What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-04 · 71 added, 94 removed, 134 unchanged (55% of the section changed)

4 unchanged sentences

We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Readers should carefully review the risk factors and related notes set forth below in Part II, Item 1A, “Risk Factors” and included under Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 10, 2020, as amended on May 18, 2020 (our “Annual Report”).

Readers should carefully review the risk factors and related notes set forth below in Part II, Item 1A, “Risk Factors” and included under Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on March 12, 2021 (our “Annual Report”).

The following MD&A is intended to help readers understand the results of our operation and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Interim Unaudited Financial Statements and the accompanying Notes to Interim Unaudited Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Growth and percentage comparisons made herein generally refer to the three and the nine months ended September 30, 2020 compared with the three and the nine months ended September 30, 2019 unless otherwise noted.

Growth and percentage comparisons made herein generally refer to the three months ended March 31, 2021 compared with the three months ended March 31, 2020 unless otherwise noted.

Unless otherwise indicated or unless the context otherwise requires, all references in this document to “ we, ” “ us, ” “ our, ” the “ Company, ” “ChromaDex” and similar expressions refer to ChromaDex Corporation, and depending on the context, its subsidiaries.

Company Overview

ChromaDex is a science-based integrated nutraceutical company devoted to improving the way people age.

ChromaDex scientists partner with leading universities and research institutions worldwide to discover, develop and create solutions to deliver the full potential of nicotinamide adenine dinucleotide ("NAD") and its impact on human health.

ChromaDex is a global bioscience company dedicated to healthy aging.

The ChromaDex team, which includes world-renowned scientists, is pioneering research on nicotinamide adenine dinucleotide (“NAD+”), levels of which decline with age.

NAD+ is an essential coenzyme and a key regulator of cellular metabolism.

16 unchanged sentences

NIAGEN® is the trade name for our proprietary ingredient NR, and is protected by patents to which we are the exclusive licensee.

ChromaDex is the world leader in the emerging NAD space.

ChromaDex is among the world leaders in the emerging NAD+ space.

ChromaDex has amassed more than 225 research partnerships with leading universities and research institutions around the world including the National Institutes of Health, Cornell, Dartmouth, Harvard, Massachusetts Institute of Technology, University of Cambridge and the Mayo Clinic.

4 unchanged sentences

Rudy Tanzi, the co-chair of the department of neurology at Harvard Medical School and one of the world’s leading experts in food and nutrition, Sir John Walker, Nobel Laureate and Emeritus Director, MRC Mitochondrial Biology Unit in the University of Cambridge, England, Dr.

Bruce German, Chairman of food, nutrition and health at the University of California, Davis, and Dr.

Brunie Felding, Associate Professor, Department of Molecular Medicine at Scripps Research Institute, California Campus.

Bruce German, Chairman of food, nutrition and health at the University of California, Davis, Dr.

Brunie Felding, Associate Professor, Department of Molecular Medicine at Scripps Research Institute, California Campus, and Dr.

David Katz, the founder and former director of Yale University’s Yale-Griffin Prevention Research Center.

Impact of COVID-19

4 unchanged sentences

To date, we have successfully navigated the business during the COVID-19 pandemic, managing our working capital effectively.

We have experienced shipment delays from our suppliers;

however, we have not encountered any major disruptions in our supply chain.

We have been maintaining adequate safety stocks to support our growth and we currently have adequate inventory on hand to meet our current demands.

Overall, we believe the supply chain disruptions arising from COVID-19 will not have a material impact to our business operations.

Global supply chains continue to be impacted by COVID-19, including challenges with transportation, logistics and production lead-times.

In the first quarter of 2021, we experienced delays due to global packaging shortages for our consumer products across our supply chain.

These have been addressed in the second quarter and we have otherwise not encountered any major disruptions in our supply chain.

It is our intention to maintain adequate safety stocks to support our growth and we currently have adequate inventory on hand to meet our current demands.

Overall, we believe the supply chain disruptions due to the COVID-19 pandemic will not have a material impact to our business operations.

In response to the outbreak, we prioritized the health and safety of our employees by closing our offices or enhancing safety protocols in place to ensure the well-being of our employees.

7 unchanged sentences

Actual results may differ from these estimates under different assumptions or conditions.

