What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-02 compared with 2022-08-10 · 196 added, 109 removed, 611 unchanged (33% of the section changed)

3 unchanged sentences

(In thousands except par values, unless otherwise indicated)

Jun 30, 2022 Dec 31, 2021

Sep 30, 2022 Dec 31, 2021

Current assets

27 unchanged sentences

authorized 150,000 shares;

68,155 shares and 68,126 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

68,169 shares and 68,126 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 205,027 200,614

3 unchanged sentences

Total liabilities and stockholders' equity $ 45,665 $ 57,840

See accompanying notes to condensed consolidated financial statements.

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ChromaDex Corporation and Subsidiaries

1 unchanged sentence

(In thousands, except per share data)

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

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

2022 2021 2022 2021

8 unchanged sentences

Operating loss ( 3,065 ) ( 8,841 ) ( 17,184 ) ( 21,757 )

Other income, net - Employee Retention Tax Credit 2,085 — 2,085 —

Interest expense, net ( 5 ) ( 15 ) ( 23 ) ( 46 )

Net loss $ ( 985 ) $ ( 8,856 ) $ ( 15,122 ) $ ( 21,803 )

Basic and diluted loss per common share $ ( 0.09 ) $ ( 0.08 ) $ ( 0.21 ) $ ( 0.20 )

Basic and diluted loss per common share attributable to ChromaDex Corporation $ ( 0.01 ) $ ( 0.13 ) $ ( 0.22 ) $ ( 0.33 )

Basic and diluted weighted average common shares outstanding 68,345 68,236 68,331 66,811

See accompanying notes to condensed consolidated financial statements.

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ChromaDex Corporation and Subsidiaries

1 unchanged sentence

(In thousands, unless otherwise indicated)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

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

Shares Amount

Balance, April 1, 2022 68,149 $ 68 $ 202,502 $ ( 176,693 ) $ — $ 25,877

Balance, July 1, 2022 68,155 $ 68 $ 203,798 $ ( 183,090 ) $ 2 $ 20,778

Issuance of restricted stock 14 — — — — —

2 unchanged sentences

Net loss — — — ( 985 ) — ( 985 )

Balance, June 30, 2022 68,155 $ 68 $ 203,798 $ ( 183,090 ) $ 2 $ 20,778

Six Months Ended June 30, 2022

Balance, September 30, 2022 68,169 $ 68 $ 205,027 $ ( 184,075 ) $ 3 $ 21,023

Nine Months Ended September 30, 2022

Common Stock Additional

9 unchanged sentences

Net loss — — — ( 15,122 ) — ( 15,122 )

Balance, June 30, 2022 68,155 $ 68 $ 203,798 $ ( 183,090 ) $ 2 $ 20,778

See accompanying notes to condensed consolidated financial statements.

Balance, September 30, 2022 68,169 $ 68 $ 205,027 $ ( 184,075 ) $ 3 $ 21,023

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ChromaDex Corporation and Subsidiaries

1 unchanged sentence

(In thousands, unless otherwise indicated)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

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

Shares Amount

Balance, April 1, 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, July 1, 2021 68,009 $ 68 $ 196,848 $ ( 154,772 ) $ ( 2 ) $ 42,142

Issuance of common stock resulting from the exercise of stock options 85 — 341 — — 341

1 unchanged sentence

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

8 unchanged sentences

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

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

See accompanying notes to condensed consolidated financial statements.

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

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ChromaDex Corporation and Subsidiaries

1 unchanged sentence

(In thousands, unless otherwise indicated)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Operating Activities

38 unchanged sentences

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

See accompanying notes to condensed consolidated financial statements.

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Nature of Business

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” or the “Company”) is a global bioscience company dedicated to healthy aging.

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

and ChromaDex Sağlik Ürünleri Anonim Şirketi (collectively, “ChromaDex” or 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.

4 unchanged sentences

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.

