SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


			CHROMADEX CORPORATION
			(Exact Name of Registrant as Specified in its Charter)


Delaware						26-2940963
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

10900 Wilshire Blvd. Suite 600, Los Angeles, California						90024
(Address of Principal Executive Offices)						(Zip Code)


Title of each class	Trading Symbol	Name of Each exchange on which registered
Common Stock, $0.001 par value per share	CDXC	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

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Yes

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☑

Yes

☐

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company or emerging growth company. See definition of “large accelerated filer, accelerated filer, smaller reporting company and emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

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Accelerated filer

☐

Non-accelerated filer

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Smaller reporting company

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Emerging growth company

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If an emerging growth company, indicate if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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Yes

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

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Yes

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CHROMADEX CORPORATION

QUARTERLY REPORT ON FORM 10-Q

Item 1. FINANCIAL STATEMENTS (unaudited)

Unaudited Condensed Consolidated Balance Sheets

(In thousands except par values, unless otherwise indicated)

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Stockholders' Equity

(In thousands, unless otherwise indicated)

ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Stockholders' Equity - Continued

(In thousands, unless otherwise indicated)

Three Months Ended June 30, 2021
Common Stock Additional Paid-in Capital Accumulated Deficit Cumulative Translation Adjustments Total Stockholders' Equity
Shares Amount
Balance, April 1, 2021 67,702 $ 68 $ 192,972 $ (149,206) $ (2) $ 43,832
Issuance of common stock, net of offering costs of $0.3 million 213 — 1,869 1,869
Issuance of common stock resulting from the exercise of stock options 94 — 391 — — 391
Share-based compensation — — 1,616 — — 1,616
Net loss — — — (5,566) — (5,566)
Balance, June 30, 2021 68,009 $ 68 $ 196,848 $ (154,772) $ (2) $ 42,142


	Six Months Ended June 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	289	1		—		—		—		1
Share-based compensation	—	—		2,597		—		—		2,597
Translation adjustment	—	—		—		—		2		2

Adjustment to retained earnings: Cumulative effect of initially adopting ASC 326	—	—		—		(29)		—		(29)
Net loss	—	—		—		(4,093)		—		(4,093)
Balance, June 30, 2023	74,856	$	75	$	216,691	$	(189,615)	$	(1)	$	27,150

Six Months Ended June 30, 2021
Common Stock Additional
Paid-in Capital Accumulated Deficit Cumulative Translation Adjustments Total Stockholders' Equity
Shares Amount
Balance, January 1, 2021 61,881 $ 62 $ 158,190 $ (141,825) $ (3) $ 16,424
Issuance of common stock, net of offering costs of $0.4 million 4,059 4 26,736 26,740
Issuance of common stock resulting from the exercise of stock options 2,069 2 9,022 — — 9,024
Share-based compensation — — 2,900 — — 2,900
Translation adjustment — — — — 1 1
Net loss — — — (12,947) (12,947)
Balance, June 30, 2021 68,009 $ 68 $ 196,848 $ (154,772) $ (2) $ 42,142


	Six Months Ended June 30, 2022
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Cumulative Translation Adjustments		Total Stockholders' Equity
	Shares	Amount
Balance, January 1, 2022	68,126	$	68	$	200,614	$	(168,953)	$	(2)	$	31,727


Issuance of restricted stock	29	—		—		—		—		—
Share-based compensation	—	—		3,184		—		—		3,184
Translation adjustment	—	—		—		—		4		4
Net loss	—	—		—		(14,137)		—		(14,137)
Balance, June 30, 2022	68,155	$	68	$	203,798	$	(183,090)	$	2	$	20,778

Unaudited Condensed Consolidated Statements of Cash Flows

(In ~~thousands, unless otherwise indicated)~~thousands)

See accompanying ~~notes~~Notes to ~~condensed consolidated financial statements.~~the Unaudited Condensed Consolidated Financial Statements.

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”) isare 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 supplementation with NAD+ precursors.

ChromaDex is the innovator behind the NAD+ precursor nicotinamide riboside (NR), commercialized as the flagship ingredient Niagen®. Nicotinamide riboside and other NAD+ precursors are protected by ChromaDex’s patent and/or licensed rights portfolio. The Company delivers Niagen® as the sole active ingredient in its consumer product Tru Niagen®. The Company further develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw materials to the manufacturers of consumer products. ~~The~~Additionally, the Company ~~also~~ offers 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~~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 ~~condensed consolidated financial statements~~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 ~~condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the ~~consolidated financial statements~~Consolidated Financial Statements and notes thereto included in the Company’s ~~2021~~2022 Annual Report on Form 10-K filed with the ~~SEC.~~SEC on March 8, 2023.

Basis of ~~Consolidation~~Consolidation:: The accompanying ~~unaudited condensed financial statements~~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~~Policies: : There have been no changes to the Company’s significant accounting policies described in the Company’s 2022 Annual Report on Form 10-K filed with the SEC ~~on March 14, 2022,~~ that have had a material impact on the Company’s ~~condensed financial statements~~Unaudited Condensed Consolidated Financial Statements and related notes.

Recent Accounting ~~Pronouncements:~~Standards Adopted by the Company: In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic ASC 326): Measurement of Credit Losses on Financial Instruments. The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope. The new guidance represents significant changes to accounting for credit losses: (i) full lifetime expected credit losses will be recognized upon initial recognition of an asset in scope; (ii) the current incurred loss impairment model that recognizes losses when a probable threshold is met will be replaced with the expected credit loss impairment method without recognition threshold; and (iii) the expected credit losses estimate will be based upon historical information, current conditions, and reasonable and supportable forecasts. ASU 2016-13 introduces two distinctive credit loss impairment models: (i) current expected credit loss impairment model (Subtopic 326-20) applicable to financial assets measured at amortized cost; and (ii) available-for-sale debt securities impairment model (Subtopic 326-30). ASU 2016-13 is effective for public entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Public entities that qualify as a smaller reporting company can elect to defer compliance effective for fiscal years beginning after December 15, 2022. The Company ~~is currently evaluating~~adopted this standard on January 1, 2023 using the ~~impact~~modified retrospective method resulting in an adjustment to the opening balance of ~~ASU 2016-13 on its consolidated financial statements.~~retained earnings of $29,000.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Evaluation of Ability to Maintain Current Level of Operations

In connection with the preparation of these ~~condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, ~~2022,~~2023, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about the Company’s ability to meet its obligations as they became due over the next twelve months from the date of issuance of the Company’s second quarter of ~~2022~~2023 interim ~~condensed consolidated financial statements.~~Unaudited Condensed Consolidated Financial Statements. Management assessed that there were such conditions and events, including a history of recurring operating losses, a history of negative cash flows from operating activities ~~the continued impact of the COVID-19 pandemic~~ and inflationary pressures. For the six months ended June 30, ~~2022,~~2023, the Company incurred a net loss of $~~14.1~~4.1 million, ~~and used net cash in~~however, during the same period the Company’s operating activities provided cash of $~~11.0~~6.1 million. As of June 30, ~~2022,~~2023, the Company had unrestricted cash and cash equivalents of ~~$16.9~~$26.3 million which consists of bank deposits orand short-term investments, including low-risk, fixed-income investments and highly liquid investment-grade debt instruments with an original maturity of three months or less. 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 ~~financial statements. Management’s assessment additionally includes plans to minimize expenses and reduce the cash burn rate for the second half of fiscal year 2022.~~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.

The Company has an available line of credit with Western Alliance Bank for up to $10.0 million, subject to certain terms and conditions which ~~currently allow~~as of June 30, 2023 allows for ~~$3.8~~$4.9 million of borrowing. There are no outstanding borrowings as of June 30, ~~2022.~~2023. In June ~~2020,~~2023, the Company filed a new $125 million registration statement on Form S-3 with the SEC, utilizing a “shelf” registration process. Under this shelf registration process, the Company may sell securities from time to time, including up to ~~$50~~approximately $47.8 million pursuant to the At Market Issuance Sales Agreement, dated as of June 12, 2020, with B. Riley FBR, Inc. and Raymond James & Associates, Inc. (ATM Facility). As of June 30, ~~2022, approximately~~2023, the full $47.8 million remains available under the ATM Facility. The Company’s potential use of the ATM facility is subject to the satisfaction of various conditions in the ATM Facility agreement as well market conditions. As a result, the Company’s ability to rely on the ATM Facility to raise liquidity is limited to a material extent.

Note 4. ~~Earnings~~Loss Per Share Applicable to Common Stockholders

The following table sets forth the computations of ~~earnings~~loss per share amounts applicable to common stockholders for the three and six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:

(1) Includes a weighted average of approximately ~~0.2 million~~181 and 182 nonvested shares of restricted stock for the three and six months ended June 30, ~~2021~~2023, respectively, and 183 nonvested shares of restricted stock for each of the three and six months ended June 30, 2022 which are participating securities that feature voting and dividend rights.

(2) Excluded from the computation of loss per share as their impact is antidilutive.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 5. Business Segments

The Company has the following 3three reportable segments:

•Consumer Products segment: provides finished dietary supplement products that contain the Company's proprietary ingredients directly to consumers as well as to distributors;

•Ingredients segment: develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw materials to the manufacturers of consumer products; 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 ~~margin~~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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements


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

(In thousands)
Net sales	$	14,520	$	1,464	$	748	$	—	$	16,732
Cost of sales	5,218		681		791		—		6,690
Gross profit (loss)	9,302		783		(43)		—		10,042
Operating expenses:
Sales and marketing	7,864		—		157		—		8,021
Research and development	1,113		132		—		—		1,245
General and administrative	—		—		—		7,163		7,163
Operating expenses	8,977		132		157		7,163		16,429

Operating income (loss)	$	325	$	651	$	(200)	$	(7,163)	$	(6,387)


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

(In thousands)
Net sales	$	29,457	$	2,891	$	1,643	$	—	$	33,991
Cost of sales	10,470		1,403		1,544		—		13,417
Gross profit	18,987		1,488		99		—		20,574
Operating expenses:
Sales and marketing	15,938		24		296		—		16,258
Research and development	2,115		208		—		—		2,323
General and administrative	—		—		—		16,112		16,112
Operating expenses	18,053		232		296		16,112		34,693

Operating income (loss)	$	934	$	1,256	$	(197)	$	(16,112)	$	(14,119)

Three months ended June 30, 2021 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total
(In thousands)
Net sales $ 15,396 $ 1,504 $ 799 $ — $ 17,699
Cost of sales 5,547 675 667 — 6,889
Gross profit 9,849 829 132 — 10,810
Operating expenses:
Sales and marketing 6,190 1 41 — 6,232
Research and development 926 78 — — 1,004
General and administrative — — — 9,128 9,128
Operating expenses 7,116 79 41 9,128 16,364
Operating income (loss) $ 2,733 $ 750 $ 91 $ (9,128) $ (5,554)

