What changed in this filing

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Item 1. Financial Statements

2024-05-08 compared with 2023-11-08 · 152 added, 252 removed, 541 unchanged (43% of the section changed)

3 unchanged sentences

(In thousands except par values, unless otherwise indicated)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets

27 unchanged sentences

authorized 150,000 shares;

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

75,153 shares and 74,981 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 219,829 218,845

7 unchanged sentences

(In thousands, except per share data)

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

2023 2022 2023 2022

Three Months Ended March 31,

Sales, net $ 22,153 $ 22,556

7 unchanged sentences

Operating loss ( 731 ) ( 1,968 )

Nonoperating income (expenses):

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

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

Nonoperating income:

Interest income, net 239 66

Net loss $ ( 492 ) $ ( 1,902 )

5 unchanged sentences

(In thousands, unless otherwise indicated)

Three Months Ended September 30, 2023

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

Shares Amount

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

Net loss — — — ( 959 ) — ( 959 )

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

Three Months Ended September 30, 2022

Three Months Ended March 31, 2024

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

Shares Amount

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

Issuance of restricted stock 14 — — — — —

Share-based compensation — — 1,229 — — 1,229

Translation adjustment — — — — 1 1

Net loss — — — ( 985 ) — ( 985 )

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

Unaudited Condensed Consolidated Statements of Stockholders' Equity Continued

(In thousands, unless otherwise indicated)

Nine Months Ended September 30, 2023

Common Stock Additional

Paid-in Capital Accumulated

Deficit Cumulative

Adjustments Total

Stockholders'

Shares Amount

Balance, January 1, 2024 74,981 $ 75 $ 218,845 $ ( 190,460 ) $ ( 4 ) $ 28,456

2 unchanged sentences

Translation adjustment — — — — 3 3

Adjustment to retained earnings:

Cumulative effect of initially adopting ASC 326 — — — ( 29 ) — ( 29 )

Net loss — — — ( 492 ) — ( 492 )

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

Nine Months Ended September 30, 2022

Common Stock Additional

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

Balance, March 31, 2024 75,153 $ 75 $ 219,829 $ ( 190,952 ) $ ( 1 ) $ 28,951

Three Months Ended March 31, 2023

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

Shares Amount

3 unchanged sentences

Translation adjustment — — — — 3 3

Adjustment to retained earnings, cumulative effect of initially adopting ASC 326 — — — ( 29 ) — ( 29 )

Net loss — — — ( 1,902 ) — ( 1,902 )

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

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

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

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(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows From Operating Activities

Net loss $ ( 492 ) $ ( 1,902 )

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

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation of leasehold improvements and equipment 178 228

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Share-based compensation expense 984 1,273

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

Provision for doubtful trade receivables 945 28

Allowance for credit losses 35 316

Non-cash financing costs 21 21

6 unchanged sentences

Accrued expenses 972 1,273

Deferred revenue ( 149 ) ( 118 )

Customer deposits and other 35 ( 6 )

Operating lease liabilities ( 48 ) ( 169 )

Net cash provided by (used in) operating activities 6,468 ( 14,770 )

Net cash provided by operating activities 295 2,792

Cash Flows From Investing Activities

Purchases of leasehold improvements and equipment ( 41 ) ( 91 )

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

Net cash used in investing activities ( 41 ) ( 91 )

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Net cash used in financing activities ( 14 ) ( 1 )

Net increase (decrease) in cash and cash equivalents 6,332 ( 14,957 )

Net increase in cash and cash equivalents 240 2,700

Cash and cash equivalents, including restricted cash of $ 152 for both periods - beginning of period

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Nicotinamide riboside and other NAD+ precursors are protected by ChromaDex’s patent and/or licensed rights portfolio.

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

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

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

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

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

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Significant Accounting Policies:

There have been no changes to the Company’s significant accounting policies described in the Company’s 2022 Annual Report on Form 10-K filed with the SEC that have had a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements and related notes.

Recent Accounting Standards Adopted by the Company:

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic ASC 326):

Measurement of Credit Losses on Financial Instruments.

The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope.

The new guidance represents significant changes to accounting for credit losses:

(i) full lifetime expected credit losses will be recognized upon initial recognition of an asset in scope;

(ii) the current incurred loss impairment model that recognizes losses when a probable threshold is met will be replaced with the expected credit loss impairment method without recognition threshold;

and (iii) the expected credit losses estimate will be based upon historical information, current conditions, and reasonable and supportable forecasts.