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

Basis of Presentation and Significant Accounting Policies

2 unchanged sentences

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.

In the opinion of management, the interim Unaudited 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.

These Unaudited 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 :

2 unchanged sentences

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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed 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 six months ended June 30, 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 second quarter of 2022 interim condensed consolidated financial statements.

In connection with the preparation of these U naudited C ondensed Consolidated Financial Statements for the nine months ended September 30, 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 third quarter of 2022 interim U naudited C ondensed 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, the continued impact of the COVID-19 pandemic and inflationary pressures.

For the six months ended June 30, 2022, t he Company incurred a net loss of $ 14.1 million and used net cash in operating activities of $ 11.0 million.

As of June 30, 2022, the Company had unrestricted cash and cash equivalents of $ 16.9 million which consists of bank deposits or highly liquid investment-grade debt instruments with an original maturity of three months or less.

For the nine months ended September 30, 2022, t he Company incurred a net loss of $ 15.1 million and used net cash in operating activities of $ 14.8 million.

As of September 30, 2022, the Company had unrestricted cash and cash equivalents of $ 13.1 million which consists of bank deposits or highly liquid investment-grade debt instruments with an original maturity of three months or less.

The fair value of the Company’s cash and cash equivalents is derived using Level 1 inputs.

Management evaluated these conditions and anticipates that its current unrestricted cash and cash equivalents and cash to be generated from net sales will be sufficient to meet its financial obligations as they become due over at least the next twelve months from the issuance date of these financial statements.

Management’s assessment additionally includes plans to minimize expenses and reduce the cash burn rate for the second half of fiscal year 2022.

Subsequent to September 30, 2022, the Company closed two separate securities purchase agreements and received proceeds of approximately $ 7.7 million, net of offering costs of $ 0.4 million.

For further discussion of the securities purchase agreements, see Note 12, Subsequent Events .

Management evaluated these conditions and anticipates that its current unrestricted cash and cash equivalents, cash generated from the securities purchase agreements and cash to be generated from net sales will be sufficient to meet its financial obligations as they become due over 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 fund its projected operating plans after the next twelve months and/or to fund the Company’s longer-term strategic objectives.

The Company has an available line of credit with Western Alliance Bank for up to $ 10.0 million, subject to certain terms and conditions which currently allow for $ 4.3 million of borrowing.

There are no outstanding borrowings as of June 30, 2022.

There are no outstanding borrowings as of September 30, 2022.

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

3 unchanged sentences

(ATM Facility).

As of June 30, 2022, approximately $ 47.8 million remains available under the ATM Facility.

As of September 30, 2022, approximately $ 47.8 million remains available under the ATM Facility.

The Company’s potential use of the ATM facility is subject to the satisfaction of various conditions in the ATM Facility agreement as well market conditions.

1 unchanged sentence

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, 2022 and 2021:

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, 2022 and 2021:

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

(In thousands, except per share data) 2022 2021 2022 2021

6 unchanged sentences

Restricted stock units 748 116 748 116

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

(1) Includes approximately 0.2 million nonvested shares of restricted stock for each of the three and nine months ended September 30, 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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Business Segments

14 unchanged sentences

The following tables set forth financial information by segment:

Three months ended June 30, 2022 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

Three months ended September 30, 2022 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

8 unchanged sentences

Operating income (loss) $ 2,552 $ 773 $ ( 210 ) $ ( 6,180 ) $ ( 3,065 )

Six Months Ended June 30, 2022 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

Nine Months Ended September 30, 2022 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

8 unchanged sentences

Operating income (loss) $ 3,486 $ 2,029 $ ( 407 ) $ ( 22,292 ) $ ( 17,184 )

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

(In thousands)

8 unchanged sentences

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

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)

11 unchanged sentences

Disaggregated revenues are as follows:

Three Months Ended June 30, 2022 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

Three Months Ended September 30, 2022 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

