Niagen Bioscience, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS (unaudited) ChromaDex Corporation and Subsidiaries Unaudited Condensed Consolidated Balance Sheets (In thousands except par values, unless otherwise indicated) September 30, 2024 December 31, 2023 Assets Current assets Cash and cash equivalents, including restricted cash of $ 152 for both periods presented $ 32,398 $ 27,325 Trade receivables, net of allowances of $ 90 and $ 68 , respectively; Including receivables from Related Party of $ 2.0 million and $ 2.8 million, respectively 7,096 5,234 Inventories 10,544 14,525 Prepaid expenses and other assets 2,096 2,450 Total current assets 52,134 49,534 Leasehold improvements and equipment, net 1,718 2,137 Intangible assets, net 397 510 Right-of-use assets, net 1,899 2,400 Other long-term assets 374 383 Total assets $ 56,522 $ 54,964 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 6,903 $ 10,232 Accrued expenses 9,592 9,493 Current maturities of operating lease obligations 1,008 691 Current maturities of finance lease obligations 12 11 Customer deposits 184 195 Total current liabilities 17,699 20,622 Deferred revenue 2,579 3,311 Operating lease obligations, less current maturities 1,873 2,563 Finance lease obligations, less current maturities 2 12 Total liabilities 22,153 26,508 Commitments and Contingencies (Note 10) Stockholders' Equity Common stock, $ 0.001 par value; authorized 150,000 shares; 76,027 shares and 74,981 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively 76 75 Additional paid-in capital 223,389 218,845 Accumulated deficit ( 189,089 ) ( 190,460 ) Cumulative translation adjustments ( 7 ) ( 4 ) Total stockholders' equity 34,369 28,456 Total liabilities and stockholders' equity $ 56,522 $ 54,964 See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. 3 Table of Contents ChromaDex Corporation and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Sales, net $ 25,580 $ 19,495 $ 70,472 $ 62,374 Cost of sales 9,340 7,526 27,083 24,531 Gross profit 16,240 11,969 43,389 37,843 Operating expenses: Sales and marketing 7,044 6,035 20,753 19,918 Research and development 1,290 1,241 4,701 3,799 General and administrative 6,304 5,840 17,320 19,557 Total operating expenses 14,638 13,116 42,774 43,274 Operating income (loss) 1,602 ( 1,147 ) 615 ( 5,431 ) Nonoperating income: Interest income, net 276 188 756 379 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. 4 Table of Contents ChromaDex Corporation and Subsidiaries Unaudited Condensed Consolidated Statements of Stockholders' Equity (In thousands, unless otherwise indicated) Three Months Ended September 30, 2024 Common Stock Additional Paid-in Capital Accumulated Deficit Cumulative Translation Adjustments Total Stockholders' Equity Shares Amount 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 Issuance of restricted stock 43 — — — — — Share-based compensation — — 735 — — 735 Translation adjustment — — — — ( 5 ) ( 5 ) 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, July 1, 2023 74,856 $ 75 $ 216,691 $ ( 189,615 ) $ ( 1 ) $ 27,150 Issuance of restricted stock 54 — — — — — Share-based compensation — — 1,117 — — 1,117 Translation adjustment — — — — — — Net loss — — — ( 959 ) — ( 959 ) Balance, September 30, 2023 74,910 $ 75 $ 217,808 $ ( 190,574 ) $ ( 1 ) $ 27,308 See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. 5 Table of Contents ChromaDex Corporation and Subsidiaries Unaudited Condensed Consolidated Statements of Stockholders' Equity Continued (In thousands, unless otherwise indicated) Nine Months Ended September 30, 2024 Common Stock Additional Paid-in Capital Accumulated Deficit Cumulative Translation Adjustments Total Stockholders' Equity Shares Amount Balance, January 1, 2024 74,981 $ 75 $ 218,845 $ ( 190,460 ) $ ( 4 ) $ 28,456 Exercise of stock options 768 1 1,640 — — 1,641 Issuance of restricted stock 253 — — — — — Share-based compensation 25 — 2,904 — — 2,904 Translation adjustment — — — — ( 3 ) ( 3 ) 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 Paid-in Capital Accumulated Deficit Cumulative Translation Adjustments Total Stockholders' Equity Shares Amount Balance, January 1, 2023 74,567 $ 74 $ 214,094 $ ( 185,493 ) $ ( 3 ) $ 28,672 Issuance of restricted stock 343 1 — — — 1 Share-based compensation — — 3,714 — — 3,714 Translation adjustment — — — — 2 2 Adjustment to retained earnings, cumulative effect of initially adopting ASC 326 — — — ( 29 ) — ( 29 ) Net loss — — — ( 5,052 ) — ( 5,052 ) Balance, September 30, 2023 74,910 $ 75 $ 217,808 $ ( 190,574 ) $ ( 1 ) $ 27,308 See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. 6 Table of Contents ChromaDex Corporation and Subsidiaries Unaudited Condensed Consolidated Statements of Cash Flows (In thousands) Nine Months Ended September 30, 2024 2023 Cash Flows From 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 Amortization of intangibles 113 119 Amortization of right of use assets 501 520 Share-based compensation expense 2,904 3,714 Gain on disposal of leasehold improvements and equipment ( 19 ) ( 5 ) Allowance for credit losses 59 945 Non-cash financing costs 62 60 Changes in operating assets and liabilities: Trade receivables ( 1,921 ) 1,907 Inventories 3,981 2,053 Implementation costs for cloud computing arrangement — ( 60 ) Prepaid expenses and other assets 312 767 Accounts payable ( 3,329 ) ( 481 ) Accrued expenses 99 1,856 Deferred revenue ( 732 ) ( 149 ) Customer deposits and other ( 14 ) 35 Operating lease liabilities ( 373 ) ( 454 ) Net cash provided by operating activities 3,526 6,468 Cash Flows From Investing Activities Purchases of leasehold improvements and equipment ( 94 ) ( 127 ) Proceeds from the sale of leasehold improvements and equipment, net 20 5 Net cash used in investing activities ( 74 ) ( 122 ) Cash Flows From Financing Activities Proceeds from exercise of stock options 1,641 — Payment of debt issuance costs ( 11 ) — Principal payments on finance leases ( 9 ) ( 14 ) Net cash provided by (used in) financing activities 1,621 ( 14 ) Net increase in cash and cash equivalents 5,073 6,332 Cash and cash equivalents, including restricted cash of $ 152 for both periods - beginning of period 27,325 20,441 Cash and cash equivalents, including restricted cash of $ 152 for both periods - end of period $ 32,398 $ 26,773 Supplemental Disclosures of Cash Flow Information Cash payments for principal on operating lease liabilities $ 358 $ 508 Supplemental Schedule of Noncash Operating Activity Adjustment to retained earnings, cumulative effect of initially adopting ASC 326 $ — $ 29 See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. 