ASU 2016-13 introduces two distinctive credit loss impairment models:

(i) current expected credit loss impairment model (Subtopic 326-20) applicable to financial assets measured at amortized cost;

and (ii) available-for-sale debt securities impairment model (Subtopic 326-30).

The Company adopted this standard on January 1, 2023 using the modified retrospective method resulting in an adjustment to the opening balance of retained earnings of $ 29,000 .

There have been no changes to the Company’s significant accounting policies described in the Company’s 2023 Annual Report on Form 10-K that have had a material impact on the Company’s Unaudited Condensed Consolidated Financial Statements and related notes.

Accounting Standards Recently Issued but Not Yet Adopted by the Company:

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the ASC.

These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC.

The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date.

Early adoption is prohibited.

The Company is currently evaluating the impact that the adoption of ASU 2023-06 may have on its consolidated financial statements and disclosures.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

In November 2023, the FASB issued ASU 2023 - 07, "Segment Reporting – Improvements to Reportable Segments Disclosures" (ASU 2023-07), which requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity's CODM.

The amendments in ASU 2023-07 also expand the interim segment disclosure requirements.

ASU 2023-07 will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted and the amendments in this update are required to be applied on a retrospective basis.

The Company is currently evaluating the impact that the adoption of ASU 2023-07 may have on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures." ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024.

Early adoption and retrospective application are permitted.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-02, "Codification Improvements." ASU 2024-02 amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification.

The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance.

ASU 2024-02 will become effective January 1, 2025 and although the Company is currently evaluating the impact of this standard, it is not expected to have a significant impact on the Company’s financial statements and disclosures.

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 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 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.

In connection with the preparation of these U naudited C ondensed Consolidated Financial Statements for the three months ended March 31, 2024, 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 2024 interim U naudited C ondensed Consolidated Financial Statements.

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

For the three months ended March 31, 2024, t he Company incurred a net loss of $ 0.5 million, however, during the same period the Company’s operating activities provided cash of $ 0.3 million.

As of March 31, 2024, the Company had unrestricted cash and cash equivalents of $ 27.4 million which consists of bank deposits and short-term investments, including 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.

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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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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 nine months ended September 30, 2023 and 2022:

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

The following table sets forth the computations of loss per share amounts applicable to common stockholders for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

(In thousands, except per share data) 2024 2023

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Restricted stock units 894 945

(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.

(1) Includes a weighted average of approximately 167,000 and 183,000 nonvested shares of restricted stock for the three months ended March 31, 2024 and 2023, respectively, 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

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

The following tables set forth financial information by segment:

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

(In thousands)

Net sales $ 17,400 $ 1,424 $ 671 $ — $ 19,495

Cost of sales 6,024 739 763 — 7,526

Gross profit (loss) 11,376 685 ( 92 ) — 11,969

Operating expenses:

Sales and marketing 5,934 — 101 — 6,035

Research and development 1,142 99 — — 1,241

General and administrative — — — 5,840 5,840

Operating expenses 7,076 99 101 5,840 13,116

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

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

(In thousands)

Net sales $ 51,924 $ 8,252 $ 2,198 $ — $ 62,374

Cost of sales 18,387 3,852 2,292 — 24,531

Gross profit (loss) 33,537 4,400 ( 94 ) — 37,843

Operating expenses:

Sales and marketing 19,599 37 282 — 19,918

Research and development 3,278 521 — — 3,799

General and administrative — — — 19,557 19,557

Operating expenses 22,877 558 282 19,557 43,274

Operating income (loss) $ 10,660 $ 3,842 $ ( 376 ) $ ( 19,557 ) $ ( 5,431 )

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

The following tables set forth financial information by segment:

Three Months Ended March 31, 2024 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

1 unchanged sentence

Cost of sales 6,154 1,837 706 — 8,697

Gross profit (loss) 9,337 920 ( 50 ) — 10,207

Gross profit 11,197 2,251 8 — 13,456

Operating expenses:

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Operating income (loss) $ 2,906 $ 1,839 $ ( 124 ) $ ( 5,352 ) $ ( 731 )

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

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

(In thousands)