8 unchanged sentences

Total Net Sales $ 14,561 $ 1,819 $ 683 $ 17,063

Six Months Ended June 30, 2022 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Nine Months Ended September 30, 2022 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

8 unchanged sentences

Total Net Sales $ 44,018 $ 4,710 $ 2,326 $ 51,054

Three Months Ended June 30, 2021 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

Three Months Ended September 30, 2021 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

8 unchanged sentences

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

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

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

(In thousands)

8 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Disclosure of Major Customers

1 unchanged sentence

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

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

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

Major Customers 2022 2021 2022 2021

Watson Group - Related Party 15.4 % 15.2 % 12.0 % 14.3 %

* Represents less than 10%

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

Major Customers At Jun 30, 2022 At Dec 31, 2021

Major Customers At Sep 30, 2022 At Dec 31, 2021

Watson Group - Related Party 51.3 % 39.6 %

1 unchanged sentence

Amazon Marketplaces 21.6 % *

Matakana Health 11.5 % *

* Represents less than 10%

Related Party Transactions

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.

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

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

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

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

2022 2021 2022 2021

1 unchanged sentence

Total Related Party Net Sales $ 2.6 million $ 2.6 million $ 6.7 million $ 7.1 million

During all periods indicated, sales to Horizon Ventures were insignificant.

Trade Receivable as of

Jun 30, 2022 Dec 31, 2021

Sep 30, 2022 Dec 31, 2021

Watson Group - Related Party $ 2.4 million $ 2.1 million

Total Related Party Trade Receivables $ 2.4 million $ 2.1 million

For the periods indicated, trade receivables to Horizon Ventures were insignificant.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Joint Venture Agreement

On May 19, 2022, the Company entered into an agreement to form a joint venture (the “JV”) to expand the Company’s market strategy to include opportunities in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan (the “Territory”), subject to the terms and satisfaction of the conditions contained therein.

The JV agreement is among Crystal Lake Developments Limited (Crystal Lake), Pioneer Idea Holdings Limited (Pioneer Idea), and Hong Kong (China) Taikuk Group Ltd (Taikuk).

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

The May JV Agreement was among the Company, Crystal Lake Developments Limited (Crystal Lake), Pioneer Idea Holdings Limited (Pioneer Idea), and Hong Kong (China) Taikuk Group Ltd (Taikuk).

Crystal Lake is indirectly wholly-owned by Li Ka-Shing, and Pioneer Idea is indirectly owned by Solina Chau, and each of Mr.

Ka-Shing and Ms.

Chau own through affiliated entities more than 5% of the Company’s common stock.

The business of the JV will be to market, sell and distribute Tru Niagen® and other products containing NR (the “Products”) developed by the Company in the Territory.

The JV agreement will have an initial term of 20 years, unless earlier terminated.

Crystal Lake, Pioneer Idea and Taikuk have each agreed to contribute $ 1.8 million, $ 1.2 million and $ 1.0 million, respectively into the JV.

In addition, the Company has agreed to pay $ 1.0 million to Taikuk, and Taikuk will receive an additional 5 % non-voting equity interest in the JV for introducing the parties.

Following the closing of the formation of the JV (the “Closing”), each of the parties will hold the following interest in the JV:

the Company ( 71 %), Crystal Lake ( 10.8 %), Pioneer Idea ( 7.2 %) and Taikuk (a 11 % non-voting interest).

The Company will have the right to elect three of the five directors in the JV, and Pioneer Idea will have the right to elect the other two directors, with each director having one vote.

Certain material corporate actions will require unanimous approval of the board of the JV.

The Closing is subject to certain customary closing conditions and is expected to occur by the end of the third quarter of 2022.

Prior to being able to commercialize the Products in the Territory, the JV will have to obtain all applicable regulatory approvals, including “Blue Hat” or health food registration with the PRC State Administration for Market Regulation for Products in the name of the Company or its designee (collectively, the “Blue Hat Registration”).