7 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements Note 1. Nature of Business ChromaDex Corporation and its wholly owned subsidiaries, ChromaDex, Inc., ChromaDex International, Inc., ChromaDex Analytics, Inc., ChromaDex Asia Limited, Asia Pacific Scientific, Inc., ChromaDex Europa B.V. and ChromaDex Sağlik Ürünleri Anonim Şirketi (collectively, “ChromaDex” or the “Company”) are a global bioscience company dedicated to healthy aging. 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 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. Nicotinamide riboside chloride and other NAD+ precursors are protected by ChromaDex’s patent and/or licensed rights portfolio. The Company delivers food-grade Niagen® as the sole or principal dietary ingredient in its dietary supplement consumer product line, Tru Niagen®. As part of its consumer product offerings, the Company offers NAD+ test kits exclusively to healthcare practitioners. Furthermore, the Company develops and commercializes proprietary ingredient technologies, including food-grade Niagen® and pharmaceutical-grade Niagen®, and supplies these ingredients as raw materials to the manufacturers of consumer products and U.S. FDA-registered 503B outsourcing facilities, respectively. Additionally, the Company provides natural product fine chemicals, known as phytochemicals, and related research and development services. Note 2. Basis of Presentation and Significant Accounting Policies Basis of Presentation: The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “GAAP”) for interim financial information and the instructions to Form 10-Q and Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim Unaudited Condensed Consolidated Financial Statements include all adjustments, including normal recurring adjustments, necessary for a fair presentation of the financial condition, results of operations and cash flows for such periods. Results of operations for any interim period are not necessarily indicative of results for any other interim period or for the full year. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s 2023 Annual Report on Form 10-K filed with the SEC on March 6, 2024. Basis of Consolidation: The accompanying Unaudited Condensed Financial Statements and notes thereto have been prepared on a consolidated basis and reflect the consolidated financial position of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated from these financial statements. Significant Accounting Policies: 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. 8 Table of Contents 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. Note 3. Liquidity 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, 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 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. Management evaluated these conditions and anticipates that its current unrestricted cash and cash equivalents and cash to be generated from net sales will be sufficient to meet its financial obligations as they become due over at least the next twelve months from the issuance date of these Unaudited Condensed Consolidated Financial Statements. 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. 9 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements Note 4. 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 Numerator: Net income (loss) $ 1,878 $ ( 959 ) $ 1,371 $ ( 5,052 ) Denominator: Weighted average common shares outstanding for basic earnings per share (1) 75,972 75,050 75,588 74,938 Plus: 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 Note 5. Business Segments The Company has the following three reportable segments: • Consumer Products segment: provides finished dietary supplement products that contain the Company's proprietary ingredients directly to consumers and distributors and offers NAD+ test kits exclusively to healthcare practitioners; • Ingredients segment : develops and commercializes proprietary-based ingredient technologies, including food-grade Niagen® and pharmaceutical-grade Niagen®, and supplies these ingredients as raw materials to the manufacturers of consumer products and U.S. FDA-registered 503B outsourcing facilities, respectively; and • Analytical Reference Standards and Services segment: offers the supply of phytochemical reference standards and other research and development services. The Company’s reportable segments are significant operating segments that offer differentiated services. This structure reflects the Company’s current operational and financial management and provides the best structure to maximize the Company's objectives and investment strategy, while maintaining financial discipline. The Company's Chief Executive Officer, who is its chief operating decision maker (CODM), reviews financial information for each operating segment to evaluate performance and allocate resources. The Company evaluates performance and allocates resources based on reviewing net sales, gross profit and operating income (loss) by reportable segment. The Company's CODM does not review assets by segment in his evaluation and therefore assets by segment are not disclosed below. There are no intersegment sales that require elimination. The “Corporate and other” classification includes corporate items not allocated by the Company to each reportable segment. 10 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements The following tables set forth financial information by segment: Three months ended September 30, 2024 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total (In thousands) Net sales $ 18,123 $ 6,673 $ 784 $ — $ 25,580 Cost of sales 6,512 2,176 652 — 9,340 Gross profit 11,611 4,497 132 — 16,240 Operating expenses: Sales and marketing 6,918 6 120 — 7,044 Research and development 901 389 — — 1,290 General and administrative — — — 6,304 6,304 Operating expenses 7,819 395 120 6,304 14,638 Operating income (loss) $ 3,792 $ 4,102 $ 12 $ ( 6,304 ) $ 1,602 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, 2024 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total (In thousands) Net sales $ 54,121 $ 14,062 $ 2,289 $ — $ 70,472 Cost of sales 19,451 5,558 2,074 — 27,083 Gross profit 34,670 8,504 215 — 43,389 Operating expenses: Sales and marketing 20,291 84 378 — 20,753 Research and development 3,731 970 — — 4,701 General and administrative — — — 17,320 17,320 Operating expenses 24,022 1,054 378 17,320 42,774 Operating income (loss) $ 10,648 $ 7,450 $ ( 163 ) $ ( 17,320 ) $ 615 11 Table of Contents 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 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 ) Disaggregation of Revenue The Company disaggregates its revenue from contracts with customers by type of goods or services for each of its segments, as the Company believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors. Disaggregated revenues are as follows: 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 