What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 193 added, 93 removed, 588 unchanged (33% of the section changed)

3 unchanged sentences

(In thousands except par values, unless otherwise indicated)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets

28 unchanged sentences

authorized 150,000 shares;

74,666 shares and 74,567 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

74,856 shares and 74,567 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 216,691 214,094

7 unchanged sentences

(In thousands, except per share data)

Three Months Ended March 31,

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

2023 2022 2023 2022

Sales, net $ 20,323 $ 16,732 $ 42,879 $ 33,991

16 unchanged sentences

(In thousands, unless otherwise indicated)

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

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

Shares Amount

Balance, April 1, 2023 74,666 $ 74 $ 215,367 $ ( 187,424 ) $ — $ 28,017

Issuance of restricted stock 190 1 — — — 1

Share-based compensation — — 1,324 — — 1,324

Translation adjustment — — — — ( 1 ) ( 1 )

Net loss — — — ( 2,191 ) — ( 2,191 )

Balance, June 30, 2023 74,856 $ 75 $ 216,691 $ ( 189,615 ) $ ( 1 ) $ 27,150

Three Months Ended June 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

Issuance of restricted stock 6 — — — — —

Share-based compensation — — 1,296 — — 1,296

Translation adjustment — — — — 2 2

Net loss — — — ( 6,397 ) — ( 6,397 )

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

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Stockholders' Equity Continued

(In thousands, unless otherwise indicated)

Six Months Ended June 30, 2023

Common Stock Additional

Paid-in Capital Accumulated

Deficit Cumulative

Adjustments Total

Stockholders'

Shares Amount

Balance, January 1, 2023 74,567 $ 74 $ 214,094 $ ( 185,493 ) $ ( 3 ) $ 28,672

5 unchanged sentences

Net loss — — — ( 4,093 ) — ( 4,093 )

Balance, March 31, 2023 74,666 $ 74 $ 215,367 $ ( 187,424 ) $ — $ 28,017

Three Months Ended March 31, 2022

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

Balance, June 30, 2023 74,856 $ 75 $ 216,691 $ ( 189,615 ) $ ( 1 ) $ 27,150

Six Months Ended June 30, 2022

Common Stock Additional

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

Shares Amount

4 unchanged sentences

Net loss — — — ( 14,137 ) — ( 14,137 )

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

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

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows From Operating Activities

Net loss $ ( 4,093 ) $ ( 14,137 )

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

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation of leasehold improvements and equipment 460 413

2 unchanged sentences

Share-based compensation expense 2,597 3,184

Loss on disposal of leasehold improvements and equipment ( 5 ) 22

Provision for doubtful trade receivables 751 5

7 unchanged sentences

Accrued expenses 742 215

Deferred revenue ( 149 ) ( 118 )

Customer deposits and other 11 16

3 unchanged sentences

Purchases of leasehold improvements and equipment ( 101 ) ( 110 )

Proceeds from the sale of leasehold improvements and equipment, net 5 —

Net cash used in investing activities ( 96 ) ( 110 )

51 unchanged sentences

Evaluation of Ability to Maintain Current Level of Operations

In connection with the preparation of these U naudited C ondensed Consolidated Financial Statements for the three months ended March 31, 2023, 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 2023 interim U naudited C ondensed Consolidated Financial Statements.

In connection with the preparation of these U naudited C ondensed Consolidated Financial Statements for the six months ended June 30, 2023, 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 2023 interim U naudited C ondensed Consolidated Financial Statements.

Management assessed that there were such conditions and events, including a history of recurring operating losses, a history of negative cash flows from operating activities and inflationary pressures.

For the three months ended March 31, 2023, t he Company incurred a net loss of $ 1.9 million, however, the Company’s operating activities provided cash of $ 2.8 million.

As of March 31, 2023, the Company had unrestricted cash and cash equivalents of $ 23.0 million which consists of bank deposits or highly liquid investment-grade debt instruments with an original maturity of three months or less.

For the six months ended June 30, 2023, t he Company incurred a net loss of $ 4.1 million, however, during the same period the Company’s operating activities provided cash of $ 6.1 million.

As of June 30, 2023, the Company had unrestricted cash and cash equivalents of $ 26.3 million which consists of bank deposits and short-term investments, including low-risk, fixed-income investments and 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.

1 unchanged sentence

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 as of March 31, 2023 allows for $ 7.2 million of borrowing.

There are no outstanding borrowings as of March 31, 2023.

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

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 as of June 30, 2023 allows for $ 4.9 million of borrowing.