Prior to the JV obtaining the Blue Hat Registration, we will supply the Products to the JV who will appoint a third party sub-distributor to sell the Products in the Territory.

Once Blue Hat Registration is obtained, we will license to the JV certain intellectual property relating to the Products for the JV to manufacture and sell the Products in the Territory.

If the Blue Hat Registration is not obtained within 24 months of Closing (which deadline for obtaining the Blue Hat Registration may be extended by an additional 12 months upon consent of the parties), the JV may repurchase the 11 % non-voting interest owned by Taikuk for two dollars.

As of the date of this report, the JV has not yet launched.

The Company's major classes of inventory and corresponding balances as of June 30, 2022 and December 31, 2021 are as follows:

(In thousands) Jun 30, 2022 Dec 31, 2021

On September 30, 2022, the Company entered into a Termination Agreement for the purpose of terminating the May JV Agreement.

The Termination Agreement was approved by the Audit Committee of the Board in accordance with the Company’s Related-Persons Transaction Policy.

In connection with the Termination Agreement, on September 30, 2022, Asia Pacific Scientific, Inc., an indirect wholly owned subsidiary of the Company, and Hong Kong (China) Taikuk Group Ltd (Taikuk) entered into a shareholders agreement (the “Shareholders Agreement”) pursuant to which Taikuk has agreed to contribute $ 1.0 million (the “Subscription Price”) in exchange for an 11 % non-voting equity interest in ChromaDex Asia Pacific Ventures Limited, a subsidiary of Asia Pacific Scientific, Inc.

(the “Joint Venture” or “JV”).

Additionally, the Company shall pay $ 1.0 million in cash to Taikuk (the “Taikuk Fee”) upon the closing of the Shareholders Agreement (the “Closing”).

The Company and Taikuk have mutually agreed that no exchange of funds for the Taikuk Fee and Subscription Price was necessary and, accordingly, no cash has or will exchange hands related to these provisions of the Shareholders Agreement.

The articles of association of the JV were amended and restated simultaneously with the Closing.

The purpose of the JV is to commercialize Tru Niagen® and other products containing nicotinamide riboside to be developed by the Company in the ordinary course (the “Products”) in the Territory.

The Shareholders Agreement has an initial term of 20 years, unless earlier terminated.

The Company indirectly owns an 89 % equity interest (and all of the voting interests) in the JV and has the right to elect all three directors of the JV.

Prior to being able to commercialize the Products in the Territory, the JV will have to obtain all applicable regulatory approvals, including “Blue Hat” or health food registration with the Peoples Republic of China State Administration for Market Regulation for Products in the name of the Company or its designee (collectively, the “Blue Hat Registration”).

Upon completion of Blue Hat Registration, the Company shall make a payment of $ 1.0 million in cash to Taikuk (the “Blue Hat Registration Fee”).

If the Blue Hat Registration is not obtained within 24 months of the Closing (which may be extended by an additional 12 months upon mutual consent of the parties), the JV may repurchase the 11 % non-voting interest purchased by Taikuk for $ 1 (the “Right of Repurchase”).

The Right of Repurchase functions as a performance vesting condition under ASC 718 and the 11 % non-voting equity interest is accounted for as nonemployee share-based compensation.

The equity interest will only vest if Blue Hat Registration is achieved, at which time the minority interest will be recorded.

Consequently, no amounts related to the Blue Hat Registration Fee or the 11 % non-voting interest have been recognized in the Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022.

The fair value of the 11 % non-voting interest and corresponding share-based compensation expense of $ 1.0 million was determined as of the grant date of September 30, 2022 and based on a discounted cash flow model, which utilizes Level 3, or unobservable, inputs.

The most significant of these inputs were the combined weighted averages of the a) discount rate at 27.5 %, b) present value of estimated future cash flows of $ 3.9 million and c) the present value of the terminal value at $ 5.6 million.