On April 27, 2020, the Company entered into a Securities Purchase Agreement with its existing stockholders Winsave Resources Limited and Pioneer Step Holdings Limited, pursuant to which the Company agreed to sell and issue an aggregate of $5.0 million of the Company’s common stock at a purchase price of $4.08 per share.

The selling price was determined by the average closing price over the ten trading days immediately preceding the date of Securities Purchase Agreement.

The financing closed on May 7, 2020, pursuant to which the Company issued approximately 1.2 million shares of its common stock.

The Company received proceeds of $4.9 million, net of offering costs.

On February 20, 2021, the Company entered into a Securities Purchase Agreement with EverFund pursuant to which the Company agreed to sell and issue approximately 3.8 million shares of common stock at a purchase price of $6.50 per share (the “financing”).

On February 23, 2021, the Company closed the Financing and received proceeds of $24.9 million, net of offering costs.

In June 2020, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B.

3 unchanged sentences

Riley FBR, the “Sales Agents”) under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $50.0 million from time to time through the Sales Agents (the “ATM Facility”).

As of September 30, 2020, the Company has not sold any shares of its common stock pursuant to the ATM Facility.

As of September 30, 2020, the Company had approximately $15.5 million of cash and cash equivalents on hand.

We anticipate that our current cash, cash equivalents, cash to be generated from operations and available line of credit up to $7.0 million from Western Alliance Bank will be sufficient to meet our projected operating plans for at least the next twelve months.

As of March 31, 2021, the Company had not sold any shares of its common stock pursuant to the ATM Facility.

As of March 31, 2021, the Company had approximately $44.7 million of cash and cash equivalents on hand.

We anticipate that our current cash, cash equivalents, and available line of credit up to $7.0 million from Western Alliance Bank will be sufficient to meet our projected operating plans for at least the next twelve months.

We may, however, seek additional capital in the next twelve months, both to meet our projected operating plans after the next twelve months and/or to fund our longer term strategic objectives.

10 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.

Effective as of September 17, 2020, the Company entered into a Sixth Amendment (the “Sixth Amendment”) to the Manufacturing and Supply Agreement (such agreement as amended, the “Grace Manufacturing Agreement”), originally effective in January 2016 with W.R.

In January 2019, Grace was issued patents related to the manufacturing of the crystalline form of NR (the “Grace Patents”).

Pursuant to the Sixth Amendment, the Grace Manufacturing Agreement expires on December 31, 2021, subject to additional two-year renewal periods to be negotiated by the parties.

In addition, the Grace Manufacturing Agreement may be terminated by (a) the Company by providing 12 months’ notice prior to the end of the current term, (b) Grace by providing 12 months’ notice of its intent to cease manufacture of NR (a “Market Exit”) and (c) a party in the case of (1) a material breach by the other party that is not cured within 30 days, (2) three material breaches by the other party in any 12 month period, or (3) bankruptcy of the other party.

In the event that certain conditions are met, then the Company will become a licensee of the Grace Patents.

Our net sales and net loss for the three- and the nine-month periods ending on September 30, 2020 and September 30, 2019 were as follows:

Our net sales and net loss for the three-month periods ending on March 31, 2021 and March 31, 2020 were as follows:

Three months ending

Nine months ending

(In thousands)

2 unchanged sentences

Three months ending

Nine months ending

(In thousands)

2 unchanged sentences

Total net sales

Total net sales increased by 18% and 32% for the three- and nine-month periods ended September 30, 2020, respectively, compared to the comparable periods in 2019.

Total net sales increased by 2% for the three-month period ended March 31, 2021, compared to the comparable period in 2020.

The Company's TRU NIAGEN® sales for the consumer products segment continue to increase after the Company's strategic shift towards consumer products in 2017.

The increase in sales for the ingredients segment is largely due to strong demand from our NIAGEN® ingredient customers, who resell NIAGEN® under their own brands.

The decrease in sales for the analytical reference standards and services is largely due to the spinoff of the regulatory consulting business unit in November 2019.The regulatory consulting business generated net sales of approximately $0.7 million in the first nine months of 2019.In addition, sales of analytical reference standards decreased largely due to the effects of COVID-19.

The decrease in sales for the ingredients segment is largely due to decreased sales to our NIAGEN® ingredient customers.

