10q10k10q10k.net

What changed in Niagen Bioscience, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Niagen Bioscience, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+295 added−338 removedSource: 10-K (2024-03-06) vs 10-K (2023-03-08)

Top changes in Niagen Bioscience, Inc.'s 2023 10-K

295 paragraphs added · 338 removed · 214 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

51 edited+17 added−17 removed50 unchanged
Biggest changeDepartment of Agriculture 9,975,915 Crystalline forms of nicotinoyl ribosides, modified derivatives thereof, and phosphorylated analogs thereof, and methods of preparation thereof 11/10/2017 5/22/2018 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 10,000,519 Methods of Preparing Nicotinamide Riboside and Derivatives Thereof 7/24/2014 6/19/2018 7/24/2034 Licensed from The Queen’s University of Belfast 10,000,520 B-vitamin and amino acid conjugates of nicotinoyl ribosides and reduced nicotinoyl ribosides, derivatives thereof, and methods of preparation thereof 3/16/2017 6/19/2018 3/16/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 9 Table of Contents Patent Number Title Filling Date Issued Date Expires Licensor 10,183,036 Use of nicotinic acid riboside or nicotinamide riboside derivatives, and reduced derivatives thereof, as NAD+ increasing precursors 4/20/2017 1/22/2019 4/20/2037 Owned by ChromaDex 10,280,190 Nicotinic acid riboside or nicotinamide riboside compositions, reduced derivatives thereof, and the use thereof to enhance skin permeation in treating skin conditions 3/16/2016 5/7/2019 5/31/2036 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 10,688,118 Nicotinamide riboside compositions for topical use in treating skin conditions 10/30/2014 6/23/2020 4/6/2035 Owned by ChromaDex 10,689,411 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 11/10/2017 6/23/2020 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 10,815,262 Methods of preparing nicotinamide riboside and derivatives thereof 2/27/2018 10/27/2020 7/24/2034 Licensed from The Queen’s University of Belfast 10,857,172 Use of nicotinamide riboside, nicotinic acid riboside, and nicotinamide mononucleotide, reduced nicotinyl compounds, and nicotinoyl compound derivatives in infant formula for healthy development 4/14/2017 12/8/2020 4/14/2037 Owned by ChromaDex 10,934,322 B-vitamin and amino acid conjugates of nicotinoyl ribosides and reduced nicotinoyl ribosides, derivatives thereof, and methods of preparation thereof 5/11/2018 3/2/2021 3/16/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 11,033,568 Nicotinamide riboside compositions for topical use in treating skin conditions 6/3/2020 6/15/2021 10/30/2034 Owned by ChromaDex 11,071,747 Use of NAD precursors for breast enhancement 11/29/2017 7/27/2021 11/29/2037 Licensed from University of Iowa 11,214,589 Crystalline forms of nicotinoyl ribosides and derivatives thereof, and methods of preparation thereof 12/10/2019 1/4/2022 8/16/2040 Owned by ChromaDex 11,242,364 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 5/18/2021 2/8/2022 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 11,274,117 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 4/30/2021 3/15/2022 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 11,345,720 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 12/15/2021 5/31/2022 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 11,524,022 Use of nicotinamide riboside, nicotinic acid riboside, and nicotinamide mononucleotide, reduced nicotinyl compounds, and nicotinoyl compound derivatives in infant formula for healthy development 4/14/2017 12/13/2022 4/14/2037 Owned by ChromaDex 11,571,413 Nicotinamide riboside treatments of domesticated meat animals 6/26/2020 2/7/2023 9/27/2039 Licensed from Kansas State University 11,584,770 Methods of preparing nicotinamide riboside and derivatives thereof 5/4/2022 2/21/2023 7/24/2034 Licensed from Queen’s University Belfast 10 Table of Contents Manufacturing, Sources and Availability of Raw Materials Our finished products are manufactured by third-party FDA-regulated contract manufacturers in the United States with some raw materials sourced internationally.
Biggest changeThe following table sets forth our existing patents and those to which we have licensed rights: Patent Number Title Filling Date Issued Date Expires Licensor 7,776,326 Methods and compositions for treating neuropathies 6/3/2005 8/17/2010 6/24/2026 Licensed from Washington University 8,106,184 Nicotinyl Riboside Compositions and Methods of Use 11/17/2006 1/31/2012 9/20/2027 Licensed from Cornell University 8,114,626 Yeast strain and method for using the same to produce Nicotinamide Riboside 3/26/2009 2/14/2012 1/5/2026 Licensed from Dartmouth College 8,889,126 Methods and compositions for treating neuropathies 5/28/2010 11/18/2014 6/3/2025 Licensed from Washington University 9,000,147 Nicotyl riboside compositions and methods of use 1/17/2012 4/7/2015 11/17/2026 Licensed from Cornell University 9,295,688 Methods and compositions for treating neuropathies 10/10/2014 3/29/2016 6/3/2025 Licensed from Washington University 9,321,797 Nicotyl riboside compositions and methods of use 11/17/2014 4/26/2016 11/17/2026 Licensed from Cornell University 9,975,915 Crystalline forms of nicotinoyl ribosides, modified derivatives thereof, and phosphorylated analogs thereof, and methods of preparation thereof 11/10/2017 5/22/2018 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 10,000,519 Methods of Preparing Nicotinamide Riboside and Derivatives Thereof 7/24/2014 6/19/2018 7/24/2034 Licensed from The Queen’s University of Belfast 10,000,520 B-vitamin and amino acid conjugates of nicotinoyl ribosides and reduced nicotinoyl ribosides, derivatives thereof, and methods of preparation thereof 3/16/2017 6/19/2018 3/16/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 10,183,036 Use of nicotinic acid riboside or nicotinamide riboside derivatives, and reduced derivatives thereof, as NAD+ increasing precursors 4/20/2017 1/22/2019 4/20/2037 Owned by ChromaDex 10,280,190 Nicotinic acid riboside or nicotinamide riboside compositions, reduced derivatives thereof, and the use thereof to enhance skin permeation in treating skin conditions 3/16/2016 5/7/2019 5/31/2036 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 10,688,118 Nicotinamide riboside compositions for topical use in treating skin conditions 10/30/2014 6/23/2020 4/6/2035 Owned by ChromaDex 10,689,411 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 11/10/2017 6/23/2020 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 10,815,262 Methods of preparing nicotinamide riboside and derivatives thereof 2/27/2018 10/27/2020 7/24/2034 Licensed from The Queen’s University of Belfast 10,857,172 Use of nicotinamide riboside, nicotinic acid riboside, and nicotinamide mononucleotide, reduced nicotinyl compounds, and nicotinoyl compound derivatives in infant formula for healthy development 4/14/2017 12/8/2020 4/14/2037 Owned by ChromaDex 10,934,322 B-vitamin and amino acid conjugates of nicotinoyl ribosides and reduced nicotinoyl ribosides, derivatives thereof, and methods of preparation thereof 5/11/2018 3/2/2021 3/16/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 11,033,568 Nicotinamide riboside compositions for topical use in treating skin conditions 6/3/2020 6/15/2021 10/30/2034 Owned by ChromaDex 9 Table of Contents Patent Number Title Filling Date Issued Date Expires Licensor 11,071,747 Use of NAD precursors for breast enhancement 11/29/2017 7/27/2021 11/29/2037 Licensed from University of Iowa 11,214,589 Crystalline forms of nicotinoyl ribosides and derivatives thereof, and methods of preparation thereof 12/10/2019 1/4/2022 8/16/2040 Owned by ChromaDex 11,242,364 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 5/18/2021 2/8/2022 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 11,274,117 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 4/30/2021 3/15/2022 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 11,345,720 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 12/15/2021 5/31/2022 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 11,524,022 Use of nicotinamide riboside, nicotinic acid riboside, and nicotinamide mononucleotide, reduced nicotinyl compounds, and nicotinoyl compound derivatives in infant formula for healthy development 4/14/2017 12/13/2022 4/14/2037 Owned by ChromaDex 11,571,413 Nicotinamide riboside treatments of domesticated meat animals 6/26/2020 2/7/2023 9/27/2039 Licensed from Kansas State University 11,584,770 Methods of preparing nicotinamide riboside and derivatives thereof 5/4/2022 2/21/2023 7/24/2034 Licensed from Queen’s University Belfast 11,633,421 Use of NAD precursors for improving maternal health and/or offspring health 11/29/2017 4/25/2023 6/19/2039 Licensed from University of Iowa 11,746,123 Efficient and scalable syntheses of nicotinoyl ribosides and reduced nicotinoyl ribosides, modified derivatives thereof, phosphorylated analogs thereof, adenylyl dinucleotide conjugates thereof, and novel crystalline forms thereof 6/22/2020 9/05/2023 11/10/2037 Co-owned with The Queen’s University of Belfast and exclusively licensed by ChromaDex 10 Table of Contents Manufacturing, Sources and Availability of Raw Materials Our finished consumer products are manufactured by third-party FDA-regulated contract manufacturers in the United States, complemented by the global sourcing of raw materials.
Currently, we are in the process of obtaining applicable regulatory approvals, including “Blue Hat” or health food registration with the Peoples Republic of China State Administration for Market Regulation for Tru Niagen® and other products containing nicotinamide riboside in our name or our designee (collectively, the “Blue Hat Registration”) in connection with our joint venture agreement with Taikuk Group Ltd.
Currently, we are in the process of obtaining applicable regulatory approvals, including “Blue Hat” or health food registration with the Peoples Republic of China State Administration for Market Regulation for Tru Niagen® and other products containing nicotinamide riboside in our name or the name of our designee (collectively, the “Blue Hat Registration”) in connection with our joint venture agreement with Taikuk Group Ltd.
We embrace collaboration and creativity and encourage the iteration of ideas to address complex challenges in all aspects of our business. We believe our people are critical for our success. We are dedicated to providing an environment where ChromaDex employees can have fulfilling careers, and be happy, healthy and productive.
We embrace collaboration and creativity and encourage the iteration of ideas to address complex challenges in all aspects of our business. We believe our people are critical for our success. We are dedicated to providing an environment where ChromaDex employees can have fulfilling careers, be happy, healthy and productive.
Many of our competitors may have significantly greater financial and human resources than our own. We seek to differentiate our products and marketing from our competitors by emphasizing product quality, product benefits, scientific rigor, and functional ingredients. Patent and trademark applications that protect brands, product names, and new technologies are pursued whenever possible.
Many of our competitors may have greater financial and human resources than our own. We seek to differentiate our products and marketing from our competitors by emphasizing product quality, product benefits, scientific rigor, and functional ingredients. Patent and trademark applications that protect brands, product names, and new technologies are pursued whenever possible.
We offer attractive wage and benefit packages to take care of the needs of our employees and their families. Our competitive compensation and dynamic culture help us to attract and retain top candidates. We continue to invest in recruiting and rewarding talented people. ChromaDex and its employees are dedicated to diversity, inclusion, and fairness.
We offer attractive wage and benefit packages to take care of the needs of our employees and their families. Our competitive compensation and dynamic culture help us to attract and retain top candidates. We continue to invest in recruiting, developing, and rewarding talented people. ChromaDex and its employees are dedicated to diversity, inclusion, and fairness.
We also offer Immulina®, a spirulina extract with predominant active compounds of Braun-type lipoproteins which are useful for supporting human immune function. Our mission is to continue to identify, acquire and commercialize other innovative proprietary ingredients and technologies.
We also offer Immulina®, a spirulina extract with predominant active compounds of Braun-type lipoproteins which are useful for supporting human immune function. Our mission is to continue to identify, acquire and commercialize innovative proprietary ingredients and technologies.
For additional discussion surrounding our joint venture agreement and Blue Hat Registration see Note 12, Joint Venture , in Item 8 Financial Statements and Supplementary Data of this Form 10-K. 5 Table of Contents Ingredients Segment & Analytical and Reference Standards Segments Our ingredients segment is supported through the development of key partnerships since we do not currently offer our ingredients to the broader public.
For additional discussion surrounding our joint venture agreement and Blue Hat Registration see Note 15, Joint Venture , in Item 8 Financial Statements and Supplementary Data of this Form 10-K. 5 Table of Contents Ingredients Segment & Analytical and Reference Standards Segments Our ingredients segment is supported through the development of key partnerships since we do not currently offer our ingredients to the broader public.
Thus far, CERP™ has achieved over 250 research partnership agreements 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. Additional relationships are currently being developed.
Thus far, CERP™ has achieved over 275 research partnership agreements 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. Additional relationships are currently being developed.
Through our ChromaDex External Research Program (CERP™), we have amassed more than 250 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.