Six Months Ended June 30, 2021 Consumer Products segment Ingredients segment Analytical Reference Standards and Services segment Corporate and other Total
(In thousands)
Net sales $ 27,833 $ 2,819 $ 1,730 $ — $ 32,382
Cost of sales 9,750 1,238 1,350 — 12,338
Gross profit 18,083 1,581 380 — 20,044
Operating expenses:
Sales and marketing 12,301 11 178 — 12,490
Research and development 1,644 147 — — 1,791
General and administrative — — — 18,679 18,679
Operating expenses 13,945 158 178 18,679 32,960
Operating income (loss) $ 4,138 $ 1,423 $ 202 $ (18,679) $ (12,916)

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:

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements


Six Months Ended June 30, 2023	Consumer Products Segment		Ingredients Segment		Analytical Reference Standards and Services Segment		Total
(In thousands)
Tru Niagen®, Consumer Product	$	34,524	$	—	$	—	$	34,524
Niagen® Ingredient	—		6,398		—		6,398
Subtotal Niagen® Related	34,524		6,398		—		40,922

Other Ingredients	—		430		—		430
Reference Standards	—		—		1,468		1,468
Consulting and Other	—		—		59		59
Subtotal Other Goods and Services	—		430		1,527		1,957

Total Net Sales	$	34,524	$	6,828	$	1,527	$	42,879


Three Months Ended June 30, 2022	Consumer Products Segment		Ingredients Segment		Analytical Reference Standards and Services Segment		Total
(In thousands)
Tru Niagen®, Consumer Product	$	14,520	$	—	$	—	$	14,520
Niagen® Ingredient	—		1,454		—		1,454
Subtotal Niagen® Related	14,520		1,454		—		15,974

Other Ingredients	—		10		—		10
Reference Standards	—		—		704		704
Consulting and Other	—		—		44		44
Subtotal Other Goods and Services	—		10		748		758

Total Net Sales	$	14,520	$	1,464	$	748	$	16,732

Six Months Ended June 30, 2022 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total
(In thousands)
Tru Niagen®, Consumer Product $ 29,457 $ — $ — $ 29,457
Niagen® Ingredient — 2,585 — 2,585
Subtotal Niagen® Related $ 29,457 $ 2,585 $ — $ 32,042
Other Ingredients — 306 — 306
Reference Standards — — 1,587 1,587
Consulting and Other — — 56 56
Subtotal Other Goods and Services $ — $ 306 $ 1,643 $ 1,949
Total Net Sales $ 29,457 $ 2,891 $ 1,643 $ 33,991

Three Months Ended June 30, 2021 Consumer Products Segment Ingredients Segment Analytical Reference Standards and Services Segment Total
(In thousands)
Tru Niagen®, Consumer Product $ 15,396 $ — $ — $ 15,396
Niagen® Ingredient — 1,281 — 1,281
Subtotal Niagen® Related $ 15,396 $ 1,281 $ — $ 16,677
Other Ingredients — 223 — 223
Reference Standards — — 695 695
Consulting and Other — — 104 104
Subtotal Other Goods and Services $ — $ 223 $ 799 $ 1,022
Total Net Sales $ 15,396 $ 1,504 $ 799 $ 17,699

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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:

* Represents less than 10%

During the three and six months ended June 30, 2023, the Company recorded provision for doubtful trade receivables of approximately $0.4 million and $0.8 million, respectively. Primarily, the higher provision was a result of the Chapter 11 bankruptcy filing by iMedia Brands, Inc., which owns ShopHQ, a multiplatform interactive television network, which has been a sales channel for Tru Niagen®.

As of June 30, 2023, concentration for the Company's outstanding trade receivables is significant, with approximately 79% 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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 6. Related Party Transactions

~~The Company has 2 related parties,~~ A.S. Watson Group ~~and Horizon Ventures,~~is a related party through common ownership of an enterprise that beneficially owns more than 10% of the common stock of the Company. The sale of consumer products and corresponding trade receivables to related parties during the periods indicated are as follows:

Net Sales
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
A.S. Watson Group - Related Party $1.5 million $2.9 million $4.1 million $4.5 million
Total Related Party Net Sales $1.5 million $2.9 million $4.1 million $4.5 million

~~During all periods indicated, sales to Horizon Ventures were insignificant.~~

Trade Receivable as of
Jun 30, 2022 Dec 31, 2021
A.S. Watson Group - Related Party $1.3 million $2.1 million
Total Related Party Trade Receivables $1.3 million $2.1 million

~~For the periods indicated, trade receivables to Horizon Ventures were insignificant.~~



	Three Months Ended June 30,				Six Months Ended June 30,
Net Sales	2023		2022		2023		2022
A.S. Watson Group - Related Party	$3.0	million	$1.5	million	$6.7	million	$4.1	million

~~Joint Venture Agreement~~

On May 19, 2022, the Company entered into an agreement to form a joint venture (the “JV”) to expand the Company’s market strategy to include opportunities in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan (the “Territory”), subject to the terms and satisfaction of the conditions contained therein. The JV agreement is among Crystal Lake Developments Limited (Crystal Lake), Pioneer Idea Holdings Limited (Pioneer Idea), and Hong Kong (China) Taikuk Group Ltd (Taikuk). Crystal Lake is indirectly wholly-owned by Li Ka Shing, and Pioneer Idea is indirectly owned by Solina Chau, and each of Mr. Li and Ms. Chau own through affiliated entities more than 5% of the Company’s common stock. The business of the JV will be to market, sell and distribute Tru Niagen® and other products containing NR (the “Products”) developed by the Company in the Territory.

The JV agreement will have an initial term of 20 years, unless earlier terminated. Crystal Lake, Pioneer Idea and Taikuk have each agreed to contribute $1.8 million, $1.2 million and $1.0 million, respectively into the JV. In addition, the Company has agreed to pay $1.0 million to Taikuk, and Taikuk will receive an additional 5% non-voting equity interest in the JV for introducing the parties. Following the closing of the formation of the JV (the “Closing”), each of the parties will hold the following interest in the JV: the Company (71%), Crystal Lake (10.8%), Pioneer Idea (7.2%) and Taikuk (a 11% non-voting interest). The Company will have the right to elect 3 of the 5 directors in the JV, and Pioneer Idea will have the right to elect the other 2 directors, with each director having 1 vote. Certain material corporate actions will require unanimous approval of the board of the JV. The Closing is subject to certain customary closing conditions and is expected to occur by the end of the third quarter of 2022.

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 PRC State Administration for Market Regulation for Products in the name of the Company or its designee (collectively, the “Blue Hat Registration”). Prior to the JV obtaining the Blue Hat Registration, we will supply the Products to the JV who will appoint a third party sub-distributor to sell the Products in the Territory. Once Blue Hat Registration is obtained, we will license to the JV certain intellectual property relating to the Products for the JV to manufacture and sell the Products in the Territory. If the Blue Hat Registration is not obtained within 24 months of Closing (which deadline for obtaining the Blue Hat Registration may be extended by an additional 12 months upon consent of the parties), the JV may repurchase the 11% non-voting interest owned by Taikuk for 2 dollars. As of the date of this report, the JV has not yet launched.



Trade Receivable as of	June 30, 2023		December 31, 2022
A.S. Watson Group - Related Party	$2.8	million	$3.1	million

The Company's major classes of inventory and corresponding balances as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are as follows:

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 ~~2028.~~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 June 30, ~~2022,~~2023, the Company had right-of-use assets and corresponding operating lease liabilities of approximately ~~$3.9~~$3.2 million and ~~$4.5~~$3.9 million, respectively. For the three and six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the components of operating lease expense are as follows:

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2022 2021 2022 2021
Operating leases
Operating lease expense $ 236 $ 152 $ 492 $ 305
Variable lease expense 45 54 85 94
Operating lease expense 281 206 577 399
Short-term lease rent expense 63 63 127 125
Total expense $ 344 $ 269 $ 704 $ 524


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2023		2022		2023		2022
Operating leases
Operating lease expense	$	230	$	236	$	461	$	492
Variable lease expense	59		45		112		85
Operating lease expense	289		281		573		577
Short-term lease rent expense	4		63		8		127
Total expense	$	293	$	344	$	581	$	704


	At June 30, ~~2022~~2023
Weighted-average remaining lease term (years), operating leases	~~4.7~~3.8
Weighted-average discount rate, operating leases	5.7	%

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Future minimum lease payments under operating leases as of June 30, ~~2022~~2023 are as follows:


Year	Year	(In thousands)		Year	(In thousands)
2022 (Remainder)		$	438
2023		949
2023 (Remainder)				2023 (Remainder)	$	461
2024	2024	1,159		2024	1,101
2025	2025	1,141		2025	1,135
2026	2026	906		2026	901
2027	2027	498		2027	491
2028				2028	358
Thereafter	Thereafter	179		Thereafter	30
Total	Total	5,270		Total	4,477
Less present value discount	Less present value discount	(742)		Less present value discount	(565)
Present value of total operating lease liabilities	Present value of total operating lease liabilities	4,528		Present value of total operating lease liabilities	3,912
Less current portion	Less current portion	(646)		Less current portion	(775)
Long-term obligations under operating leases	Long-term obligations under operating leases	$	3,882	Long-term obligations under operating leases	$	3,137

Note 9. Share-Based Compensation

The Company grants awards to recipients through the 2017 Equity Incentive Plan, as amended (the “2017 Plan”), which was approved by stockholders and the Board of Directors. ~~The~~In June 2023, stockholders approved an amendment to the Company’s 2017 Equity Incentive Plan to increase the number of shares available for issuance by 3.65 million shares of common stock. Pursuant to the latest amendment, the 2017 Plan provides for the issuance of shares that total no more than the sum of (i) ~~14,500,000~~18,150,000 new shares, (ii) ~~approximately 384,000 unallocated shares remaining available for the grant of new awards under the Second Amended and Restated 2007 Equity Incentive Plan, (iii)~~ any returning shares such as forfeited, cancelled, or expired shares granted under either the 2017 Plan or the Second Amended and ~~(iv)~~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) 1one share for each share that relates to an option or stock appreciation right award and (ii) 1.5 shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award). As of June 30, ~~2022,~~2023, there were approximately ~~2.8~~5.3 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 1/3rd of the shares vest with the remaining shares vesting ratably each month over a two-year period subject to the ~~passage of time.~~applicable grantee’s continued service. Beginning in the second quarter of 2022, ~~restricted stock units~~RSU awards are generally subject to a ~~three year~~three-year vesting period with 1/3rd vesting per year on the anniversary of the grant date. ~~Additionally, certain~~Certain stock option awards are market or performance based and vest based on certain triggering events established by the Compensation Committee. Certain executive stock option and RSU awards provide for accelerated vesting if there is a change in control or termination without cause.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

~~The fair value of the Company’s stock options that are not market based are estimated at the grant date using the Black-Scholes option pricing model.~~ The Company used the following weighted average assumptions for options granted during the six months ended June 30, ~~2022:~~2023:


Weighted Average:	Six Months Ended June 30, ~~2022~~2023
Expected term	~~5.7~~6.2 years
Expected volatility	~~76.0~~75.4	%
Risk-free rate	~~2.0~~3.6	%
Expected dividends	—	%

Service Period Based Stock Options

The following table summarizes activity of service period-based stock options during the six months ended June 30, ~~2022~~2023:

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, 2021 9,495 $ 4.65 6.5 $ 2,452
Options Granted 2,056 2.57
Options Exercised — — —
Options Forfeited (685) 5.22
Outstanding at June 30, 2022 10,866 $ 4.22 6.2 $ 3 *
Exercisable at June 30, 2022 7,451 $ 4.11 4.7 $ — *


		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, 2022	9,397	$	4.21	6.2	$	44
Options Granted	2,400	1.80
Options Exercised	—	—			—
Options Forfeited	(559)	3.60
Outstanding at June 30, 2023	11,238	$	3.75	6.2	$	23	*

Exercisable at June 30, 2023	7,623	$	4.37	4.7	$	—	*

*The aggregate intrinsic values in the table above are based on the Company’s stock price of ~~$1.67,~~$1.57, which is the closing price of the Company’s stock on the last day of business for the period ended June 30, ~~2022.~~2023.

