What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-07 · 171 added, 115 removed, 675 unchanged (30% of the section changed)

3 unchanged sentences

(In thousands except par values, unless otherwise indicated)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Current assets

27 unchanged sentences

authorized 150,000 shares;

75,473 shares and 74,981 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

76,027 shares and 74,981 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 223,389 218,845

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,

2024 2023 2024 2023

7 unchanged sentences

Total operating expenses 14,638 13,116 42,774 43,274

Operating loss ( 256 ) ( 2,316 ) ( 987 ) ( 4,284 )

Operating income (loss) 1,602 ( 1,147 ) 615 ( 5,431 )

Nonoperating income:

Interest income, net 276 188 756 379

Net loss $ ( 15 ) $ ( 2,191 ) $ ( 507 ) $ ( 4,093 )

Basic and diluted loss per common share attributable to ChromaDex Corporation $ 0.00 $ ( 0.03 ) $ ( 0.01 ) $ ( 0.05 )

Basic and diluted weighted average common shares outstanding 75,559 74,967 75,394 74,882

Net income (loss) $ 1,878 $ ( 959 ) $ 1,371 $ ( 5,052 )

Net income (loss) per share attributable to ChromaDex Corporation:

Basic $ 0.02 $ ( 0.01 ) $ 0.02 $ ( 0.07 )

Diluted $ 0.02 $ ( 0.01 ) $ 0.02 $ ( 0.07 )

Weighted average common shares outstanding:

Basic 75,972 75,050 75,588 74,938

Diluted 77,768 75,050 76,804 74,938

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands, unless otherwise indicated)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

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

Shares Amount

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

Balance, July 1, 2024 75,473 $ 75 $ 221,612 $ ( 190,967 ) $ ( 2 ) $ 30,718

Issuance of common stock resulting from the exercise of stock options 511 1 1,042 — — 1,043

2 unchanged sentences

Translation adjustment — — — — ( 5 ) ( 5 )

Net loss — — — ( 15 ) — ( 15 )

Balance, June 30, 2024 75,473 $ 75 $ 221,612 $ ( 190,967 ) $ ( 2 ) $ 30,718

Three Months Ended June 30, 2023

Net income — — — 1,878 — 1,878

Balance, September 30, 2024 76,027 $ 76 $ 223,389 $ ( 189,089 ) $ ( 7 ) $ 34,369

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 — — — — —

2 unchanged sentences

Net loss — — — ( 959 ) — ( 959 )

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

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

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands, unless otherwise indicated)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Common Stock Additional

9 unchanged sentences

Translation adjustment — — — — ( 3 ) ( 3 )

Net loss — — — ( 507 ) — ( 507 )

Balance, June 30, 2024 75,473 $ 75 $ 221,612 $ ( 190,967 ) $ ( 2 ) $ 30,718

Six Months Ended June 30, 2023

Net income — — — 1,371 — 1,371

Balance, September 30, 2024 76,027 $ 76 $ 223,389 $ ( 189,089 ) $ ( 7 ) $ 34,369

Nine Months Ended September 30, 2023

Common Stock Additional

7 unchanged sentences

Net loss — — — ( 5,052 ) — ( 5,052 )

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

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

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

Net loss $ ( 507 ) $ ( 4,093 )

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

Net income (loss) $ 1,371 $ ( 5,052 )

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

Depreciation of leasehold improvements and equipment 512 693

2 unchanged sentences

Share-based compensation expense 2,904 3,714

(Gain) Loss on disposal of leasehold improvements and equipment 1 ( 5 )

Gain on disposal of leasehold improvements and equipment ( 19 ) ( 5 )

Allowance for credit losses 59 945

36 unchanged sentences

The ChromaDex team, which includes world-renowned scientists, is pioneering research on nicotinamide adenine dinucleotide (NAD+), an essential coenzyme that is a key regulator of cellular metabolism and is found in every cell of the human body.

NAD+ levels in humans have been shown to decline with age, among other factors, and may be increased through supplementation with NAD+ precursors.

NAD+ levels in humans have been shown to decline with age, among other factors, and may be increased through administration of NAD+ precursors.

ChromaDex is the innovator behind the NAD+ precursor nicotinamide riboside chloride (“NRC”, commonly referred to as “NR”), commercialized as the flagship ingredient Niagen®, available in both food and pharmaceutical grades.