Through our ChromaDex External Research Program (CERP™), we have amassed more than 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.
To date, over 300 peer-reviewed studies have been published on the science behind NR, including its NAD+ boosting properties, and there are over 475 published human clinical studies on NAD+ and its impact on health. CERP™ has produced more than 40% of all peer-reviewed NR-focused publications and 75% of the peer-reviewed clinical NR publications so far.
To date, over 375 peer-reviewed studies have been published on the science behind NR, including its NAD+ boosting properties, and there are over 475 published human clinical studies on NAD+ and its impact on health. CERP™ has produced more than 40% of all peer-reviewed NR-focused publications and 75% of the peer-reviewed clinical NR publications so far.
We believe these resellers are focused on specific channels that we feel are complementary to our business and expand awareness of the Niagen® ingredient and benefits. We also face strong indirect competition from other ingredient suppliers who may supply alternative ingredients that may have similar characteristics to ingredients we offer.
We believe these resellers are focused on specific channels or geographies that we feel are complementary to our business and expand awareness of the Niagen® ingredient and benefits. We also face strong indirect competition from other ingredient suppliers who may supply alternative ingredients that may have similar characteristics to ingredients we offer.
The results of the 250+ research agreements have allowed 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.
The results of the 275+ research agreements have allowed 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.
While we cannot assure that such measures will block competitive products, we believe our continued emphasis on innovation and new product development targeted at the needs of our consumers will enable us to effectively compete in the marketplace by building a trusted brand.
While we cannot assure that such measures will block competitive products, we believe our continued emphasis on scientific research, innovation and new product development targeted at the needs of our consumers will enable us to effectively compete in the marketplace by building a trusted brand.
These backlog orders are normally fulfilled within two to six weeks. 11 Table of Contents Culture and Workforce We are a company of curious, talented, and passionate people who are devoted to health, well-being, and improving the way people age.
These backlog orders are normally fulfilled within two to six weeks. 11 Table of Contents Human Capital: Culture and Workforce We are a company of curious, talented, and passionate people who are devoted to health, well-being, and improving the way people age.
For our international operations, we partner with international distributors to market and sell to several foreign countries and markets. Total sales and marketing expense for the years ended December 31, 2022 and 2021 was approximately $28.3 million and $28.4 million, respectively. Research and Development The ChromaDex External Research Program (CERP™) is an essential component of our research and development platform.
For our international operations, we partner with international distributors to market and sell to several foreign countries and markets. Total sales and marketing expense for the years ended December 31, 2023 and 2022 was approximately $26.4 million and $28.3 million, respectively. Research and Development The ChromaDex External Research Program (CERP™) is an essential component of our research and development platform.
Regulation in other major and established markets, including Canada, Japan, Brazil, China, Turkey and Australia all maintain and enforce a clear regulatory framework for novel ingredients and dietary supplements (or their equivalent). 8 Table of Contents Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, Including Duration We currently protect our intellectual property through patents, trademarks, designs and copyrights on our products and services.
Regulation in other markets we operate in or seek to operate in, including Canada, Japan, Brazil, China, Turkey and Australia all maintain and enforce a clear regulatory framework for novel ingredients and dietary supplements (or their equivalent). 8 Table of Contents Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, Including Duration We currently protect our intellectual property through patents, trademarks, designs and copyrights on our products and services.
To date, 24 peer-reviewed human clinical trials have been published on our proprietary ingredient Niagen® demonstrating its safety and/or efficacy through CERP™. No adverse effects have been attributed to Niagen® in any of the published clinical trials. In both 2015 and 2018, Niagen® was successfully notified to the FDA as an NDI.
To date, 31 peer-reviewed human clinical trials have been published on our proprietary ingredient Niagen® demonstrating its safety and/or efficacy. No adverse effects have been attributed to Niagen® in any of the published clinical trials. In both 2015 and 2018, Niagen® was successfully notified to the FDA as an NDI.
Research and development expense for the years ended December 31, 2022 and 2021 was approximately $4.8 million and $3.8 million, respectively. Competitive Business Conditions The health and wellness, anti-aging and dietary supplement industries are highly competitive, and we have competitors that offer products similar to our products.
Research and development expense for the years ended December 31, 2023 and 2022 was approximately $5.0 million and $4.8 million, respectively. Competitive Business Conditions The health and wellness, anti-aging and dietary supplement industries are highly competitive, and we have competitors that offer products similar to our products.
Achieving Blue Hat Registration would notably broaden our sales opportunities in China and is at the forefront of our expansion goals. As of December 31, 2022, it is uncertain when Blue Hat Registration will be achieved.
Achieving Blue Hat Registration would notably broaden our sales opportunities in China and is at the forefront of our expansion goals. As of December 31, 2023, it is uncertain if or when Blue Hat Registration will be achieved.
Niagen® was also successfully notified to FDA as Generally Recognized as Safe in August 2016. Through our research and development laboratory in Longmont, Colorado, we venture to discover, develop and evaluate new products that we aim to take to market and explore cost saving processes for existing products.
Niagen® was also successfully notified to FDA as Generally Recognized as Safe in August 2016. Through our research and development laboratory in Longmont, Colorado, and the collective efforts of our experienced team, we venture to discover, develop and evaluate new products that we aim to take to market and explore cost saving processes for existing products.
A.S. Watson Group, a related party, accounted for approximately 13.9% and 13.8% of our net sales for the years ended December 31, 2022 and 2021, respectively.
A.S. Watson Group, a related party, accounted for approximately 15.4% and 13.9% of our net sales for the years ended December 31, 2023 and 2022, respectively.
We also partner with specialty retailers and direct healthcare practitioners who are authorized resellers of Tru Niagen® in the United States. International: We utilize strategic partners on a regional or local country basis to expand our distribution of Tru Niagen® products internationally. Our strategic partners offer our products through brick and mortar stores, e-commerce channels or a combination of both.
We also partner with specialty retailers and direct healthcare practitioners who are authorized resellers of Tru Niagen® in the United States. International: We utilize strategic partners on a regional or local country basis to expand our distribution of Tru Niagen® products internationally.
For our ingredients segment, we also have minimal backlog orders as we carry sufficient inventory on hand for most of the products we offer and we ship upon the receipt of customer’s order. For our analytical reference standards and services segment, we normally have a small backlog of orders. These orders amount to approximately $20,000 or less.
For our ingredients segment, we also have minimal backlog orders as we carry sufficient inventory on hand for most of the products we offer and we ship upon the receipt of customer’s order. For our analytical reference standards and services segment, we normally have a small, immaterial backlog of orders.
As one of the world leaders in the emerging NAD+ space and the science of healthy aging, we continuously strive to evolve our Tru Niagen® products through the exploration, discovery and enhancement of patented technologies.
As one of the world leaders on NAD+ and the science of healthy aging, we continuously strive to evolve our Tru Niagen® products through ongoing exploration, discovery and the application of patented technologies.
Year Ended December 31, (In thousands) 2022 2021 Consumer Products Segment $ 60,110 $ 56,705 Ingredients Segment 8,736 7,407 Analytical Reference Standards and Services Segment 3,204 3,337 Total net sales $ 72,050 $ 67,449 Major Customers For the years ended December 31, 2022 and 2021, we had one major customer which accounted for more than 10% of our total net sales.
Year Ended December 31, (In thousands) 2023 2022 Consumer Products Segment $ 69,528 $ 60,110 Ingredients Segment 11,137 8,736 Analytical Reference Standards and Services Segment 2,905 3,204 Total net sales $ 83,570 $ 72,050 Major Customers For the years ended December 31, 2023 and 2022, we had one major customer which accounted for more than 10% of our total net sales.
On March 12, 2017, ChromaDex Corporation acquired Healthspan Research LLC, a consumer product company offering Tru Niagen® branded products. This marked the strategic shift to become a global bioscience company dedicated to healthy aging.
On March 12, 2017, ChromaDex Corporation acquired Healthspan Research LLC, a consumer product company offering Tru Niagen® branded products. This marked the strategic shift to become a global bioscience company dedicated to healthy aging. On January 15, 2021, Healthspan Research LLC was dissolved. Prior to its dissolution, Healthspan Research, LLC contributed its assets and liabilities to ChromaDex, Inc.
Simultaneously, we continue to support our proprietary e-commerce platforms and the e-commerce platforms of strategic regional and local partners within the U.S while further exploring opportunities for new domestic channels. Ingredients Segment Through our ingredients segment, we provide Niagen® in ingredient form to our strategic partners, including Nestec Ltd. (Nestlé), a global leader in pioneering quality science-based nutritional health solutions.
Concurrently, we maintain support for our proprietary e-commerce platforms and collaborate on the e-commerce platforms of partners both within the U.S and internationally. Ingredients Segment Through our ingredients segment, we provide Niagen® in ingredient form to our strategic partners, including Nestec Ltd. (Nestlé), a global leader in pioneering quality science-based nutritional health solutions.
The following table summarizes total net sales for each of our business segments in the last two years. Please refer to Item 8 Financial Statements and Supplementary Data of this Form 10-K for additional financial information about each of our business segments.
Please refer to Item 8 Financial Statements and Supplementary Data of this Form 10-K for additional financial information about each of our business segments.
David Katz, the Founder and former director of Yale University’s Yale-Griffin Prevention Research Center, President and Founder of the non-profit True Health Initiative, and Founder and Chief Executive Officer of Diet ID, Inc. and Dr.
Brunie Felding, Associate Professor in the Department of Molecular Medicine at Scripps Research Institute, California Campus; Dr. David Katz, Founder and former director of Yale University’s Yale-Griffin Prevention Research Center, President and Founder of the non-profit True Health Initiative, and Founder and Chief Executive Officer of Diet ID, Inc.; and Dr.
As of December 31, 2022 we did not have any significant backlog orders from the distributors that have not been shipped. For products that are directly shipped to consumers, we have minimal backlog orders as we carry sufficient inventory on hand to ship upon the receipt of order.
As of December 31, 2023 we did not have any significant backlog orders from the distributors that have not been shipped. For consumer products directly shipped to consumers, our standard practice involves maintaining sufficient inventory on hand to fulfill orders upon receipt and as of December 31, 2023 backlog orders to consumers were minimal.
We strive to always provide superior products and services to our competition. 6 Table of Contents Working Capital ChromaDex’s working capital as of December 31, 2022 and 2021 was approximately $13.5 million and $8.4 million, respectively. We measure working capital by adding trade receivables and inventories and subtracting accounts payable.
We strive to always provide superior products and services than our competition. 6 Table of Contents Working Capital ChromaDex’s working capital as of December 31, 2023 and 2022 was approximately $9.5 million and $13.5 million, respectively.
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. In 2013, we commercialized Niagen®, a proprietary form of NR, a novel form of vitamin B3.
NAD+ levels in humans have been shown to decline by up to 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.
According to data from Grand View Research, the global dietary supplements market size was estimated at $164 billion in 2022, and is expected to grow at a compound annual growth rate of 8.9% from 2022 to 2030. For the years ended December 31, 2022 and 2021, our net sales were approximately $72.1 million and $67.4 million, respectively.
According to data from Grand View Research, the global dietary supplements market size was estimated at $164 billion in 2022, and is expected to grow at a compound annual growth rate of 8.9% from 2022 to 2030. In 2022, our net sales grew by 7%, followed by a 16% increase in 2023.
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 to middle age.
Company Overview ChromaDex is 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.
As we list over 1,750 phytochemicals and 400 botanical reference materials in our catalog, we may not always have the items in stock at the time of customers’ orders.
As we have an extensive catalog featuring a wide array of phytochemicals and botanical reference material, we may not always have the items in stock at the time of customers’ orders.
In most cases, our contract manufacturers purchase raw materials based on our specifications; however, we may also license particular raw material ingredients and supply our own source to the manufacturer.
In most cases, our contract manufacturers purchase raw materials based on our specifications; however, we may also license particular raw material ingredients and supply our own source to the manufacturer. Following the receipt of products or product components from third-party manufacturers, alongside the in-house testing conducted by the manufacturers themselves, we conduct independent analyses and testing.
Our experienced team is capable of advancing products through early development into commercialization with the required regulatory approval, safety, toxicology and clinical trials as well as providing supply chain management and manufacturing needs to ultimately sell the ingredient products directly or license to third parties. 3 Table of Contents Analytical Reference Standards and Services Segment Since 1999, we have provided research and quality-control products and services through our analytical reference standards and services segment and have positioned ourselves as a leader in the industry.