Once Blue Hat Registration is complete and certain distribution agreements relating to the commercialization of the Products in the Territory are assigned and entered into (the “Distribution Agreements”), Taikuk would be entitled to certain royalty payments based on the Company’s and the JV’s net revenue for sales of the Products in the Territory under the Distribution Agreements.

Operating activity under the JV was not material during the three months ended September 30, 2022.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

The Company's major classes of inventory and corresponding balances as of September 30, 2022 and December 31, 2021 are as follows:

(In thousands) Sep 30, 2022 Dec 31, 2021

Consumer Products - Finished Goods $ 9,214 $ 6,823

10 unchanged sentences

Operating Leases

As of June 30, 2022, the Company had right-of-use assets and corresponding operating lease liabilities of approximately $ 3.9 million and $ 4.5 million, respectively.

For the three and six months ended June 30, 2022 and 2021, the components of operating lease expense are as follows:

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

As of September 30, 2022, the Company had right-of-use assets and corresponding operating lease liabilities of approximately $ 3.7 million and $ 4.4 million, respectively.

For the three and nine months ended September 30, 2022 and 2021, the components of operating lease expense are as follows:

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

(In thousands) 2022 2021 2022 2021

5 unchanged sentences

Total expense $ 315 $ 266 $ 1,019 $ 689

At June 30, 2022

At September 30, 2022

Weighted-average remaining lease term (years), operating leases 4.6

Weighted-average discount rate, operating leases 5.9 %

Future minimum lease payments under operating leases as of June 30, 2022 are as follows:

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Future minimum lease payments under operating leases as of September 30, 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 June 30, 2022, there were approximately 2.8 million remaining shares available for issuance under the 2017 Plan.

As of September 30, 2022, there were approximately 4.4 million remaining shares available for issuance under the 2017 Plan.

Options expire 10 years from the date of grant.

The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for stock option awards that are not market based.

Determining the appropriate fair-value model and calculating the fair value of stock option awards at the grant date requires judgment, including estimating stock price volatility and expected option life.

The fair-value of the restricted stock unit awards at the grant date is based on the market price on the grant date.

The Company develops estimates based on historical data and market information, which can change significantly over time, and adjusts for forfeitures as they occur.

General Vesting Conditions

1 unchanged sentence

Beginning in the second quarter of 2022, restricted stock units are generally subject to a three-year vesting period with 1/3rd vesting per year on the anniversary of the grant date.

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

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

Certain executive stock option and RSU awards provide for accelerated vesting if there is a change in control or termination without cause.

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, 2022:

The Company used the following weighted average assumptions for options granted during the nine months ended September 30, 2022:

Weighted Average:

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Expected term 6.7 years

2 unchanged sentences

Expected dividends — %

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Service Period Based Stock Options

The following table summarizes activity of service period-based stock options during the six months ended June 30, 2022 :

The following table summarizes activity of service period-based stock options during the nine months ended September 30, 2022 :

Weighted Average

7 unchanged sentences

Options Forfeited ( 2,806 ) 4.09

Outstanding at June 30, 2022 10,866 $ 4.22 6.2 $ 3 *

Exercisable at June 30, 2022 7,451 $ 4.11 4.7 $ — *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 1.67 , which is the closing price of the Company’s stock on the last day of business for the period ended June 30, 2022.

Outstanding at September 30, 2022 9,023 $ 4.25 6.3 $ — *

Exercisable at September 30, 2022 6,112 $ 4.42 5.0 $ — *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 1.23 , which is the closing price of the Company’s stock on the last day of business for the period ended September 30, 2022.