Food-grade Niagen® — 5,760 — 5,760 Pharmaceutical-grade Niagen® — 900 — 900 Subtotal Niagen® Related 18,123 6,660 — 24,783 Other Ingredients — 13 — 13 Reference Standards — — 759 759 Consulting and Other — — 25 25 Subtotal Other Goods and Services — 13 784 797 Total Net Sales $ 18,123 $ 6,673 $ 784 $ 25,580 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 Food-grade Niagen® — 1,424 — 1,424 Pharmaceutical-grade Niagen® — — — — 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 12 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements 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 Food-grade Niagen® — 12,992 — 12,992 Pharmaceutical-grade Niagen® — 900 900 Subtotal Niagen® Related 54,121 13,892 — 68,013 Other Ingredients — 170 — 170 Reference Standards — — 2,195 2,195 Consulting and Other — — 94 94 Subtotal Other Goods and Services — 170 2,289 2,459 Total Net Sales $ 54,121 $ 14,062 $ 2,289 $ 70,472 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 Food-grade Niagen® — 7,822 — 7,822 Pharmaceutical-grade Niagen® — — — — 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 Disclosure of Major Customers Major customers are defined as customers whose sales or trade receivables individually consist of more than ten percent of total sales or total trade receivables, respectively. Percentage of net sales from major customers of the Company’s consumer products segment and ingredients segment for the periods indicated were as follows: Three Months Ended September 30, Nine Months Ended September 30, Major Customers 2024 2023 2024 2023 A.S. Watson Group - Related Party (1) * 16.0 % 12.4 % 15.7 % Life Extension 16.8 % * 13.3 % * * 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 . 13 Table of Contents 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: Percentage of the Company's Total Trade Receivables Major Customers At September 30, 2024 At December 31, 2023 A.S. Watson Group - Related Party (1) 28.6 % 52.7 % Amazon Marketplaces * 12.2 % Life Extension 33.3 % 16.1 % Wells Pharma of Houston 12.7 % * * 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 . 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. The Company has determined that the current concentration is primarily due to the timing of purchases, and the Company does not consider the concentration of its trade receivables to be a significant risk. Nevertheless, to ensure prudence and safeguard against potential challenges arising from this concentration, the Company remains vigilant in monitoring the creditworthiness and payment behavior of these major customers. Furthermore, the Company continues to pursue new partnerships and business opportunities which helps to diversify its customer base and minimize the risk of an overreliance on any particular trade receivable. Despite the Company’s risk mitigation efforts, there is no assurance that the Company will not experience delays or defaults in payment from its customers, which could result in an increase in the Company's bad debt expense, a reduction in cash flows, and a negative impact on its financial performance. Note 6. Related Party Transactions 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 September 30, Nine Months Ended September 30, Net Sales 2024 2023 2024 2023 A.S. Watson Group - Related Party $ 2.0 million $ 3.1 million $ 8.7 million $ 9.8 million Trade Receivable as of September 30, 2024 December 31, 2023 A.S. Watson Group - Related Party $ 2.0 million $ 2.8 million 14 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements Note 7. Inventories 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 Consumer Products - Work in Process 2,762 3,537 Bulk ingredients 2,498 4,478 Reference standards 519 548 Total Inventory $ 10,544 $ 14,525 Note 8. Leases The Company accounts for its leases in accordance with ASU No. 2016-02 (Topic 842) which requires that a lessee recognize the assets and liabilities that arise from operating leases. The ASU requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use (ROU) asset on the balance sheet. The Company leases office space facilities and a research and development laboratory under non-cancelable operating leases with varying expirations extending through fiscal year 2029. The lease agreements provide for renewal options and rent escalation over the lease term as well as require the Company to pay maintenance, insurance and property taxes. Lease expense is recognized on a straight-line basis over the term of the lease. Operating Leases 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 Operating leases Operating lease expense $ 218 $ 231 $ 668 $ 692 Variable lease expense (1) 104 79 309 191 Operating lease expense 322 310 977 883 Short-term lease rent expense 4 4 12 12 Total expense $ 326 $ 314 $ 989 $ 895 (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 September 30, 2024 Weighted-average remaining lease term (years), operating leases 3.0 Weighted-average discount rate, operating leases 6.6 % 15 Table of Contents 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) 2024 (Remainder) $ 218 2025 1,135 2026 901 2027 491 2028 358 2029 30 Total 3,133 Less present value discount ( 252 ) Present value of total operating lease liabilities 2,881 Less current portion ( 1,008 ) Long-term obligations under operating leases $ 1,873 Note 9. Share-Based Compensation Equity Plans 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. 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, 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. The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for stock option awards that are not market based. Determining the appropriate fair-value model and calculating the fair value of stock option awards at the grant date requires judgment, including estimating stock price volatility and expected option life. The fair-value of the restricted stock unit awards at the grant date is based on the market price on the grant date. The Company develops estimates based on historical data and market information, which can change significantly over time, and adjusts for forfeitures as they occur. 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 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. 