In 2021, the Company did not ship NIAGEN® to Thorne Research Inc., a former customer who filed a petition on December 1, 2020 for IPR of the ‘086 Patent which ChromaDex Inc.

exclusively licenses from Dartmouth College.

For more information, see Note 12, Commitments and Contingencies, Legal Proceedings of the Notes to Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The increase in sales for the analytical reference standards and services is largely due to increased demand from the customers.

In 2020, the Company experienced lower sales of analytical reference standards due to the effects of COVID-19.

Cost of Sales

1 unchanged sentence

Three months ending

Nine months ending

(In thousands)

3 unchanged sentences

Total cost of sales

The cost of sales, as a percentage of net sales, decreased by 4% for each of the three- and nine-month periods ended September 30, 2020, compared to the comparable periods in 2019.

The cost of sales, as a percentage of net sales, for the consumer products segment decreased by 3% and 2% for the three- and nine-month periods ended September 30, 2020, respectively, compared to the comparable periods in 2019.

Product cost savings initiatives and overall scale on our supply chain drove the decrease in cost of sales.

The cost of sales, as a percentage of net sales, for the ingredients segment decreased 10% and 9% for the three- and nine-month periods ended September 30, 2020, respectively, compared to the comparable periods in 2019.

In 2020, we were able to lower supply cost of NIAGEN® ingredient through supply chain cost savings initiatives, which resulted in decrease of cost of sales.

Also, a portion of this decrease was realized in the form of a rebate from a supplier for prior year efficiency initiatives, which was recorded in the second quarter of 2020.

In addition, we had an inventory write off of approximately $0.2 million related to our decision to wind down sales for a certain ingredient in the first quarter of 2019.

The cost of sales, as a percentage of net sales for the analytical reference standards and services segment, increased 22% for each of the three- and the nine-month periods ended September 30, 2020, compared to the comparable periods in 2019.

The decrease in sales of analytical reference standards and services due to the spinoff of the regulatory consulting business in November 2019 and the effects of COVID-19 led to a lower labor and overhead utilization rate, which resulted in our cost of sales increasing as a percentage of net sales.

Cost of sales, as a percentage of net sales, decreased by 5% for the three-month period ended March 31, 2021, compared to the comparable period in 2020.

Cost of sales, as a percentage of net sales, for the consumer products segment decreased by 5% for the three-month period ended March 31, 2021, compared to the comparable period in 2020.

Product mix, cost savings initiatives and overall scale on our supply chain drove the decrease in cost of sales.

Cost of sales, as a percentage of net sales, for the ingredients segment was flat at 43% for the three-month period ended March 31, 2021, compared to the comparable period in 2020.

Cost of sales, as a percentage of net sales for the analytical reference standards and services segment, decreased 20% for the three-month period ended March 31, 2021, compared to the comparable period in 2020.

The increase in sales of analytical reference standards led to a higher labor and overhead utilization rate, which resulted in our cost of sales decreasing as a percentage of net sales.

Gross profit is net sales less the cost of sales and is affected by a number of factors including business and product mix, competitive pricing and costs of products, labor, overhead, services and delivery.

Three months ending

Nine months ending

(In thousands)

3 unchanged sentences

Total gross profit

The consumer products segment posted gross profit of $7.5 million and $21.7 million for the three- and the nine-month periods ending September 30, 2020, an increase of 29% and 41%, respectively, compared to the comparable periods in 2019.

The increased gross profit was due to higher sales, product cost savings initiatives and scale on our supply chain operations.

The ingredients segment posted gross profit of $0.9 million and $4.0 million for the three- and the nine-month periods ending September 30, 2020, respectively, an increase of 46% and 97%, respectively, compared to the comparable periods in 2019.

The increased gross profit for the ingredients segment was largely due to higher sales to key customers, scale on our supply chain operations, and a rebate related to savings from prior year efficiency initiatives.

The decreased gross profit for the analytical reference standards and services segment was largely due to the decreased sales resulting from the spinoff of the regulatory consulting business and the effects of COVID-19.

Fixed supply chain labor and overhead costs make up a substantial portion of the costs and these fixed labor and overhead costs did not decrease in proportion to sales, yielding lower profit margin.

The consumer products segment posted gross profit of $8.2 million for the three-month period ending March 31, 2021, an increase of 20% compared to the comparable period in 2020.

The increased gross profit was due to higher sales, product mix, cost savings initiatives and scale on our supply chain operations.