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Operating income (loss) $ 2,489 $ 1,999 $ ( 37 ) $ ( 6,419 ) $ ( 1,968 )

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Disaggregation of Revenue

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Disaggregated revenues are as follows:

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

(In thousands)

Tru Niagen®, Consumer Product $ 17,400 $ — $ — $ 17,400

Niagen® Ingredient

— 1,424 — 1,424

Subtotal Niagen® Related 17,400 1,424 — 18,824

Other Ingredients — — — —

Reference Standards — — 654 654

Consulting and Other — — 17 17

Subtotal Other Goods and Services — — 671 671

Total Net Sales $ 17,400 $ 1,424 $ 671 $ 19,495

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

(In thousands)

Tru Niagen®, Consumer Product $ 51,924 $ — $ — $ 51,924

Niagen® Ingredient

— 7,822 — 7,822

Subtotal Niagen® Related 51,924 7,822 — 59,746

Other Ingredients — 430 — 430

Reference Standards — — 2,122 2,122

Consulting and Other — — 76 76

Subtotal Other Goods and Services — 430 2,198 2,628

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

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

Three Months Ended March 31, 2024 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

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Total Net Sales $ 17,351 $ 4,088 $ 714 $ 22,153

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

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

(In thousands)

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Total Net Sales $ 17,633 $ 4,124 $ 799 $ 22,556

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Disclosure of Major Customers

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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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Major Customers 2024 2023

Watson Group - Related Party 13.4 % 16.5 %

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

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

Percentage of the Company's Total Trade Receivables

Major Customers At March 31, 2024 At December 31, 2023

Watson Group - Related Party 41.6 % 52.7 %

Nestlé (NHSc) * 23.6 %

Amazon Marketplaces 18.6 % 12.2 %

Life Extension 19.6 % 16.1 %

* Represents less than 10%

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 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.

As of March 31, 2024, concentration for the Company's outstanding trade receivables is significant, with approximately 80 % 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.

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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

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

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

Three Months Ended March 31,

Net Sales 2024 2023

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

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

Watson Group - Related Party $ 3.0 million $ 3.7 million

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

Trade Receivable as of March 31, 2024 December 31, 2023

Watson Group - Related Party $ 2.7 million $ 2.8 million

The Company's major classes of inventory and corresponding balances as of March 31, 2024 and December 31, 2023 are as follows:

(In thousands) March 31, 2024 December 31, 2023

Consumer Products - Finished Goods $ 6,478 $ 5,962

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Total Inventory $ 12,495 $ 14,525

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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

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Operating Leases

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,

As of March 31, 2024 and December 31, 2023, the Company had ROU assets of $ 2.2 million and $ 2.4 million, respectively, and corresponding operating lease liabilities of $ 3.2 million and $ 3.3 million, respectively.

For the three months ended March 31, 2024 and 2023, the components of operating lease expenses are as follows:

Three Months Ended March 31,

(In thousands) 2024 2023

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Total expense $ 343 $ 288

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

At September 30, 2023

(1) Variable lease costs, including property taxes and insurance and common area maintenance fees, are classified in cost of services in the Company's Unaudited Condensed Consolidated Statements of Operations.

At March 31, 2024

Weighted-average remaining lease term (years), operating leases 3.7

Weighted-average discount rate, operating leases 7.0 %

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

Future minimum lease payments under operating leases as of March 31, 2024 are as follows:

Year (In thousands)

2024 (Remainder)

Thereafter 30

Less present value discount ( 364 )

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Long-term obligations under operating leases $ 2,356

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.

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.

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

As of March 31, 2024, there were approximately 3.1 million remaining shares available for issuance under the 2017 Plan.

Options expire 10 years from the date of grant.

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General Vesting Conditions

The Company’s stock options and restricted stock unit (RSU) awards are generally subject to a one-year cliff vesting period after which 1/3rd of the shares vest with the remaining shares vesting ratably each month over a two-year period subject to the applicable grantee’s continued service.

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

The Company’s stock options and restricted stock unit (RSU) awards are generally subject to a one-year cliff vesting period after which one-third of the shares vest with the remaining shares vesting ratably each month over a two-year period subject to the applicable grantee’s continued service.

Beginning in the second quarter of 2022, RSU awards are generally subject to a three-year vesting period with one-third vesting per year on the anniversary of the grant date.