Restricted Stock Units

The following table summarizes activity of restricted stock units during the six months ended June 30, 2022 :

The following table summarizes activity of restricted stock units during the nine months ended September 30, 2022 :

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

3 unchanged sentences

Forfeited ( 14 ) 9.85

Unvested shares at June 30, 2022 593 $ 3.24

Expected to vest at June 30, 2022 593 $ 3.24

Unvested shares at September 30, 2022 748 $ 2.75

Expected to vest at September 30, 2022 748 $ 2.75

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) 2022 2021 2022 2021

5 unchanged sentences

Total $ 1,229 $ 1,822 $ 4,413 $ 4,722

In future periods, the Company expects to recognize approximately $ 8.7 million and $ 1.7 million in share-based compensation expense for unvested options and unvested restricted stock units, respectively, that were outstanding as of June 30, 2022.

In future periods, the Company expects to recognize approximately $ 6.2 million and $ 1.7 million in share-based compensation expense for unvested options and unvested restricted stock units, respectively, that were outstanding as of September 30, 2022.

Future share-based compensation expense will be recognized over 1.8 and 1.9 weighted average years for unvested options and restricted stock units, respectively.

The Company also has total unrecognized share-based compensation expense of $ 1.0 million pertaining to the Joint Venture.

Such expense will only be recognized if Blue Hat Registration is achieved, the timing of which is uncertain as of September 30, 2022.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Commitments and Contingencies

24 unchanged sentences

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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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.

29 unchanged sentences

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

On August 22, 2022, ChromaDex, Inc.

filed a motion for entry of judgment pursuant to Federal Rule of Civil Procedure 54(b) on the basis that the settlement agreement was enforceable and resolved the claims and counterclaims tried to the jury in the California Action.

Elysium’s opposition brief was filed on August 29, 2022, and ChromaDex, Inc.’s reply brief was filed on September 2, 2022.

On September 13, 2022, the court denied ChromaDex, Inc.’s motion for entry of judgment pursuant to Rule 54(b).

On September 28, 2022, ChromaDex, Inc., Elysium, and Mark Morris filed a joint stipulation requesting that the court stay the California Action pending the final resolution of ChromaDex, Inc.’s appeal in the U.S.

Court of Appeals for the Federal Circuit captioned ChromaDex, Inc.

Elysium Health, Inc., No.

2022-1116 (the “Federal Circuit Appeal”).

On September 28, 2022, the court issued an order staying the California Action pending the final resolution of the Federal Circuit Appeal.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

(B) Southern District of New York Action

41 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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.

16 unchanged sentences

On May 25, 2022, ChromaDex filed a notice of cross-appeal.

Elysium filed its opening brief on August 24, 2022.

ChromaDex’s brief is due on November 22, 2022.

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 June 30, 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.

As of September 30, 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.

9 unchanged sentences

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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

33 unchanged sentences

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.

Oral argument has been scheduled for December 6, 2022.

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

Thorne Research, Inc .

11 unchanged sentences

On May 31, 2022, the PTAB issued a final written decision holding that the challenged claim was unpatentable.

On August 2, 2022, Dartmouth filed a notice of appeal.

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

4 unchanged sentences

Oral argument was held on May 17, 2022.

A final written decision had not yet been rendered.

On August 10, 2022, the PTAB issued a final written decision holding that the challenged claims were not unpatentable.

On October 12, 2022, Thorne filed a notice of appeal.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

8 unchanged sentences

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

On August 24, 2022, the parties filed a status report agreeing to continue to stay until fourteen days after the deadline to appeal the final written notice decision in the ‘807 Patent IPR.

On October 26, 2022, the parties filed a further status report agreeing to continue the stay through resolution of the appeals.

Erica Martinez

5 unchanged sentences

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

The resolution of such matter was not material to the Company.

(A) Florida Action

5 unchanged sentences

On May 23, 2022, Power filed a second amended complaint.

There has been no request for an issuance of a summons.

As of August 10, 2022, the Company has not been served with the complaint.

On August 2, 2022, the Magistrate Judge issued a Report and Recommendation on Power’s motion to proceed in forma pauperis , which included an analysis of the second amended complaint.