Furthermore, we offer comprehensive supply chain management and manufacturing support, enabling us to either directly sell the ingredient products or license them to third parties. 3 Table of Contents Analytical Reference Standards and Services Segment Since 1999, we have provided research and quality-control products and services through our analytical reference standards and services segment and have positioned ourselves as a high-quality technical leader in the industry.
Facilities For information on our facilities, see “Properties” in Item 2 of this Form 10-K. Available Information We are subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the Exchange Act).
Available Information We are subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the Exchange Act).
Since then, we have further expanded into Singapore, New Zealand, Canada, Australia, China, Korea, Japan, the United Kingdom and other European markets. We support our international operations in various capacities which include supplying our international strategic partners with finished products manufactured in the U.S, as well as marketing materials and know-how.
Watson Group, in 2017. Since then, through our strategic partners, we have further expanded distribution into over 100 countries. We support our international operations in various capacities which include supplying our international strategic partners with finished products manufactured in the U.S, as well as marketing materials and expertise.
Roger Kornberg, Nobel Laureate Stanford Professor, Dr. Charles Brenner, one of the world’s recognized experts in NAD+ and discoverer of NR as a NAD+ precursor, Dr. Rudy Tanzi, the co-chair of the department of neurology at Harvard Medical School, Sir John Walker, Nobel Laureate and Emeritus Director, MRC Mitochondrial Biology Unit in the University of Cambridge, England, Dr.
Rudy Tanzi, co-chair of the department of neurology at Harvard Medical School; Sir John Walker, Nobel Laureate and Emeritus Director of the MRC Mitochondrial Biology Unit in the University of Cambridge, England; Dr. Bruce German, Chairman of Food, Nutrition and Health at the University of California, Davis; Dr.
Each contract manufacturer upholds the standards imposed by the International Organization for Standardization as well as the high quality standards we require. We utilize third-party manufacturers to produce NR, encapsulate and bottle NR sold as a dietary supplement and produce and supply other ingredients, products, and services.
These manufacturing partners uphold the standards imposed by the International Organization for Standardization, as well as the high-quality standards we require. We utilize third-party manufacturers for the production, encapsulation, and bottling of NR as well as the manufacturing and supply of various other ingredients, products, and services.
We celebrate personal authenticity and expression as a catalyst to advance human health and innovation. We support healthy, open dialogue and we communicate information about the company through multiple internal channels to our employees . As of December 31, 2022, ChromaDex had 113 full-time employees, none of whom are unionized. We believe relations with our employees are good.
We promote and support an open dialogue. We communicate information about the company through multiple internal channels to our employees . As of December 31, 2023, ChromaDex had 106 full-time employees, none of whom are unionized. We believe relations with our employees are good. Facilities For information on our facilities, see “Properties” in Item 2 of this Form 10-K.
We do not anticipate incurring significant additional expense in our compliance with federal, state and local environmental laws and regulations.
For the years ended December 31, 2023 and 2022, these expenses totaled approximately $2.5 million and $2.1 million, respectively. We do not anticipate incurring significant additional expense in our compliance with federal, state and local environmental laws and regulations.
We continue to focus on obtaining additional regulatory approvals required to expand marketing and distribution of the Tru Niagen® brand in new strategic international markets.
Additionally, in August 2023, we launched a partnership with iHerb, an online global destination for supplements with access to over 180 countries, to help accelerate our global expansion. We continue to focus on obtaining additional regulatory approvals required to expand marketing and distribution of the Tru Niagen® brand in new strategic international markets.
The loss of or deterioration in relationship with this customer would have a material adverse effect on our business and financial condition. 4 Table of Contents Sales and Marketing Strategy Consumer Products Segment We employ a variety of strategies to drive sales and consumer awareness of Tru Niagen®, including social media and internet advertising, managing affiliate marketing, influencer campaigns and marketing, paid spokespersons and talent, events and trade shows, e-mail marketing campaigns, paid search advertising and distribution of research publications and press releases.
The loss of or deterioration in relationship with this customer would have a material adverse effect on our business and financial condition. 4 Table of Contents Sales and Marketing Strategy Consumer Products Segment Our sales and marketing strategy for the Consumer Products Segment is designed to enhance the visibility and awareness of Tru Niagen® in a targeted and effective manner.
We remain focused on expanding marketing and distribution of the Tru Niagen® brand in new strategic international markets and securing the regulatory approvals necessary to accomplish the same. We began international expansion of the Tru Niagen® brand with the launch in Hong Kong and Macau with our strategic partner, A.S. Watson Group, in 2017.
Our dedication to extending the reach of the Tru Niagen® brand is evident in our focus on enhanced marketing and distribution efforts in key global markets, while also working to obtain the required regulatory approvals for these endeavors. We began international expansion of the Tru Niagen® brand with the launch in Hong Kong and Macau with our strategic partner, A.S.
We also have a dedicated customer care department that handles day-to-day communications with our end customers addressing any needs or concerns related to our Tru Niagen® products. United States of America: We distribute Tru Niagen® products direct to consumers through our propriety e-commerce platform TruNiagen.com, Amazon, ShopHQ and other established internet marketplaces.
Through these strategic initiatives, we aim not only to drive sales but also to build a strong and enduring connection with our esteemed customer base. Distribution: Domestic (United States of America): We distribute Tru Niagen® products direct to consumers through our propriety e-commerce platform TruNiagen.com, Amazon, ShopHQ and other established internet marketplaces.
Environmental Compliance We incur various expenses in complying with Good Manufacturing Practices and safe handling and disposal of materials used in our research and manufacturing activities. For the years ended December 31, 2022 and 2021, these expenses totaled approximately $2.1 million and $1.7 million, respectively.
These trusted partners are committed to delivering products that align with our stringent guidelines, further reinforcing our confidence in the quality and consistency of our supply chain. Environmental Compliance We incur various expenses in complying with Good Manufacturing Practices and safe handling and disposal of materials used in our research and manufacturing activities.
In 2020, the personal care, beauty and anti-aging market was approximately $960 billion, healthy eating, nutrition and weight loss was approximately $950 billion and traditional and complementary medicine market was approximately $410 billion.
In 2022, the personal care and beauty market was approximately $1,089 billion, healthy eating, nutrition and weight loss was approximately $1,079 billion and traditional and complementary medicine market was approximately $519 billion. The Global Wellness Institute projects the overall wellness economy to grow approximately 8.6% annually, or 51% in total, from 2022 to 2027.
The Grace Manufacturing Agreement will expire on December 31, 2023, subject to further renewal of the agreement to be negotiated by the parties. We believe that we have identified reliable sources and suppliers of ingredients, chemicals, phytochemicals and reference materials that will provide products in compliance with our guidelines.
Risk Factors, "We rely on a single supplier, W.R. Grace, for NR and a limited number of third-party suppliers for the raw materials required to produce our products." In our pursuit of excellence, we believe that we have identified reliable sources and suppliers of ingredients, chemicals, phytochemicals, and reference materials.
With our strategic partners, we currently distribute Tru Niagen® products to the following international markets: • Hong Kong (A.S. Watson Group); • Macau (A.S. Watson Group); • Singapore (A.S.
Our strategic partners offer our products through brick and mortar stores, e-commerce channels, such as Amazon, or a combination of both. With our strategic partners, we currently distribute Tru Niagen® products to the following international markets, Hong Kong, Macau, Singapore, New Zealand, Australia, China, South Korea, Canada, Japan, United Kingdom, Germany, France, Italy, Spain, Poland, Netherlands, Switzerland and Sweden.
Removed
On September 5, 2017, the Company completed the sale of its operating assets that were used with the Company’s quality verification program testing and analytical chemistry business for food and food related products to Covance Laboratories Inc. On January 15, 2021, Healthspan Research LLC was dissolved.
Added
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, and one of the most well-studied and efficient NAD+ precursors on the market.
Removed
Prior to its dissolution, Healthspan Research, LLC contributed its assets and liabilities to ChromaDex, Inc. Company Overview ChromaDex is a global bioscience company dedicated to healthy aging.
Added
Roger Kornberg, Nobel Laureate and Stanford 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; Dr.
Removed
Bruce German, Chairman of food, nutrition and health at the University of California, Davis, Dr. Brunie Felding, Associate Professor, Department of Molecular Medicine at Scripps Research Institute, California Campus, Dr.
Added
We believe that the Tru Niagen® brand is associated with scientific rigor and a dedication to enhancing consumer health by safely elevating NAD+ levels, thereby facilitating a healthier aging process. Our primary objective is to amplify global awareness of the Tru Niagen® brand through comprehensive marketing strategies, strategic partnerships and expanded market presence.
Removed
The Tru Niagen® brand is built on a dedication to scientific evidence and improving consumer health by safely raising NAD+ levels to help consumers age better. Our principal objective is to increase awareness of the Tru Niagen® brand worldwide including through expanded access to consumers by entering new markets, retail platforms and other opportunities.
Added
With an experienced team, we possess the capability to guide innovative ingredients and technologies from early development through commercialization, ensuring compliance with regulatory approvals, safety standards, toxicology assessments, and clinical trials.
Removed
We intend to capitalize on additional opportunities in product development and commercialization of various kinds of intellectual property that we have largely discovered and acquired through the sales process associated with this segment.
Added
We have used and, to a limited extent, continue to use intellectual property harnessed from our analytical reference standards and services segment to create new proprietary ingredients to our customers. Business Market According to data from Global Wellness Institute, the global wellness industry market was approximately $5.6 trillion in 2022, nearly 14% higher than its size in 2019.
Removed
Business Market According to data from Global Wellness Institute, the global wellness industry market was approximately $4.4 trillion in 2020 amidst the disruptions of COVID-19, which is down from $4.9 trillion in 2019.
Added
Over the five-year period from 2019 to 2023, we achieved a compound annual growth rate of 13%. For the years ended December 31, 2023 and 2022, our net sales were approximately $83.6 million and $72.1 million, respectively. The following table summarizes total net sales for each of our business segments in the last two years.
Removed
The Global Wellness Institute projects the overall wellness economy to grow approximately 10% annually, or 60% in total, from 2020 to 2025, with most segments projected to exceed GDP growth.
Added
With our dedicated team and supporting agencies, we implement a diverse array of strategies aimed at engaging our target audience and driving sales. We leverage social media and internet advertising to reach a broad audience and create a strong online presence. Simultaneously, we actively manage affiliate marketing programs to foster strategic partnerships and expand our reach through trusted networks.
Removed
Watson Group); • New Zealand (Matakana Superfoods); • Australia (Matakana Superfoods); • China (Sinopharm); • Korea (Juvenis, Coupang); • Canada (CLM Health Group, Amazon, Fullscript Canada and www.TruNiagen.ca); • Japan (Amazon); • United Kingdom (Amazon); • Germany (Amazon); • France (Amazon); • Italy (Amazon); • Spain (Amazon); • Poland (Amazon); • Netherlands (Amazon); and • Sweden (Amazon).
Added
In our pursuit of authentic connections, we engage in influencer collaborations with key personalities, leveraging their reach to promote Tru Niagen® and connect with their followers. In addition, utilizing paid spokespersons and talent plays a crucial role in articulating the benefits and uniqueness of Tru Niagen®, thereby adding credibility to our brand.
Removed
The following table sets forth our existing patents and those to which we have licensed rights: Patent Number Title Filling Date Issued Date Expires Licensor 7,776,326 Methods and compositions for treating neuropathies 6/3/2005 8/17/2010 6/24/2026 Licensed from Washington University 7,846,452 Potent immunostimulatory extracts from microalgae 7/28/2005 12/7/2010 7/28/2025 Licensed from University of Mississippi 8,106,184 Nicotinyl Riboside Compositions and Methods of Use 11/17/2006 1/31/2012 9/20/2027 Licensed from Cornell University 8,114,626 Yeast strain and method for using the same to produce Nicotinamide Riboside 3/26/2009 2/14/2012 1/5/2026 Licensed from Dartmouth College 8,133,917 Pterostilbene as an agonist for the peroxisome proliferator-activated receptor alpha isoform 10/25/2010 3/13/2012 8/18/2025 Licensed from the University of Mississippi and U.S.
Added
Participation in industry events and trade shows serves as one among several avenues through which we showcase our products and engage with potential customers on a personal level. Moreover, we implement targeted email campaigns to establish direct communication with our audience, delivering valuable information and exclusive offers.
Removed
Department of Agriculture 8,197,807 Nicotinamide Riboside Kinase compositions and Methods for using the same 4/20/2006 6/12/2012 11/19/2026 Licensed from Dartmouth College 8,252,845 Pterostilbene as an agonist for the peroxisome proliferator-activated receptor alpha isoform 2/1/2012 8/28/2012 8/18/2025 Licensed from the University of Mississippi and U.S.