41 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, 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 second quarter of 2024 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, 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 third 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 six months ended June 30, 2024, t he Company incurred a net loss of $ 0.5 million and the Company’s operating activities provided cash of $ 31,000 .

As of June 30, 2024, the Company had unrestricted cash and cash equivalents of $ 27.7 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.

For the nine months ended September 30, 2024, t he Company had net income of $ 1.4 million and the Company’s operating activities provided cash of $ 3.5 million.

As of September 30, 2024, the Company had unrestricted cash and cash equivalents of $ 32.2 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.

3 unchanged sentences

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 six months ended June 30, 2024 and 2023:

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

Income (Loss) Per Share Applicable to Common Stockholders

The following table sets forth the computations of income (loss) per share amounts applicable to common stockholders for the three and nine months ended September 30, 2024 and 2023:

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

(In thousands, except per share data) 2024 2023 2024 2023

Net loss $ ( 15 ) $ ( 2,191 ) $ ( 507 ) $ ( 4,093 )

Basic and diluted loss per common share $ 0.00 $ ( 0.03 ) $ ( 0.01 ) $ ( 0.05 )

Basic and diluted weighted average common shares outstanding (1):

75,559 74,967 75,394 74,882

Potentially dilutive securities (2):

Net income (loss) $ 1,878 $ ( 959 ) $ 1,371 $ ( 5,052 )

Weighted average common shares outstanding for basic earnings per share (1) 75,972 75,050 75,588 74,938

incremental shares from assumed exercise of options and assumed vesting of restricted stock (2) 1,796 — 1,216 —

Adjusted weighted average common shares outstanding for diluted earnings per share 77,768 75,050 76,804 74,938

Earnings (Loss) Per Share:

Basic net income (loss) per common share $ 0.02 $ ( 0.01 ) $ 0.02 $ ( 0.07 )

Diluted net income (loss) per common share $ 0.02 $ ( 0.01 ) $ 0.02 $ ( 0.07 )

(1) Includes a weighted average of approximately 167,000 nonvested shares of restricted stock for each of the three and nine months ended September 30, 2024 and 167,000 and 177,000 nonvested shares of restricted stock for the three and nine months ended September 30, 2023, respectively, which are participating securities that feature voting and dividend rights.

(2) Options and restricted stock outstanding, which are anti-dilutive and therefore not factored into the weighted average common shares amount above, for the three and nine months ended September 30, 2024 and 2023 were as follows:

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

(In thousands) 2024 2023 2024 2023

Stock options 5,712 11,917 6,585 11,917

Restricted stock units — 677 — 677

(1) Includes a weighted average of approximately 167,000 nonvested shares of restricted stock for each of the three and six months ended June 30, 2024 and 181,000 and 182,000 nonvested shares of restricted stock for the three and six months ended June 30, 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.

Business Segments

17 unchanged sentences

The following tables set forth financial information by segment:

Three months ended June 30, 2024 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

Three months ended September 30, 2024 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

(In thousands)

8 unchanged sentences

Operating income (loss) $ 3,792 $ 4,102 $ 12 $ ( 6,304 ) $ 1,602

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, 2024 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total

Nine Months Ended September 30, 2024 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

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)

11 unchanged sentences

Disaggregated revenues are as follows:

Three Months Ended June 30, 2024 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

Three Months Ended September 30, 2024 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

Tru Niagen®, Consumer Product $ 18,123 $ — $ — $ 18,123

Niagen® Ingredient

Food-grade Niagen®

— 5,760 — 5,760

Pharmaceutical-grade Niagen®

Subtotal Niagen® Related 18,123 6,660 — 24,783

4 unchanged sentences

Total Net Sales $ 18,123 $ 6,673 $ 784 $ 25,580

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)

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

Niagen® Ingredient

— 2,500 — 2,500

Food-grade Niagen® — 1,424 — 1,424

Pharmaceutical-grade Niagen® — — — —

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

6 unchanged sentences

Notes to the Unaudited Condensed Consolidated Financial Statements

Six Months Ended June 30, 2024 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

Nine Months Ended September 30, 2024 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total

(In thousands)

Tru Niagen®, Consumer Product $ 54,121 $ — $ — $ 54,121

Niagen® Ingredient

— 7,232 — 7,232

Food-grade Niagen® — 12,992 — 12,992

Pharmaceutical-grade Niagen® — 900 900

Subtotal Niagen® Related 54,121 13,892 — 68,013

4 unchanged sentences

Total Net Sales $ 54,121 $ 14,062 $ 2,289 $ 70,472

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)

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

Niagen® Ingredient

— 6,398 — 6,398

Food-grade Niagen® — 7,822 — 7,822

Pharmaceutical-grade Niagen® — — — —

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

7 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 2024 2023 2024 2023

2 unchanged sentences

* Represents less than 10%

(1) For additional information regarding the relationship between the Company and A.S.

