What changed in this filing

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Item 1A. Risk Factors

2024-10-31 compared with 2024-08-07 · 34 added, 31 removed, 593 unchanged (10% of the section changed)

19 unchanged sentences

• Our operating results may fluctuate significantly, which could make our future results difficult to predict and could cause our operating results to fall below expectations.

• If we are unable to maintain sales, marketing and distribution capabilities or maintain arrangements with third parties to sell, market and distribute our products, our business may be harmed.

• If we are unable to maintain or develop sales, marketing and distribution capabilities or maintain or develop arrangements with third parties to sell, market and distribute our products, our business may be harmed.

• Our business could be negatively impacted by cyber security incidents or threats, including without limitation a material interruption to our operations and our IT systems, a material interruption to our clinical trials, harm to our reputation, significant fines, penalties, litigation, and liabilities, regulatory investigations or lawsuits, including class actions, breach or triggering of data protection laws, privacy policies and data protection obligations, or a loss of revenue, customers or sales.

20 unchanged sentences

Future sales of these shares could adversely affect the market price of our common stock.

• We have a limited operating history in China and we face risks with respect to conducting business in connection with our joint venture in China due to certain legal, political, economic and social uncertainties relating to China.

• We have a limited operating history in China and we face risks with respect to conducting business in China due to certain legal, political, economic and social uncertainties relating to China.

General Risks:

5 unchanged sentences

We have a history of losses and may continue to incur operating and net losses for the foreseeable future.

We have recorded a net loss of approximately $0.5 million for the six months ended June 30, 2024.

We have recorded a net income of approximately $1.4 million for the nine months ended September 30, 2024.

We incurred net losses of approximately $4.9 million and $16.5 million for the years ended December 31, 2023 and December 31, 2022, respectively.

As of June 30, 2024, our accumulated deficit was approximately $191.0 million.

We have not achieved profitability on an annual basis.

As of September 30, 2024, our accumulated deficit was approximately $189.1 million.

We have not achieved consistent profitability on an annual basis.

Our net losses and history of negative cash flow have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital, and if we are not able to achieve and sustain profitability in the near future or at all our stock price may be depressed.

We expect to continue to incur increasing expenses as we develop our sales, marketing distribution and other commercial infrastructure and continue to develop and commercializing our products, including the cost of obtaining and maintaining regulatory approvals, and establishing new distribution channels for pharmaceutical-grade Niagen®.

As of June 30, 2024, our cash and cash equivalents totaled approximately $27.9 million, of which $27.7 million was unrestricted, and we had no borrowings outstanding under our line of credit up to $10.0 million, subject to certain terms and conditions, with Western Alliance Bank.

As of September 30, 2024, our cash and cash equivalents totaled approximately $32.4 million, of which $32.2 million was unrestricted, and we had no borrowings outstanding under our line of credit up to $10.0 million, subject to certain terms and conditions, with Western Alliance Bank.

However, we may require additional funds, either through additional equity or debt financings, including pursuant to the At Market Issuance Sales Agreement, dated as of June 12, 2020, with B.

6 unchanged sentences

If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

If adequate financing is not available, the Company will delay, postpone or

terminate product and service expansion and curtail certain selling, general and administrative operations.

If adequate financing is not available, the Company will delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations.

The inability to raise additional financing may have a material adverse effect on the future performance of the Company.

Interruptions in our relationships or declines in our business with major customers could materially harm our business and financial results.

Watson Group, a related party, accounted for approximately 14.9% of our sales during the six months ended June 30, 2024.

Any interruption in our relationship or decline in our business with this customer or other customers upon whom we become highly dependent could cause harm to our business.

Any interruption in our relationship or decline in our business with key customers upon whom we become highly dependent could cause harm to our business.

Factors that could influence our relationship with our customers upon whom we may become highly dependent include:

62 unchanged sentences

In any of these events, our costs may increase, we may have significant charges associated with the write-down of assets or returns on new investments may be lower than prior to the change in strategy or restructuring.

For example, we may not be successful in developing our consumer product business for sales of Tru Niagen® products or sales of our Niagen® IV product, and our sales may decrease despite us incurring increased costs related to marketing such products.

For example, we may not be successful in developing our consumer product business for sales of Tru Niagen® products or sales of our pharmaceutical-grade Niagen® product, and our sales may decrease despite us incurring increased costs related to marketing or otherwise developing such products.

We face significant competition, including changes in pricing.

38 unchanged sentences

Our revenues and operating results are and will remain difficult to forecast due to the foregoing factors as the occurrence of any one of these factors could negatively affect our operating results in any particular quarter.

If we are unable to maintain sales, marketing and distribution capabilities or maintain arrangements with third parties to sell, market and distribute our products, our business may be harmed.

If we are unable to maintain or develop sales, marketing and distribution capabilities or maintain or develop arrangements with third parties to sell, market and distribute our products, our business may be harmed.

To achieve commercial success for our products, we must sell our product lines and/or technologies at favorable prices.