The ingredients segment posted gross profit of $0.8 million for the three-month period ending March 31, 2021, a decrease of 47% compared to the comparable period in 2020.

The decreased gross profit for the ingredients segment was largely due to lower sales.

The increased gross profit for the analytical reference standards and services segment was largely due to the increased sales.

Fixed supply chain labor and overhead costs make up a substantial portion of the costs and these fixed labor and overhead costs did not increase in proportion to sales, yielding higher profit margin.

Operating Expenses-Sales and Marketing

1 unchanged sentence

Three months ending

Nine months ending

(In thousands)

3 unchanged sentences

Total sales and marketing expenses

For the consumer products segment, the increase during the three- and nine-month periods ended September 30, 2020 is largely due to increased staffing as well as direct marketing expenses associated with social media, public relations and other customer awareness and acquisition programs.

For the ingredients segment, selling and marketing expenses increased slightly by 4% during the three-month period ended September 30, 2020 and decreased by 83% during the nine-month period ended September 30, 2020, compared to comparable periods in 2019.

We reversed approximately $114,000 of certain accrued commission expense during the first quarter of 2020, as we were no longer obligated to pay the commission.

For the analytical reference standards and services segment, the selling and marketing expenses increased by 22% during the three-month period ended September 30, 2020 and decreased by 3% during the nine-month period ended September 30, 2020.

During the three-month period ended September 30, 2020, we increased our sales and marketing efforts to increase the sales of our analytical reference standards business.

For the consumer products segment, the increase during the three-month period ended March 31, 2021 is largely due to direct marketing expenses associated with social media, public relations and other customer awareness and acquisition programs, as well as increased staffing.

For the ingredients segment, selling and marketing expenses were approximately $10,000 during the three-month period ended March 31, 2021.

During the first quarter of 2020, we reversed approximately $114,000 of certain accrued commission expense, as we were no longer obligated to pay the commission.

For the analytical reference standards and services segment, the selling and marketing expenses increased by 12% during the three-month period ended March 31, 2021.

During the three-month period ended March 31, 2021, we increased our sales and marketing efforts to increase the sales of our analytical reference standards business.

Operating Expenses-Research and Development

1 unchanged sentence

Three months ending

Nine months ending

(In thousands)

2 unchanged sentences

Total research and development expenses

We are allocating the research and development expenses related to our NIAGEN® branded ingredient to the consumer products and ingredients segment, based on revenues recorded.

Overall, we decreased our research and development efforts during the three- and the nine-month periods ended September 30, 2020 as we evaluate and realign the priorities of our ongoing research and development efforts of our flagship ingredient, NIAGEN® nicotinamide riboside.

We allocate the research and development expenses related to our NIAGEN® branded ingredient to the consumer products and ingredients segment, based on revenues recorded.

Overall, we decreased our research and development efforts during the three-month period ended March 31, 2021 largely due to the timing of projects as we evaluate and realign the priorities of our ongoing research and development efforts of our flagship ingredient, NIAGEN® nicotinamide riboside.

Operating Expenses-General and Administrative

1 unchanged sentence

Three months ending

Nine months ending

(In thousands)

General and administrative

The decrease in general and administrative expenses for the three- and nine-month periods ended September 30, 2020, compared to the comparable periods in 2019 was largely due to a decrease in legal expenses.

Our legal expenses decreased to approximately $1.9 million and $6.1 million in the three- and nine-month periods ended September 30, 2020, compared to approximately $2.9 million and $9.1 million in the comparable periods in 2019.

During the three- and nine-month periods ended September 30, 2020, we incurred approximately $0.2 million and $1.5 million, respectively, of severance and restructuring expenses.

These expenses relate to realignment of the business operations to reduce redundancies and improve efficiencies as we scale the business.

Non-operating Expenses-Interest Expense, net

Interest expense, net consists of interest earned from bank deposit accounts less interest expenses on convertible notes and finance leases.

Three months ending

Nine months ending

(In thousands)

Interest expense, net

In the second and third quarter of 2019, we incurred debt issuance costs of approximately $0.8 million in connection with the issuance of convertible promissory notes in the aggregate principal amount of $10.0 million to Winsave Resources Limited and Pioneer Step Holdings Limited.

The issuance costs were recorded as a debt discount and have been amortized as interest expense using the effective interest method.