Watson Group, see Note 6, Related Party Transactions .

ChromaDex Corporation and Subsidiaries

2 unchanged sentences

Percentage of the Company's Total Trade Receivables

Major Customers At June 30, 2024 At December 31, 2023

Major Customers At September 30, 2024 At December 31, 2023

Watson Group - Related Party (1) 28.6 % 52.7 %

1 unchanged sentence

Life Extension 33.3 % 16.1 %

Wells Pharma of Houston 12.7 % *

* Represents less than 10%

As of June 30, 2024, concentration for the Company's outstanding trade receivables is significant, with approximately 61 % of the total outstanding trade receivables aggregated among two customers.

(1) For additional information regarding the relationship between the Company and A.S.

Watson Group, see Note 6, Related Party Transactions .

As of September 30, 2024, concentration of the Company's outstanding trade receivables is significant, with approximately 74.6 % 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.

4 unchanged sentences

Related Party Transactions

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

Prior to August 20, 2024, A.S.

Watson Group was considered a related party through common ownership by an enterprise that beneficially owned more than 10% of the common stock of the Company.

On August 20, 2024, the common owner of A.S.

Watson Group sold its ownership of the Company’s common stock and is no longer considered a related party of the Company as of that date.

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 2024 2023 2024 2023

Watson Group - Related Party $ 2.0 million $ 3.1 million $ 8.7 million $ 9.8 million

Trade Receivable as of June 30, 2024 December 31, 2023

Trade Receivable as of September 30, 2024 December 31, 2023

Watson Group - Related Party $ 2.0 million $ 2.8 million

The Company's major classes of inventory and corresponding balances as of June 30, 2024 and December 31, 2023 are as follows:

(In thousands) June 30, 2024 December 31, 2023

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

The Company's major classes of inventory and corresponding balances as of September 30, 2024 and December 31, 2023 are as follows:

(In thousands) September 30, 2024 December 31, 2023

Consumer Products - Finished Goods $ 4,765 $ 5,962

3 unchanged sentences

Total Inventory $ 10,544 $ 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.

5 unchanged sentences

Operating Leases

As of June 30, 2024 and December 31, 2023, the Company had ROU assets of $ 2.1 million and $ 2.4 million, respectively, and corresponding operating lease liabilities of $ 3.1 million and $ 3.3 million, respectively.

For the three and six months ended June 30, 2024 and 2023, the components of operating lease expenses are as follows:

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

As of September 30, 2024 and December 31, 2023, the Company had ROU assets of $ 1.9 million and $ 2.4 million, respectively, and corresponding operating lease liabilities of $ 2.9 million and $ 3.3 million, respectively.

For the three and nine months ended September 30, 2024 and 2023, the components of operating lease expenses are as follows:

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

(In thousands) 2024 2023 2024 2023

6 unchanged sentences

(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 June 30, 2024

At September 30, 2024

Weighted-average remaining lease term (years), operating leases 3.0

Weighted-average discount rate, operating leases 6.6 %

Future minimum lease payments under operating leases as of June 30, 2024 are as follows:

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Future minimum lease payments under operating leases as of September 30, 2024 are as follows:

Year (In thousands)

4 unchanged sentences

Long-term obligations under operating leases $ 1,873

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Share-Based Compensation

2 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, 2024, there were approximately 3.9 million remaining shares available for issuance under the 2017 Plan.

As of September 30, 2024, there were approximately 4.6 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 six months ended June 30, 2024:

The Company used the following weighted average assumptions for options granted during the nine months ended September 30, 2024:

Weighted Average:

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Expected term 6.4 years

2 unchanged sentences

Expected dividends — %

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Service Period Based Stock Options

The following table summarizes activity of service period-based stock options during the six months ended June 30, 2024 :

The following table summarizes activity of service period-based stock options during the nine months ended September 30, 2024 :

Weighted Average

7 unchanged sentences

Options Forfeited ( 2,332 ) 3.75

Outstanding at June 30, 2024 11,881 $ 2.99 6.7 $ 6,176 *

Exercisable at June 30, 2024 7,168 $ 3.81 4.9 $ 1,411 *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 2.73 , which is the closing price of the Company’s stock on the last trading day for the period ended June 30, 2024.