16 Table of Contents 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, 2024: Weighted Average: Nine Months Ended September 30, 2024 Expected term 6.4 years Expected volatility 74.3 % Risk-free rate 4.3 % Expected dividends — % Service Period Based Stock Options The following table summarizes activity of service period-based stock options during the nine months ended September 30, 2024 : Weighted Average (In thousands except per share data and remaining contractual term) Number of Options Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2023 10,581 $ 3.63 5.9 $ 4 Options Granted 3,228 1.68 Options Exercised ( 768 ) 2.13 368 * Options Forfeited ( 2,332 ) 3.75 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 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 nine months ended September 30, 2024: Weighted Average (In thousands except per share data and remaining contractual term) Number of Options Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2023 41 $ 4.34 0.1 $ — Options Granted — — Options Exercised — — $ — Options Forfeited ( 41 ) 4.34 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. 17 Table of Contents 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, 2024: (In thousands except per share fair value) Number of RSUs Weighted Average Fair Value Unvested shares at December 31, 2023 589 $ 2.08 Granted 479 1.52 Vested ( 252 ) 2.32 Forfeited ( 132 ) 1.73 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 September 30, Nine Months Ended September 30, (In thousands) 2024 2023 2024 2023 Share-based compensation expense Cost of sales $ 73 $ 87 $ 245 $ 253 Sales and marketing 128 180 568 879 Research and development 144 247 580 746 General and administrative (1) 390 603 1,511 1,836 Total $ 735 $ 1,117 $ 2,904 $ 3,714 (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 $ 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. 18 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements Note 10. Commitments and Contingencies Legal proceedings 1. Elysium Health, LLC (A) California Action On December 29, 2016, ChromaDex filed a complaint in the United States District Court for the Central District of California, naming Elysium Health, Inc. (together with Elysium Health, LLC, “Elysium”) as defendant (Complaint). On January 25, 2017, Elysium filed an answer and counterclaims in response to the Complaint (together with the Complaint, the “California Action”). Over the course of the California Action, the parties have each filed amended pleadings several times and have each engaged in several rounds of motions to dismiss and one round of motion for judgment on the pleadings with respect to various claims. Most recently, on November 27, 2018, ChromaDex filed a fifth amended complaint that added an individual, Mark Morris, as a defendant. Elysium and Morris (Defendants) moved to dismiss on December 21, 2018. The court denied Defendants’ motion on February 4, 2019. Defendants filed their answer to ChromaDex’s fifth amended complaint on February 19, 2019. ChromaDex filed an answer to Elysium’s restated counterclaims on March 5, 2019. Discovery closed on August 9, 2019. On August 16, 2019, the parties filed motions for partial summary judgment as to certain claims and counterclaims. The parties filed opposition briefs on August 28, 2019, and reply briefs on September 4, 2019. On October 9, 2019, among other things, the court vacated the previously scheduled trial date, ordered supplemental briefing with respect to certain issues related to summary judgment. Elysium filed its opening supplemental brief on October 30, 2019, ChromaDex filed its opening supplemental brief on November 18, 2019, and Elysium filed a reply brief on November 27, 2019, and the court heard argument on January 13, 2020. On January 16, 2020, the court granted both parties’ motions for summary judgment in part and denied both in part. On ChromaDex’s motion, the court granted summary judgment in favor of ChromaDex on Elysium’s counterclaims for (i) breach of contract related to manufacturing Niagen® according to the defined standard, selling Niagen® and ingredients that are substantially similar to pterostilbene to other customers, distributing the Niagen® product specifications, and failing to provide information concerning the quality and identity of Niagen®, and (ii) breach of the implied covenant of good faith and fair dealing. The court denied summary judgment on Elysium’s counterclaims for (i) fraudulent inducement of the Trademark License and Royalty Agreement, dated February 3, 2014, by and between ChromaDex and Elysium (License Agreement), (ii) patent misuse, and (iii) unjust enrichment. On Elysium’s motion, the court granted summary judgment in favor of Elysium on ChromaDex’s claim for damages related to $ 110,000 in avoided costs arising from documents that Elysium used in violation of the Supply Agreement, dated February 3, 2014, by and between ChromaDex and Elysium, as amended (Niagen® Supply Agreement). The court denied summary judgment on Elysium’s counterclaim for breach of contract related to certain refunds or credits to Elysium. The court also denied summary judgment on ChromaDex’s breach of contract claim against Morris and claims for disgorgement of $ 8.3 million in Elysium’s resale profits, $ 600,000 for a price discount received by Elysium, and $ 684,781 in Morris’s compensation. Following the court’s January 16, 2020 order, ChromaDex’s claims asserted in the California Action, among other allegations, were that (i) Elysium breached the Supply Agreement, dated June 26, 2014, by and between ChromaDex and Elysium (pTeroPure® Supply Agreement), by failing to make payments to ChromaDex for purchases of pTeroPure® and by improper disclosure of confidential ChromaDex information pursuant to the pTeroPure® Supply Agreement, (ii) Elysium breached the Niagen® Supply Agreement, by failing to make payments to ChromaDex for purchases of Niagen®, (iii) Defendants willfully and maliciously misappropriated ChromaDex trade secrets concerning its ingredient sales business under both the California Uniform Trade Secrets Act and the Federal Defend Trade Secrets Act, (iv) Morris breached two confidentiality agreements he signed by improperly stealing confidential ChromaDex documents and information, (v) Morris breached his fiduciary duty to ChromaDex by lying to and competing with ChromaDex while still employed there, and (vi) Elysium aided and abetted Morris’s breach of fiduciary duty. ChromaDex sought damages and interest for Elysium’s alleged breaches of the Niagen® Supply Agreement and pTeroPure® Supply Agreement and Morris’s alleged breaches of his confidentiality agreements, compensatory damages and interest, punitive damages, injunctive relief, and attorney’s fees for Defendants’ alleged willful and malicious misappropriation of ChromaDex’s trade secrets, and compensatory damages and interest, disgorgement of all benefits received, and punitive damages for Morris’s alleged breach of his fiduciary duty and Elysium’s aiding and abetting of that alleged breach. 