16There were no activities related to performance or market-based stock options during the six months ended June 30, 2023.

Restricted Stock Units

The following table summarizes activity of restricted stock units during the six months ended June 30, ~~2022~~2023:

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Restricted Stock Awards

The following table summarizes activity of restricted stock awards during the periods indicated:


(In thousands except per share fair value)	Number of Awards	Weighted Average Fair Value
Unvested shares at December 31, 2022	183	$	3.25
Granted	—	—
Vested	(16)	$	4.23
Forfeited	—	—
Unvested shares at June 30, 2023	167	$	3.15

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

Total Share-Based Compensation

Total share-based compensation expense was as follows:

In future periods, the Company expects to recognize approximately ~~$8.7~~$5.0 million and ~~$1.7~~$1.5 million in share-based compensation expense for unvested options and unvested restricted stock units, respectively, that were outstanding as of June 30, ~~2022.~~2023. Future share-based compensation expense will be recognized over ~~1.9~~1.6 and ~~2.2~~1.9 weighted average years for unvested options and restricted stock units, respectively. The Company also has total unrecognized share-based compensation expense of $1.0 million pertaining to the Joint Venture. Such expense will only be recognized if Blue Hat Registration is achieved, the timing of which is uncertain as of June 30, 2023. For additional discussion of the Joint Venture, see Note 12, Joint Venture Agreement.

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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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.

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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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).

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.

(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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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.

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 has informed the Parties that trial date will 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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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 is scheduled for October 13, 2023.

The Company is unable to predict the outcome of the Elysium SDNY Complaint or any possible appeals and, at this time, cannot reasonably estimate the possible loss or range of loss with respect to the legal proceeding discussed herein. As of June 30, ~~2022,~~2023, ChromaDex did not accrue a potential loss for the Elysium SDNY Complaint because ChromaDex believes that the allegations are without merit and thus it is not probable that a liability has been incurred.

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.

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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

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 ~~has~~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. The Company does not ~~yet been scheduled. If~~believe that this decision will have a material impact on the ~~appeal is unsuccessful, or, if on remand the Court dismisses ChromaDex’s claims for some other reason, that could reduce or eliminate any competitive advantage the Company may otherwise have had.~~Company’s NR business.

2. Thorne Research, Inc.

(A) Inter Partes Review Proceedings

On or around September 28, 2020, Thorne Research, Inc. (Thorne) provided notice to ChromaDex that it intended to terminate its March 25, 2019 Supply Agreement and subsequent amendments with ChromaDex, effective as of December 31, 2020. A discussion between ChromaDex and Thorne followed, and Thorne asserted that it could challenge the ‘086 Patent in an inter partes review (IPR) proceeding on the basis of prior art, but would be willing to enter into a mutual existence agreement that would permit Thorne to source NR from a third party. Thorne did not offer substantive information supporting a prior art claim or about the nature of the threatened IPR.

On December 1, 2020, Thorne filed a petition for IPR of the ‘086 Patent. Dartmouth’s preliminary response to the petition was filed on March 15, 2021. On June 10, 2021, the Patent Trial and Appeal Board (PTAB) issued a decision instituting an IPR on the ‘086 Patent. On September 21, 2021, Dartmouth filed its Patent Owner Response. On December 21, 2021, Thorne filed its reply. Oral argument was held on March 15, 2022. On May 31, 2022, the PTAB issued a final written decision holding that the challenged claim was unpatentable. On August 2, 2022, Dartmouth filed a notice of appeal. On December 29, 2022, the parties filed a joint stipulation to dismiss the appeal. On January 3, 2023, the appeal was dismissed.

On February 1, 2021, Thorne filed a petition for IPR of the ‘807 Patent. Dartmouth’s preliminary response to the petition was filed on May 18, 2021. On August 12, 2021, the Patent Trial and Appeal Board (PTAB) issued a decision instituting an IPR on the ‘807 Patent. On November 9, 2021, Dartmouth filed its Patent Owner Response. On February 15, 2022, Thorne filed its reply. Oral argument was held on May 17, 2022. AOn August 10, 2022, the PTAB issued a final written decision ~~had~~holding that the challenged claims were not ~~yet been rendered.~~unpatentable. On October 12, 2022, Thorne filed a notice of appeal. On April 4, 2023, the court of appeals stayed the appeal pending issuance of the mandate in the pending appeal from the Delaware patent infringement action. On June 22, 2023, the court of appeals directed the parties to inform the court of appeals by no later than August 1, 2023 how they believe the appeal should proceed. On August 1, 2023, the parties requested that the court of appeals continue the stay of briefing until Dartmouth has determined whether it will seek certiorari.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

(B) Southern District of New York – Patent Infringement Action

On May 12, 2021, ChromaDex and Trustees of Dartmouth College filed a patent infringement complaint in the United States District Court for the Southern District of New York. The complaint alleges that certain of Thorne’s dietary supplements containing isolated NR infringe the ‘807 and ‘086 Patents, which claim compositions containing isolated nicotinamide riboside and are held by Dartmouth and licensed exclusively to ChromaDex. On July 6, 2021, Thorne filed an answer and counterclaims to the complaint. The answer asserts various affirmative defenses and denies that Plaintiffs are entitled to any relief. The counterclaims seek declaratory judgment of patent invalidity for the ‘807 and ‘086 Patents. On July 8, 2021, the parties filed a proposed stipulation and order staying the matter pending issuance of the institution decision in the ‘807 Patent IPR. On July 9, 2021, the Court granted the stipulation and order to stay. On August 19, 2021, the parties filed a proposed stipulation and order staying the matter pending issuance of final written decisions in the IPRs. On August 20, 2021, the Court granted the stipulation and order to stay. On August 24, 2022, the parties filed a status report agreeing to continue to stay until fourteen days after the deadline to appeal the final written notice decision in the ‘807 Patent IPR. On October 26, 2022, the parties filed a further status report agreeing to continue the stay through resolution of the appeals.

3. ~~Erica Martinez~~

~~(A) California Action~~

On October 1, 2021, Erica Martinez, a former employee of ChromaDex, filed a complaint in the Orange County Superior Court alleging claims against ChromaDex for: (1) disability discrimination, (2) failure to accommodate a disability, (3) failure to engage in the interactive process, (4) retaliation for taking California Family Rights Act leave, and (5) failure to prevent discrimination and harassment. Martinez’s allegations are based primarily upon Martinez’s claim that her son was allegedly diagnosed with Autism Spectrum Disorder in or around July 17, 2019, and ChromaDex allegedly retaliated against, and ultimately terminated, her for taking time off to care for her son and attend his doctors’ appointments. ChromaDex has not been served with the Summons and Complaint. The parties have settled this matter and the request for dismissal, with prejudice, of Martinez’s claims was entered on January 25, 2022.

~~4. Lynda Power~~

~~(A) Florida Action~~

On April 18, 2022, Lynda Power, a citizen of the state of Florida, filed a complaint in the United States District Court for the Middle District of Florida, Orlando Division alleging claims against the Company for (1) product liability (2) personal injury (3) strict liability and (4) negligence. Power's allegations are based primarily upon Power's claim that she suffered an adverse event after consuming the Company’s products. On April 26, 2022, the Court ordered Power to serve an amended complaint due to the failure to properly plead subject matter jurisdiction. On May 6, 2022, Power filed an amended complaint. On May 11, 2022, the Court issued another order that Power had not properly pleaded subject matter jurisdiction. On May 23, 2022, Power filed a second amended complaint. There has been no request for an issuance of a summons. As of August 10, 2022, the Company has not been served with the complaint. The Company believes these claims are without merit, will aggressively defend itself, and does not anticipate that the ultimate resolution of this matter will be material to the Company’s operations, financial condition, or cash flows.

~~5. Other~~

~~(A) Rejuvenation Therapeutics~~

On September 15, 2020, the Company received a letter from a customer, Rejuvenation Therapeutics Corp. (Rejuvenation), and has received subsequent correspondence, requesting a full refund of approximately $1.6 million of Niagen® it purchased, alleging breaches of the supply agreement between the parties. As of June 30, 2022, the Company has recorded a return liability of approximately $0.5 million, which the Company offered to settle in good faith. On May 13, 2021, Rejuvenation filed a complaint in the Superior Court of the State of California, County of Orange, asserting causes of action for Concealment and Negligent Misrepresentation. On July 20, 2021, Rejuvenation filed an amended complaint adding a claim for Declaratory Relief. The Company filed a demurrer on September 3, 2021. On February 1, 2022, the Court sustained ChromaDex’s demurrer in its entirety with leave to amend as to the claims for Concealment and Negligent Misrepresentation, and without leave to amend as to the claim for Declaratory Relief. On February 16, 2022, Rejuvenation filed a Second Amended Complaint, asserting causes of action for Fraud and Negligent Misrepresentation. On May 16, 2022, ChromaDex filed a demurrer to the Second Amended Complaint. On June 23, 2022, Rejuvenation filed for a motion for leave to file a third amended complaint. Both the demurrer and motion for leave to amend are scheduled to be heard on September 27, 2022. The Company believes these claims are without merit and will aggressively defend itself if a reasonable settlement cannot be reached. The Company does not anticipate that the ultimate resolution of this matter will be material to the Company’s operations, financial condition or cash flows.

6. 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.

(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.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 11. ~~Subsequent Events~~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 ERTC was subsequently amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, the Consolidated Appropriation Act of 2021, and the American Rescue Plan Act of 2021, all of which amended and extended the ERTC availability and guidelines under the CARES Act. During the third quarter of 2022, the Company evaluated its eligibility for the ERTC and is eligible to claim a refundable tax credit against the employer share of Social Security taxes equal to fifty percent (50%) of the qualified wages paid to employees between March 27, 2020 and December 31, 2020 and seventy percent (70%) of the qualified wages paid to employees between January 1, 2021 and September 30, 2021. For fiscal year 2020, qualified wages are limited to $10,000 annually per employee for a maximum allowable ERTC per employee of $5,000 annually and qualified wages are limited to $10,000 per calendar quarter in 2021 for a maximum allowable ERTC per employee of $7,000 for each calendar quarter in 2021.