Added
The strategic use of paid search advertising ensures visibility among individuals actively searching for related keywords, contributing to the overall effectiveness of our marketing efforts. Additionally, we distribute research publications and press releases to investors and healthcare practitioners to underscore the scientific backing and noteworthy developments associated with Tru Niagen®.
Removed
Department of Agriculture 8,383,086 Nicotinamide Riboside Kinase compositions and Methods for using the same 4/12/2012 2/26/2013 4/20/2026 Licensed from Dartmouth College 8,809,400 Method to Ameliorate Oxidative Stress and Improve Working Memory Via Pterostilbene Administration 8/8/2011 8/19/2014 10/2/2028 Licensed from the University of Mississippi and U.S.
Added
Integral to our customer-centric approach is the maintenance of a dedicated customer care department. This department handles day-to-day communications and promptly addresses any inquiries or concerns from our valued customers. Our overarching approach is firmly grounded in professionalism and integrity, with the ultimate goal of leaving a lasting and positive impression of Tru Niagen® in the minds of consumers.
Removed
Department of Agriculture 8,841,350 Method for treating non-melanoma skin cancer by inducing UDP-Glucuronosyltransferase activity using pterostilbene 5/8/2012 9/23/2014 5/8/2032 Co-owned by ChromaDex and University of California 8,889,126 Methods and compositions for treating neuropathies 5/28/2010 11/18/2014 6/3/2025 Licensed from Washington University 9,000,147 Nicotyl riboside compositions and methods of use 1/17/2012 4/7/2015 11/17/2026 Licensed from Cornell University 9,028,887 Method improve spatial memory via pterostilbene administration 5/22/2014 5/12/2015 6/10/2028 Licensed from the University of Mississippi and U.S.
Added
For the year ended December 31, 2023, we observed a positive impact on our supply chain lead times due to the mitigation of COVID-related disruptions and the implementation of additional efficiency initiatives. We measure working capital by adding trade receivables and inventories and subtracting accounts payable.
Removed
Department of Agriculture 9,295,688 Methods and compositions for treating neuropathies 10/10/2014 3/29/2016 6/3/2025 Licensed from Washington University 9,321,797 Nicotyl riboside compositions and methods of use 11/17/2014 4/26/2016 11/17/2026 Licensed from Cornell University 9,439,875 Anxiolytic effect of pterostilbene 5/11/2011 9/13/2016 12/11/2031 Licensed from the University of Mississippi and U.S.
Added
This dual-layered approach ensures adherence to our stringent specifications. To uphold quality standards, we continually monitor and manage supplier performance through a proactive corrective action program developed in-house.
Removed
Following the receipt of products or product components from third-party manufacturers, in addition to in-house testing performed by the contract manufacturer, we perform independent analysis and testing to ensure conformance to our strict specifications. We continuously monitor and manage supplier performance through a corrective action program developed by us.
Added
We believe these strategic manufacturing relationships not only mitigate our capital investment but also enable us to exercise cost control, positioning us competitively against larger-volume manufacturers in the dietary supplements, phytochemicals, and ingredients market. Additionally, the Company has an exclusive manufacturer for the supply of NR, W.R. Grace & Co. -Conn. (Grace).
Removed
We believe these manufacturing relationships can minimize our capital investment, help control costs, and allow us to compete with larger volume manufacturers of dietary supplements, phytochemicals and ingredients. From time to time, if our capacity permits and when demand or quality requirements make it appropriate to do so, we manufacture certain products or product components internally. W.R.

… 5 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

103 edited+20 added−59 removed175 unchanged
Biggest changeWe are subject to the following factors, among others, that may negatively affect our operating results: • the announcement or introduction of new products by our competitors; • our ability to upgrade and develop our systems and infrastructure to accommodate growth; • the decision by significant customers to reduce purchases; • increased costs of our raw materials or the development, sales and distribution of our products; • disputes and litigation; • our ability to attract and retain key personnel in a timely and cost-effective manner; • technical difficulties; • the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure; • regulation by federal, state or local governments; and • general economic conditions as well as economic conditions specific to the nutraceutical industry.
Biggest changeFactors that are difficult to predict and that could cause our operating results to fluctuate include: • the timing and magnitude of orders, shipments and acceptance of our products, including product returns, order rescheduling and cancellations by our customers; • our ability to control the costs of the parts and materials we use or to timely adopt subsequent generations of parts and materials; • our ability to control the costs of the development, sales and distribution of our products; • disruption in our supply chains, shipping logistics, component availability and related procurement costs; • our ability to develop, introduce and distribute new products or product enhancements that meet customer requirements and to effectively manage product transitions; • changes in the competitive dynamics of our markets, including new entrants, new products, or discounting of product prices; • our ability to control or mitigate costs, including our operating expenses, to support business growth and our continued expansion; • our ability to upgrade and develop our systems and infrastructure to accommodate growth; • the impact of inflation on labor and other costs, other adverse economic conditions including the impact of public health epidemics or pandemics; • disputes and litigation; • our ability to attract and retain key personnel in a timely and cost-effective manner; • information technology related costs, disruptions and hindrances; • future regulation by federal, state or local governments; and • general economic conditions as well as economic conditions specific to the dietary supplement industry.
Risks Related to our Company and Business: • 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. • Global, market and economic conditions may negatively impact our business, financial condition and share price. • Interruptions in our relationships or declines in our business with major customers could materially harm our business and financial results. • 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 Company and Business: • 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.
We cannot assure prospective investors that we will be successful in finding partners or be able to continue to incorporate new developments in technology, to improve existing products and services, or to develop successful new products and services, nor can we be certain that newly developed products and services will perform satisfactorily or be widely accepted in the marketplace or that the costs involved in these efforts will not be substantial.
We cannot assure prospective or existing investors that we will be successful in finding partners or be able to continue to incorporate new developments in technology, to improve existing products and services, or to develop successful new products and services, nor can we be certain that newly developed products and services will perform satisfactorily or be widely accepted in the marketplace or that the costs involved in these efforts will not be substantial.
For example, the European Union’s General Data Protection Regulation (GDPR) and the United Kingdom’s GDPR (UK GDPR) imposes strict obligations on the processing of personal data, including, without limitation, and personal health data.
For example, the European Union’s General Data Protection Regulation (GDPR) and the United Kingdom’s GDPR (UK GDPR) imposes strict obligations on the processing of personal data, including, without limitation, personal health data.
An actual or perceived cyber security incident could result in disrupted operations, including suspension of our clinical trial activities, lost opportunities, misstated financial data, liability for stolen assets or information, theft of our intellectual property, loss of data and other personally identifiable or sensitive information, increased costs arising from the implementation of additional security protective measures, litigation, reputational damage, government enforcement actions that could include investigations, fines, penalties, audits and inspections, additional reporting requirements and/or oversight, temporary or permanent bans on all or some processing of personal data (which could impact clinical trials), interruptions in our operations (including availability of data) financial loss, and other similar harms.
An actual or perceived cyber security incident could result in disrupted operations, including suspension of our clinical trial activities, lost opportunities, misstated financial data, liability for stolen assets or information, theft of our intellectual property, loss of data and other personally identifiable or sensitive information, increased costs arising from the implementation of additional security protective measures, litigation (including class actions), reputational damage, government enforcement actions that could include investigations, fines, penalties, audits and inspections, additional reporting requirements and/or oversight, temporary or permanent bans on all or some processing of personal data (which could impact clinical trials), interruptions in our operations (including availability of data) financial loss, and other similar harms.
During fiscal year 2022, we entered into an agreement to form a joint venture to expand the Company’s market strategy to include opportunities in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan. Operating activity under the joint venture was not material during the year ended December 31, 2022.
During fiscal year 2022, we entered into an agreement to form a joint venture to expand the Company’s market strategy to include opportunities in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan. Operating activity under the joint venture was not material during the year ended December 31, 2023.
Under current law, federal NOLs incurred in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs in tax years beginning after December 31, 2020, is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to federal tax laws.
Under current law, federal NOLs incurred in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs in tax years beginning after December 31, 2017, is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to federal tax laws.
Our general business strategy may be adversely affected by any such economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly and more dilutive.
Our general business strategy may be adversely affected by any such economic downturns, volatile business environments and unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly and more dilutive.
The market price of our common stock could fluctuate significantly in response to various factors and events, including, but not limited to: • our ability to develop and commercialize our products; • our ability to integrate operations, technology, products and services; • our ability to execute our business plan; • our operating results are below expectations; • our issuance of additional securities, including debt or equity or a combination thereof,; • announcements of technological innovations or new products by us or our competitors; • acceptance of and demand for our products by consumers; • media coverage or social media attention regarding our industry or us; • litigation, arbitration, or other adverse non-judicial proceedings; • disputes with or our inability to collect from significant customers; • loss of any strategic relationship; • industry developments, including, without limitation, changes in healthcare policies or practices; • economic and other external factors, including effects of the COVID-19 pandemic, inflationary pressures or higher interest rates; • reductions in purchases from our large customers; • sales of our common stock by us, our insiders or other stockholders; • short positions, hedging, or other transactions in our securities; • period-to-period fluctuations in our financial results; and • whether an active trading market in our common stock develops and is maintained.
The market price of our common stock could fluctuate significantly in response to various factors and events, including, but not limited to: • our ability to develop and commercialize our products; • our ability to integrate operations, technology, products and services; • our ability to execute our business plan; • our operating results are below expectations; • our issuance of additional securities, including debt or equity or a combination thereof,; • announcements of technological innovations or new products by us or our competitors; • acceptance of and demand for our products by consumers; • media coverage or social media attention regarding our industry or us; • litigation, arbitration, or other adverse non-judicial proceedings; • disputes with or our inability to collect from significant customers; • loss of any strategic relationship; • industry developments, including, without limitation, changes in healthcare policies or practices; • economic and other external factors, including effects of inflationary pressures or higher interest rates; • reductions in purchases from our large customers; • sales of our common stock by us, our insiders or other stockholders; • short positions, hedging, or other transactions in our securities; • period-to-period fluctuations in our financial results; and • whether an active trading market in our common stock develops and is maintained.
Changes in regulation, such as a relaxation in regulatory requirements or the introduction of simplified drug approval procedures, or an increase in regulatory requirements that we have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services.
Changes in regulation, such as a relaxation in regulatory requirements or the introduction of simplified drug approval procedures, or an increase in regulatory requirements that we may have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services.
Relatedly, following the United Kingdom’s withdrawal from the EEA and the EU, we also have to comply with the UK-specific requirements related to data protection, including with respect to transfer of personal data outside of the UK, which increases our regulatory compliance burden.
Following the United Kingdom’s withdrawal from the EEA and the EU, we also have to comply with the UK-specific requirements related to data protection, including with respect to transfer of personal data outside of the UK, which increases our regulatory compliance burden.
Additionally, we expect that there will continue to be new proposed laws and regulations concerning data privacy and security, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. 29 Table of Contents We are subject to regulation by various federal, state and foreign agencies that require us to comply with a wide variety of regulations, including those regarding the manufacture of products, advertising and product label claims, the distribution of our products and environmental matters.
Additionally, we expect that there will continue to be new proposed laws and regulations concerning data privacy and security, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. 28 Table of Contents We are subject to regulation by various federal, state and foreign agencies that require us to comply with a wide variety of regulations, including those regarding the manufacture of products, advertising and product label claims, the distribution of our products and environmental matters.
Accordingly, the acquisition of these ingredients is subject to the risks generally associated with importing raw materials, including, among other factors, delays in shipments, changes in economic and political conditions, supply chain disruptions, quality assurance, health epidemics affecting the region of such suppliers, including COVID-19, global instability, nonconformity to specifications or laws and regulations, tariffs, trade and/or labor disputes and foreign currency fluctuations.
Accordingly, the acquisition of these ingredients is subject to the risks generally associated with importing raw materials, including, among other factors, delays in shipments, changes in economic and political conditions, supply chain disruptions, quality assurance, health epidemics affecting the region of such suppliers, global instability, nonconformity to specifications or laws and regulations, tariffs, trade and/or labor disputes and foreign currency fluctuations.
We have not achieved profitability on an annual basis. Our net losses and negative cash flow have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital, and if we are not able to achieve and sustain profitability in the near future or at all our stock price may be depressed.
We have not achieved profitability on an annual basis. Our net losses and history of negative cash flow have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital, and if we are not able to achieve and sustain profitability in the near future or at all our stock price may be depressed.
This could cause the market price of our common stock to decline. 31 Table of Contents 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.
This could cause the market price of our common stock to decline. 30 Table of Contents 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.