19 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements Elysium’s claims alleged in the California Action were that (i) ChromaDex breached the Niagen® Supply Agreement by not issuing certain refunds or credits to Elysium, (ii) ChromaDex fraudulently induced Elysium into entering into the License Agreement, (iv) ChromaDex’s conduct constitutes misuse of its patent rights, and (v) ChromaDex was unjustly enriched by the royalties Elysium paid pursuant to the License Agreement. Elysium sought damages for ChromaDex’s alleged breaches of the Niagen® Supply Agreement, and compensatory damages, punitive damages, and/or rescission of the License Agreement and restitution of any royalty payments conveyed by Elysium pursuant to the License Agreement, and a declaratory judgment that ChromaDex has engaged in patent misuse. On January 17, 2020, Elysium moved to substitute its counsel. The same day, the court ordered hearing on that motion for January 21, 2020, and granted Elysium’s motion at the hearing. On January 23, 2020, the court issued a scheduling order that, among other things, set trial on the remaining claims to begin on May 12, 2020. On March 19, 2020, in light of the global 2019 coronavirus disease ("COVID-19" or "COVID") pandemic and ongoing private mediation efforts, the parties jointly stipulated to adjourn the trial date. The court vacated the trial date on March 20, 2020. The court held a telephonic status conference on June 9, 2020, during which the court indicated that it will reschedule the jury trial as soon as conditions permit. On November 4, 2020, the parties submitted a joint status report indicating that they will propose a new trial date as soon as the court announces that it will resume jury trials. On November 18, 2020, the court set trial to begin on September 21, 2021. On December 11, 2020, Elysium filed a “Notice of Correction of Depositions” related to the depositions of its chief executive officer, Eric Marcotulli, and chief operating officer, Daniel Alminana, both taken in March 2019. On March 8, 2021, based in part on information that Elysium submitted under seal with that notice, ChromaDex filed a motion for sanctions or, in the alternative, reconsideration of the court’s January 16, 2020 order regarding summary judgment, in which ChromaDex moved to dismiss Elysium’s third, fourth, and fifth counterclaims. Elysium’s opposition brief was filed on March 22, 2021. ChromaDex filed its reply brief on March 29, 2021. On April 27, 2021, the court denied ChromaDex, Inc’s motion for terminating sanctions, but concluded that the evidence at issue in the motion will be admissible at trial. The jury trial portion of the case commenced on September 21, 2021. The jury returned a verdict on September 27, 2021. The verdict found (i) Elysium liable for breaches of the Niagen® and pTeroPure® Supply Agreements for failing to pay for purchases of the ingredients totaling approximately $ 3.0 million, (ii) Mark Morris liable for breach of a confidentiality agreement, requiring him to disgorge approximately $ 17,307 , (iii) ChromaDex liable for breaching the Niagen® Supply Agreement for not issuing certain refunds or credits to Elysium in the amount of $ 625,000 , and (iv) ChromaDex liable for fraudulent inducement of the Licensing Agreement in the amount of $ 250,000 , along with $ 1,025,000 in punitive damages arising from the same counterclaim. On October 25, 2021, ChromaDex informed the court that it would request prejudgment interest on the approximately $ 3.0 million in damages awarded by the jury for Elysium’s breaches of the Niagen® and pTeroPure® Supply Agreements. Elysium’s opposition brief was filed on January 24, 2022, and ChromaDex, Inc.’s reply brief was filed on January 31, 2022. On February 10, 2022, the court denied ChromaDex Inc.’s motion for prejudgment interest. On February 18, 2022, ChromaDex, Inc. and Elysium jointly filed a notice informing the court that ChromaDex, Inc. had filed in the U.S. District Court for the Southern District of New York (SDNY Court) a motion to enforce a settlement agreement between ChromaDex, Inc. and Elysium that ChromaDex, Inc. asserts would materially affect the California Action. On April 22, 2022, ChromaDex, Inc. and Elysium jointly filed a notice informing the court that the SDNY Court had granted ChromaDex, Inc.’s motion to enforce the settlement agreement. On April 29, 2022, ChromaDex, Inc. filed a notice informing the court that the SDNY Court had dismissed the SDNY action with prejudice pursuant to the settlement agreement. On August 22, 2022, ChromaDex, Inc. filed a motion for entry of judgment pursuant to Federal Rule of Civil Procedure 54(b) on the basis that the settlement agreement was enforceable and resolved the claims and counterclaims tried to the jury in the California Action. Elysium’s opposition brief was filed on August 29, 2022, and ChromaDex, Inc.’s reply brief was filed on September 2, 2022. On September 13, 2022, the court denied ChromaDex, Inc.’s motion for entry of judgment pursuant to Rule 54(b). 20 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements On September 28, 2022, ChromaDex, Inc., Elysium, and Mark Morris filed a joint stipulation requesting that the court stay the California Action pending the final resolution of ChromaDex, Inc.’s appeal in the U.S. Court of Appeals for the Federal Circuit captioned ChromaDex, Inc. v. Elysium Health, Inc., No. 2022-1116 (the “Federal Circuit Appeal”). On September 28, 2022, the court issued an order staying the California Action pending the final resolution of the Federal Circuit Appeal. On June 16, 2023, ChromaDex, Elysium, and Mark Morris filed a joint status report and stipulation informing the court that the U.S. Court of Appeals for the Federal Circuit had issued its mandate in the Federal Circuit Appeal and requesting the court continue the stay of the California Action until August 22, 2023, in order to allow the parties in the Federal Circuit Appeal the opportunity to file a petition for a writ of certiorari in the Supreme Court. On June 20, 2023, the court approved the joint stipulation and continued the stay until August 22, 2023. On August 14, 2023, at the request of the parties, the court further continued the stay until September 21, 2023. On September 15, 2023, ChromaDex, Elysium, and Mark Morris filed a joint status report and stipulation informing the court that ChromaDex and the Trustees of Dartmouth College had filed a petition for writ of certiorari in the Supreme Court and requesting the court continue the stay pending the Supreme Court’s decision on the petition. On September 15, 2023, the court approved the joint stipulation and continued the stay pending the Supreme Court’s decision on the petition. 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. On April 26, 2024, ChromaDex filed its opening brief in support of its motion for entry of final judgment. On June 3, 2024, the California Action was reassigned to a different judge. On June 25, 2024, Defendants filed their opposition to ChromaDex’s motion for entry of final judgment. ChromaDex filed its reply brief on July 25, 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. 