The Company ~~has evaluated subsequent events through~~qualified for the ~~filing date of this Form 10-Q to ensure that this filing includes all appropriate footnote disclosure of events both recognized~~ERTC in the ~~financial statements as~~last three quarters of ~~June 30, 2022~~,2020 and ~~events which occurred subsequently but were not recognized in the financial statements. On August 5, 2022, the Company~~all three quarters of 2021 and filed a claim for ~~a refund from~~ the ~~U.S. Treasury~~credit in August 2022. During the ~~amount~~quarter ended September 30, 2022, the Company recorded an aggregate benefit of approximately ~~$2.5~~$2.1 million ~~representing the anticipated~~ in Other income, net - Employee Retention Tax Credit ~~(ERTC) available~~in its Unaudited Condensed Consolidated Statements of Operations to ~~it under~~reflect the ~~CARES Act. The~~ ERTC is available to companies that retained employees on its payroll without receiving services due to fully, or partially, suspending operations during fiscal years 2020 and 2021 due to orders from an appropriate governmental authority, which limited commerce, travel, or group meetings due to COVID-19. The employee retention tax credits will be recorded as an offset to the related employee expenses within the appropriate financial statement line item. Beyond this, there were no further subsequent events which required recognition, adjustment to or disclosure in the financial statements.for all eligible quarters.

During the fourth quarter of 2022, the Company received $0.6 million related to the ERTC. During the six months ended June 30, 2023, the Company received another $0.9 million related to the ERTC. As of June 30, 2023, the Company's Consolidated Balance Sheets include an ERTC benefit of $0.9 million and associated commissions payable of $0.1 million recorded within prepaid expenses and other current assets and accrued expenses, respectively.

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 shall make a payment of $1.0 million in cash to Taikuk (the “Blue Hat Registration Fee”). If the Blue Hat Registration is not obtained within 24 months of the Closing (which may be extended by an additional 12 months upon mutual consent of the parties), the JV may repurchase the 11% non-voting interest purchased by Taikuk for $1 (the “Right of Repurchase”). The Right of Repurchase functions as a performance vesting condition under ASC 718 and the 11% non-voting equity interest is accounted for as nonemployee share-based compensation. The equity interest will only vest if Blue Hat Registration is achieved, at which time the minority interest will be recorded. As of June 30, 2023, it is uncertain when Blue Hat Registration will be achieved. Consequently, no amounts related to the Blue Hat Registration Fee or the 11% non-voting interest have been recognized in the Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023.

ChromaDex Corporation and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

The fair value of the 11% non-voting interest and corresponding share-based compensation expense of $1.0 million was determined as of the grant date of September 30, 2022 and based on a discounted cash flow model, which utilizes Level 3, or unobservable, inputs. The most significant of these inputs were the combined weighted averages of the a) discount rate at 27.5%, b) present value of estimated future cash flows of $3.9 million and c) the present value of the terminal value at $5.6 million.

Once Blue Hat Registration is complete and certain distribution agreements relating to the commercialization of the Products in the Territory are assigned and entered into (the “Distribution Agreements”), Taikuk would be entitled to certain royalty payments based on the Company’s and the JV’s net revenue for sales of the Products in the Territory under the Distribution Agreements. Operating activity under the JV was not material during the three and six months ended June 30, 2023.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following ~~Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations~~discussion should be read in conjunction with the ~~condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements and accompanying notes, ~~thereto included~~which appear elsewhere in this Quarterly Report on Form ~~10-Q~~10-Q. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our ~~2021~~other reports filed with the Securities and Exchange Commission (SEC), including our Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2022, as well as subsequent reports we may file from time to time on Form 10-Q and Form 8-K, for additional information. All dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are approximate.

Growth and percentage comparisons made herein generally refer to the three and six months ended June 30, ~~2022~~2023 compared with the three and six months ended June 30, ~~2021~~2022 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.

Special Note Regarding Forward Looking Statements

Certain statements in this MD&A, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “expects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “possible,” “probable,” “believes,” “seeks,” “may,” “will,” “should,” “could,” “predicts,” “projects,” “continue,” “would” or the negative of such terms or other similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. 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 set forth below in Part II, Item 1A, “Risk Factors” and our financial statements and related notes in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the Securities and Exchange Commission on March ~~14, 2022~~8, 2023 (Annual Report).

Company Overview

We are a global bioscience company dedicated to healthy aging. Our 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 by ~~more than 50% from young adulthood~~up to ~~middle age.~~65% between ages 30 and 70. In addition to age, other factors linked to NAD+ depletion include poor diet, excess alcohol consumption and a number of disease states. NAD+ levels may be increased through supplementation with NAD+ precursors, such as nicotinamide riboside (NR), calorie restriction and moderate exercise. We are at the forefront of exploring effective methods to increase NAD+ levels and support healthy aging.

In 2013, we commercialized Niagen®, a proprietary form of NR, a novel form of vitamin ~~B3.~~B3, and one of the most well-studied NAD+ precursors on the market as well as the most efficient. Data from numerous preclinical studies and human clinical trials show that NR is a highly efficient NAD+ precursor that significantly raises NAD+ levels in blood and tissue. Niagen® is confirmed safe for human consumption as a dietary supplement and food ingredient. Niagen® has twice been successfully reviewed under the U.S. Food and Drug Administration’s (FDA) new dietary ingredient (NDI) notification program, it has been successfully notified to the FDA as generally recognized as safe (GRAS), and has been approved by Health Canada, the European Commission, the Turkish Ministry of Agriculture and the Therapeutic Goods Administration (TGA) of Australia. Niagen® has also been approved for inclusion in medical foods by both the Brazilian Health Regulatory Agency (ANVISA) and the Food Standards Australia New Zealand (FSANZ). Clinical studies of Niagen® have demonstrated a variety of outcomes including increased NAD+ levels, altered body composition, increased cellular metabolism and increased energy production. Niagen® is protected by patents to which we are the owner or have exclusive rights.

While best known for its role in cellular energy production, NAD+ is also thought to play an important role in healthy aging. Many cellular functions related to health and healthy aging are sensitive to levels of locally available NAD+ and this represents an active area of research in the field of NAD+. To date, there are over ~~450~~475 published human clinical studies related to NAD+ and its impact on health. These areas of study include understanding NAD+’s role in Alzheimer’s disease, Parkinson’s disease, neuropathy, sarcopenia, liver disease and heart failure.

We are among the world leaders in the emerging NAD+ space. Through our ChromaDex External Research Program ~~(CERP)~~(CERP™), we have amassed more than ~~250~~275 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, the Mayo Clinic, Chiba University and Sun Yat-sen University. The results of the ~~250+~~275+ research agreements have allowed ~~CERP~~CERP™ to help produce the trusted science behind Niagen® and continue to advance the understanding of NAD+ in health, diseases, and aging. We value and encourage strong scientific rigor behind our products and seek to continually develop additional relationships in pursuit of this. ~~CERP~~CERP™ is a vital component of our research and development platform along with our scientific advisory board. Our scientific advisory board supports the technical and intellectual property needs of investigators, presents research at conferences, and helps build and support the NAD+ and healthy aging research community.

Our scientific advisory board is led by Chairman Dr. Roger Kornberg, Nobel Laureate Stanford ~~Professor,~~Professor. Other distinguished members include Dr. Charles Brenner, Alfred E Mann Family Foundation Chair in the Department of Diabetes & Cancer Metabolism at City of Hope and one of the world’s recognized experts in NAD+ and discoverer of NR as a NAD+ ~~precursor,~~precursor; Dr. Rudy Tanzi, ~~the~~ co-chair of the department of neurology at Harvard Medical ~~School,~~School; Sir John Walker, Nobel Laureate and Emeritus Director of the MRC Mitochondrial Biology Unit in the University of Cambridge, ~~England,~~England; Dr. Bruce German, Chairman of ~~food, nutrition~~Food, Nutrition and ~~health~~Health at the University of California, ~~Davis,~~Davis; Dr. Brunie Felding, Associate Professor in the Department of Molecular Medicine at Scripps Research Institute, California ~~Campus, and~~Campus; Dr. David Katz, ~~the~~ Founder and former director of Yale University’s Yale-Griffin Prevention Research ~~Center;~~Center, President and Founder of the non-profit True Health ~~Initiative;~~Initiative, and Founder and Chief Executive Officer of Diet ID, Inc.; and Dr. Vilhelm (Will) Bohr, M.D., Ph.D., D.Sc., former Chief of the Laboratory of Molecular Genetics at the National Institute on Aging of the National Institutes of Health.

Impact of COVID-19

~~The worldwide outbreak~~Under the Coronavirus Aid, Relief, and Economic Security Act the employee retention tax credit (ERTC) was established and subsequently amended by other Acts. During the third quarter of ~~COVID-19 continues~~2022, we evaluated our eligibility for the ERTC and determined that we qualified in all three quarters of 2020 and the first three quarters in 2021. As a result, during August 2022, we filed a claim for the ERTC. During fiscal year 2022, we recognized approximately $2.1 million in Other income - Employee Retention Tax Credit in our Unaudited Condensed Consolidated Statements of Operations to ~~drive global uncertainty~~reflect the ERTC. As of June 30, 2023, the Company's Unaudited Condensed Consolidated Balance Sheets include an ERTC benefit of $0.9 million and ~~disruption, which has created headwinds for our business. Authorities have imposed,~~associated commissions payable of $0.1 million recorded within prepaid expenses and ~~businesses~~other current assets and individuals have implemented, numerous measures to try to contain the virus or treat its impact, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, store closures and reduced operating hours, and vaccine requirements. These measures have impacted and mayaccrued expenses, respectively. For further ~~impact our workforce and operations and those of our respective suppliers and partners.~~

Our primary focus throughout the COVID-19 pandemic has remained ensuring the health and safety of our employees through office closures or implementing enhanced safety protocols to ensure the well-being of our employees. We have adapted and have been able to successfully conduct business virtually.discussion, see Note 11, Employee Retention Tax Credit.

~~The degree~~Other than the impacts to ~~which~~our Unaudited Condensed Consolidated Balance Sheets pertaining to the ERTC, the impact of COVID-19 ~~impacts~~did not have a material impact on our ~~results will depend on~~business during the three and six months ended June 30, 2023. Any future developments and impacts of COVID-19, which are ~~highly~~ uncertain and cannot be predicted, including ~~the duration and severity of the pandemic; surges related~~but not limited to ~~new variants; the actions taken~~impacts to contain the virus or treat its impact; other actions taken by governments, businesses, and individuals in response to the virus and resulting economic disruption; and how quickly and to what extent normal economic and operating conditions can resume. Additional impacts and risks may arise that we are not aware of or able to respond to effectively. We are similarly unable to predict the extent of the impact of the pandemic on our ~~customers, suppliers, and other~~ partners, ~~but a material effect on these parties could also materially adversely affect us. The impact of COVID-19~~ can also exacerbate other risks discussed in Part II, Item 1A Risk Factors and throughout this report.

