Commission on March 17, 2016)

Form of Stock Certificate representing shares of the Registrant’s Common Stock effective as of December 10, 2018 (incorporated by reference to, and filed as Exhibit 4.5 to the Registrant’s Annual Report on Form 10-K (File No.

001-37752) filed with the Commission on March 7, 2019)

Registration Rights Agreement, dated as of May 9, 2019, by and among the Registrant and the parties thereto (incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 10, 2019)

Registration Rights Agreement, dated as of August 15, 2019, by and among the Registrant and the parties thereto (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 15, 2019)

Registration Rights Agreement, dated as of April 27, 2020, by and among the Registrant and the parties thereto (incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 29, 2020)

Registration Rights Agreement, dated February 20, 2021, by and among the Company and the Purchaser (incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 22, 2021)

Second Amendment to the Amended and Restated Exclusive License Agreement, effective as of January 1, 2022, between Dartmouth College and ChromaDex, Inc.

First Amendment to the Amended and Restated Exclusive License Agreement, effective as of December 29, 2020, between Dartmouth College and ChromaDex, Inc.

Side letter agreement to the Amended and Restated Exclusive License Agreement, effective as of March 13, 2019, between Dartmouth College and ChromaDex, Inc.

Restated and Amended Exclusive License Agreement, effective as of March 13, 2017, between Dartmouth College and ChromaDex, Inc.

First Amendment to the Joint Ownership Management Agreement, effective March 9, 2022, between Queen’s University of Belfast and ChromaDex, Inc.**❖

Joint Ownership Management Agreement, effective October 9, 2015, between Queen’s University of Belfast and ChromaDex, Inc.**❖

Description of Exhibits

Transition and Separation Agreement, effective July 8, 2021, between Lisa Harrington and ChromaDex, Inc.

Joint Venture Agreement, effective as of May 19, 2022, between the Named Parties and ChromaDex, Inc.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 19, 2022)

Certification of the Chief Executive Officer pursuant to Rule 13a-14(A) of the Securities Exchange Act of 1934, as amended❖

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and ChromaDex, Inc.

(2) Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

ChromaDex Corporation undertakes to furnish supplemental copies of any of the omitted schedules upon request by the Securities and Exchange Commission;

provided, however, that ChromaDex Corporation may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule so furnished.

** Certain portions of this exhibit (indicated by asterisks) have been excluded pursuant to Item 601(b)(10) of Regulation S-K because they are both not material and are the type that the Registrant treats as private or confidential.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CHROMADEX CORPORATION

May 12, 2022 /s/ KEVIN M.

August 10, 2022 /s/ KEVIN M.

Chief Financial Officer

1 unchanged sentence

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 1A. Risk Factors