We did not incur debt issuance costs in the three- or nine-month periods ended September 30, 2020.

The increase in general and administrative expenses for the three-month period ended March 31, 2021, compared to the comparable period in 2020 was largely due to an increase in legal expenses.

Our legal expenses increased to approximately $5.0 million in the three-month period ended March 31, 2021, compared to approximately $2.4 million in the comparable period in 2020 due to higher ligation-related expenses.

For the three-month period ended March 31, 2021, we did not incur significant severance and restructuring expenses while we incurred approximately $1.0 million in the comparable period in 2020.

For the three-month period ended March 31, 2021, our share-based compensation expense recorded as general and administrative expense was $0.7 million compared to $1.5 million in the comparable period in 2020.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

At September 30, 2020, and September 30, 2019, we maintained a full valuation allowance against the entire deferred income tax balance which resulted in an effective tax rate of approximately 0% for the three- and the nine-month periods ended September 30, 2020, and September 30, 2019, respectively.

At March 31, 2021 and March 31, 2020, we maintained a full valuation allowance against the entire deferred income tax balance which resulted in an effective tax rate of approximately 0% for the three-month periods ended March 31, 2021, and March 31, 2020, respectively.

As defined in ASC 740, Income Taxes, future realization of the tax benefit will depend on the existence of sufficient taxable income, including the expectation of continued future taxable income.

Depreciation and Amortization

Depreciation expense for the nine-month period ended September 30, 2020 was approximately $652,000 as compared to $559,000 for the nine-month period ended September 30, 2019.

Depreciation expense for the three-month period ended March 31, 2021 was approximately $0.2 million as compared to $0.2 million for the three-month period ended March 31, 2020.

We depreciate our assets on a straight-line basis, based on the estimated useful lives of the respective assets.

Amortization expense of intangible assets for the nine-month period ended September 30, 2020 was approximately $182,000 as compared to $184,000 for the nine-month period ended September 30, 2019.

Amortization expense of intangible assets for the three-month period ended March 31, 2021 was approximately $0.1 million as compared to $0.1 million for the three-month period ended March 31, 2020.

We amortize intangible assets using a straight-line method, generally over 10 years.

1 unchanged sentence

The useful lives of subsequent milestone payments that are capitalized are the remaining useful life of the initial licensing payment that was capitalized.

Amortization expense of right of use assets for the nine-month period ended September 30, 2020 was approximately $284,000 as compared to $423,000 for the nine-month period ended September 30, 2019.

Amortization expense of right of use assets for the three-month period ended March 31, 2021 was approximately $0.1 million as compared to $0.1 million for the three-month period ended March 31, 2020.

Liquidity and Capital Resources

From inception through September 30, 2020, we have incurred aggregate losses of approximately $135.7 million.

These losses are primarily due to expenses associated with the development and expansion of our operations.

From inception through March 31, 2021, we have incurred aggregate losses of approximately $149.2 million.

These losses are primarily due to expenses associated with the development and expansion of our operations and investments to protect our intellectual property, including litigation-related expenses.

These operations have been financed through capital contributions, the issuance of common stock and warrants through private placements, and the issuance of debt.

5 unchanged sentences

Any inability to raise additional financing would have a material adverse effect on us.

On April 27, 2020, the Company entered into a Securities Purchase Agreement with its existing stockholders, Winsave Resources Limited and Pioneer Step Holdings Limited, pursuant to which the Company agreed to sell and issue an aggregate of $5.0 million of the Company’s common stock at a purchase price of $4.08 per share.

The selling price was determined by the average closing price over the ten trading days immediately preceding the date of Securities Purchase Agreement.

The financing closed on May 7, 2020, pursuant to which the Company issued approximately 1.2 million shares of its common stock.

The Company received proceeds of $4.9 million, net of offering costs.

While we anticipate that our current cash, cash equivalents, cash to be generated from operations and available line of credit up to $7.0 million from Western Alliance Bank will be sufficient to meet our projected operating plans for at least the next twelve months, we may seek additional funds, either through additional equity or debt financings or collaborative agreements or from other sources.

Pursuant to the Financing, on February 23, 2021 we received proceeds of $24.9 million, net of offering costs.