~~Supply chain disruptions, inflation~~Inflation and changing prices

We have experienced, and could in the future experience, global supply chain delays including challenges with transportation, logistics and production lead-times, as well as labor shortages and cost inflation. In the first quarter of 2021, we experienced delays due to global components and packaging shortages for our consumer products across our supply chain. These supply chain challenges were addressed in the second quarter of 2021 and we have otherwise not encountered any major disruptions in our supply chain. Supply chain delays, among other factors such as store closures, have impacted our sales to partners in international markets. It is our intention to maintain adequate safety stocks to support our growth and we currently believe we have adequate inventory on hand to meet current demands.

~~We have also recently~~ experienced inflation in labor, raw materials, transportation and other costs. Inflation can ~~also~~ have a long-term impact as increasing costs may ~~impact~~affect our ability to maintain satisfactory margins. We may be unsuccessful in passing these increases on to our customers or finding other mitigating solutions. Furthermore, increases in inflation may not be matched by growth in consumer income, which ~~also~~ could have a negative impact on customer spending. If customer sales diminish, we may be required to scale back production volumes which could negatively impact any economies of scale we have previously benefited from. We have also seen changing prices due to other macroeconomic factors including rising interest rates, fluctuations in currency exchange rates and geopolitical uncertainties such as those surrounding Russia’s invasion of Ukraine. We will continue to monitor changing prices and inflationary pressures closely as conditions may become more challenging due to ongoing and uncertain economic factors.

~~Recent Activities~~

~~Joint Venture Agreement with Related Parties~~

On May 19, 2022, we entered into an agreement to form a joint venture (the “JV”) to expand our market strategy to include opportunities in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan (the “Territory”), subject to the terms and satisfaction of the conditions contained therein. The JV agreement is among Crystal Lake Developments Limited (Crystal Lake), Pioneer Idea Holdings Limited (Pioneer Idea), and Hong Kong (China) Taikuk Group Ltd (Taikuk). Crystal Lake is indirectly wholly-owned by Li Ka Shing, and Pioneer Idea is indirectly owned by Solina Chau, and each of Mr. Li and Ms. Chau own through affiliated entities more than 5% of our common stock. The business of the JV will be to market, sell and distribute Tru Niagen® and other products containing NR (the “Products”) developed by us in the Territory.

The JV agreement will have an initial term of 20 years, unless earlier terminated. Crystal Lake, Pioneer Idea and Taikuk have each agreed to contribute $1.8 million, $1.2 million and $1.0 million, respectively into the JV. In addition, we have agreed to pay $1.0 million to Taikuk and Taikuk will receive an additional 5% non-voting equity interest in the JV for introducing the parties. Following the closing of the formation of the JV (the “Closing”), each of the parties will hold the following interest in the JV: us (71%), Crystal Lake (10.8%), Pioneer Idea (7.2%) and Taikuk (a 11% non-voting interest). We will have the right to elect three of the five directors in the JV, and Pioneer Idea will have the right to elect the other two directors, with each director having one vote. Certain material corporate actions will require unanimous approval of the board of the JV. The Closing is subject to certain customary closing conditions and is expected to occur by the end of the third quarter of 2022.

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 PRC State Administration for Market Regulation for Products in the name of the Company or its designee (collectively, the “Blue Hat Registration”). Prior to the JV obtaining the Blue Hat Registration, we will supply the Products to the JV who will appoint a third party sub-distributor to sell the Products in the Territory. Once Blue Hat Registration is obtained, we will license to the JV certain intellectual property relating to the Products for the JV to manufacture and sell the Products in the Territory. If the Blue Hat Registration is not obtained within 24 months of Closing (which deadline for obtaining the Blue Hat Registration may be extended by an additional 12 months upon consent of the parties), the JV may repurchase the 11% non-voting interest owned by Taikuk for two dollars. As of the date of this report, the JV has not yet launched.

Financial Condition and Results of Operations

The discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements requires making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported ~~revenues, if any,~~net sales and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

As of June 30, ~~2022,~~2023, our cash and cash equivalents totaled approximately ~~$17.1~~$26.4 million, of which ~~$16.9~~$26.3 million was unrestricted. We anticipate that our current unrestricted cash and cash equivalents and cash to be generated from net sales will be sufficient to meet our financial obligations as they become due over at least the next twelve months. ~~Additionally, we have begun implementing plans to minimize expenses and reduce our cash burn rate for the second half of fiscal year 2022.~~ 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.

In June 2020, we entered into an At Market Issuance Sales Agreement (the Sales Agreement) with B. Riley FBR, Inc. (B. Riley FBR) and Raymond James & Associates, Inc. (“Raymond James” and together with B. Riley FBR, the “Sales Agents”) under which ChromaDex may offer and sell shares of our common stock having an aggregate offering price of up to $50.0 million from time to time through the Sales Agents (ATM Facility). As of June 30, 2022, approximately $47.8 million remains available under the ATM Facility. Our potential use of the ATM facility is subject to the satisfaction of various conditions in the ATM Facility agreement as well market conditions. As a result, our ability to rely on the ATM Facility to raise liquidity is limited to a material extent.

Additional capital may come from other public and/or private stock or debt offerings, borrowings under lines of credit or other sources. These additional funds may not be available on favorable terms, or at all. Further, if we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution and the new equity or debt securities we issue may have rights, preferences and privileges senior to those of our existing stockholders. In addition, if we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to our products or proprietary technologies, or to grant licenses on terms that are not favorable to us. If we cannot raise funds on acceptable terms, we may not be able to develop or enhance our products, obtain the required regulatory clearances or approvals, achieve long term strategic objectives, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements. Any of these events could adversely affect our ability to achieve our development and commercialization goals, which could have a material and adverse effect on our business, results of operations and financial condition. Further, as a result of the COVID-19 pandemic and other macroeconomic factors such as rising interest rates, inflation and geopolitical uncertainties, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. 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.

We currently have three operating segments which offer differentiated services. Through our Consumer Products segment we provide finished dietary supplement products that contain the Company's proprietary ingredients directly to consumers and distributors. We deliver Niagen® as the sole active ingredient in our consumer product Tru Niagen® ~~which is offered~~. We additionally offer consumer products containing Niagen® in ~~both convenient capsules and stickpacks. Additionally, beginning in April 2022, we launched our new consumer product,~~combination with other nutrients, such as, but not limited to, Tru Niagen® ~~Immune, a combination of immune-boosting nutrition with Niagen® in capsule form.~~Immune. Our ingredients segment develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw material to the manufacturers of consumer products. ~~Finally, our~~Our Analytical Reference Standards and Services segment focuses on natural product fine chemicals, known as phytochemicals, and related research and development services. The results of these segments and our consolidated operations are detailed in the discussion that follows.

Our consolidated net sales and net loss for the three and six months ended on June 30, ~~2022~~2023 and ~~2021~~2022 are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)		2022		2021		2022		2021
(In thousands, except per share data)										(In thousands, except per share data)	2023		2022		2023		2022

Net sales	Net sales	$	16,732	$	17,699	$	33,991	$	32,382	Net sales	$	20,323	$	16,732	$	42,879	$	33,991
Net loss	Net loss	(6,397)		(5,566)		(14,137)		(12,947)		Net loss	(2,191)		(6,397)		(4,093)		(14,137)

Basic and diluted loss per common share	Basic and diluted loss per common share	$	(0.09)	$	(0.08)	$	(0.21)	$	(0.20)	Basic and diluted loss per common share	$	(0.03)	$	(0.09)	$	(0.05)	$	(0.21)

Net sales consist of gross sales less discounts and returns. The following table sets forth our total net sales by reportable segment:

Total net sales ~~decreased~~increased by approximately 5%$3.6 million and $8.9 million for the three ~~months ended June 30, 2022 compared to the same period in 2021, while total net sales increased approximately 5% for the~~and six months ended June 30, ~~2022~~2023, compared to the same ~~period~~periods in ~~2021.~~2022, respectively. Changes in net sales ~~for the periods indicated~~ were driven by the following:

•Tru Niagen® sales ~~for our Consumer Products segment decreased $0.9~~were the largest contributor to total net sales growth, increasing $2.4 million ~~or (6)%,~~and $5.1 million for the three and six months ended June 30, ~~2022~~2023 compared to the ~~same period~~corresponding periods in ~~the prior year.~~2022, respectively. The ~~decrease is related to the initial shelf stocking in Wal-Mart to support our launch in the prior year quarter driving increased~~elevated sales for ~~the three months ended June 30, 2021, paired with a decline in~~both periods were primarily fueled by higher sales to A.S. Watson, a related party, ~~of $1.4 million for~~and strong performance in our e-commerce business. For the three months ~~ended~~ending June 30, 2022 compared to the prior year quarter to better align purchases with anticipated consumer demand during the key selling season in late 2022. These declines were largely offset by higher e-commerce sales of approximately $1.4 million for the three months ended June 30, 2022 compared to the same period in 2021. For the six months ended June 30, 2022 total consumer product sales increased $1.6 million, or 6%, compared to the same period in 2021. The higher sales were primarily related to increased e-commerce sales of $2.6 million, largely offset by lower2023, sales to ~~Wal-Mart, following the initial shelf stocking~~A.S. Watson and sales from our e-commerce business accounted for approximately $1.5 million and $1.0 million in ~~2021.~~

•~~Total ingredient sales remained relatively stable with a decrease of approximately $40 thousand, or (3)%, for the three months ended June 30, 2022 and an increase of $72 thousand, or 3%,~~growth, respectively. Similarly, for the six months ended June 30, ~~2022, each compared~~2023, sales to A.S. Watson drove approximately $2.6 million in higher sales, while e-commerce sales added approximately $2.3 million. Looking ahead, we expect e-commerce sales to be the ~~corresponding periods in 2021.~~ primary catalyst for growth throughout 2023.

•For the three and six months ended June 30, ~~2022, Niagen® ingredient~~2023, total ingredients sales increased ~~$173 thousand~~by approximately $1.2 million and ~~$101 thousand, respectively,~~$3.9 million compared to the ~~corresponding~~same periods in ~~2021, while all other~~2022, respectively. The growth in ingredients sales was largely driven by sales of our Niagen® ingredient, ~~sales decreased $213 thousand~~which experienced increased demand from existing partners and ~~$29 thousand, respectively,~~new partners, accounting for $1.0 million and $3.8 million of the growth during ~~the same periods.~~

•~~Analytical reference standards and services segment sales decreased $51 thousand and $87 thousand for~~ the three and six months ended June 30, ~~2022~~2023, respectively.

•Our analytical reference standards and services segment accounted for the smallest proportion of total sales, remaining relatively flat for the three months ended June 30, 2023, and experiencing a slight decline of $0.1 million for the six months ended June 30, 2023, compared to the ~~same~~corresponding periods in ~~2021, respectively. The decreased sales are attributable to lower research and development sales throughout 2022 compared to 2021, primarily due to the timing of project requests from customers.~~2022.

Cost of sales include raw materials, labor, overhead, and delivery costs. The following table sets forth our total cost of sales by reportable segment:

Overall, cost of sales, as a percentage of net sales, ~~slightly increased during the three and six months ended June 30, 2022 compared to the same periods in 2021. Changes in cost of sales were primarily driven by the following:~~

•~~Cost of sales, as a percentage of net sales, for our consumer products segment~~ remained substantially similar for the three months ended June 30, 2022 and 2021 and increased approximately 1% for the six months ended June 30, 2022 compared to the same period in 2021. The increase is primarily attributable to a shift in our business mix as we experienced higher business-to-business sales during the six months ended June 30, 2021 resulting in greater cost saving benefits from economies of scale on our overall supply chain overhead costs compared to the same period in the current year.