21 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements (B) Southern District of New York Action On September 27, 2017, Elysium Health Inc. (Elysium Health) filed a complaint in the United States District Court for the Southern District of New York, against ChromaDex (Elysium SDNY Complaint). Elysium Health alleged in the Elysium SDNY Complaint that ChromaDex made false and misleading statements in a citizen petition to the Food and Drug Administration it filed on or about August 18, 2017. Among other allegations, Elysium Health averred that the citizen petition made Elysium Health’s product appear dangerous, while casting ChromaDex’s own product as safe. The Elysium SDNY Complaint asserted four claims for relief: (i) false advertising under the Lanham Act, 15 U.S.C. § 1125(a); (ii) trade libel; (iii) deceptive business practices under New York General Business Law § 349; and (iv) tortious interference with prospective economic relations. On October 26, 2017, ChromaDex moved to dismiss the Elysium SDNY Complaint on the grounds that, inter alia, its statements in the citizen petition are immune from liability under the Noerr-Pennington Doctrine, the litigation privilege, and New York’s Anti-SLAPP statute, and that the Elysium SDNY Complaint failed to state a claim. Elysium Health opposed the motion on November 2, 2017. ChromaDex filed its reply on November 9, 2017. On October 26, 2017, ChromaDex filed a complaint in the United States District Court for the Southern District of New York against Elysium Health (ChromaDex SDNY Complaint). ChromaDex alleges that Elysium Health made material false and misleading statements to consumers in the promotion, marketing, and sale of its health supplement product, Basis, and asserts five claims for relief: (i) false advertising under the Lanham Act, 15 U.S.C. §1125(a); (ii) unfair competition under 15 U.S.C. § 1125(a); (iii) deceptive practices under New York General Business Law § 349; (iv) deceptive practices under New York General Business Law § 350; and (v) tortious interference with prospective economic advantage. On November 16, 2017, Elysium Health moved to dismiss for failure to state a claim. ChromaDex opposed the motion on November 30, 2017 and Elysium Health filed a reply on December 7, 2017. 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. The mediation was unsuccessful. On September 27, 2018, the Court issued a combined ruling on both parties’ motions to dismiss. For ChromaDex’s motion to dismiss, the Court converted the part of the motion on the issue of whether the citizen petition is immune under the Noerr-Pennington Doctrine into a motion for summary judgment, and requested supplemental evidence from both parties, which were submitted on October 29, 2018. The Court otherwise denied the motion to dismiss. On January 3, 2019, the Court granted ChromaDex’s motion for summary judgment under the Noerr-Pennington Doctrine and dismissed all claims in the Elysium SDNY Complaint. Elysium moved for reconsideration on January 17, 2019. The Court denied Elysium’s motion for reconsideration on February 6, 2019, and issued an amended final order granting ChromaDex’s motion for summary judgment on February 7, 2019. The Court granted in part and denied in part Elysium’s motion to dismiss, sustaining three grounds for ChromaDex’s Lanham Act claims while dismissing two others, sustaining the claim under New York General Business Law § 349, and dismissing the claims under New York General Business Law § 350 and for tortious interference. Elysium filed an answer and counterclaims on October 10, 2018, alleging claims for (i) false advertising under the Lanham Act, 15 U.S.C. §1125(a); (ii) unfair competition under 15 U.S.C. § 1125(a); and (iii) deceptive practices under New York General Business Law § 349. ChromaDex answered Elysium’s counterclaims on November 2, 2018. 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. § 1125(a). On April 10, 2019, Elysium Health answered the amended complaint and filed amended counterclaims, also adding new claims against ChromaDex for false advertising and unfair competition under the Lanham Act, 15 U.S.C. § 1125(a). On July 1, 2019, Elysium Health filed further amended counterclaims, adding new claims under the Copyright Act §§ 106 & 501. On February 9, 2020, ChromaDex filed a motion for leave to amend its complaint to add additional claims against Elysium Health for false advertising and unfair competition. On February 10, 2020, Elysium Health filed a motion for leave to amend its counterclaims to identify allegedly false and misleading statements in ChromaDex’s advertising. Those motions were both granted after respective stipulations. On March 12, 2020, Elysium Health answered the second amended complaint. On March 13, 2020, ChromaDex filed an answer and objection to Elysium Health’s third amended counterclaims. On December 14, 2020, Elysium Health filed a motion to supplement and amend its counterclaims to add claims regarding alleged advertising related to COVID, to add an allegation about a change to the ChromaDex website, and to remove its copyright infringement claim under the Copyright Act. On January 19, 2021, the Court denied Elysium Health’s motion to add claims regarding alleged advertising related to COVID. The Court granted the unopposed requests to add an allegation about a change to ChromaDex’s website and to remove Elysium’s Copyright Act claim. Pursuant to the Court’s order, Elysium filed fourth amended counterclaims on April 21, 2021. 22 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements All discovery closed on April 23, 2021. The Court vacated a previously scheduled joint pretrial order and trial date because of COVID-19, and the Court informed the Parties that trial date would be rescheduled in November or December 2021. Both parties filed dispositive and Daubert motions on June 4, 2021. Opposition papers were filed by both parties on June 25, 2021, and reply papers were filed on July 9, 2021. On January 10, 2022, both parties appeared for oral argument on the dispositive and Daubert motions. On February 3, 2022, ChromaDex reached a settlement in order to resolve the SDNY action in its entirety as well as the claims tried to the jury in the Central District of California (the “Settlement Agreement”). Shortly thereafter, before the parties could notify the Court, the Court issued a ruling on the pending dispositive and Daubert motions, dismissing ChromaDex’s SDNY complaint in its entirety on the grounds that ChromaDex’s damages were uncertain, and dismissing some of Elysium’s