22 unchanged sentences

An actual or perceived cyber security incident could result in disrupted operations, including suspension of our clinical trial activities, lost opportunities, misstated financial data, liability for stolen assets or information, theft of our intellectual property, loss of data and other personally identifiable or sensitive information, increased costs arising from the implementation of additional security protective measures, litigation (including class actions), reputational damage, government enforcement actions that could include investigations, fines, penalties, audits and inspections, additional reporting requirements and/or oversight, temporary or permanent bans on all or some processing of personal data (which could impact clinical trials), interruptions in our operations (including availability of data) financial loss, and other similar harms.

Further, individuals, clinical trial participants or other relevant stakeholders could sue us for our actual or perceived failure to comply with our security obligations, including, without limitation, in class action litigation.

Further, individuals,

clinical trial participants or other relevant stakeholders could sue us for our actual or perceived failure to comply with our security obligations, including, without limitation, in class action litigation.

We may expend significant resources, fundamentally change our business activities and practices, or modify our operations, including our clinical trial activities, or information technology in an effort to protect against security incidents and to mitigate, detect, and remediate actual and potential vulnerabilities.

76 unchanged sentences

Failure by outsourcing facilities that produce pharmaceutical-grade Niagen® to adequately perform their obligations could harm our business.

We will rely on contract manufacturers to manufacture pharmaceutical-grade Niagen® and 503B outsourcing facilities to compound and distribute pharmaceutical-grade Niagen® into intravenous, injectable and intravenous-push forms and then distribute the same.

We rely on contract manufacturers to manufacture pharmaceutical-grade Niagen® and 503B outsourcing facilities to compound and distribute pharmaceutical-grade Niagen® into intravenous, injectable and intravenous-push forms and then distribute the same.

We do not control or direct the compounding process used by these outsourcing facilities.

We will rely on those manufacturers and outsourcing facilities for compliance with the applicable regulatory requirements.

We will have no control over the ability of third parties to maintain adequate quality control, quality assurance and qualified personnel.

We rely on those manufacturers and outsourcing facilities for compliance with the applicable regulatory requirements.

We have no control over the ability of third parties to maintain adequate quality control, quality assurance and qualified personnel.

If the FDA or a comparable international regulatory authority does not approve these facilities for the manufacturing or compounding of these ingredients and products, respectively, or if it withdraws any such approval in the future, we may need to identify alternative manufacturing and compounding facilities, which would significantly impact our ability to meet consumer demand.

134 unchanged sentences

Governmental agencies throughout the world, including in the United States, strictly regulate the pharmaceutical, dietary supplement, food and cosmetic industries.

Changes in regulation, such as a relaxation in regulatory requirements or the introduction of simplified drug approval procedures, or an increase in regulatory requirements that we may have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services or adverse impact our ability to comply with the new regulations.

Changes in regulation, such as a relaxation in regulatory requirements or the introduction of simplified drug approval procedures, or an increase in regulatory requirements that we may have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services or adversely impact our ability to comply with the new regulations.

Also, if the government makes efforts to contain drug costs and pharmaceutical and biotechnology company profits from new drugs, or if health insurers were to change their practices with respect to reimbursements for pharmaceutical products, our customers may spend less, or reduce their spending on research and development.

4 unchanged sentences

Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.

For example, the European Union’s General Data Protection Regulation (GDPR) and the United Kingdom’s GDPR (UK

GDPR) imposes strict obligations on the processing of personal data, including, without limitation, personal health data.

For example, the European Union’s General Data Protection Regulation (GDPR) and the United Kingdom’s GDPR (UK GDPR) imposes strict obligations on the processing of personal data, including, without limitation, personal health data.

The GDPR and UK GDPR set out extensive compliance requirements, including providing detailed disclosures about how personal data is collected and processed, demonstrating that an appropriate legal basis is in place or otherwise exists to justify data processing activities;

14 unchanged sentences

If we cannot implement a valid compliance mechanism for cross-border data transfers, we may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal data from Europe or elsewhere.

The inability to import personal data to the United States could significantly and negatively impact our business operations, including by limiting our ability to collaborate with parties that are subject to European and other data privacy and security laws;

The inability to import personal data to the United States could significantly and negatively impact our business operations,

including by limiting our ability to collaborate with parties that are subject to European and other data privacy and security laws;

or requiring us to increase our personal data processing capabilities and infrastructure in Europe and/or elsewhere at significant expense.

13 unchanged sentences

For example, any failure by a third-party processor to comply with applicable law, regulations, or contractual obligations could result in adverse effects, including inability to operate our business and proceedings against us by governmental entities or others.

fail, or are perceived to have failed, to address or comply with obligations related to data privacy and security, we could face government enforcement actions that could include investigations, fines, penalties, audits and inspections;

If we fail, or are perceived to have failed, to address or comply with obligations related to data privacy and security, we could face government enforcement actions that could include investigations, fines, penalties, audits and inspections;

additional reporting requirements and/or oversight;

14 unchanged sentences

If we fail to comply with any of these regulations, we may be subject to fines or penalties, have to recall products and/or cease their manufacture and distribution, which would increase our costs and reduce our sales.