There are no outstanding borrowings as of June 30, 2023.

In June 2023, the Company filed a new $ 125 million registration statement on Form S-3 with the SEC, utilizing a “shelf” registration process.

Under this shelf registration process, the Company may sell securities from time to time, including up to approximately $ 47.8 million pursuant to the At Market Issuance Sales Agreement, dated as of June 12, 2020, with B.

Riley FBR, Inc.

1 unchanged sentence

(ATM Facility).

As of March 31, 2023, approximately $ 47.8 million remains available under the ATM Facility.

As of June 30, 2023, the full $ 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.

As a result, the Company’s ability to rely on the ATM Facility to raise liquidity is limited to a material extent.

Earnings (Loss) Per Share Applicable to Common Stockholders

The following table sets forth the computations of earnings (loss) per share amounts applicable to common stockholders for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Loss Per Share Applicable to Common Stockholders

The following table sets forth the computations of loss per share amounts applicable to common stockholders for the three and six months ended June 30, 2023 and 2022:

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

(In thousands, except per share data) 2023 2022 2023 2022

6 unchanged sentences

Restricted stock units 774 593 774 593

(1) Includes approximately 0.2 million nonvested shares of restricted stock for each of the three months ended March 31, 2023 and 2022 which are participating securities that feature voting and dividend rights.

(1) Includes a weighted average of approximately 181 and 182 nonvested shares of restricted stock for the three and six months ended June 30, 2023, respectively, and 183 nonvested shares of restricted stock for each of the three and six months ended June 30, 2022 which are participating securities that feature voting and dividend rights.

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

17 unchanged sentences

The following tables set forth financial information by segment:

Three Months Ended March 31, 2023 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

Three months ended June 30, 2023 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

1 unchanged sentence

Cost of sales 5,959 1,232 776 — 7,967

Gross profit 11,229 2,243 46 — 13,518

Gross profit (loss) 10,932 1,472 ( 48 ) — 12,356

Operating expenses:

4 unchanged sentences

Operating income (loss) $ 3,871 $ 1,257 $ ( 146 ) $ ( 7,298 ) $ ( 2,316 )

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

Six Months Ended June 30, 2023 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

1 unchanged sentence

Cost of sales 12,363 3,113 1,529 — 17,005

Gross profit 9,685 705 142 — 10,532

Gross profit (loss) 22,161 3,715 ( 2 ) — 25,874

Operating expenses:

6 unchanged sentences

Notes to the Unaudited Condensed Consolidated Financial Statements

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

(In thousands)

Net sales $ 14,520 $ 1,464 $ 748 $ — $ 16,732

Cost of sales 5,218 681 791 — 6,690

Gross profit (loss) 9,302 783 ( 43 ) — 10,042

Operating expenses:

Sales and marketing 7,864 — 157 — 8,021

Research and development 1,113 132 — — 1,245

General and administrative — — — 7,163 7,163

Operating expenses 8,977 132 157 7,163 16,429

Operating income (loss) $ 325 $ 651 $ ( 200 ) $ ( 7,163 ) $ ( 6,387 )

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

(In thousands)

Net sales $ 29,457 $ 2,891 $ 1,643 $ — $ 33,991

Cost of sales 10,470 1,403 1,544 — 13,417

Gross profit 18,987 1,488 99 — 20,574

Operating expenses:

Sales and marketing 15,938 24 296 — 16,258

Research and development 2,115 208 — — 2,323

General and administrative — — — 16,112 16,112

Operating expenses 18,053 232 296 16,112 34,693

Operating income (loss) $ 934 $ 1,256 $ ( 197 ) $ ( 16,112 ) $ ( 14,119 )

Disaggregation of Revenue

1 unchanged sentence

Disaggregated revenues are as follows:

Three Months Ended March 31, 2023 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

Three Months Ended June 30, 2023 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

8 unchanged sentences

Total Net Sales $ 16,891 $ 2,704 $ 728 $ 20,323

Three Months Ended March 31, 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

Six Months Ended June 30, 2023 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

8 unchanged sentences

Total Net Sales $ 34,524 $ 6,828 $ 1,527 $ 42,879

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

(In thousands)

Tru Niagen®, Consumer Product $ 14,520 $ — $ — $ 14,520

Niagen® Ingredient

— 1,454 — 1,454

Subtotal Niagen® Related 14,520 1,454 — 15,974

Other Ingredients — 10 — 10

Reference Standards — — 704 704

Consulting and Other — — 44 44

Subtotal Other Goods and Services — 10 748 758

Total Net Sales $ 14,520 $ 1,464 $ 748 $ 16,732

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

(In thousands)