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.

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 nine months ended September 30, 2023:

The Company used the following weighted average assumptions for options granted during the three months ended March 31, 2024:

Weighted Average:

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Expected term 6.5 years

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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 nine months ended September 30, 2023 :

The following table summarizes activity of service period-based stock options during the three months ended March 31, 2024 :

Weighted Average

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Options Forfeited ( 646 ) 3.91

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.

Outstanding at March 31, 2024 12,845 $ 3.14 6.6 $ 12,472 *

Exercisable at March 31, 2024 7,563 $ 4.08 4.6 $ 3,189 *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 3.48 , which is the closing price of the Company’s stock on the last trading day for the period ended March 31, 2024.

Performance Based Stock Options

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

If these performance criteria are not met, the compensation expenses are not recognized and the expenses that have been recognized will be reversed.

The following table summarizes performance based stock options activity during the three months ended March 31, 2024 :

Weighted Average

(In thousands except per share data and remaining contractual term) Number of

Options Exercise

Price Remaining

Term (Years) Aggregate

Outstanding at December 31, 2023 41 $ 4.34 0.1 $ —

Options Granted — —

Options Exercised — — $ —

Options Forfeited ( 41 ) 4.34

Outstanding at March 31, 2024 — $ — — $ — *

Exercisable at March 31, 2024 — $ — — $ — *

There were no activities related to market-based stock options or restricted stock awards during the three months ended March 31, 2024.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Restricted Stock Units

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

The following table summarizes activity of RSUs during the three months ended March 31, 2024 :

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

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Forfeited ( 27 ) 1.91

Unvested shares at September 30, 2023 677 $ 2.18

Expected to vest at September 30, 2023 677 $ 2.18

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 September 30, 2023 167 $ 3.15

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

Unvested shares at March 31, 2024 894 $ 1.74

Expected to vest at March 31, 2024 894 $ 1.74

Total Share-Based Compensation

Total share-based compensation expense was as follows:

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

Three Months Ended March 31,

(In thousands) 2024 2023

5 unchanged sentences

Total $ 984 $ 1,273

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.

(1) On March 1, 2024, the Company issued 25,000 shares of the Company’s common stock in exchange for services rendered.

Such shares had a fair value of $ 40,250 , or $ 1.61 per share, based upon the quoted closing trading price on the issuance date.

The fair value of $ 40,250 was recognized as share-based compensation during the three months ended March 31, 2024 under the general and administrative classification.

The shares issued were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws.

The Company relied on the exemption from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder.

In future periods, the Company expects to recognize approximately $ 5.7 million and $ 1.4 million in share-based compensation expense for unvested options and unvested RSUs, respectively, that were outstanding as of March 31, 2024.

Future share-based compensation expense will be recognized over 2.2 weighted average years for both unvested options and RSUs.

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, 2023.

Such expense will only be recognized if Blue Hat Registration is achieved, the timing of which is uncertain as of March 31, 2024.

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

77 unchanged sentences

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

On November 15, 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 Second Circuit, in a case captioned In re Elysium-ChromaDex Litigation, No.

22-1059 (the “Second Circuit Appeal”), had affirmed the order by the SDNY Court granting ChromaDex’s motion to enforce the settlement agreement and requesting that the court continue the stay of the California Action until February 23, 2024, in order to allow the parties in the Second Circuit Appeal the opportunity to file a petition for a writ of certiorari in the Supreme Court.

On November 16, 2023, the court approved the joint stipulation and continued the stay until February 23, 2024.

On February 23, 2024, ChromaDex, Elysium, and Mark Morris filed a joint status report and stipulation requesting that the court approve a schedule for briefing concerning the judgment in the California Action.

On February 26, 2024, the court approved the joint stipulation and adopted the parties’ proposed briefing schedule.

ChromaDex filed its opening brief on April 26, 2024.

Defendants must file their opposition brief no later than June 25, 2024 and ChromaDex must file its reply brief no later than July 25, 2024.

The matter is scheduled to be heard on August 12, 2024.

(B) Southern District of New York Action

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ChromaDex opposed the motion on November 30, 2017 and Elysium Health filed a reply on December 7, 2017.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

On November 3, 2017, the Court consolidated the Elysium SDNY Complaint and the ChromaDex SDNY Complaint actions under the caption In re Elysium Health-ChromaDex Litigation, 17-cv-7394, and stayed discovery in the consolidated action pending a Court-ordered mediation.