There can be no assurance that we will obtain regulatory approval of our proposed goods that may require it. 30 Table of Contents 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.
There can be no assurance that we will obtain regulatory approval of our proposed goods that may require it. 29 Table of Contents 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.
As further described in Note 17, Commitments and Contingencies — Contingencies in the Notes to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K, we are currently involved in substantial and complex litigation.
As further described in Note 16, Commitments and Contingencies — Contingencies in the Notes to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K, we are currently involved in substantial and complex litigation.
For further details on this litigation, please refer to Note 17, Commitments and Contingencies — Legal Proceedings in the Notes to the Consolidated Financial Statements, included in Item 8 of Part II of this Annual Report on Form 10-K.
For further details on this litigation, please refer to Note 16, Commitments and Contingencies — Legal Proceedings in the Notes to the Consolidated Financial Statements, included in Item 8 of Part II of this Annual Report on Form 10-K.
Further, adverse public reports or other media attention regarding the safety, efficacy and quality of nutritional supplements in general, or our products specifically, or associating the consumption of nutritional supplements with illness, could have such a material adverse effect.
Further, adverse public reports or other media attention regarding the safety, efficacy and quality of dietary supplements in general, or our products specifically, or associating the consumption of dietary supplements with illness, could have such a material adverse effect.
Future tax reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense. Our shares of common stock may be thinly traded, so you may be unable to sell at or near ask prices or at all.
Future tax reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense. 33 Table of Contents Our shares of common stock may be thinly traded, so you may be unable to sell at or near ask prices or at all.
We cannot assure you that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the nutritional supplement market or any product, or consistent with earlier publicity.
We cannot assure you that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the dietary supplement market or any product, or consistent with earlier publicity.
Consumer perception of our products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, national media attention, social media and other publicity regarding the consumption of nutritional supplements.
Consumer perception of our products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, national media attention, social media and other publicity regarding the consumption of dietary supplements.
General Risks: • 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. 14 Table of Contents Risks Related to our Company and Business 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.
General Risks: • 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. • Environmental, social and governance matters may impact our business and reputation. 14 Table of Contents Risks Related to our Company and Business 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.
We believe the nutritional supplement market is highly dependent upon consumer perception regarding the safety, efficacy and quality of nutritional supplements generally, as well as of products distributed specifically by us.
We believe the dietary supplement market is highly dependent upon consumer perception regarding the safety, efficacy and quality of dietary supplements generally, as well as of products distributed specifically by us.
Furthermore, the laws of foreign countries may not protect our intellectual property rights to the same extent as do the laws of the United States. 25 Table of Contents In the event a competitor infringes our licensed or pending patent or other intellectual property rights, enforcing those rights may be costly, uncertain, difficult and time consuming.
Furthermore, the laws of foreign countries may not protect our intellectual property rights to the same extent as do the laws of the United States. In the event a competitor infringes our licensed or pending patent or other intellectual property rights, enforcing those rights may be costly, uncertain, difficult and time consuming.
We cannot predict the outcome of our litigation with Elysium, which could have any of the results described above or other results that could materially adversely affect our business. 26 Table of Contents The prosecution and enforcement of patents licensed to us by third parties are not within our control.
We cannot predict the outcome of our litigation with Elysium, which could have any of the results described above or other results that could materially adversely affect our business. The prosecution and enforcement of patents licensed to us by third parties are not within our control.
The legal framework for the collection, use, safeguarding, sharing, transfer and other processing of information worldwide is rapidly evolving and may remain unsettled for the foreseeable future. 27 Table of Contents Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.
The legal framework for the collection, use, safeguarding, sharing, transfer and other processing of information worldwide is rapidly evolving and may remain unsettled for the foreseeable future. Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.
If regulatory clearance of a good that we propose to market and sell is granted, this clearance may be limited to those particular states and conditions for which the good is demonstrated to be safe and effective, which would limit our ability to generate revenue.
If regulatory clearance of a good that we propose to market and sell is granted, this clearance may be limited to those particular countries, states and conditions for which the good is demonstrated to be safe and effective, which could limit our ability to generate revenue.
Despite our efforts, these products may not become commercially successful products for a number of reasons, including but not limited to: • we may not be able to obtain regulatory approvals for our products, or the approved indication may be narrower than we seek; • our products may not prove to be safe and effective in clinical trials; • we may experience delays in our development program; • any products that are approved may not be accepted in the marketplace; • we may not have adequate financial or other resources to complete the development or to commence the commercialization of our products or will not have adequate financial or other resources to achieve significant commercialization of our products; • we may not be able to manufacture any of our products in commercial quantities or at an acceptable cost; • rapid technological change may make our products obsolete; • we may be unable to effectively protect our intellectual property rights or we may become subject to claims that our activities have infringed the intellectual property rights of others; and • we may be unable to obtain or defend patent rights for our products. 24 Table of Contents We may not be able to partner with others for technological capabilities and new products and services.
Despite our efforts, these products may not become commercially successful products for a number of reasons, including but not limited to: • we may not be able to obtain regulatory approvals for our products, or the approved indication may be narrower than we seek; • our products may not prove to be safe and effective in clinical trials; • we may experience delays in our development program; • any products that are approved may not be accepted in the marketplace; • we may not have adequate financial or other resources to complete the development or to commence the commercialization of our products or will not have adequate financial or other resources to achieve significant commercialization of our products; • we may not be able to manufacture any of our products in commercial quantities or at an acceptable cost; • rapid technological change may make our products obsolete; • we may be unable to effectively protect our intellectual property rights or we may become subject to claims that our activities have infringed the intellectual property rights of others; and • we may be unable to obtain or defend patent rights for our products.
We cannot assure you that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained or not diminish. 34 Table of Contents Stockholders may experience significant dilution if future equity offerings are used to fund operations or acquire complementary businesses.
We cannot assure you that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained or not diminish. Stockholders may experience significant dilution if future equity offerings are used to fund operations or acquire complementary businesses.
A failure to maintain, or, in some instances, upgrade our quality standards to meet our customers’ needs, could cause damage to our reputation and potentially result in substantial sales losses. If we experience product recalls, we may incur significant and unexpected costs, and our business reputation could be adversely affected.
A failure to maintain, or, in some instances, upgrade our quality standards to meet our customers’ needs, could cause damage to our reputation and potentially result in substantial sales losses. 24 Table of Contents If we experience product recalls, we may incur significant and unexpected costs, and our business reputation could be adversely affected.
Concerns over inflation, geopolitical issues, the U.S. financial markets, higher interest rates, foreign exchange rates, capital and exchange controls, unstable global credit markets and financial conditions and the COVID-19 pandemic, have led to periods of significant economic instability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward, and increased unemployment rates.
Concerns over inflation, geopolitical issues, the U.S. financial markets, higher interest rates, foreign exchange rates, capital and exchange controls, unstable global credit markets and financial conditions, have led to periods of significant economic instability, declines in consumer confidence and discretionary spending and diminished expectations for the global economy and expectations of slower global economic growth going forward.
Qualified direct sales personnel with experience in the natural products industry are in high demand, and there can be no assurance that we will be able to hire or retain an effective direct sales team.
Qualified direct sales personnel with experience in the dietary supplement industry are in high demand, and there can be no assurance that we will be able to hire or retain an effective direct sales team.
While our mission is to promote healthy aging, if our ESG practices do not meet investor or other industry stakeholder expectations, which continue to evolve, we may incur additional costs and our brand’s ability to attract and retain qualified employees and business may be harmed. Item 1B. Unresolved Staff Comments None.
While our mission is to promote healthy aging, if our ESG practices do not meet investor or other industry stakeholder expectations, which continue to evolve, we may incur additional costs and our brand’s ability to attract and retain qualified employees and business may be harmed.
Factors that could influence our relationship with our customers upon whom we may become highly dependent include: • our ability to maintain our products at prices and quality that are competitive with those of our competitors, and the potential for new competitors or more aggressive actions by our existing competitors; • our ability to maintain quality levels for our products sufficient to meet the expectations of our customers; • our ability to produce, ship and deliver a sufficient quantity of our products in a timely manner to meet the needs of our customers; • our ability to continue to develop and launch new products that our customers feel meet their needs and requirements, with respect to cost, timeliness, features, performance and other factors; • our ability to provide timely, responsive and accurate customer support to our customers; and • the ability of our customers to effectively deliver, market and increase sales of their own products based on ours.
Factors that could influence our relationship with our customers upon whom we may become highly dependent include: • our ability to maintain our products at prices and quality that are competitive with those of our competitors, and the potential for new competitors or more aggressive actions by our existing competitors; • our ability to maintain quality levels for our products sufficient to meet the expectations of our customers; • our ability to produce, ship and deliver a sufficient quantity of our products in a timely manner to meet the needs of our customers; • our ability to continue to develop and launch new products that our customers feel meet their needs and requirements, with respect to cost, timeliness, features, performance and other factors; • our ability to provide timely, responsive and accurate customer support to our customers; and • the ability of our customers to effectively deliver, market and increase sales of their own products based on ours. 15 Table of Contents Global, market and economic conditions may negatively impact our business, financial condition and share price.
As of December 31, 2022, our cash and cash equivalents totaled approximately $20.4 million of which $20.3 million was unrestricted, and we had no borrowings outstanding under our line of credit up to $10.0 million, subject to certain terms and conditions, with Western Alliance Bank.
As of December 31, 2023, our cash and cash equivalents totaled approximately $27.3 million, of which $27.2 million was unrestricted, and we had no borrowings outstanding under our line of credit up to $10.0 million, subject to certain terms and conditions, with Western Alliance Bank.
Satisfaction of regulatory requirements typically takes many years, is dependent upon the type, complexity and novelty of the product or service and would require the expenditure of substantial resources.
Satisfaction of regulatory requirements may take many years, is dependent upon the type, complexity and novelty of the product or service and would require the expenditure of substantial resources.
There may be changes to our business if there is instability, disruption or destruction in a significant geographic region, regardless of cause, including war, terrorism, riot, civil insurrection or social unrest; and natural or man-made disasters, including famine, flood, fire, earthquake, storm or disease. In February 2022, armed conflict escalated between Russia and Ukraine.
There may be changes to our business if there is instability, disruption or destruction in a significant geographic region, regardless of cause, including war, terrorism, riot, civil insurrection or social unrest; and natural or man-made disasters, including famine, flood, fire, earthquake, storm or disease.
Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our marketing efforts, including our ability to: • create greater awareness of our brand; • identify the most effective and efficient levels of spending in each market, media and specific media vehicle; • determine the appropriate creative messages and media mix for advertising, marketing and promotional expenditures; • effectively manage marketing costs (including creative and media) to maintain acceptable customer acquisition costs; • acquire cost-effective television advertising; • select the most effective markets, media and specific media vehicles in which to market and advertise; and • convert consumer inquiries into actual orders. 16 Table of Contents Many of our competitors are larger and have greater financial and other resources than we do.
Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our marketing efforts, including our ability to: • create greater awareness of our brand; • identify the most effective and efficient levels of spending in each market, media and specific media vehicle; • determine the appropriate creative messages and media mix for advertising, marketing and promotional expenditures; • effectively manage marketing costs (including creative and media) to maintain acceptable customer acquisition costs; • acquire cost-effective television advertising; • select the most effective markets, media and specific media vehicles in which to market and advertise; and • convert consumer inquiries into actual orders.
Any performance failure on the part of our suppliers could delay the development and commercialization of our products, or interrupt production of then existing products that are already marketed, which would have a material adverse effect on our business. For example, W.R. Grace & Co.-Conn. (Grace) is the exclusive manufacturer to us for the supply of NR.
Any performance failure on the part of our suppliers could delay the development and commercialization of our products, or interrupt production of then existing products that are already marketed, which would have a material adverse effect on our business. In particular, W.R. Grace & Co.-Conn. (Grace) is our single source for the supply of NR.
House of Representatives on July 20, 2022, which has been amended as of December 30, 2022, and recommended for passage as law, would establish new requirements for how companies handle personal data, including information that identifies or is reasonably linked to an individual, such as our consumers.
A United States federal privacy bill advanced to the U.S. House of Representatives on July 20, 2022, which has been amended as of December 30, 2022, and recommended for passage as law, would establish new requirements for how companies handle personal data, including information that identifies or is reasonably linked to an individual, such as our consumers.
We have a history of losses and may continue to incur operating and net losses for the foreseeable future. We incurred net losses of approximately $16.5 million and $27.1 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our accumulated deficit was approximately $185.5 million.
We have a history of losses and may continue to incur operating and net losses for the foreseeable future. We incurred net losses of approximately $4.9 million and $16.5 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, our accumulated deficit was approximately $190.5 million.