The Report and Recommendation recommended that the Court (i) deny the motion to proceed in forma pauperis , (ii) dismiss the second amended complaint with prejudice, and (iii) direct the Clerk of the Court to close the file.

On August 2, 2022, Power filed an objection to the Report and Recommendation.

On September 20, 2022, the Court (i) dismissed the complaint without prejudice, but without leave to amend (ii) denied the motion to proceed in forma pauperis , and (iii) directed the Clerk of the Court to close the file.

On October 11, 2022, Power filed a motion to extend the time to object to the Report and Recommendation.

On October 28, 2022, the Court denied the motion to extend.

As of November 2, 2022, the Company has not been served with the 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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

(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 June 30, 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.

5 unchanged sentences

On June 23, 2022, Rejuvenation filed for a motion for leave to file a third amended complaint.

Both the demurrer and motion for leave to amend are scheduled to be heard on September 27, 2022.

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.

On October 21, 2022, the parties reached a settlement on confidential terms and the resolution was not material to the Company.

Contingencies

14 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Employee Retention Tax Credit

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law, providing numerous tax provisions and other stimulus measures, including the Employee Retention Tax Credit (ERTC):

a refundable tax credit against certain employment taxes for qualifying businesses keeping employees on their payroll during the COVID-19 pandemic.

The ERTC was subsequently amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, the Consolidated Appropriation Act of 2021, and the American Rescue Plan Act of 2021, all of which amended and extended the ERTC availability and guidelines under the CARES Act.

During the third quarter of 2022, the Company evaluated its eligibility for the ERTC and is eligible to claim a refundable tax credit against the employer share of Social Security taxes equal to fifty percent (50%) of the qualified wages paid to employees between March 27, 2020 and December 31, 2020 and seventy percent (70%) of the qualified wages paid to employees between January 1, 2021 and September 30, 2021.

For fiscal year 2020, qualified wages are limited to $10,000 annually per employee for a maximum allowable ERTC per employee of $5,000 annually and qualified wages are limited to $10,000 per calendar quarter in 2021 for a maximum allowable ERTC per employee of $7,000 for each calendar quarter in 2021.

The Company qualified for the ERTC in the last three quarters of 2020 and all three quarters of 2021 and filed a claim for the credit in August 2022.

During the quarter ended September 30, 2022, the Company recorded an aggregate benefit of approximately $ 2.1 million in Other income, net - Employee Retention Tax Credit in its Unaudited Condensed Consolidated Statements of Operations to reflect the ERTC for all eligible quarters.

The receivable for the ERTC benefit is included within Prepaid expenses and other current assets on the Company’s Unaudited Condensed Consolidated Balance Sheets at September 30, 2022.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Subsequent Events

The Company has evaluated subsequent events through the filing date of this Form 10-Q to ensure that this filing includes all appropriate footnote disclosure of events both recognized in the financial statements as of June 30, 2022 , and events which occurred subsequently but were not recognized in the financial statements.

On August 5, 2022, the Company filed a claim for a refund from the U.S.

Treasury in the amount of approximately $ 2.5 million representing the anticipated Employee Retention Tax Credit (ERTC) available to it under the CARES Act.

The ERTC is available to companies that retained employees on its payroll without receiving services due to fully, or partially, suspending operations during fiscal years 2020 and 2021 due to orders from an appropriate governmental authority, which limited commerce, travel, or group meetings due to COVID-19.

The employee retention tax credits will be recorded as an offset to the related employee expenses within the appropriate financial statement line item.

Beyond this, there were no further subsequent events which required recognition, adjustment to or disclosure in the financial statements.

Securities Purchase Agreement and Registration Rights Agreement - Related Parties

On September 30, 2022, the Company entered into a Securities Purchase Agreement with Pioneer Step Holdings Limited (Pioneer Step), Champion River Ventures Limited (Champion) and Robert Fried (collectively, the “Purchasers”) pursuant to which the Company agreed to sell and issue approximately 2.5 million shares of common stock at a price of $ 1.25 per share (the “Financing”).