Tru Niagen®, Consumer Product $ 29,457 $ — $ — $ 29,457

Niagen® Ingredient

— 2,585 — 2,585

Subtotal Niagen® Related 29,457 2,585 — 32,042

Other Ingredients — 306 — 306

Reference Standards — — 1,587 1,587

Consulting and Other — — 56 56

Subtotal Other Goods and Services — 306 1,643 1,949

Total Net Sales $ 29,457 $ 2,891 $ 1,643 $ 33,991

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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,

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

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

Major Customers 2023 2022 2023 2022

Watson Group - Related Party 14.7 % * 15.6 % 12.0 %

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Life Extension 10.0 % * * *

* 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 March 31, 2023 At December 31, 2022

Major Customers At June 30, 2023 At December 31, 2022

Watson Group - Related Party 45.3 % 36.6 %

Nestlé (NHSc) * 23.6 %

ProHealth 13.0 % *

Amazon Marketplaces 11.2 % *

Life Extension 22.8 % *

ShopHQ 10.8 % *

* Represents less than 10%

As of March 31, 2023, concentration for the Company's outstanding trade receivables is significant, with approximately 86 % of the total outstanding trade receivables aggregated among five customers.

This concentration presents a potential risk to the Company's financial performance and cash flows, as any adverse changes in the payment behavior or financial health of these major customers could impact the Company's cash flows and financial results.

The Company has determined that the current concentration is primarily due to the timing of purchases and does not consider the concentration of its trade receivables to be a significant risk.

However, to mitigate the risk associated with the concentration of trade receivables, the Company is actively monitoring the creditworthiness and payment behavior of these major customers.

It has implemented credit risk management policies and procedures, including credit assessments, ongoing credit monitoring, and diligent collection efforts.

Furthermore, the Company continues to pursue new partnerships and business opportunities which helps to broaden its customer base and minimize the risk of a significant concentration of trade receivables.

Despite these risk mitigation efforts, there is no assurance that the Company will not experience delays or defaults in payment from these major customers, which could result in an increase in the Company's bad debt expense, a reduction in cash flows, and a negative impact on its financial performance.

During the three and six months ended June 30, 2023, the Company recorded provision for doubtful trade receivables of approximately $ 0.4 million and $ 0.8 million, respectively.

Primarily, the higher provision was a result of the Chapter 11 bankruptcy filing by iMedia Brands, Inc., which owns ShopHQ, a multiplatform interactive television network, which has been a sales channel for Tru Niagen®.

As of June 30, 2023, concentration for the Company's outstanding trade receivables is significant, with approximately 79 % of the total outstanding trade receivables aggregated among three customers.

Whenever a significant concentration is present it poses a potential risk to the Company's financial performance and cash flows, as any adverse changes in the payment behavior or financial health of these major customers could impact the Company's cash flows and financial results.

The Company has determined that the current concentration is primarily due to the timing of purchases, and the Company does not consider the concentration of its trade receivables to be a significant risk.

Nevertheless, to ensure prudence and safeguard against potential challenges arising from this concentration, the Company remains vigilant in monitoring the creditworthiness and payment behavior of these major customers.

Furthermore, the Company continues to pursue new partnerships and business opportunities which helps to diversify its customer base and minimize the risk of an overreliance on any particular trade receivable.

Despite the Company’s risk mitigation efforts, there is no assurance that the Company will not experience delays or defaults in payment from its customers, which could result in an increase in the Company's bad debt expense, a reduction in cash flows, and a negative impact on its financial performance.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Related Party Transactions

1 unchanged sentence

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

Three Months Ended March 31,

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

Net Sales 2023 2022 2023 2022

Watson Group - Related Party $ 3.7 million $ 2.6 million

Trade Receivable as of March 31, 2023 December 31, 2022

Watson Group - Related Party $ 3.0 million $ 1.5 million $ 6.7 million $ 4.1 million

Trade Receivable as of June 30, 2023 December 31, 2022

Watson Group - Related Party $ 2.8 million $ 3.1 million

The Company's major classes of inventory and corresponding balances as of March 31, 2023 and December 31, 2022 are as follows:

(In thousands) March 31, 2023 December 31, 2022

The Company's major classes of inventory and corresponding balances as of June 30, 2023 and December 31, 2022 are as follows:

(In thousands) June 30, 2023 December 31, 2022

Consumer Products - Finished Goods $ 6,539 $ 7,901

3 unchanged sentences

Total Inventory $ 11,973 $ 14,677

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

5 unchanged sentences

Operating Leases

As of March 31, 2023, the Company had right-of-use assets and corresponding operating lease liabilities of approximately $ 3.4 million and $ 4.1 million, respectively.