claims. Elysium then asserted that a settlement had not been reached. ChromaDex thereafter filed a motion to enforce the Settlement Agreement in its entirety on February 16, 2022. Elysium’s opposition to that motion was filed on March 2, 2022, and ChromaDex’s reply was filed on March 9, 2022. On April 19, 2022, the Court concluded that a settlement had been reached and granted ChromaDex’s motion to enforce the Settlement Agreement. On April 28, 2022, pursuant to the Settlement Agreement, the Court dismissed the entire action with prejudice. On May 11, 2022, Elysium filed a notice of appeal. On May 25, 2022, ChromaDex filed a notice of cross-appeal. Elysium filed its opening brief on August 24, 2022. ChromaDex filed its opening and response brief on November 22, 2022. Elysium filed its reply and response brief on January 20, 2023. ChromaDex filed its reply brief on February 10, 2023. Oral argument took place on October 13, 2023. On October 26, 2023, the court of appeals issued a decision affirming the district court’s decision enforcing the Settlement Agreement, and also dismissed ChromaDex’s conditional cross-appeal as moot. On November 16, 2023, the court of appeals’ decision became final. (C) Delaware - Patent Infringement Action On September 17, 2018, ChromaDex and Trustees of Dartmouth College filed a patent infringement complaint in the United States District Court for the District of Delaware against Elysium Health, Inc. The complaint alleges that Elysium’s BASIS® dietary supplement infringes U.S. Patent Nos. 8,197,807 (‘807 Patent) and 8,383,086 (‘086 Patent) that comprise compositions containing isolated nicotinamide riboside held by Dartmouth and licensed exclusively to ChromaDex On October 23, 2018, Elysium filed an answer to the complaint. The answer asserts various affirmative defenses and denies that Plaintiffs are entitled to any relief. 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. ChromaDex filed an opposition brief on November 21, 2018 detailing the issues with Elysium’s motion to stay. In particular, ChromaDex argued that given claim 2 of the ‘086 Patent was only included in the PTAB’s inter partes review for procedural reasons the PTAB was unlikely to invalidate claim 2 and therefore litigation in Delaware would continue regardless. In addition, ChromaDex argued that the litigation in the California Action is unlikely to have a significant effect on the ongoing patent litigation. After the PTAB released its written decision upholding claim 2 of the ‘086 Patent, proving right ChromaDex’s prediction, ChromaDex informed the Delaware court of the PTAB’s decision on January 17, 2019. On June 19, 2019, the Delaware court granted in part and denied in part Elysium’s motion, ordering that the case was stayed pending the resolution of Elysium’s patent misuse counterclaim in the California Action. On November 1, 2019, ChromaDex filed a motion to lift the stay due to changed circumstances in the California Action, among other reasons. Briefing on the motion was completed on November 22, 2019. On January 6, 2020, the Delaware court issued an oral order instructing the parties to submit a joint status report after the January 13, 2020 motions hearing in the California Action. The joint status report was submitted on January 30, 2020. On February 4, 2020, the Delaware court issued an order granting ChromaDex’s motion to lift the stay and setting a scheduling conference for March 10, 2020. On March 19, 2020, the Delaware court entered a scheduling order, which, among other things, set the claim-construction hearing for December 17, 2020 and trial for the week of September 27, 2021. On April 17, 2020, ChromaDex served infringement contentions. Elysium filed a Second Amended Answer on July 10, 2020. 23 Table of Contents 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. On May 5, 2020, Elysium filed its opposition to ChromaDex’s motion for leave to amend and moved to dismiss ChromaDex for alleged lack of standing. ChromaDex filed its opposition to Elysium’s motion to dismiss and reply in support of its motion to amend on May 19, 2020. Elysium filed its reply in support of its motion to dismiss on May 26, 2020. The Court held a hearing on the motion for leave to amend the complaint and Elysium’s motion to dismiss on September 16, 2020. On December 15, 2020, the Court entered orders (i) granting in part and denying in part Elysium’s motion to dismiss ChromaDex for alleged lack of standing; and (ii) denying ChromaDex’s motion for leave to amend. ChromaDex filed a motion for reargument on December 29, 2020. Elysium filed a response to the motion for reargument on January 28, 2021. ChromaDex filed a motion for leave to file a reply on February 8, 2021. Elysium filed a response to the motion for leave to file a reply on February 12, 2021. ChromaDex filed a reply to the motion for leave to file a reply on February 19, 2021. The Court granted the motion for leave to file the reply on April 26, 2021, and denied the motion for reargument on April 27, 2021. On July 22, 2020 the parties filed a Joint Claim Construction Chart and respective motions for claim construction. The parties filed a Joint Claim Construction Brief on November 5, 2020. The Court held a Markman hearing on claim-construction issues on December 17, 2020. The Court entered a claim-construction ruling on January 5, 2021. Fact discovery closed on January 26, 2021. Opening expert reports were served on February 9, 2021. Responsive expert reports were served on March 9, 2021. Reply expert reports were served on March 30, 2021. Both parties filed dispositive and Daubert motions on April 27, 2021. 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. ChromaDex filed a notice of appeal on November 2, 2021. ChromaDex’s opening brief was filed on February 2, 2022. Elysium’s response brief was filed on April 11, 2022. ChromaDex’s reply brief was filed on May 9, 2022. Oral argument occurred on December 6, 2022. On February 13, 2023, the court of appeals issued a decision affirming the district court’s decision. On March 15, 2023, ChromaDex filed a petition for a panel rehearing and/or rehearing en banc. On April 10, 2023, the court of appeals invited Elysium to file a response to the petition and on April 24, 2023, Elysium filed a response to the petition. On May 10, 2023, the court of appeals denied the petition. On May 17, 2023, the court of appeals issued the mandate. On June 16, 2023, Elysium filed a bill of costs and a motion for attorneys’ fees and costs. On June 30, 2023, ChromaDex filed objections to Elysium’s bill of costs. On July 21, 2023, ChromaDex filed a response to Elysium’s motion for attorneys’ fees and costs. On July 28, 2023, ChromaDex filed an application for an extension of time to September 7, 2023 to file a petition for writ of certiorari . On August 1, 2023, the Supreme Court granted the requested extension. On August 14, 2023, Elysium filed a reply in support of its motion for attorneys’ fees and costs. On September 7, 2023, ChromaDex filed a petition for writ of certiorari . On October 16, 2023, the Supreme Court denied the petition. 