What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-09 · 113 added, 101 removed, 680 unchanged (24% of the section changed)

3 unchanged sentences

(In thousands except par values, unless otherwise indicated)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets

2 unchanged sentences

Trade receivables, net of allowances of $ 993 and $ 122 , respectively;

Including receivables from Related Party of:

$ 2.8 million and $ 3.1 million, respectively

Including receivables from Related Party of $ 2.9 million and $ 3.1 million, respectively

Inventories 12,624 14,677

22 unchanged sentences

authorized 150,000 shares;

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

74,910 shares and 74,567 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 217,808 214,094

7 unchanged sentences

(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,

2023 2022 2023 2022

9 unchanged sentences

Nonoperating income (expenses):

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

Interest income (expense), net 188 ( 5 ) 379 ( 23 )

6 unchanged sentences

(In thousands, unless otherwise indicated)

Three Months Ended June 30, 2023

Three Months Ended September 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

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

Issuance of restricted stock 54 — — — — —

Share-based compensation — — 1,117 — — 1,117

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

Net loss — — — ( 959 ) — ( 959 )

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

Three Months Ended June 30, 2022

Balance, September 30, 2023 74,910 $ 75 $ 217,808 $ ( 190,574 ) $ ( 1 ) $ 27,308

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

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

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands, unless otherwise indicated)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Common Stock Additional

11 unchanged sentences

Net loss — — — ( 5,052 ) — ( 5,052 )

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

Six Months Ended June 30, 2022

Balance, September 30, 2023 74,910 $ 75 $ 217,808 $ ( 190,574 ) $ ( 1 ) $ 27,308

Nine Months Ended September 30, 2022

Common Stock Additional

6 unchanged sentences

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

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

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

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Operating Activities

5 unchanged sentences

Share-based compensation expense 3,714 4,413

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

(Gain) Loss on disposal of leasehold improvements and equipment ( 5 ) 7

Provision for doubtful trade receivables 945 28

16 unchanged sentences

Cash Flows From Financing Activities

Payment of debt issuance costs — ( 15 )

Principal payments on finance leases ( 14 ) ( 10 )

49 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 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.

In connection with the preparation of these U naudited C ondensed Consolidated Financial Statements for the nine months ended September 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 third 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 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.

For the nine months ended September 30, 2023, t he Company incurred a net loss of $ 5.1 million, however, during the same period the Company’s operating activities provided cash of $ 6.5 million.

As of September 30, 2023, the Company had unrestricted cash and cash equivalents of $ 26.6 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 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.

and Raymond James & Associates, Inc.

(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.

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,

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

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

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

6 unchanged sentences

Restricted stock units 677 748 677 748

(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.

(1) Includes a weighted average of approximately 167 and 177 nonvested shares of restricted stock for the three and nine months ended September 30, 2023, respectively, and 183 nonvested shares of restricted stock for each of the three and nine months ended September 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 June 30, 2023 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

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

(In thousands)

8 unchanged sentences

Operating income (loss) $ 4,300 $ 586 $ ( 193 ) $ ( 5,840 ) $ ( 1,147 )

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

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

(In thousands)

10 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

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)

11 unchanged sentences

Disaggregated revenues are as follows:

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

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

(In thousands)

10 unchanged sentences

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

Nine Months Ended September 30, 2023 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

8 unchanged sentences

Total Net Sales $ 51,924 $ 8,252 $ 2,198 $ 62,374

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

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

(In thousands)

13 unchanged sentences

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,

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

Major Customers 2023 2022 2023 2022

Watson Group - Related Party 16.0 % 15.4 % 15.7 % 12.0 %

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 June 30, 2023 At December 31, 2022

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

Watson Group - Related Party 52.0 % 36.6 %

3 unchanged sentences

* Represents less than 10%

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.

During the three and nine months ended September 30, 2023, the Company recorded provision for doubtful trade receivables of approximately $ 0.2 million and $ 0.9 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.

As of September 30, 2023, concentration for the Company's outstanding trade receivables is significant, with approximately 85 % 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.

8 unchanged sentences

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,

Net Sales 2023 2022 2023 2022

Watson Group - Related Party $ 3.1 million $ 2.6 million $ 9.8 million $ 6.7 million

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

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

Watson Group - Related Party $ 2.9 million $ 3.1 million

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

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

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

Consumer Products - Finished Goods $ 7,078 $ 7,901

10 unchanged sentences

Operating Leases

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,

As of September 30, 2023, the Company had right-of-use assets and corresponding operating lease liabilities of approximately $ 3.0 million and $ 3.8 million, respectively.

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

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

(In thousands) 2023 2022 2023 2022

5 unchanged sentences

Total expense $ 314 $ 315 $ 895 $ 1,019

At June 30, 2023

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

Weighted-average discount rate, operating leases 5.7 %

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:

At September 30, 2023

Weighted-average remaining lease term (years), operating leases 4.0

Weighted-average discount rate, operating leases 5.7 %

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

Year (In thousands)

5 unchanged sentences

Long-term obligations under operating leases $ 2,911

Subsequent to September 30, 2023, the Company entered into a lease amendment for its Los Angeles, California office space.

Pursuant to this amendment, the Company received a total value of approximately $ 355,000 in rent abatement for approximately eight months starting in November 2023.

Share-Based Compensation

3 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, 2023, there were approximately 5.3 million remaining shares available for issuance under the 2017 Plan.

As of September 30, 2023, there were approximately 5.7 million remaining shares available for issuance under the 2017 Plan.