•~~Cost of sales, as a percentage of net sales, for our ingredients segment increased 2% and 5%~~relatively stable for the three and six months ended June 30, 2022, compared to the comparable periods in 2021, respectively. The increase is primarily a result of higher supply chain overhead costs, as we increased headcount to scale the business, paired with higher costs of raw materials.

•~~Cost of sales, as a percentage of net sales, for the analytical reference standards and services segment increased 23% and 16% for the three and six months ended June 30, 2022~~2023 compared to the same periods in ~~2021, respectively. Cost of sales for our analytical reference standards and services segment are largely driven by fixed supply chain overhead costs which do not increase in proportion to sales.~~2022. During the ~~first six~~three months of 2022, we increased our supply chain headcount in order to scale the business, increasing our overheads costs. Accordingly, as sales decreased and our supply chain labor head count increased during 2022, weended June 30, 2023, all segments experienced ~~lower labor and overhead utilization rates resulting in increased~~substantially similar cost of sales, as a percentage of net sales, compared to ~~2021.~~the corresponding periods in 2022. This can be attributed to our continuous efforts to optimize our supply chain amid the prevailing inflationary environment.

For the six months ended June 30, 2023, the ingredients segment saw a 3% decrease in cost of sales, as a percentage of net sales, while the analytical reference standards and services segment increased by 6% each compared to the same periods in 2022. Cost of sales for each of these segments is primarily influenced by fixed supply chain overhead costs, which do not fluctuate with sales. Consequently, with higher sales in the ingredients segment, we benefited from improved labor and overhead utilization rates. Conversely, in the analytical reference standards and services segment, with lower sales, we experienced lower labor and overhead utilization rates.

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. The following table sets forth our total gross profit by reportable segment:

For details supporting the changes in gross profit, refer to the preceding discussions ~~above~~ regarding changes in both our net sales and cost of sales for each respective segment.

Operating Expenses-Sales and Marketing

Sales and marketing expenses consist of salaries, advertising, public relations and marketing expenses. Sales and marketing expenses by reportable segment were as follows:

•~~During fiscal year 2022, for~~For our consumer products segment, we launched a direct marketing campaign spanning multiple platforms including Amazon marketplaces, televised commercials, social media, public relations and other customer awareness and acquisition programs in addition to increasing our staffing. These focused marketing efforts drove increased sales and marketing expense, as a percentage of ~~approximately $1.7 million~~net sales, improved 1,928 basis points and ~~$3.6 million~~1,452 basis points for the three and six months ended June 30, ~~2022,~~2023, respectively, compared to the same periods in ~~2021. We anticipate these expenses will decrease~~2022. This significant improvement can be attributed to a strategic shift in our marketing approach. In the three and six months ended June 30, 2022, we launched an extensive direct marketing campaign across multiple platforms, including televised commercials. However, during the ~~second half of 2022 as~~three and six months ended June 30, 2023, we ~~shift~~pivoted our ~~focus~~marketing efforts towards what we believe to be more efficient distribution channels and marketing campaigns, ~~coupled with overall expense management.~~while investing in a brand building event to boost awareness and drive sales of Tru Niagen® on our largest e-commerce channel.

•~~For the ingredients segment, selling and marketing expenses were nominal during the three months ended June 30, 2022 and 2021.~~ Sales and marketing expense ~~increased~~for our ingredients segment remained nominal during ~~the six months ended June 30, 2022 compared to the same period in the prior year largely due to higher commissionable sales for other ingredients.~~

•~~For the analytical reference standards and services segment, total selling and marketing expenses increased approximately $0.1 million for~~ each of the three and six months ended June 30, ~~2022,~~2023 and 2022.

•For our analytical reference standards and services segment, sales and marketing expense, as a percentage of net sales, improved by 8% and 6% for the three and six months ended June 30, 2023, respectively, compared to the same periods in ~~2021. The increase was primarily driven by headcount increases.~~2022. This favorable change can be mainly attributed to a reduction in marketing spend as we strategically manage expenses and retain our marketing focus on our consumer products segment.

Operating Expenses-Research and Development

Research and development (R&D) expenses consist primarily of headcount, clinical trials, product development and process development expenses. Research and development expenses by reportable segment were as follows:

We allocate R&D expenses related to our Niagen® branded ingredient to the consumer products and ingredients segment, based on revenues recorded. ~~Overall,~~In total, we had slightly higher R&D expenses for the three and six months ended June 30, ~~2022~~2023 compared to the ~~comparable period in 2021 due to increased staffing of research scientists, share-based compensation~~three and six months ended June 30, 2022, primarily driven by inflationary pressures, such as overall wage inflation, as well as professional services and the timing of projects.

Operating Expenses-General and Administrative

General and administrative expense consists of general company administration, legal, royalties, IT, accounting and executive management expenses. General and administrative expenses are not allocated by segment and instead are classified under our Corporate and Other category. General and administrative expense for the periods indicated were as follows:

~~The decline in~~Total general and administrative expense remained relatively flat increasing only $0.1 million for the three months ended June 30, 2023 compared to the same period in 2022, with the substantial drivers being an increase in severance and restructuring costs of $0.8 million largely offset by a decrease in legal expense of $0.6 million. For the six months ended June 30, ~~2022,~~2023, general and administrative expense declined by approximately $2.4 million compared to the ~~comparable periods~~same period in ~~2021~~2022. The lower expense for the six month period was ~~primarily~~ driven by ~~lower~~a decrease in legal expense of ~~$2.4~~$2.0 million, lower share-based compensation expense of $0.6 million and ~~$5.1~~a decrease of $0.5 million related to ~~litigation which was~~lower executive headcount, partially offset by ~~increased investments in technology and increased staffing in key functional areas~~an increase of $0.8 million due to ~~support growth. For additional details regarding our litigation see Note 10, Commitments and Contingencies,~~ ~~Legal Proceedings~~ ~~in the Notes to the Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q.~~provisions for doubtful trade receivables.

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 June 30, ~~2022~~2023 and June 30, ~~2021,~~2022, 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 six months ended June 30, ~~2022~~2023 and ~~2021.~~2022. 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 (in thousands)

Depreciation expense was approximately ~~$0.4 million~~$460 and $413 for ~~both of~~ the six months ended June 30, 2023 and 2022, ~~and 2021.~~respectively. We depreciate our assets on a straight-line basis, based on the estimated useful lives of the respective assets.

Amortization expense of intangible assets was approximately $80 and $99 ~~thousand~~ for the six months ended June 30, 2023 and 2022, ~~compared to $121 thousand for the six months ended June 30, 2021.~~respectively. We amortize intangible assets using a straight-line method, generally over 10 years. For licensed patent rights, the useful lives are 10 years or the remaining term of the patents underlying licensing rights, whichever is shorter. 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 six months ended June 30, ~~2022~~2023 was approximately ~~$0.5 million as~~$344 compared to ~~$0.3 million~~$468 for the six months ended June 30, ~~2021.~~2022.

Liquidity and Capital Resources

From inception through June 30, ~~2022,~~2023, we have incurred aggregate losses of approximately ~~$183.1~~$189.6 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. Historically, these operations have been financed through capital contributions, the issuance of common stock and warrants through private placements and the issuance of debt.

Our board of directors periodically reviews our capital requirements in light of our proposed business plan. Our future capital requirements will ~~remain dependent upon a variety of~~be influenced by several factors, including cash ~~flow~~flows from operations, ~~the ability to increase~~ sales ~~increasing our~~growth, optimized gross ~~profits from current levels, reducing~~profit margins, reduced selling and ~~administrative expenses~~marketing expense as a percentage of net sales, continued customer relationship development, ~~of customer relationships,~~ and ~~our~~the ability to successfully market ~~our~~ new ~~products successfully.~~and existing products. However, based on our results from operations, we may determine that we need additional financing to implement our long-term business plan. There can be no assurance that any such financing will be available on terms favorable to us or at all. Without adequate financing we may have to delay or terminate product and service expansion and curtail certain selling, general and administrative expenses. Any inability to raise additional financing would have a material adverse effect on us.

As of June 30, ~~2022,~~2023, we had cash and cash equivalents of ~~$17.1~~$26.4 million, including $152 thousand of restricted cash, no material off-balance sheet arrangements and no outstanding borrowings under our line of credit with Western Alliance ~~Bank,~~Bank. Additionally, as of June 30, 2023, we had purchase obligations of ~~$15.1~~$8.2 million related to inventory purchase commitments ~~to be paid over approximately one year~~ and future minimum lease obligations of ~~$5.3~~$4.5 million to be paid over approximately 6 months and six ~~years.~~ years, respectively.

We anticipate that our current unrestricted cash and cash equivalents of ~~$16.9~~$26.3 million and cash to be generated from net sales will be sufficient to meet our financial obligations as they become due over at least the next twelve months and beyond. However, we may seek additional funds to support both our short-term and long-term operating objectives, either through additional equity or debt financings or collaborative agreements or from other sources. Furthermore, in June ~~2020,~~2023, we filed a new $125.0 million registration statement on Form S-3 with the Commission, utilizing a “shelf” registration process. Under this shelf registration process, we may sell securities from time to time, including up to ~~$50.0~~approximately $47.8 million, pursuant to the ATM Facility, of which ~~approximately $47.8 million~~the full amount remains available as of June 30, ~~2022.~~2023. Our potential use of the ATM facility is subject to the satisfaction of various conditions in the ATM Facility agreement as well market conditions. As a result, our ability to rely on the ATM Facility to raise liquidity is limited to a material extent.

As a result of ~~the COVID-19 pandemic and other~~various macroeconomic factors such as rising interest rates, inflation, bank failures and geopolitical uncertainties, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit ~~availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.~~availability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. 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 and used in operating activities: Cash provided by and used in operating activities is net loss adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash ~~used in~~provided by operating activities was approximately ~~$11.0 million and $13.3~~$6.1 million for the six months ended June 30, ~~2022 and 2021, respectively. The decrease in~~2023 compared to net cash ~~used~~use of $11.0 million for the six months ended June 30, ~~2022 compared to June 30, 2021 of $2.3~~2022. The $17.1 million positive change was primarily driven by a $10.0 million improvement in net loss paired with improved cash flow management related to inventory. Specifically, inventory management resulted in a positive impact of $4.9 million, with a net cash inflow of $2.7 million for the ~~timing~~six months ended June 30, 2023 compared to a net cash outflow of ~~collections~~$2.2 million for ~~our trade receivables accounting for $4.3 million which was partially offset by increases in our inventories of $1.7 million.~~the six months ended June 30, 2022.

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.