As supervisory authorities issue further guidance on personal data export mechanisms, including on the new Standard Contractual Clauses, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we or third parties we work with are otherwise unable to transfer personal data between and among countries and regions in which clinical trials of our products are conducted, it could affect our business.
As supervisory authorities issue further guidance on personal data export mechanisms, including updates to the Standard Contractual Clauses, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we or third 27 Table of Contents parties we work with are otherwise unable to transfer personal data between and among countries and regions in which we conduct business.
The foregoing economic conditions may lead to increased levels of bankruptcies, restructurings and liquidations for our customers, scaling back of research and development expenditures, delays in planned projects and shifts in business strategies for many of our customers.
The foregoing economic conditions may lead to increased levels of bankruptcies, restructurings and liquidations for our customers, scaling back of research and development expenditures, delays in planned projects and shifts in business strategies for many of our customers. Such events could, in turn, adversely affect our business through loss of sales.
Specifically, the impact of these volatile and negative conditions may include decreased demand for our products and services, a decrease in our ability to accurately forecast future product trends and demand, and a negative impact on our ability to timely collect receivables from our customers.
Specifically, the impact of these volatile and negative conditions may include, but are not limited to, decreased demand for our products and services as consumers may consider the purchase of nutritional products discretionary, a decrease in our ability to accurately forecast future product trends and demand, and a negative impact on our ability to timely collect receivables from our customers.
If adequate financing is not available, the Company will further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations. The inability to raise additional financing may have a material adverse effect on the future performance of the Company. Global, market and economic conditions may negatively impact our business, financial condition and share price.
If adequate financing is not available, the Company will further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations. The inability to raise additional financing may have a material adverse effect on the future performance of the Company.
As of December 31, 2022, we had outstanding options for an aggregate of approximately 10.4 million shares of common stock at a weighted average exercise price of $4.21 per share and approximately 0.7 million of unvested restricted stock units.
As of December 31, 2023, we had outstanding options for an aggregate of approximately 11.6 million shares of common stock at a weighted average exercise price of $3.68 per share and approximately 0.6 million of unvested restricted stock units.
Our ability to use our net operating loss (NOL) carryforwards and certain other tax attributes may be limited. Our federal net operating losses (NOLs) generated in taxable years beginning on or prior to December 31, 2017 could expire unused.
There is no guarantee that we will be able to successfully launch our joint venture. Our ability to use our net operating loss (NOL) carryforwards and certain other tax attributes may be limited. Our federal net operating losses (NOLs) generated in taxable years beginning on or prior to December 31, 2017 could expire unused.
Our dependence on a limited number of third-party suppliers or on a single supplier, and the challenges we may face in obtaining adequate supplies of raw materials, involve several risks, including limited control over pricing, availability, health epidemics affecting the region of such suppliers (including the coronavirus), quality and delivery schedules.
Grace, for NR and a limited number of third-party suppliers for the raw materials required to produce our products. Our dependence on a limited number of third-party suppliers or on a single supplier, and the challenges we may face in obtaining adequate supplies of raw materials, involve several risks, including limited control over pricing, availability, quality and delivery schedules.
Our products compete and will compete with other similar products produced by our competitors. These competitive products could be marketed by well-established, successful companies that possess greater financial, marketing, distributional, personnel and other resources than we possess.
Many of our competitors are larger and have greater financial and other resources than we do. Our products compete and will compete with other similar products produced by our competitors. These competitive products are and may in the future be marketed by well-established, successful companies that possess greater financial, marketing, distributional, personnel and other resources than we possess.
No assurance can be given that we will be successful in identifying attractive acquisition candidates or completing acquisitions, joint ventures or other arrangements on favorable terms. In addition, any future acquisitions will be accompanied by the risks commonly associated with acquisitions.
As part of our business strategy, we intend to consider acquisitions of similar or complementary businesses or products. No assurance can be given that we will be successful in identifying attractive acquisition candidates or completing acquisitions, joint ventures or other arrangements on favorable terms. In addition, any future acquisitions will be accompanied by the risks commonly associated with acquisitions.
Our ability to remain competitive may depend, in part, on our ability to continue to seek partners that can offer technological improvements and improve existing products and services that are offered to our customers.
We may not be able to partner with others for technological capabilities and new products and services. Our ability to remain competitive may depend, in part, on our ability to continue to seek partners that can offer technological improvements and improve existing products and services that are offered to our customers.
If a court were to find this choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition. 33 Table of Contents General Risks We may become involved in securities class action litigation that could divert management’s attention and harm our business.
If a court were to find this choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
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 COVID-19 pandemic has adversely affected, and may continue to pose risks to, our business, results of operations, financial condition and cash flows, and other epidemics or outbreaks of infectious diseases may have a similar impact.
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.
Any failure to comply with such covenants may be a disclosable event and may be perceived negatively. Such perception could adversely affect the market price for our common stock and our ability to obtain financing in the future.
Any failure to comply with such covenants may be a disclosable event and may be perceived negatively. Such perception could adversely affect the market price for our common stock and our ability to obtain financing in the future. 22 Table of Contents Risks Related to Our Products We rely on single supplier, W.R.
Although we maintain cyber insurance, we cannot be sure that our insurance coverage will be adequate or sufficient of protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
Although we maintain cyber insurance, we cannot be sure that our insurance coverage will be adequate or sufficient of protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims. 20 Table of Contents We may need to increase the size of our organization, and we can provide no assurance that we will successfully expand operations or manage growth effectively.
The GDPR and UK GDPR set out extensive compliance requirements, including providing detailed disclosures about how personal data is collected and processed, demonstrating that an appropriate legal basis is in place or otherwise exists to justify data processing activities; granting new rights for data subjects in regard to their personal data, as well as enhancing pre-existing rights (e.g., data subject access requests); requiring the appointment of a data protection officer in certain circumstances; mandating the appointment of representatives in the United Kingdom and/or the EEA in certain circumstances; introducing the obligation to notify data protection regulators or supervisory authorities (and in certain cases, affected individuals) of significant data breaches; imposing limitations on retention of personal data; maintaining a record of data processing; and complying with the principle of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.
The GDPR and UK GDPR set out extensive compliance requirements, including providing detailed disclosures about how personal data is collected and processed, demonstrating that an appropriate legal basis is in place or otherwise exists to justify data processing activities; granting new rights for data subjects in regard to their personal data, as well as enhancing pre-existing rights (e.g., data subject access requests); requiring the appointment of a data protection officer in certain circumstances; mandating the appointment of representatives in the United Kingdom and/or the EEA in certain circumstances; introducing new data transfer frameworks such as the EU-U.S.
If any third-party licensor is unable to successfully maintain, prosecute or enforce the licensed patents and/or patent application rights related to our products, we may become subject to infringement or misappropriate claims or lose our competitive advantage. Without access to these technologies or suitable design-around or alternative technology options, our ability to conduct our business could be impaired significantly.
If any third-party licensor is unable to successfully maintain, prosecute or enforce the licensed patents and/or patent application rights related to our products, we may become subject to infringement or misappropriate claims or lose our competitive advantage.
In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company.
If these fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company.
Legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the European Economic Area, or EEA, to the United States.
Legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the European Economic Area, or EEA, to the United States. We continue to execute contracts involving the transfer of personal data outside of the European Economic Area with the Standard Contractual Clauses in the ordinary course.
Further, in recent years as a result of the COVID-19 pandemic, global instability and other factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, high inflation, higher interest rates, increases in unemployment rates and uncertainty about economic stability.
Further, in recent years as a result of various factors including global instability, increased interest rates, and inflationary conditions, among other factors, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability and uncertainty about economic stability.
The Credit Agreement contains affirmative and restrictive covenants, including covenants regarding delivery of financial statements, maintenance of inventory, payment of taxes, maintenance of insurance, dispositions of property, business combinations or acquisitions and incurrence of additional indebtedness, among other customary covenants, in each case subject to limited exceptions. 22 Table of Contents There can be no assurance that we will be able to comply with the financial and other covenants in the Credit Agreement.
The Credit Agreement contains affirmative and restrictive covenants, including covenants regarding delivery of financial statements, the amount of cash maintained at Western Alliance Bank, maintenance of inventory, payment of taxes, maintenance of insurance, dispositions of property, business combinations or acquisitions and incurrence of additional indebtedness, among other customary covenants, in each case subject to limited exceptions.
The insurance industry has become more selective in offering some types of coverage and we may not be able to obtain insurance coverage in the future. The insurance industry has become more selective in offering some types of insurance in recent years, such as product liability, product recall, property and directors’ and officers’ liability insurance.
The insurance industry has previously and may again become more selective in offering some types of coverage and we may not be able to obtain insurance coverage in the future. The insurance industry has previously experienced periods of increased selectivity in providing certain types of coverage, including product liability, cyber, property, and directors' and officers' liability insurance.
To achieve commercial success for our products, we must sell our product lines and/or technologies at favorable prices. In addition to being expensive, maintaining such a sales force is time-consuming.
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. To achieve commercial success for our products, we must sell our product lines and/or technologies at favorable prices. In addition to being expensive, maintaining such a sales force is time-consuming.
We depend greatly on the services of Robert Fried, Brianna Gerber and Heather Van Blarcom who are our Chief Executive Officer, Chief Financial Officer and Senior Vice President of Legal and Corporate Secretary, respectively. We also depend greatly on other key employees, including key scientific and marketing personnel.
We depend on key personnel, the loss of any of which could negatively affect our business . Our business depends greatly on the expertise and contributions of several key individuals, including Robert Fried, Brianna Gerber and Heather Van Blarcom who are our Chief Executive Officer, Chief Financial Officer and Senior Vice President of Legal and Corporate Secretary, respectively.
Riley FBR, Inc. and Raymond James & Associates, Inc. (ATM Facility), or collaborative agreements or from other sources. We have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all.
We have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all.
Our bylaws, as amended (Bylaws) provide that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. 31 Table of Contents Our bylaws, as amended (Bylaws) provide that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
A product liability claim or class action litigation against us could result in increased costs and could adversely affect our reputation with our customers, which, in turn, could have a materially adverse effect on our business, results of operations, financial condition and cash flows. 23 Table of Contents We rely on single or a limited number of third-party suppliers for the raw materials required to produce our products.
A product liability claim or class action litigation against us could result in increased costs and could adversely affect our reputation with our customers, which, in turn, could have a materially adverse effect on our business, results of operations, financial condition and cash flows. 23 Table of Contents 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.
Th ere may be additional cyber security threats as most of our employees work from home, utilizing network connections outside of the Company premises. Any of the previously identified or similar threats could cause a security incident or other interruption and could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to data.
Any of the previously identified or similar threats could cause a security incident or other interruption and could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to data.
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 together with all other information contained in this Form 10-K before making investment decisions with respect to our common stock.
Current investors and potential investors should consider carefully the risks and uncertainties described below together with all other information contained in this Form 10-K, 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.
Disputes from time to time with such companies, organizations or individuals are not uncommon, and we cannot assure you that we will always be able to resolve such disputes on terms favorable to us.
For example, lawsuits by employees, stockholders, collaborators, distributors, customers, competitors or others could be very costly and substantially disrupt our business. Disputes from time to time with such companies, organizations or individuals are not uncommon, and we cannot assure you that we will always be able to resolve such disputes on terms favorable to us.
We may bear financial risk if we underprice our contracts or overrun cost estimates. In cases where our contracts are structured as fixed price or fee-for-service with a cap, we bear the financial risk if we initially underprice our contracts or otherwise overrun our cost estimates.
In cases where our contracts are structured as fixed price or fee-for-service with a cap, we bear the financial risk if we initially underprice our contracts or otherwise overrun our cost estimates. Such underpricing or significant cost overruns could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Our participation in the joint venture in China is subject to general, as well as industry-specific, economic, political and legal developments and risks in China. Disruptions in our relationships with our collaborators could also impact the success of our joint venture, and the anticipated benefits may not materialize.
Our participation in the joint venture in China is subject to general, as well as industry-specific, economic, political and legal developments and risks in China.
Additionally, in the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws.
Additionally, in the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws. Each of these state laws adds potential compliance and risk for us with respect to data necessary to operate our business.
In addition, the issuance of shares of our common stock upon the exercise of outstanding options or warrants may result in dilution to our stockholders. Environmental, social and governance matters may impact our business and reputation.
In addition, the issuance of shares of our common stock upon the exercise of outstanding options or warrants may result in dilution to our stockholders. Item 1B. Unresolved Staff Comments None.