Options expire 10 years from the date of grant.

11 unchanged sentences

Stock Options

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

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

Weighted Average:

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Expected term 6.2 years

3 unchanged sentences

Service Period Based Stock Options

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

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

Weighted Average

7 unchanged sentences

Options Forfeited ( 1,171 ) 3.98

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.

Outstanding at September 30, 2023 10,876 $ 3.64 6.1 $ 3 *

Exercisable at September 30, 2023 7,507 $ 4.32 4.6 $ 1 *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 1.46 , which is the closing price of the Company’s stock on the last day of business for the period ended September 30, 2023.

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

Restricted Stock Units

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

The following table summarizes activity of RSUs during the nine months ended September 30, 2023 :

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

3 unchanged sentences

Forfeited ( 75 ) 2.35

Unvested shares at June 30, 2023 774 $ 2.25

Expected to vest at June 30, 2023 774 $ 2.25

Unvested shares at September 30, 2023 677 $ 2.18

Expected to vest at September 30, 2023 677 $ 2.18

ChromaDex Corporation and Subsidiaries

6 unchanged sentences

Forfeited — —

Unvested shares at June 30, 2023 167 $ 3.15

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

Unvested shares at September 30, 2023 167 $ 3.15

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

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) 2023 2022 2023 2022

5 unchanged sentences

Total $ 1,117 $ 1,229 $ 3,714 $ 4,413

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.

In future periods, the Company expects to recognize approximately $ 4.3 million and $ 1.2 million in share-based compensation expense for unvested options and unvested RSUs, respectively, that were outstanding as of September 30, 2023.

Future share-based compensation expense will be recognized over 1.5 and 1.7 weighted average years for unvested options and RSUs, 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 June 30, 2023.

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

23 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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.

6 unchanged sentences

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

On August 14, 2023, at the request of the parties, the court further continued the stay until September 21, 2023.

On September 15, 2023, ChromaDex, Elysium, and Mark Morris filed a joint status report and stipulation informing the court that ChromaDex and the Trustees of Dartmouth College had filed a petition for writ of certiorari in the Supreme Court and requesting the court continue the stay pending the Supreme Court’s decision on the petition.

On September 15, 2023, the court approved the joint stipulation and continued the stay pending the Supreme Court’s decision on the petition.

(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).

20 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

15 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 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.

Oral argument took place on October 13, 2023.

On October 26, 2023, the court of appeals issued a decision affirming the district court’s decision enforcing the Settlement Agreement, and also dismissed ChromaDex’s conditional cross-appeal as moot.

3 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

25 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.

23 unchanged sentences

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

On August 14, 2023, Elysium filed a reply in support of its motion for attorneys’ fees and costs.

On September 7, 2023, ChromaDex filed a petition for writ of certiorari .

On October 16, 2023, the Supreme Court denied the petition.

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Thorne Research, Inc .

25 unchanged sentences

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

Notes to the Unaudited Condensed Consolidated Financial Statements

On August 25, 2023, the court of appeals granted the request, and instructed the parties, within seven days of the Supreme Court’s disposition of any petition for certiorari or the expiration of the time to seek certiorari if no petition is filed, to inform the court how they think the appeal should proceed.

On October 23, 2023, the parties jointly informed the court of appeals that the Supreme Court had denied the petition for writ of certiorari and that they believed the decision on appeal should be vacated and remanded with instructions to the Patent Trial and Appeal Board to dismiss the IPR proceedings.

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

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

(B) On November 17, 2020, the Company received a warning letter (the Letter) from the United States Food and Drug Administration (FDA) and Federal Trade Commission (FTC).

10 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

4 unchanged sentences

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.

The Company determined that it 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.

During the fourth quarter of 2022, the Company received $ 0.6 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.

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

As of September 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.

On September 14, 2023, the IRS announced an immediate halt in processing new claims for the employee retention credit until at least the end of the year, citing ongoing concerns about improper claims.

The IRS guaranteed ongoing processing of existing claims, albeit at a reduced pace and with increased compliance scrutiny.

To date, the Company has not received communications from the IRS regarding the Company’s existing claims.

Nevertheless, the Company is diligently monitoring the situation to ensure continued compliance.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Joint Venture Agreement

12 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 June 30, 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 and six months ended June 30, 2023.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

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.

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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 and six months ended June 30, 2023.

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Subsequent Events

Effective as of November 2, 2023, the Company entered into a Ninth Amendment (Ninth Amendment) to the Manufacturing and Supply Agreement (such agreement as amended, the “Grace Manufacturing Agreement” or “Agreement”), originally effective in January 2016 with W.R.

In January 2019, Grace was issued patents related to the crystalline form of NR chloride which limit the Company’s ability to find alternatives for supply (Grace Patents).

Pursuant to the Ninth Amendment, the Company is committed to purchase approximately $ 17.1 million of total inventory between January 1, 2024 and December 31, 2024.

In addition, the Company has remaining purchase commitments from the Eighth Amendment totaling $ 4.5 million to be purchased during the three months ended December 31, 2023.

The Grace Manufacturing Agreement will expire on December 31, 2024, subject to further renewal of the Agreement to be negotiated by the parties.

If the Company is unable to extend the agreement on satisfactory terms, it could have a material adverse impact to its financial results and strategic position in the market.

Risk Factors, “ We rely on single supplier, W.R.

Grace, for NR and a limited number of third-party suppliers for the raw materials required to produce our products.” for more information.

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