Outstanding at September 30, 2024 10,709 $ 3.12 6.7 $ 6,176 *

Exercisable at September 30, 2024 6,914 $ 3.81 5.0 $ 1,411 *

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $ 3.65 , which is the closing price of the Company’s stock on the last trading day for the period ended September 30, 2024.

Performance Based Stock Options

1 unchanged sentence

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 six months ended June 30, 2024 :

The following table summarizes performance based stock options activity during the nine months ended September 30, 2024:

Weighted Average

7 unchanged sentences

Options Forfeited ( 41 ) 4.34

Outstanding at June 30, 2024 — $ — — $ — *

Exercisable at June 30, 2024 — $ — — $ — *

There were no activities related to market-based stock options or restricted stock awards during the six months ended June 30, 2024.

Outstanding at September 30, 2024 — $ — — $ —

Exercisable at September 30, 2024 — $ — — $ —

There were no activities related to market-based stock options or restricted stock awards during the nine months ended September 30, 2024.

ChromaDex Corporation and Subsidiaries

1 unchanged sentence

Restricted Stock Units

The following table summarizes activity of RSUs during the six months ended June 30, 2024 :

The following table summarizes activity of RSUs during the nine months ended September 30, 2024:

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

3 unchanged sentences

Forfeited ( 132 ) 1.73

Unvested shares at June 30, 2024 784 $ 1.70

Expected to vest at June 30, 2024 784 $ 1.70

Unvested shares at September 30, 2024 684 $ 1.66

Expected to vest at September 30, 2024 684 $ 1.66

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) 2024 2023 2024 2023

11 unchanged sentences

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 $ 5.0 million and $ 1.1 million in share-based compensation expense for unvested options and unvested RSUs, respectively, that were outstanding as of June 30, 2024.

In future periods, the Company expects to recognize approximately $ 3.8 million and $ 0.9 million in share-based compensation expense for unvested options and unvested RSUs, respectively, that were outstanding as of September 30, 2024.

Future share-based compensation expense will be recognized over 1.9 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 June 30, 2024.

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

ChromaDex Corporation and Subsidiaries

86 unchanged sentences

ChromaDex filed its reply brief on July 25, 2024.

The matter was previously scheduled to be heard on August 12, 2024, but, following the reassignment of the case, the hearing on this matter was rescheduled to August 15, 2024.

On August 13, 2024, the court granted ChromaDex’s motion for entry of final judgment and entered judgment in accordance with the terms of the parties’ settlement agreement.

Pursuant to the judgment, Elysium must pay to ChromaDex the sum of $ 2,500,000 .

The judgment resolves any outstanding issues that existed as of February 3, 2022, with respect to the claims and counterclaims that were tried to the jury in the California Action.

On September 11, 2024, Elysium and Mark Morris filed a notice of appeal.

On September 25, 2024, ChromaDex filed a notice of conditional cross-appeal.

On October 1, 2024, the Court of Appeals for the Ninth Circuit issued an order setting a schedule for briefing concerning the appeal and conditional cross-appeal.

Pursuant to the court’s scheduling order, Elysium and Mark Morris must file their opening brief no later than December 4, 2024;

ChromaDex must file its opening and response brief no later than January 3, 2025;

Elysium and Mark Morris must file their response and reply brief no later than February 3, 2025;

and ChromaDex must file any reply brief no later than February 24, 2025.

On September 3, 2024, ChromaDex filed with the district court a motion for attorney’s fees, costs, and interest pursuant to the settlement agreement and the judgment.

On September 19, 2024, Defendants filed their opposition to ChromaDex’s motion for attorney’s fees, costs, and interest.

ChromaDex filed a reply brief in support of the motion on September 26, 2024.

On October 8, 2024, the court issued an order granting ChromaDex’s request for interest and denying ChromaDex’s request for attorney’s fees and costs.

Pursuant to the court’s October 8, 2024 order, ChromaDex is entitled to pre-judgment interest in the amount of $ 21,768.82 and post-judgment interest accruing at the rate of 4.46 percent per annum until the $ 2,500,000 judgment is paid.

ChromaDex’s deadline to appeal the court’s order denying its request for attorney’s fees and costs is November 7, 2024.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

(B) Southern District of New York Action

20 unchanged sentences

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.

23 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.

19 unchanged sentences

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

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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.

20 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.