Champion is indirectly owned by Li Ka-Shing and Pioneer Step is indirectly owned by Solina Chau, and each of Mr.

Ka-Shing and Ms.

Chau own through affiliated entities more than 5 % of the Company’s common stock.

Pursuant to previous agreements, each of Pioneer Step and Champion have appointed a member of the Company’s Board.

Fried is the Company’s Chief Executive Officer.

The transaction and related agreements were approved by the Audit Committee of the Board in accordance with the Company’s Related-Persons Transaction Policy.

On October 7, 2022, the Company closed the Financing and received proceeds of approximately $ 2.9 million, net of offering costs of $ 0.2 million.

In connection with the Financing, on September 30, 2022, the Company also entered into a Registration Rights Agreement with the Purchasers (the “Registration Rights Agreement”), pursuant to which the Company agreed to (i) file one or more registration statements with the SEC to cover the resale of the shares of Common Stock issued to the Purchasers, (ii) use reasonable best efforts to have all such registration statements declared effective within the timeframes set forth in the Registration Rights Agreement, and (iii) use commercially reasonable efforts to keep such registration statements effective during the timeframes set forth in the Registration Rights Agreement.

In the event that such registration statements are not filed or declared effective within the timeframes set forth in the Registration Rights Agreement, any such effective registration statements subsequently become unavailable, or the Purchasers are unable to sell the shares of Common Stock issued pursuant to the Financing due to failure by the Company to satisfy the current public information requirement of Rule 144 under the Securities Act, the Company would be required to pay liquidated damages to the Purchasers equal to 1.0% of the aggregate purchase price per month for each default (up to a maximum of 5.0% of such aggregate purchase price).

NHSc Agreement

On October 10, 2022, the Company and Société des Produits Nestlé SA, a société anonyme organized under the laws of Switzerland (NHSc), as successor-in-interest to NESTEC Ltd., entered into an amended and restated supply agreement (the “Supply Agreement”), which amends and restates the supply agreement, dated December 19, 2018, entered into by the Company and NESTEC Ltd.

Pursuant to the Supply Agreement, NHSc and its affiliates will exclusively purchase nicotinamide riboside chloride (NRCL) from the Company and NHSc and its affiliates will have the non-exclusive right to manufacture, market, distribute, and sell products using NRCL for human use in the (i) medical nutritional, (ii) functional food and beverage and (iii) multi-ingredient dietary supplements categories sold under one of the NHSc brands (the “Approved Products”) world-wide, but excluding certain countries and ingredient combinations.

The term of the Supply Agreement is five years , unless earlier terminated, and is subject to automatic extensions provided certain minimum purchases by NHSc are met.

As consideration for the rights granted to NHSc under the Supply Agreement, NHSc agreed to an initial purchase commitment of NRCL equal to approximately $ 2.0 million.

The Supply Agreement additionally provides for NHSc to pay a royalty to the Company at tiered percentage rates in the low-single digits based on worldwide annual net sales of the Approved Products, subject to certain deductions.

Furthermore, the Supply Agreement provides for NHSc to pay the Company two separate one-time milestone payments in the low seven figures depending on whether NHSc achieves certain net sales targets in any contract year.

In connection with the entry into the Supply Agreement, the Company entered into a Securities Purchase Agreement with NHSc, pursuant to which NHSc agreed to purchase 3.8 million shares of common stock at a price of $ 1.31 which is equal to the volume weighted average price of the Company’s common stock for the ten trading days preceding October 10, 2022 (the “Securities Purchase Agreement”).

On October 17, 2022, the Company closed the Securities Purchase Agreement and received proceeds of approximately $ 4.8 million , net of offering costs of $ 0.2 million.

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