For the three months ended March 31, 2023 and 2022, the components of operating lease expense are as follows:

Three Months Ended March 31,

As of June 30, 2023, the Company had right-of-use assets and corresponding operating lease liabilities of approximately $ 3.2 million and $ 3.9 million, respectively.

For the three and six months ended June 30, 2023 and 2022, the components of operating lease expense are as follows:

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

(In thousands) 2023 2022 2023 2022

5 unchanged sentences

Total expense $ 293 $ 344 $ 581 $ 704

At March 31, 2023

At June 30, 2023

Weighted-average remaining lease term (years), operating leases 3.8

Weighted-average discount rate, operating leases 5.7 %

Future minimum lease payments under operating leases as of March 31, 2023 are as follows:

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Future minimum lease payments under operating leases as of June 30, 2023 are as follows:

Year (In thousands)

5 unchanged sentences

Long-term obligations under operating leases $ 3,137

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Share-Based Compensation

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

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

In June 2023, stockholders approved an amendment to the Company’s 2017 Equity Incentive Plan to increase the number of shares available for issuance by 3.65 million shares of common stock.

Pursuant to the latest amendment, the 2017 Plan provides for the issuance of shares that total no more than the sum of (i) 18,150,000 new shares, (ii) any returning shares such as forfeited, cancelled, or expired shares granted under either the 2017 Plan or the Second Amended and Restated 2007 Equity Incentive Plan and (iii) 500,000 shares pursuant to an inducement award.

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

As of March 31, 2023, there were approximately 1.4 million remaining shares available for issuance under the 2017 Plan.

As of June 30, 2023, there were approximately 5.3 million remaining shares available for issuance under the 2017 Plan.

Options expire 10 years from the date of grant.

8 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Stock Options

The Company used the following weighted average assumptions for options granted during the three months ended March 31, 2023:

The Company used the following weighted average assumptions for options granted during the six months ended June 30, 2023:

Weighted Average:

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Expected term 6.2 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 three months ended March 31, 2023 :

The following table summarizes activity of service period-based stock options during the six months ended June 30, 2023 :

Weighted Average

7 unchanged sentences

Options Forfeited ( 559 ) 3.60

Outstanding at March 31, 2023 11,472 $ 3.75 6.9 $ 13 *

Exercisable at March 31, 2023 7,145 $ 4.36 5.3 $ — *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 1.53 , which is the closing price of the Company’s stock on the last day of business for the period ended March 31, 2023.

There were no activities related to performance or market-based stock options during the three months ended March 31, 2023.

Outstanding at June 30, 2023 11,238 $ 3.75 6.2 $ 23 *

Exercisable at June 30, 2023 7,623 $ 4.37 4.7 $ — *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 1.57 , which is the closing price of the Company’s stock on the last day of business for the period ended June 30, 2023.

There were no activities related to performance or market-based stock options during the six months ended June 30, 2023.

Restricted Stock Units

The following table summarizes activity of restricted stock units during the three months ended March 31, 2023 :

The following table summarizes activity of restricted stock units during the six months ended June 30, 2023 :

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

3 unchanged sentences

Forfeited ( 30 ) 2.79

Unvested shares at March 31, 2023 945 $ 2.29

Expected to vest at March 31, 2023 945 $ 2.29

Unvested shares at June 30, 2023 774 $ 2.25

Expected to vest at June 30, 2023 774 $ 2.25

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Restricted Stock Awards

The following table summarizes activity of restricted stock awards during the periods indicated:

(In thousands except per share fair value) Number of Awards Weighted Average Fair Value

Unvested shares at December 31, 2022 183 $ 3.25

Vested ( 16 ) $ 4.23

Forfeited — —

Unvested shares at June 30, 2023 167 $ 3.15

Expected to vest as of June 30, 2023 167 $ 3.15

Total Share-Based Compensation

Total share-based compensation expense was as follows:

Three Months Ended March 31,

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

(In thousands) 2023 2022 2023 2022

5 unchanged sentences

Total $ 1,324 $ 1,296 $ 2,597 $ 3,184

In future periods, the Company expects to recognize approximately $ 7.0 million and $ 1.9 million in share-based compensation expense for unvested options and unvested restricted stock units, respectively, that were outstanding as of March 31, 2023.