11 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.

30 unchanged sentences

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.

On November 16, 2023, the court of appeals’ decision became final.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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.

34 unchanged sentences

Both parties filed dispositive and Daubert motions on April 27, 2021.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

On September 21, 2021, the Court granted Elysium’s motion for summary judgment that the claims of the ‘807 and ‘086 patents are invalid based on patent-ineligible subject matter.

17 unchanged sentences

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 .

(A) Inter Partes Review Proceedings

On or around September 28, 2020, Thorne Research, Inc.

(Thorne) provided notice to ChromaDex that it intended to terminate its March 25, 2019 Supply Agreement and subsequent amendments with ChromaDex, effective as of December 31, 2020.

A discussion between ChromaDex and Thorne followed, and Thorne asserted that it could challenge the ‘086 Patent in an inter partes review (IPR) proceeding on the basis of prior art, but would be willing to enter into a mutual existence agreement that would permit Thorne to source NR from a third party.

Thorne did not offer substantive information supporting a prior art claim or about the nature of the threatened IPR.

On December 1, 2020, Thorne filed a petition for IPR of the ‘086 Patent.

Dartmouth’s preliminary response to the petition was filed on March 15, 2021.

On June 10, 2021, the Patent Trial and Appeal Board (PTAB) issued a decision instituting an IPR on the ‘086 Patent.

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

On December 21, 2021, Thorne filed its reply.

Oral argument was held on March 15, 2022.

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 December 29, 2022, the parties filed a joint stipulation to dismiss the appeal.

On January 3, 2023, the appeal was dismissed.

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

Dartmouth’s preliminary response to the petition was filed on May 18, 2021.

On August 12, 2021, the Patent Trial and Appeal Board (PTAB) issued a decision instituting an IPR on the ‘807 Patent.

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

On February 15, 2022, Thorne filed its reply.

Oral argument was held on May 17, 2022.

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.

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 .

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

On May 12, 2021, ChromaDex and Trustees of Dartmouth College filed a patent infringement complaint in the United States District Court for the Southern District of New York.

The complaint alleges that certain of Thorne’s dietary supplements containing isolated NR infringe the ‘807 and ‘086 Patents, which claim compositions containing isolated nicotinamide riboside and are held by Dartmouth and licensed exclusively to ChromaDex.

On July 6, 2021, Thorne filed an answer and counterclaims to the complaint.

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

The counterclaims seek declaratory judgment of patent invalidity for the ‘807 and ‘086 Patents.

On July 8, 2021, the parties filed a proposed stipulation and order staying the matter pending issuance of the institution decision in the ‘807 Patent IPR.

On July 9, 2021, the Court granted the stipulation and order to stay.

On August 19, 2021, the parties filed a proposed stipulation and order staying the matter pending issuance of final written decisions in the IPRs.

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.

On March 25, 2024, the Court granted Elysium’s motion for attorneys’ fees and costs.

On April 9, 2024, the Court entered a stipulated schedule and procedure for resolving the amount of fees and costs.

In connection with the Court's current ruling and the Company’s intention to appeal this decision, management has assessed that it is reasonably possible a contingent liability will be incurred.

If the Company is successful in its appeal, no liability would be incurred.

However, if the Company is not successful, the Company may be liable for the aggregate amount sought by Elysium, which, inclusive of ChromaDex’s estimates for post-judgment interest, is approximately $ 9.8 million.

It is at least reasonably possible that the estimated range of the loss will change in the near term as additional information from the Court is made available.

Contingencies

2 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

1 unchanged sentence

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 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 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.

During the years ended December 31, 2023 and December 31, 2022, the Company collected $ 0.9 million and $ 0.6 million, respectively, related to the ERTC.

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.

2 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

As of March 31, 2024, 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

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 September 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 nine months ended September 30, 2023.

As of March 31, 2024, 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 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.

Operating activity under the JV was not material during the three months ended March 31, 2024 and 2023.

During the first quarter of 2024, the Company was notified that it was selected for examination by the Internal Revenue Service (IRS) for its federal income tax return for the fiscal year 2021 period.

The Company is not currently under examination by any other major income tax jurisdiction.

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