22 unchanged sentences

On June 13, 2024, Elysium filed its reply brief.

The issue is now fully briefed and awaiting a ruling by the Court.

On August 20, 2024, the Court issued a ruling on the parties’ disputes regarding the amount of fees and costs and instructed the parties to meet and confer about the next steps in light of the ruling.

On October 1, 2024, the parties submitted a joint motion for entry of judgment.

On October 28, 2024, the court issued its final judgement resolving the amount of fees and costs granting $ 9.2 million, plus judgment interest on this amount calculated at a rate of 5.02 % compounded annually on any unpaid balance for the period from March 25, 2024, until ChromaDex pays the total sum owed.

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.

The Company believes the Court abused its discretion in granting the award.

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.

Purchase obligations

The Company uses contract manufacturers to provide manufacturing services for its products.

During the normal course of business, in order to manage manufacturing lead times and help ensure adequate supply, the Company enters into agreements with its contract manufacturers that either allow them to procure inventory based on criteria as defined by the Company or that establish the parameters defining the Company’s requirements.

A portion of the Company’s purchase commitments arising from these agreements consist of firm, non-cancelable and unconditional purchase commitments.

In certain instances, these agreements allow the Company the option to cancel, reschedule or adjust the Company’s requirements based on its business needs prior to firm orders being placed.

During the third quarter of 2024, the Company entered into a Tenth Amendment (Tenth Amendment) to the Manufacturing and Supply Agreement (such agreement as amended, the “Grace Manufacturing Agreement” or “Agreement”), effective as of January 1, 2025 and 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 Tenth Amendment, the Company committed to purchase approximately $ 4.8 million of total inventory between January 1, 2025 and March 31, 2025.

In addition, the Company has remaining purchase commitments from the Ninth Amendment totaling $ 5.2 million to be purchased during the three months ended December 31, 2024.

The Grace Manufacturing Agreement will expire on March 31, 2025, subject to further renewal of the Agreement to be negotiated by the parties.

If we are unable to extend the agreement on satisfactory terms, it could have a material adverse impact to our 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.

Future minimum payments under inventory purchase obligations as of September 30, 2024 are as follows:

(In thousands)

2024 Remaining

ChromaDex Corporation and Subsidiaries

10 unchanged sentences

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

As of June 30, 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.

As of September 30, 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

8 unchanged sentences

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

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

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

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

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

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

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

As of June 30, 2024, 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, 2024.

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

On September 27, 2024, the Company sent a notification of non-extension to Taikuk providing that the Registration Period expired on October 1, 2024 and that the Company did not elect to extend the Registration Period.

As a result, Blue Hat Registration under the JV is no longer possible, and no amounts related to the Blue Hat Registration Fee or the 11 % non-voting interest have been or will be recognized.

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.

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

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

Operating activity under the JV was not material during the three and six months ended June 30, 2024 and 2023.

During the first quarter of 2024, the Company was notified that it was selected for examination by the 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.

Subsequent Events

Effective July 12, 2024, Brianna Gerber, the Company’s former Chief Financial Officer and Chief Accounting Officer, separated from the Company.

Gerber has entered into a Letter Agreement and Consulting Agreement, under which she will be available to consult on financial and accounting matters for the Company until August 12, 2024.

Effective July 13, 2024, the Board of Directors appointed James Lee, the Company’s current Controller, as the Company’s Interim Chief Financial Officer and Interim Principal Accounting Officer.

The examination was completed in the third quarter of 2024, with no changes recommended.

As of the date of this report, the Company is not under examination by any major income tax jurisdiction.

Deferred Revenue - NHSc

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

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

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

Under the Supply Agreement, the Company will continue to recognize the deferred revenue balance received in connection with the original Nestec Ltd.

agreement utilizing the output method.

Deferred revenue will be recognized by the Company based on the percentage of NRCL kilograms delivered to-date compared to the total forecasted NRCL kilograms to be delivered for the duration of the contract term including renewal options as estimated by the Company.

Revenue recognized from deferred revenue due to updated estimates of the total forecasted deliverables over the contract term for the three and nine months ended September 30, 2024 and 2023 is as follows:

(In thousands) Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Revenue recognized from deferred revenue $ 732 $ — $ 732 $ 149

The corresponding deferred revenue balance as of September 30, 2024 and December 31, 2023 is as follows:

(In thousands) September 30, 2024 December 31, 2023

Deferred revenue balance $ 2,579 $ 3,311

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