Cash used in investing activities: Investing cash flows consist primarily of capital expenditures and investment activities. Cash used in investing activities was approximately ~~$110 thousand~~$0.1 million for each of the six months ended June 30, 2022 compared to $311 thousand for the six months ended June 30, 2021. The decrease in cash used during the six months ended June 30, 2022 of $201 thousand compared to the same period in 2021 is attributable to fewer purchases of leasehold improvements2023 and ~~equipment.~~2022.

Net cash used in ~~and provided by~~ financing activities: Financing cash flows consist primarily of ~~proceeds from issuance of our common stock, exercise of stock options through employee equity incentive plans and~~the repayment of short-term and long-term debt. Cash used in financing activities was ~~approximately $7 thousand for~~nominal during each of the six months ended June 30, ~~2022, compared to net cash provided by financing activities of approximately $35.7 million for the six months ended~~2023 and June 30, ~~2021. The difference in cash activities is largely attributable to proceeds from the issuance~~2022 consisting entirely of common stock pursuant to the Securities Purchase Agreement with EverFund, the ATM Facility transaction, as well as the exercise of employee stock options, all of which occurred during the six months ended June 30, 2021 with no similar activity during the six months ended June 30, 2022.repayments for finance leases.

Critical Account Estimates

There have been no material changes to critical accounting estimates from those disclosed in our ~~2021~~2022 Form 10-K.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the supervision of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, ~~2022,~~2023, our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s second fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 1. Legal Proceedings

For a description of our legal proceedings, see Note 10, Commitments and Contingencies, Legal Proceedings in the Notes to the Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

Investing in our common stock involves a high degree of risk. Current investors and potential investors should consider carefully the risks and uncertainties described below and in our Annual Report, together with all other information contained in this Quarterly Report on Form 10-Q and our Annual Report, including our financial statements, the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making investment decisions with respect to our common stock. If any of the following risks actually occur, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. Under these circumstances, the trading price and value of our common stock could decline, and you may lose all or part of your investment. The risks and uncertainties described in this Quarterly Report on Form 10-Q and in our Annual Report are not the only ones facing our Company. Additional risks and uncertainties of which we are not presently aware, or that we currently consider immaterial, may also ~~impair~~affect our business operations.

We are providing the following summary of the risk factors contained in our Form 10-Q to enhance the readability and accessibility of our risk factor disclosures. This summary does not address all of the risks that we face. We encourage our stockholders to carefully review the risk factors contained in this Form 10-Q in their entirety for additional information regarding the risks and uncertainties that could cause our actual results to vary materially from recent results or from our anticipated future results.

~~The COVID-19 pandemic has adversely affected, and is expected to continue to pose risks~~Table of Contents

Risks Related to our ~~business, results of operations, financial condition~~Company and ~~cash flows, and other epidemics or outbreaks of infectious diseases may have a similar impact.~~Business:

▪~~Global, market and economic conditions may negatively impact our business, financial condition and share price.~~

▪•We have a history of operating losses, may need additional financing to meet our future long-term capital requirements and may be unable to raise sufficient capital on favorable terms or at all.

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

▪•Global, market and economic conditions may negatively impact our business, financial condition and share price.

•Our future success largely depends on sales of our Tru Niagen® product.

▪•The success of our consumer product and ingredient business is linked to the size and growth rate of the vitamin, mineral and dietary supplement market and an adverse change in the size or growth rate of that market could have a material adverse effect on us.

▪•The future growth and profitability of our consumer product business will depend in large part upon the effectiveness and efficiency of our marketing efforts and our ability to select effective markets and media in which to market and advertise.

▪•Many of our competitors are larger and have greater financial and other resources than we do.

Risks Related to our Operations:

▪•Our operating results may fluctuate significantly, ~~as a result of a variety of factors, many of~~ which ~~are outside of~~could make our ~~control.~~future results difficult to predict and could cause our operating results to fall below expectations.

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

▪Our failure to establish and maintain effective internal control over financial reporting could result in material misstatements in our financial statements, result in our failure to meet our reporting obligations and cause investors to lose confidence in our reported financial information, which in turn could cause the trading price of our common stock to decline.

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

Risks Related to our Products:

▪•Unfavorable publicity or consumer perception of our products and any similar products distributed by other companies could have a material adverse effect on our business.

▪•We may incur material product liability claims or class action litigation, which could increase our costs and adversely affect our reputation, revenues and operating income.

▪•We rely on single or a limited number of third-party suppliers for the raw materials required to produce our products.

•We utilize ingredients and components for our products from foreign suppliers, and may be negatively affected by the risks associated with international trade and importation issues.

▪~~We rely on single or a limited number of third-party suppliers for the raw materials required~~Risks Related to ~~produce~~ our ~~products.~~Intellectual Property:

▪•Our ability to protect our intellectual property and proprietary technology through patents and other means is uncertain and may be inadequate, which ~~would~~may have a material and adverse effect on us.

▪•Our patents and licenses may be subject to challenge on validity grounds, and our patent applications may be rejected.

▪•We may become subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from developing our products, require us to obtain licenses from third parties or to develop non-infringing alternatives and subject us to substantial monetary damages.

▪•We are currently engaged in substantial and complex litigation with Elysium Health, Inc. and Elysium Health LLC (collectively, “Elysium”), the outcome of which could materially harm our business and financial results.

Risks Related to Regulatory Approval of our Products and Other Government Regulations:

▪•Changes in government regulation or in practices relating to the pharmaceutical, dietary supplement, food and cosmetic industry could decrease the need for the services we provide.

▪•Compliance with stringent and changing global privacy and data security laws and regulations could result in additional costs and liabilities to us or inhibit our ability to collect and, if applicable, process data globally, and the failure or perceived failure to comply with such laws and regulations could have a material adverse effect on our business, financial condition or results of operations.

Risks Related to the Securities Markets and Ownership of our Equity Securities:

•The market price of our common stock may be volatile and adversely affected by several factors.

▪•We have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.

▪•We have a significant number of outstanding options and unvested restricted stock units. Future sales of these shares could adversely affect the market price of our common stock.

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

▪•The occurrence of pandemics and epidemics, including potential resurgences, poses risks to our business, results of operations, financial condition, and cash flows.

•We may become involved in securities class action litigation that could divert management’s attention and harm our business.

•Our failure to establish and maintain effective internal control over financial reporting could result in material misstatements in our financial statements, result in our failure to meet our reporting obligations and cause investors to lose confidence in our reported financial information, which in turn could cause the trading price of our common stock to decline.


PART I - Financial Information (unaudited)			Pg.

Item 1. Financial Statements (unaudited):			3

Condensed Consolidated Balance Sheets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022			3

Condensed Consolidated Statements of Operations for the three and six months ended June 30, ~~2022~~2023 and June 30, ~~2021~~2022			4

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, ~~2022~~2023 and June 30, ~~2021~~2022			5

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, ~~2022~~2023 and June 30, ~~2021~~2022			7

Notes to Condensed Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25

Item 3. Quantitative and Qualitative Disclosures About Market Risk			33

Item 4. Controls and Procedures			3433

PART II - Other Information

Item 1. Legal Proceedings			3433

Item 1A. Risk Factors			3635









Item 5. Other information			54

Item 6. Exhibits			5855

Signatures			5956


		Jun 30, 2022		Dec 31, 2021			June 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents, including restricted cash of $0.2 million as of both dates		$	17,072	$	28,219
Trade receivables, net of allowances of $54 and $65, respectively; Including receivables from Related Party of: $1.3 million and $2.1 million, respectively		4,228		5,226
Cash and cash equivalents, including restricted cash of $152 for both periods presented						Cash and cash equivalents, including restricted cash of $152 for both periods presented	$	26,406	$	20,441
Trade receivables, net of allowances of $826 and $122, respectively; Including receivables from Related Party of: $2.8 million and $3.1 million, respectively						Trade receivables, net of allowances of $826 and $122, respectively; Including receivables from Related Party of: $2.8 million and $3.1 million, respectively	6,118		8,482
Inventories	Inventories	15,753		13,601		Inventories	11,973		14,677
Prepaid expenses and other assets	Prepaid expenses and other assets	1,455		1,859		Prepaid expenses and other assets	1,885		2,967��
Total current assets	Total current assets	38,508		48,905		Total current assets	46,382		46,567

Leasehold improvements and equipment, net	Leasehold improvements and equipment, net	2,899		3,003		Leasehold improvements and equipment, net	2,501		2,799
Intangible assets, net	Intangible assets, net	758		857		Intangible assets, net	591		671
Right-of-use assets		3,884		4,352
Right-of-use assets, net						Right-of-use assets, net	3,179		3,523
Other long-term assets	Other long-term assets	564		723		Other long-term assets	518		497
Total assets	Total assets	$	46,613	$	57,840	Total assets	$	53,171	$	54,057
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	10,197	$	10,423	Accounts payable	$	10,031	$	9,679
Accrued expenses	Accrued expenses	6,696		6,481		Accrued expenses	8,079		7,337
Current maturities of operating lease obligations	Current maturities of operating lease obligations	646		528		Current maturities of operating lease obligations	775		680
Current maturities of finance lease obligations	Current maturities of finance lease obligations	13		20		Current maturities of finance lease obligations	10		16
Customer deposits	Customer deposits	173		161		Customer deposits	166		157
Total current liabilities	Total current liabilities	17,725		17,613		Total current liabilities	19,061		17,869
Deferred revenue	Deferred revenue	4,228		4,346		Deferred revenue	3,806		3,955
Operating lease obligations, less current maturities	Operating lease obligations, less current maturities	3,882		4,154		Operating lease obligations, less current maturities	3,137		3,539

Finance lease obligations, less current maturities						Finance lease obligations, less current maturities	17		22
Total liabilities	Total liabilities	25,835		26,113		Total liabilities	26,021		25,385

Commitments and Contingencies (Note 10)	Commitments and Contingencies (Note 10)	0		0		Commitments and Contingencies (Note 10)

Stockholders' Equity	Stockholders' Equity					Stockholders' Equity
Common stock, $0.001 par value; authorized 150,000 shares; 68,155 shares and 68,126 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		68		68
Common stock, $0.001 par value; authorized 150,000 shares; 74,856 shares and 74,567 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively						Common stock, $0.001 par value; authorized 150,000 shares; 74,856 shares and 74,567 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	75		74
Additional paid-in capital	Additional paid-in capital	203,798		200,614		Additional paid-in capital	216,691		214,094
Accumulated deficit	Accumulated deficit	(183,090)		(168,953)		Accumulated deficit	(189,615)		(185,493)
Cumulative translation adjustments	Cumulative translation adjustments	2		(2)		Cumulative translation adjustments	(1)		(3)

Total stockholders' equity	Total stockholders' equity	20,778		31,727		Total stockholders' equity	27,150		28,672
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	46,613	$	57,840	Total liabilities and stockholders' equity	$	53,171	$	54,057