The SEC has proposed new rules regarding climate change and cybersecurity that, if adopted, require significant new disclosure obligations of us and require us to update and develop our controls to accommodate these new obligations.
The SEC has proposed a new rule regarding climate change that, if adopted, requires significant new disclosure obligations of us and requires us to update and develop our controls to accommodate these new obligations. 32 Table of Contents Environmental, social and governance matters may impact our business and reputation.
If we fail to defend such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to market existing or new products, which could severely harm our business.
A loss of key personnel or their work product could hamper or prevent our ability to market existing or new products, which could severely harm our business.
We believe that customers in our markets display a significant amount of loyalty to their supplier of a particular product. To the extent we are not the first to develop, offer and/or supply new products, customers may buy from our competitors or make materials themselves, causing our competitive position to suffer. Litigation may harm our business.
To the extent we are not the first to develop, offer and/or supply new products, customers may buy from our competitors or make materials themselves, causing our competitive position to suffer. Litigation may harm our business. Substantial, complex or extended litigation could cause us to incur significant costs and distract our management.
If one or more of those patents, patent applications, licenses and other intellectual property rights are invalidated, rejected or found unenforceable and we are unable to reverse that finding through an appeal, that could reduce or eliminate any competitive advantage we might otherwise have had.
If one or more of those patents, patent applications, licenses and other intellectual property rights are invalidated, rejected or found unenforceable and we are unable to reverse that finding through an appeal, that could reduce or eliminate any competitive advantage we might otherwise have had. 25 Table of Contents 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.
The UK updated its transfer mechanism and we will need to update all of our contracts entailing the transfer of personal data outside of the United Kingdom with this new UK-specific transfer tools. 28 Table of Contents If we cannot implement a valid compliance mechanism for cross-border data transfers, we may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal data from Europe or elsewhere.
If we cannot implement a valid compliance mechanism for cross-border data transfers, we may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal data from Europe or elsewhere.

… 102 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeWe do not own any real estate. The below table illustrates the use of each property by our business segments. Business Segment Property Used Consumer Products All properties Ingredients All properties Analytical Reference Standards and Services Longmont, CO For the year ended December 31, 2022, our total annual rent expense was approximately $1,281,000. 35 Table of Contents
Biggest changeWe do not own any real estate. The below table illustrates the use of each property by our business segments. Business Segment Property Used Consumer Products All properties Ingredients All properties Analytical Reference Standards and Services All properties For the year ended December 31, 2023, our total annual rent expense was approximately $1,214,000. 35 Table of Contents
Properties As of December 31, 2022, we lease (i) approximately 10,000 square feet of office space in Los Angeles, California with four years remaining on the lease, (ii) approximately 20,000 square feet of space for a research and development laboratory in Longmont, Colorado with three years remaining on the lease, and (iii) approximately 8,000 square feet of office space in Tustin, California with six years remaining on the lease.
Properties As of December 31, 2023, we lease (i) approximately 10,000 square feet of office space in Los Angeles, California with three years remaining on the lease, (ii) approximately 20,000 square feet of space for a research and development laboratory in Longmont, Colorado with two years remaining on the lease, and (iii) approximately 8,000 square feet of office space in Tustin, California with five years remaining on the lease.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings The information set forth under the heading “Legal Proceedings” in Note 17, Commitments and Contingencies, in Notes to the Consolidated Financial Statements in Item 8 of Part II of this Form 10-K, is incorporated herein by reference. For additional discussion of certain risks associated with legal proceedings, see Item 1A, Risk Factors. Item 4.
Biggest changeItem 3. Legal Proceedings The information set forth under the heading “Legal Proceedings” in Note 16, Commitments and Contingencies, in Notes to the Consolidated Financial Statements in Item 8 of Part II of this Form 10-K, is incorporated herein by reference. For additional discussion of certain risks associated with legal proceedings, see Item 1A, Risk Factors. Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+1 added−5 removed1 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Since April 25, 2016, our common stock has been traded on The Nasdaq Capital Market (NASDAQ) under the symbol “CDXC.” On March 6, 2023, the closing sale price was $1.62.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Since April 25, 2016, our common stock has been traded on The Nasdaq Capital Market (NASDAQ) under the symbol “CDXC.” On March 4, 2024, the closing sale price was $1.66.
Holders of Our Common Stock As of March 6, 2023, we had approximately 40 registered holders of record of our common stock, which does not include stockholders who hold shares in street name or stockholders whose shares may be held in trust by other entities.
Holders of Our Common Stock As of March 4, 2024, we had approximately 40 registered holders of record of our common stock, which does not include stockholders who hold shares in street name or stockholders whose shares may be held in trust by other entities.
Removed
Recent Sales of Unregistered Securities On September 30, 2022, we entered into a Securities Purchase Agreement with Pioneer Step Holdings Limited (Pioneer Step), Champion River Ventures Limited (Champion) and Robert Fried (collectively, the “Purchasers”) pursuant to which we agreed to sell and issue approximately 2.5 million shares of common stock at a price of $1.25 per share (the “Financing”).
Added
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities None. Item 6. Reserved 36 Table of Contents
Removed
Champion is indirectly owned by Li Ka-Shing and Pioneer Step is indirectly owned by Solina Chau, and each of Mr. Ka-Shing and Ms. Chau own through affiliated entities more than 5% of the Company’s common stock. Pursuant to previous agreements, each of Pioneer Step and Champion have appointed a member of our Board. Mr. Fried is our Chief Executive Officer.
Removed
The transaction and related agreements were approved by the Audit Committee of the Board in accordance with our Related-Persons Transaction Policy. On October 7, 2022, we closed the Financing and received proceeds of approximately $2.9 million, net of offering costs of $0.2 million.
Removed
On October 10, 2022, we entered into a Securities Purchase Agreement with Société des Produits Nestlé SA, a société anonyme organized under the laws of Switzerland (NHSc), as successor-in-interest to NESTEC Ltd., pursuant to which NHSc agreed to purchase 3.8 million shares of common stock at a price of $1.31 which is equal to the volume weighted average price of the Company’s common stock for the ten trading days preceding October 10, 2022 (the “Securities Purchase Agreement”).
Removed
On October 17, 2022, we closed the Securities Purchase Agreement and received proceeds of approximately $4.8 million, net of offering costs of $0.2 million. Item 6. Reserved 36 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

55 edited+43 added−43 removed25 unchanged
Biggest changeThe NHSc purchase was partially offset by a decline in sales of other, non-Niagen®, ingredients. • Net sales for our analytical reference standards and services segment moderately decreased during 2022 compared to 2021 primarily due to a decline in demand for research and development services in 2022. 41 Table of Contents Cost of Sales.
Biggest changeHowever, these gains were partially offset by lower sales to Nestlé (NHSc) in 2023, as NHSc had made a $2.0 million upfront minimum purchase in the fourth quarter of 2022 which was not met with similar activity in 2023. • Net sales for our analytical reference standards and services segment moderately decreased by $0.3 million during 2023 compared to 2022 primarily due to lower demand for quality-control reference standard products which fluctuates based on the timing of projects for our customers. 40 Table of Contents Cost of Sales.
The discussion and analysis of our financial condition and results of operations are based on the ChromaDex financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP).
The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP).
Accordingly, we may recognize a different amount of deferred revenue over the next 12-month period if our plan changes in the future or if our customer informs us of changes to their expected purchases. As of December 31, 2022 and 2021, we held deferred revenue balances of $4.0 million and $4.3 million, respectively.
Accordingly, we may recognize a different amount of deferred revenue over the next 12-month period if our plan changes in the future or if our customer informs us of changes to their expected purchases. As of December 31, 2023 and 2022, we held deferred revenue balances of $3.3 million and $4.0 million, respectively.
At December 31, 2022 and 2021, we maintained a full valuation allowance against the entire deferred income tax balance which resulted in an effective tax rate of approximately 0% for both of the years ended December 31, 2022 and 2021.
At December 31, 2023 and 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 both of the years ended December 31, 2023 and 2022.
Table of Contents Whenever we determine that goods or services promised in a contract should be accounted for as a combined performance obligation over time, we determine the period over which the performance obligations will be performed and revenue will be recognized.
Whenever we determine that goods or services promised in a contract should be accounted for as a combined performance obligation over time, we determine the period over which the performance obligations will be performed and revenue will be recognized.
By doing so, we believe we can lower the costs of our inventory and yield higher gross profit. In addition, we are working with our suppliers and partners to develop more efficient manufacturing methods in an effort to lower the costs of our inventory. Accounts Payable.
By doing so, we believe we can lower the costs of our inventory and yield higher gross profit. In addition, we continuously work with our suppliers and partners to develop more efficient manufacturing methods in an effort to lower the costs of our inventory. Accounts Payable.
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, and expenses during the reporting periods.
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 net sales and expenses during the reporting periods.
Department of Agriculture regulations relating to composition, labeling and advertising claims. These regulations may in some cases, particularly with respect to those applicable to new ingredients, require a notification that must be submitted to the FDA along with evidence of safety and similar regulations exist related to food additives.
These regulations may in some cases, particularly with respect to those applicable to new ingredients, require a notification that must be submitted to the FDA along with evidence of safety and similar regulations exist related to food additives.
For example, when utilizing the output method, we estimate total delivery volume based on our current operating plan, forecast inputs received from the customer for expected purchases, minimum purchase commitments by the customer and historical experience with similar customer contracts.
Certain judgments affect the application of our revenue recognition policy. For example, when utilizing the output method, we estimate total delivery volume based on our current operating plan, forecast inputs received from the customer for expected purchases, minimum purchase commitments by the customer and historical experience with similar customer contracts.
As of December 31, 2022, we had approximately $14.7 million in inventory, compared to approximately $13.6 million as of December 31, 2021. As of December 31, 2022, our inventory consisted of approximately $10.9 million of consumer products, $3.3 million of bulk ingredients and $0.5 million of reference standards.
As of December 31, 2023, we had approximately $14.5 million in inventory, compared to approximately $14.7 million as of December 31, 2022. As of December 31, 2023, our inventory consisted of approximately $9.5 million of consumer products, $4.5 million of bulk ingredients and $0.5 million of reference standards.
General and administrative expense is not allocated by segment and is instead classified under our Corporate and Other category.
General and administrative expenses are not allocated by segment and instead are classified under our Corporate and Other category.
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. Since 2018, total gross profit grew from $16.1 million to $42.8 million in 2022, representing a 22% compound annual growth rate.
Gross profit (loss) 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. Since 2019, total gross profit grew from $25.8 million to $50.8 million in 2023, representing a 15% compound annual growth rate.
Revenue recognition : Beginning in fiscal year 2018, we adopted Financial Accounting Standards Board (FASB) Topic 606 - Revenue for Contracts from Customers which amended revenue recognition principles and provides a single, comprehensive set of criteria for revenue recognition within and across all industries.
Revenue recognition : We recognize revenue in accordance with Financial Accounting Standards Board (FASB) Topic 606 - Revenue for Contracts from Customers which provides a single, comprehensive set of criteria for revenue recognition within and across all industries.
Research and development expenses by reportable segment are as follows: Year Ended December 31, (In thousands) 2022 2021 Change R&D expenses: Consumer Products $ 4,214 $ 3,427 23 % Ingredients 612 405 51 Total R&D expenses $ 4,826 $ 3,832 26 % • We allocate R&D expenses related to our Niagen® branded ingredient to the consumer products and ingredients segment, based on revenues recorded.
Research and development expenses by reportable segment were as follows: Year Ended December 31, ($ In thousands) 2023 2022 % Change R&D expenses: Consumer Products $ 4,273 $ 4,214 1 % Ingredients 685 612 12 Total R&D expenses $ 4,958 $ 4,826 3 % • We allocate R&D expenses related to our Niagen® branded ingredient to the consumer products and ingredients segment, based on recorded revenues.
(2) Excluded from the computation of loss per share as their impact is antidilutive. 40 Table of Contents Net Sales. Net sales consist of gross sales less discounts and returns. Our total net sales grew from $31.6 million in 2018 to $72.1 million in 2022, representing a 18% compound annual growth rate.
(2) Excluded from the computation of loss per share as their impact is antidilutive. 39 Table of Contents Net Sales. Net sales consist of gross sales less discounts and returns. Our total net sales grew from $46.3 million in 2019 to $83.6 million in 2023, representing a 13% compound annual growth rate.