We will rely on outsourcing facilities for compounding our pharmaceutical-grade Niagen® ingredient.

We rely on outsourcing facilities for compounding our pharmaceutical-grade Niagen® ingredient.

The bulk drug substances must appear on the FDA’s “interim” list of bulk substances that may be used in compounding under Section 503B which are those bulk drug substances for which the FDA has determined there is a clinical need.

Provided certain conditions are met, the FDA will exercise enforcement discretion concerning use of “interim” Category 1 substances pending evaluation of the substances for inclusion on the FDA’s final list of bulk drug substances for which there is a clinical need.

If certain conditions are met, the FDA will exercise enforcement

discretion concerning use of “interim” Category 1 substances pending evaluation of the substances for inclusion on the FDA’s final list of bulk drug substances for which there is a clinical need.

If the substances used in manufacturing and compounding our products are removed from this interim list or if the FDA determines not to place NRC on the final list of bulk drug substances for which there is a clinical need, it may subject us and our third-party partners to additional regulatory scrutiny.

We are in the pre-investigational new drug (IND) phase with respect to the potential for Niagen® to be used as a treatment for Ataxia telangiectasia (AT), a rare disease with less than 200,000 cases diagnosed in the U.S.

We are pursuing an investigational new drug (IND) application with the FDA with respect to the potential for Niagen® to be used as a treatment for Ataxia telangiectasia (AT), a rare disease with less than 200,000 cases diagnosed in the U.S.

per year, and have obtained Orphan Drug Designation (ODD) and Rare Pediatric Disease (RPD) designation from the FDA.

55 unchanged sentences

Future sales of these shares could adversely affect the market price of our common stock.

As of June 30, 2024, we had outstanding options for an aggregate of approximately 12.9 million shares of common stock at a weighted average exercise price of $3.08 per share and unvested restricted stock units of approximately 0.8 million shares.

As of September 30, 2024, we had outstanding options for an aggregate of approximately 11.7 million shares of common stock at a weighted average exercise price of $3.22 per share and unvested restricted stock units of approximately 0.7 million shares.

The holders may sell many of these shares in the public markets from time to time, without limitations on the timing, amount or method of sale.

1 unchanged sentence

This could cause the market price of our common stock to decline.

We have a limited operating history in China and we face risks with respect to conducting business in connection with our joint venture in China due to certain legal, political, economic and social uncertainties relating to China.

We have a limited operating history in China and we face risks with respect to conducting business in China due to certain legal, political, economic and social uncertainties relating to China.

During fiscal year 2022, we entered into an agreement to form a joint venture to expand the Company’s market strategy to include opportunities in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan.

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

Our participation in the joint venture in China is subject to general, as well as industry-specific, economic, political and legal developments and risks in China.

Operating activity under the joint venture was not material during the three and nine months ended September 30, 2024, and we are in the process of terminating the joint venture.

While we intend to seek other partners and paths to expand our operations, there is no guarantee that we will be able to do so.

Our ability to pursue successful expansion in China is subject to general, as well as industry-specific, economic, political and legal developments and risks in China.

The Chinese government exercises significant control over the Chinese economy, including but not limited to, controlling capital investments, allocating resources, setting monetary policy, controlling and monitoring foreign exchange rates, implementing and overseeing tax regulations, providing preferential treatment to certain industry segments or companies and issuing necessary licenses to conduct business.

5 unchanged sentences

If we cannot adequately monitor the use of our technologies and products or enforce our intellectual property rights in China or contractual restrictions relating to use of our intellectual property by Chinese companies, our revenue could be adversely affected.

Our joint venture will be subject to laws and regulations applicable to foreign investment in China.

Our operations, whether through a new joint venture or otherwise, will be subject to laws and regulations applicable to foreign investment in China.

There are uncertainties regarding the interpretation and enforcement of laws, rules and policies in China.

15 unchanged sentences

Our Bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

(i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to our company or our stockholders, (iii) any action asserting a claim against our company arising pursuant to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or Bylaws, or (iv) any action asserting a claim against our company governed by the internal affairs doctrine.

Delaware General Corporation Law or our amended and restated certificate of incorporation or Bylaws, or (iv) any action asserting a claim against our company governed by the internal affairs doctrine.

This choice of forum provision may limit a stockholder’s ability to bring certain claims in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.

21 unchanged sentences

In addition, the State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations on certain companies doing business in California, starting in 2026.

New or revised laws and regulations or new interpretations of existing laws and regulations, such as those related to climate change, could affect the operation of our properties or result in significant additional expense and restrictions on our business operations.

New or revised laws and regulations or new interpretations of existing laws and regulations, such as those related to climate change,

could affect the operation of our properties or result in significant additional expense and restrictions on our business operations.

If we are unable to satisfy such new criteria, investors may conclude that our policies with respect to corporate responsibility are inadequate.

24 unchanged sentences

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 1A. Risk Factors