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022

Cash Flows From Operating Activities	Cash Flows From Operating Activities					Cash Flows From Operating Activities
Net loss	Net loss	$	(14,137)	$	(12,947)	Net loss	$	(4,093)	$	(14,137)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:						Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation of leasehold improvements and equipment	Depreciation of leasehold improvements and equipment	413		447		Depreciation of leasehold improvements and equipment	460		413
Amortization of intangibles	Amortization of intangibles	99		121		Amortization of intangibles	80		99
Amortization of right of use assets	Amortization of right of use assets	468		254		Amortization of right of use assets	344		468
Share-based compensation expense	Share-based compensation expense	3,184		2,900		Share-based compensation expense	2,597		3,184
Loss on disposal of leasehold improvements and equipment	Loss on disposal of leasehold improvements and equipment	5		—		Loss on disposal of leasehold improvements and equipment	(5)		22
Provision for doubtful trade receivables	Provision for doubtful trade receivables	22		26		Provision for doubtful trade receivables	751		5
Non-cash financing costs	Non-cash financing costs	34		57		Non-cash financing costs	42		34
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Trade receivables	Trade receivables	976		(3,331)		Trade receivables	1,584		976
Inventories	Inventories	(2,152)		(500)		Inventories	2,704		(2,152)
Implementation costs for cloud computing arrangement	Implementation costs for cloud computing arrangement	(204)		(79)		Implementation costs for cloud computing arrangement	(60)		(204)
Prepaid expenses and other assets	Prepaid expenses and other assets	529		171		Prepaid expenses and other assets	1,019		529
Accounts payable	Accounts payable	(226)		525		Accounts payable	352		(226)
Accrued expenses	Accrued expenses	215		(564)		Accrued expenses	742		215
Deferred revenue	Deferred revenue	(118)		—		Deferred revenue	(149)		(118)
Customer deposits and other	Customer deposits and other	16		(68)		Customer deposits and other	11		16
Operating lease liabilities	Operating lease liabilities	(154)		(312)		Operating lease liabilities	(307)		(154)
Net cash used in operating activities		(11,030)		(13,300)
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	6,072		(11,030)

Cash Flows From Investing Activities	Cash Flows From Investing Activities					Cash Flows From Investing Activities
Purchases of leasehold improvements and equipment	Purchases of leasehold improvements and equipment	(110)		(311)		Purchases of leasehold improvements and equipment	(101)		(110)
Proceeds from the sale of leasehold improvements and equipment, net						Proceeds from the sale of leasehold improvements and equipment, net	5		—

Net cash used in investing activities	Net cash used in investing activities	(110)		(311)		Net cash used in investing activities	(96)		(110)

Cash Flows From Financing Activities	Cash Flows From Financing Activities					Cash Flows From Financing Activities
Proceeds from issuance of common stock, net		—		26,740
Proceeds from exercise of stock options		—		9,024
Payment of debt issuance costs		—		(47)

Principal payments on finance leases	Principal payments on finance leases	(7)		(25)		Principal payments on finance leases	(11)		(7)
Net cash (used in) provided by financing activities		(7)		35,692
Net cash used in financing activities						Net cash used in financing activities	(11)		(7)

Net (decrease) increase in cash and cash equivalents		(11,147)		22,081
Cash and cash equivalents, including restricted cash of $0.2 million for both periods - beginning of period		28,219		16,697
Cash and cash equivalents, including restricted cash of $0.2 million for both periods - end of period		$	17,072	$	38,778
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	5,965		(11,147)
Cash and cash equivalents, including restricted cash of $152 for both periods - beginning of period						Cash and cash equivalents, including restricted cash of $152 for both periods - beginning of period	20,441		28,219
Cash and cash equivalents, including restricted cash of $152 for both periods - end of period						Cash and cash equivalents, including restricted cash of $152 for both periods - end of period	$	26,406	$	17,072

Supplemental Disclosures of Cash Flow Information	Supplemental Disclosures of Cash Flow Information					Supplemental Disclosures of Cash Flow Information
Cash payments for interest on finance leases		$	—	$	1

Cash payments for principal on operating lease liabilities	Cash payments for principal on operating lease liabilities	$	204	$	312	Cash payments for principal on operating lease liabilities	$	342	$	204

Supplemental Schedule of Noncash Operating Activity	Supplemental Schedule of Noncash Operating Activity					Supplemental Schedule of Noncash Operating Activity
Right-of-use assets and operating lease obligations incurred for entering into lease amendment		$	—	$	2,209

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


Major Customers	Major Customers	At Jun 30, 2022		At Dec 31, 2021		Major Customers	At June 30, 2023		At December 31, 2022
A.S. Watson Group - Related Party	A.S. Watson Group - Related Party	34.2	%	39.6	%	A.S. Watson Group - Related Party	45.3	%	36.6	%
Nestlé (NHSc)						Nestlé (NHSc)	*		23.6	%

Amazon Marketplaces						Amazon Marketplaces	11.2	%	*
Life Extension	Life Extension	14.1	%	22.1	%	Life Extension	22.8	%	*
Amazon Marketplaces		13.7	%	*
Matakana Health		11.5	%	*
Persona		*		10.3	%


(In thousands)	(In thousands)	Jun 30, 2022		Dec 31, 2021		(In thousands)	June 30, 2023		December 31, 2022
Consumer Products - Finished Goods	Consumer Products - Finished Goods	$	7,605	$	6,823	Consumer Products - Finished Goods	$	6,539	$	7,901
Consumer Products - Work in Process	Consumer Products - Work in Process	4,966		4,131		Consumer Products - Work in Process	3,607		2,992
Bulk ingredients	Bulk ingredients	2,655		2,131		Bulk ingredients	1,286		3,284
Reference standards	Reference standards	527		516		Reference standards	541		500
Total Inventory	Total Inventory	$	15,753	$	13,601	Total Inventory	$	11,973	$	14,677


		Three Months Ended June 30, 2022																		Three Months Ended June 30, 2023
		Common Stock			Additional Paid-in Capital				Accumulated Deficit			Cumulative Translation Adjustments				Total Stockholders' Equity				Common Stock					Additional Paid-in Capital			Accumulated Deficit				Cumulative Translation Adjustments				Total Stockholders' Equity
		Shares	Amount								Shares								Amount												Total Stockholders' Equity
Balance, April 1, 2022		68,149	$	68			$	202,502						$	(176,693)			$	—		$	25,877

Balance, April 1, 2023																			Balance, April 1, 2023	74,666			$	74		$	215,367		$	(187,424)				$	—			$	28,017

Issuance of restricted stock	Issuance of restricted stock	6	—		—											—			Issuance of restricted stock	190			1		—			—				—				1
Share-based compensation	Share-based compensation	—	—		1,296				—			—				1,296			Share-based compensation	—			—		1,324			—				—				1,324
Translation adjustment	Translation adjustment	—	—		—				—			2				2			Translation adjustment	—			—		—			—				(1)				(1)

Net loss	Net loss	—	—		—				(6,397)			—				(6,397)			Net loss	—			—		—			(2,191)				—				(2,191)
Balance, June 30, 2022		68,155	$	68	$	203,798			$	(183,090)		$	2			$	20,778
Balance, June 30, 2023																			Balance, June 30, 2023	74,856			$	75	$	216,691		$	(189,615)			$	(1)			$	27,150


	Three Months Ended June 30, 2021
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Cumulative Translation Adjustments		Total Stockholders' Equity
	Shares	Amount
Balance, April 1, 2021	67,702	$	68	$	192,972	$	(149,206)	$	(2)	$	43,832
Issuance of common stock, net of offering costs of $0.3 million	213	—		1,869						1,869
Issuance of common stock resulting from the exercise of stock options	94	—		391		—		—		391
Share-based compensation	—	—		1,616		—		—		1,616

Net loss	—	—		—		(5,566)		—		(5,566)
Balance, June 30, 2021	68,009	$	68	$	196,848	$	(154,772)	$	(2)	$	42,142


	Six Months Ended June 30, 2021
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Cumulative Translation Adjustments		Total Stockholders' Equity
	Shares	Amount
Balance, January 1, 2021	61,881	$	62	$	158,190	$	(141,825)	$	(3)	$	16,424
Issuance of common stock, net of offering costs of $0.4 million	4,059	4		26,736						26,740
Issuance of common stock resulting from the exercise of stock options	2,069	2		9,022		—		—		9,024
Share-based compensation	—	—		2,900		—		—		2,900
Translation adjustment	—	—		—		—		1		1
Net loss	—	—		—		(12,947)				(12,947)
Balance, June 30, 2021	68,009	$	68	$	196,848	$	(154,772)	$	(2)	$	42,142


		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, 2021	9,495	$	4.65	6.5	$	2,452
Options Granted	2,056	2.57
Options Exercised	—	—			—
Options Forfeited	(685)	5.22
Outstanding at June 30, 2022	10,866	$	4.22	6.2	$	3	*

Exercisable at June 30, 2022	7,451	$	4.11	4.7	$	—	*


(In thousands except per share fair value)	(In thousands except per share fair value)	Number of RSUs	Weighted Average Fair Value		(In thousands except per share fair value)	Number of RSUs	Weighted Average Fair Value
Unvested shares at December 31, 2021		115	$	10.21
Unvested shares at December 31, 2022					Unvested shares at December 31, 2022	650	$	2.77
Granted	Granted	518	2.34		Granted	427	1.81
Vested	Vested	(29)	11.83		Vested	(273)	2.75
Forfeited	Forfeited	(11)	11.02		Forfeited	(30)	2.79
Unvested shares at June 30, 2022		593	$	3.24
Unvested shares at June 30, 2023					Unvested shares at June 30, 2023	774	$	2.25

Expected to vest at June 30, 2022		593	$	3.24
Expected to vest at June 30, 2023					Expected to vest at June 30, 2023	774	$	2.25



~~Exhibit No.~~**						~~Description~~Certain portions of ~~Exhibits~~this exhibit are omitted because they are both not material and are the type that the Registrant treats as private or confidential.
+						Indicates management contract or compensatory plan or arrangement.

~~3.1~~						Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to, and filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K (File No. 001-37752) filed with the Commission on March 15, 2018)
~~3.2~~						Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to, and filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 000-53290) filed with the Commission on April 12, 2016)
~~3.3~~						Amended and Restated Bylaws of the Registrant (incorporated by reference to, and filed as Exhibit 3.3 to the Registrant’s Annual Report on Form 10-K (File No. 001-37752) filed with the Commission on March 15, 2022)
~~10.1~~						Joint Venture Agreement, effective as of May 19, 2022, between the Named Parties and ChromaDex, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 19, 2022)
~~31.1~~						~~Certification of the Chief Executive Officer pursuant to Rule 13a-14(A) of the Securities Exchange Act of 1934, as amended❖~~
~~31.2~~						~~Certification of the Chief Financial Officer pursuant to Rule 13a-14(A) of the Securities Exchange Act of 1934, as amended❖~~
~~32.1~~						~~Certification pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes−Oxley Act of 2002)❖~~
~~101.INS~~						~~Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document~~
~~101.SCH~~						~~Inline XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~						~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~						~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~						~~Inline XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~						~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~
~~104~~						~~104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)~~


						CHROMADEX CORPORATION

Date: August ~~10, 2022~~9, 2023						/s/ ~~KEVIN M. FARR~~BRIANNA L. GERBER
						~~Kevin M. Farr~~Brianna L. Gerber
						Chief Financial Officer

						(principal financial ~~and accounting~~ officer and duly authorized on behalf of the registrant)