In future periods, the Company expects to recognize approximately $ 5.0 million and $ 1.5 million in share-based compensation expense for unvested options and unvested restricted stock units, respectively, that were outstanding as of June 30, 2023.

Future share-based compensation expense will be recognized over 1.6 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 March 31, 2023.

Such expense will only be recognized if Blue Hat Registration is achieved, the timing of which is uncertain as of June 30, 2023.

For additional discussion of the Joint Venture, see Note 12, Joint Venture Agreement .

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Commitments and Contingencies

12 unchanged sentences

Discovery closed on August 9, 2019.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

On August 16, 2019, the parties filed motions for partial summary judgment as to certain claims and counterclaims.

10 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.

8 unchanged sentences

On November 18, 2020, the court set trial to begin on September 21, 2021.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

28 unchanged sentences

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

On June 16, 2023, ChromaDex, Elysium, and Mark Morris filed a joint status report and stipulation informing the court that the U.S.

Court of Appeals for the Federal Circuit had issued its mandate in the Federal Circuit Appeal and requesting the court continue the stay of the California Action until August 22, 2023, in order to allow the parties in the Federal Circuit Appeal the opportunity to file a petition for a writ of certiorari in the Supreme Court.

On June 20, 2023, the court approved the joint stipulation and continued the stay until August 22, 2023.

(B) Southern District of New York Action

11 unchanged sentences

ChromaDex filed its reply on November 9, 2017.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

32 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

All discovery closed on April 23, 2021.

3 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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”).

11 unchanged sentences

ChromaDex filed its reply brief on February 10, 2023.

Oral argument is scheduled for October 13, 2023.

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, 2023, 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 June 30, 2023, 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.

17 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

11 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

On July 22, 2020 the parties filed a Joint Claim Construction Chart and respective motions for claim construction.

16 unchanged sentences

On April 10, 2023, the court of appeals invited Elysium to file a response to the petition and on April 24, 2023, Elysium filed a response to the petition.

On May 10, 2023, the Court denied the petition.

On May 10, 2023, the court of appeals denied the petition.

On May 17, 2023, the court of appeals issued the mandate.

On June 16, 2023, Elysium filed a bill of costs and a motion for attorneys’ fees and costs.

On June 30, 2023, ChromaDex filed objections to Elysium’s bill of costs.

On July 21, 2023, ChromaDex filed a response to Elysium’s motion for attorneys’ fees and costs.

On July 28, 2023, ChromaDex filed an application for an extension of time to September 7, 2023 to file a petition for writ of certiorari.

On August 1, 2023, the Supreme Court granted the requested extension.

The Company does not believe that this decision will have a material impact on the Company’s NR business.

24 unchanged sentences

On April 4, 2023, the court of appeals stayed the appeal pending issuance of the mandate in the pending appeal from the Delaware patent infringement action.

On June 22, 2023, the court of appeals directed the parties to inform the court of appeals by no later than August 1, 2023 how they believe the appeal should proceed.

On August 1, 2023, the parties requested that the court of appeals continue the stay of briefing until Dartmouth has determined whether it will seek certiorari.

ChromaDex Corporation and Subsidiaries

39 unchanged sentences

During the fourth quarter of 2022, the Company received $ 0.6 million related to the ERTC.

During the first quarter of 2023, the Company received another $ 0.8 million related to the ERTC.

As of March 31, 2023, the Company's Consolidated Balance Sheets include an ERTC benefit of $ 1.0 million and associated commissions payable of $ 0.2 million recorded within prepaid expenses and other current assets and accrued expenses, respectively.

Subsequent to March 31, 2023, the Company received an additional $ 0.1 million related to the ERTC.

During the six months ended June 30, 2023, the Company received another $ 0.9 million related to the ERTC.

As of June 30, 2023, the Company's Consolidated Balance Sheets include an ERTC benefit of $ 0.9 million and associated commissions payable of $ 0.1 million recorded within prepaid expenses and other current assets and accrued expenses, respectively.

Joint Venture Agreement

7 unchanged sentences

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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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”).

3 unchanged sentences

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

As of March 31, 2023, it is uncertain when Blue Hat Registration will be achieved.

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 months ended March 31, 2023.

As of June 30, 2023, it is uncertain when Blue Hat Registration will be achieved.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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.

1 unchanged sentence

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 March 31, 2023.

Operating activity under the JV was not material during the three and six months ended June 30, 2023.

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