While we anticipate that our current cash, cash equivalents, and available line of credit up to $7.0 million from Western Alliance Bank will be sufficient to meet our projected operating plans for at least the next twelve months, we may seek additional funds, either through additional equity or debt financings or collaborative agreements or from other sources.

In June 2020, we filed a $125.0 million registration statement on Form S-3 with the Commission, utilizing a “shelf” registration process.

3 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.

Net cash provided by ( used in ) operating activities

Net cash used in operating activities for the nine months ended September 30, 2020 was approximately $10.6 million as compared to approximately $19.8 million for the nine months ended September 30, 2019.

Along with the net loss, a decrease in allowance for doubtful trade receivables and a decrease in accounts payable were the largest uses of cash during the nine-month period ended September 30, 2020, partially offset by a decrease in trade receivables, an increase in accrued expenses and noncash share-based compensation expense.

Net cash used in operating activities for the nine months ended September 30, 2019 largely reflects the net loss, partially offset by an increase in deferred revenue and noncash share-based compensation expense.

Net cash used in operating activities

Net cash used in operating activities for the three months ended March 31, 2021 was approximately $5.4 million as compared to approximately $5.2 million for the three months ended March 31, 2020.

Along with the net loss, an increase in trade receivables and an increase in inventories were the largest uses of cash during the three-month period ended March 31, 2021, partially offset by an increase in accounts payable, an increase in accrued expenses and noncash share-based compensation expense.

Net cash used in operating activities for the three months ended March 31, 2020 largely reflects the net loss, a decrease in allowance for doubtful trade receivables and a decrease in accounts payable, partially offset by a decrease in trade receivables and noncash share-based compensation expense.

We expect our operating cash flows to fluctuate significantly in future periods as a result of fluctuations in our operating results, shipment timetables, trade receivable collections, inventory management, and the timing of our payments, among other factors.

Net cash provided by (used in) investing activities

Net cash used in investing activities was approximately $0.2 million for the nine months ended September 30, 2020, compared to approximately $0.5 million for the nine months ended September 30, 2019.

Net cash used in investing activities for the nine months ended September 30, 2020 mainly consisted of purchases of leasehold improvements and equipment.

Net cash used in investing activities for the nine months ended September 30, 2019 also consisted of purchases of leasehold improvements and equipment.

Net cash provided by (used in) financing activities

Net cash provided by financing activities was approximately $7.5 million for the nine months ended September 30, 2020, compared to approximately $16.6 million for the nine months ended September 30, 2019.

Net cash provided by financing activities for the nine months ended September 30, 2020 primarily consisted of proceeds from the issuance of common stock and the exercise of stock options.

Net cash provided by financing activities for the nine months ended September 30, 2019 consisted of proceeds from the sale of convertible notes, the issuance of common stock and the exercise of stock options.

Net cash used in investing activities

Net cash used in investing activities was approximately $46,000 for the three months ended March 31, 2021, compared to approximately $20,000 for the three months ended March 31, 2020.

Net cash used in investing activities for the three months ended March 31, 2021 mainly consisted of purchases of leasehold improvements and equipment.

Net cash used in investing activities for the three months ended March 31, 2020 consisted of purchases of leasehold improvements and equipment and investment in other long-term assets.

Net cash provided by financing activities

Net cash provided by financing activities was approximately $33.4 million for the three months ended March 31, 2021, compared to approximately $37,000 for the three months ended March 31, 2020.

Net cash provided by financing activities for the three months ended March 31, 2021 primarily consisted of proceeds from the issuance of common stock pursuant to the Financing and the exercise of stock options.

Net cash provided by financing activities for the three months ended March 31, 2020 consisted of proceeds from the exercise of stock options, partially offset by principal payments on finance leases.

Contractual Obligations and Commitments

During the nine months ended September 30, 2020, there were no material changes outside of the ordinary course of business in the specified contractual obligations disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as contained in our Annual Report, other than as disclosed in “Item 1 Financial Statements” of this Quarterly Report.

During the three months ended March 31, 2021, there were no material changes outside of the ordinary course of business in the specified contractual obligations disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as contained in our Annual Report, other than as disclosed in “Item 1 Financial Statements” of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

During the nine months ended September 30, 2020, we had no material off-balance sheet arrangements.

During the three months ended March 31, 2021, we had no material off-balance sheet arrangements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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 2. Management’s Discussion and Analysis