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. On May 23, 2024, Elysium filed its opening brief. On June 6, 2024, ChromaDex filed its response brief. On June 13, 2024, Elysium filed its reply brief. 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. The Company believes the Court abused its discretion in granting the award. 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 through the anticipated appeal, is approximately $ 10.1 million. 2. Contingencies (A) In September 2019, the Company received a letter from a licensor stating that the Company owed the licensor $ 1.6 million plus interest for sublicense fees as a result of the Company entering into a supply agreement with a customer. After reviewing the relevant facts and circumstances, the Company believes that the Company does not owe any sublicense fees to the licensor and has corresponded with the licensor to resolve the matter. 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. 24 Table of Contents 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). The Letter references statements issued by the Company relating to preclinical and clinical research results involving nicotinamide riboside and COVID-19. The statements were included in press releases and referenced in social media posts. On November 18, 2020, the Company provided a response to the Letter stating that the Company disagrees with the assertion in the Letter that the Company’s products are intended to mitigate, prevent, treat, diagnose or cure COVID-19 in violation of certain sections of the Federal Food, Drug, and Cosmetic Act or that they were unsubstantiated under the FTC Act, but rather accurately reflected the state of the science and the results of scientific research. Nonetheless, the Company also responded that it had deleted social media references to the studies and removed related press releases from its website. On April 30, 2021, the Company received an additional warning letter (the Second Letter) from only the FTC. The Second Letter references the original Letter, and cites additional statements issued by the Company and certain officers and advisors of the Company relating to nicotinamide riboside and scientific studies related to COVID-19. The Second Letter asserts that such statements contain coronavirus-related prevention or treatment claims and are deceptive in violation of the Federal Trade Commission Act. On May 4, 2021, the Company provided a response to the Second Letter stating that it had removed the social posts from its accounts identified in the Second Letter and requested that third parties remove the post from their accounts that were identified in the Second Letter. The Company stated that the press release identified in the Second Letter is appropriate and not a deceptive act or practice under applicable law. The Company affirmed its belief in the need to accurately report on the scientific results of its studies to its investors and welcomed the opportunity to discuss its research and development program with the FTC and receive guidance on future releases. 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. Grace & Co. –Conn. (Grace). 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. See Item 1A. 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) Year Amount 2024 Remaining $ 5,215 2025 4,750 $ 9,965 25 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements Note 11. Employee Retention Tax Credit In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law, providing numerous tax provisions and other stimulus measures, including the Employee Retention Tax Credit (ERTC): a refundable tax credit against certain employment taxes for qualifying businesses keeping employees on their payroll during the COVID-19 pandemic. 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 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 Internal Revenue Services (IRS) announced a moratorium in processing new claims for the employee retention credit, citing ongoing concerns about improper claims. The IRS guaranteed ongoing processing of existing claims, albeit at a reduced pace and with increased compliance scrutiny. To date, the Company has not received communications from the IRS regarding the Company’s existing claims. Nevertheless, the Company is diligently monitoring the situation to ensure continued compliance. 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. Note 12. Joint Venture Agreement On September 30, 2022, Asia Pacific Scientific, Inc., an indirect wholly owned subsidiary of the Company, and Hong Kong (China) Taikuk Group Ltd (Taikuk) entered into a shareholders agreement (the “Shareholders Agreement”) pursuant to which Taikuk has agreed to contribute $ 1.0 million (the “Subscription Price”) in exchange for an 11 % non-voting equity interest in ChromaDex Asia Pacific Ventures Limited, a subsidiary of Asia Pacific Scientific, Inc. (the “Joint Venture” or “JV”). Additionally, the Company shall pay $ 1.0 million in cash to Taikuk (the “Taikuk Fee”) upon the closing of the Shareholders Agreement (the “Closing”). The Company and Taikuk have mutually agreed that no exchange of funds for the Taikuk Fee and Subscription Price was necessary and, accordingly, no cash has or will exchange hands related to these provisions of the Shareholders Agreement. The articles of association of the JV were amended and restated simultaneously with the Closing. The purpose of the JV is to commercialize Tru Niagen® and other products containing nicotinamide riboside to be developed by the Company in the ordinary course (the “Products”) in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan (the “Territory”). The Shareholders Agreement has an initial term of 20 years, unless earlier terminated. The Company indirectly owns an 89 % equity interest (and all of the voting interests) in the JV and has the right to elect all three directors of the JV. 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 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 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. 26 Table of Contents ChromaDex Corporation and Subsidiaries Notes to the Unaudited Condensed Consolidated Financial Statements Note 13. Income Taxes 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 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. Note 14. 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 27 Table of Contents