We will continue to monitor changing prices and inflationary pressures closely as conditions may become more challenging due to ongoing and uncertain economic factors. 39 Table of Contents Results of Operations Our results of operations for the years ended December 31, 2022 and 2021 are as follows: Year Ended December 31, (In thousands) 2022 2021 Sales $ 72,050 $ 67,449 Cost of sales 29,253 25,959 Gross profit 42,797 41,490 Operating expenses Sales and marketing 28,313 28,352 Research and development 4,826 3,832 General and administrative 28,286 36,379 Nonoperating expenses: Other income, net - Employee Retention Tax Credit 2,085 — Interest income (expense), net 3 (55) Net loss $ (16,540) $ (27,128) Our loss per share applicable to common stockholders for the years indicated is calculated as follows: Year Ended December 31, (In thousands, except per share data) 2022 2021 Net loss $ (16,540) $ (27,128) Basic and diluted loss per common share $ (0.24) $ (0.40) Basic and diluted weighted average common shares outstanding (1): 69,729 67,185 Potentially dilutive securities (2): Stock options 10,438 10,536 Restricted stock units 650 115 (1) Includes approximately 0.2 million nonvested shares of restricted stock for the year ended December 31, 2022 and December 31, 2021 which are participating securities that feature voting and dividend rights.
We will continue to monitor changing prices and inflationary pressures closely as conditions may become more challenging due to ongoing and uncertain economic factors. 38 Table of Contents Results of Operations Our results of operations for the years ended December 31, 2023 and 2022 are as follows: Year Ended December 31, (In thousands) 2023 2022 Sales $ 83,570 $ 72,050 Cost of sales 32,790 29,253 Gross profit 50,780 42,797 Operating expenses Sales and marketing 26,438 28,313 Research and development 4,958 4,826 General and administrative 24,983 28,286 Nonoperating expenses: Other income, net - Employee Retention Tax Credit — 2,085 Interest income, net 661 3 Net loss $ (4,938) $ (16,540) Our loss per share applicable to common stockholders for the years indicated is calculated as follows: Year Ended December 31, (In thousands, except per share data) 2023 2022 Net loss $ (4,938) $ (16,540) Basic and diluted loss per common share $ (0.07) $ (0.24) Basic and diluted weighted average common shares outstanding (1): 74,985 69,729 Potentially dilutive securities (2): Stock options 11,622 10,438 Restricted stock units 589 650 (1) Includes a weighted average of approximately 174,000 and 183,000 nonvested shares of restricted stock for the years ended December 31, 2023 and December 31, 2022, respectively, which are participating securities that feature voting and dividend rights.
Net cash used in investing activities was approximately $0.3 million and $0.4 million in 2022 and 2021, respectively. The slight decrease in cash used during the year ended December 31, 2022 compared to 2021 was primarily due to fewer purchases of leasehold improvements and equipment in 2022. Net cash provided by financing activities.
The slight decrease in cash used during the year ended December 31, 2023 compared to 2022 was largely due to fewer purchases of leasehold improvements and equipment in 2023. Net cash (used in) provided by financing activities.
Revenue under bill-and-hold arrangements was $1.7 million for the year ended December 31, 2022. There was no revenue under bill-and-hold arrangements for the year ended December 31, 2021.
We recognized $1.7 million revenue under bill-and-hold arrangements during the year ended December 31, 2022 and no revenue under bill-and-hold arrangements during the year ended December 31, 2023.
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.
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 up to 65% between ages 30 and 70.
For additional details regarding our litigation see Note 17, Commitments and Contingencies, Legal Proceedings in the Notes to the Consolidated Financial Statements, included in Part II, Item 8 of this Form 10-K. Nonoperating - Interest Expense, net. Interest expense, net consists of interest earned from bank deposit accounts less interest expenses from the line of credit arrangement and finance leases.
For additional details regarding our litigation see Note 16, Commitments and Contingencies, Legal Proceedings in the Notes to the Consolidated Financial Statements, included in Part II, Item 8 of this Form 10-K. Nonoperating income - Interest Income, net.
These operations have been financed through capital contributions, primarily through the issuance of common stock in private placements, and cash generated from net sales.
Historically, these operations have been financed through capital contributions, primarily through the issuance of common stock in private placements, and cash generated from sales. Our board of directors periodically reviews our capital requirements in light of our proposed business plan.
Financing cash flows consist primarily of proceeds from issuance of our common stock, exercise of stock options through employee equity incentive plans and repayment of short-term and long-term debt. Net cash provided by financing activities was approximately $7.7 million and $36.1 million in 2022 and 2021, respectively.
Financing cash flows consist primarily of proceeds from issuance of our common stock, exercise of stock options through employee equity incentive plans and repayment of short-term and long-term debt.
During 2022, we recognized approximately $2.1 million in Other income - Employee Retention Tax Credit in our Consolidated Statements of Operations to reflect the ERTC. As of December 31, 2022, we have received $0.6 million of the ERTC claimed. Subsequent to December 31, 2022, the Company received an additional $0.8 million related to the ERTC.
During 2022, we recognized approximately $2.1 million in Other income - Employee Retention Tax Credit in our Consolidated Statements of Operations to reflect the ERTC.
Reference standards are small quantities of plant-based compounds typically used to research an array of potential attributes or for quality control purposes. The Company currently lists over 1,750 phytochemicals and 400 botanical reference materials in our catalog and holds a lot of these as inventory in small quantities, mostly in grams and milligrams.
Reference standards are small quantities of plant-based compounds typically used to research an array of potential attributes or for quality control purposes. The Company boasts an extensive catalog featuring a wide array of phytochemicals and botanical reference materials. Our on hand inventory includes a variety of these substances, stocked in small quantities predominantly measured in grams and milligrams.
For fiscal year 2022 gross profit increased $1.3 million, or 3%, compared to 2021.
For fiscal year 2023 gross profit increased $8.0 million, or 19%, compared to 2022.
We anticipate that our current unrestricted cash and cash equivalents and cash to be generated from net sales will be sufficient to meet our projected operating plans through at least the next twelve months from the issuance date of these financial statements.
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 and beyond.
The following table sets forth our total cost of sales by reportable segment: Year Ended December 31, 2022 2021 Change (In thousands) Amount % of net sales Amount % of net sales % of net sales Cost of sales: Consumer Products $ 21,726 36 % $ 19,864 35 % 1 % Ingredients 4,465 51 3,233 44 7 Analytical reference standards and services 3,062 96 2,862 86 10 Total cost of sales $ 29,253 41 % $ 25,959 38 % 3 % Total cost of sales, as a percentage of net sales, increased 3% in 2022 compared to 2021.
The following table sets forth our total cost of sales by reportable segment: Year Ended December 31, 2023 2022 Change ( $ In thousands) Amount % of net sales Amount % of net sales % of net sales (in basis points) Cost of sales: Consumer Products $ 24,755 36 % $ 21,726 36 % — Ingredients 4,980 45 4,465 51 (600) Analytical reference standards and services 3,055 105 3,062 96 900 Total cost of sales $ 32,790 39 % $ 29,253 41 % (200) Total cost of sales, as a percentage of net sales, improved 200 basis points in 2023 compared to 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. Net cash used in investing activities. Investing cash flows consist primarily of capital expenditures and investment activities.
Additionally, increases in accrued expenses and accounts payable had a positive cash impact of $1.3 million each. 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.
As of December 31, 2022, we had purchase obligations of approximately $18.0 million related to inventory purchase commitments and approximately $4.9 million related to future minimum lease obligations to be paid over one year and six years, respectively. As of December 31, 2022 and 2021, we had no material off-balance sheet arrangements.
Additionally, as of December 31, 2023, we had purchase obligations of approximately $15.9 million related to inventory purchase commitments and approximately $3.7 million related to future minimum lease obligations to be paid over one year and five years, respectively.
As of December 31, 2022, we had $9.7 million in accounts payable compared to approximately $10.4 million as of December 31, 2021 driven by the timing of purchases and payments to our vendors. Liquidity and Capital Resources For the year ended December 31, 2022, we incurred losses from operations of approximately $16.5 million.
As of December 31, 2023, we had $10.2 million in accounts payable compared to approximately $9.7 million as of December 31, 2022 driven by the timing of purchases and payments to our vendors. 44 Table of Contents Liquidity and Capital Resources For the year ended December 31, 2023, we incurred a net loss of approximately $4.9 million, however, during the same period the Company’s operating activities provided cash of $7.1 million.
Our overall gross margin percentage remained strong at 59.4% for fiscal year 2022, however it declined 210 basis points compared to 2021 largely due to increases in supply chain headcount to scale the business, including higher wages, and other inflationary pressures. 42 Table of Contents The following table sets forth our total gross profit by reportable segment: Year Ended December 31, (In thousands) 2022 2021 Change Gross profit: Consumer Products $ 38,384 $ 36,841 4 % Ingredients 4,271 4,174 2 Analytical reference standards and services 142 475 (70) Total gross profit $ 42,797 $ 41,490 3 % For details supporting year-over-year changes in gross profit refer to the discussions above surrounding changes in our net sales and cost of sales for each segment.
Our overall gross margin percentage remained strong at 60.8% for fiscal year 2023, increasing 140 basis points compared to 2022. 41 Table of Contents The following table sets forth our total gross profit (loss) by reportable segment: Year Ended December 31, ($ In thousands) 2023 2022 % Change Gross profit (loss): Consumer Products $ 44,773 $ 38,384 17 % Ingredients 6,157 4,271 44 Analytical reference standards and services (150) 142 (206) Total gross profit $ 50,780 $ 42,797 19 % For details supporting year-over-year changes in gross profit (loss) refer to the discussions above surrounding changes in our net sales and cost of sales for each segment.
If we determine that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on our consolidated balance sheets. Revenue is then recognized utilizing the output method based on an estimated rate to allocate the transaction price for this performance obligation as products or services are supplied over the duration of the contract.
Table of Contents Revenue is then recognized utilizing the output method based on an estimated rate to allocate the transaction price for this performance obligation as products or services are supplied over the duration of the contract. We believe this most appropriately depicts our performance towards complete satisfaction of the performance obligation to our customer.
Further, 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.
As a result of 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. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur.
Interest expense, net totaled approximately $3,000 and $55,000 for the years ended December 31, 2022 and 2021, respectively. Depreciation and Amortization. Depreciation expense was approximately $0.9 million for both of the years ended December 31, 2022 and 2021. We depreciate our assets on a straight-line basis, based on the estimated useful lives of the respective assets.
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 $158,000 and $186,000 for the years ended December 31, 2023 and 2022, respectively. We amortize intangible assets using a straight-line method, generally over 10 years.
Total net sales by reportable segment for the years ended December 31, 2022 and 2021 are as follows: Year Ended December 31, (In thousands) 2022 2021 Change Net sales: Consumer Products $ 60,110 $ 56,705 6 % Ingredients 8,736 7,407 18 Analytical reference standards and services 3,204 3,337 (4) Total net sales $ 72,050 $ 67,449 7 % In 2022, our total net sales increased by 7%, up $4.6 million, from 2021. • In 2022, Tru Niagen® sales continued to see steady e-commerce growth with $3.4 million, or 8%, higher sales compared to 2021 paired with $0.7 million in increased sales to A.S.
Total net sales by reportable segment for the years ended December 31, 2023 and 2022 are as follows: Year Ended December 31, ($ In thousands) 2023 2022 % Change Net sales: Consumer Products $ 69,528 $ 60,110 16 % Ingredients 11,137 8,736 27 Analytical reference standards and services 2,905 3,204 (9) Total net sales $ 83,570 $ 72,050 16 % In 2023, our total net sales increased by 16%, up $11.5 million, from 2022. • In 2023, Tru Niagen® sales remained the leading contributor to total net sales growth, increasing $9.4 million, or 16%, compared to 2022.
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 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 and the current conflict in the Middle East.
Sales and marketing expense by reportable segment is as follows: Year Ended December 31, 2022 2021 Change (In thousands) Amount % of net sales Amount % of net sales % of net sales Sales and marketing expenses: Consumer Products $ 27,661 46 % $ 27,821 49 % (3) % Ingredients 51 1 46 1 — Analytical reference standards and services 601 19 485 15 4 Total sales and marketing expenses $ 28,313 39 % $ 28,352 42 % (3) % • We continue to focus our primary marketing efforts on our consumer products segment to increase consumer awareness of Tru Niagen®.
Sales and marketing expense by reportable segment is as follows: Year Ended December 31, 2023 2022 Change ($ In thousands) Amount % of net sales Amount % of net sales % of net sales (in basis points) Sales and marketing expenses: Consumer Products $ 26,014 37 % $ 27,661 46 % (900) Ingredients 52 — 51 1 (100) Analytical reference standards and services 372 13 601 19 (600) Total sales and marketing expenses $ 26,438 32 % $ 28,313 39 % (700) Total sales and marketing expense, as a percentage of net sales, improved 700 basis points in 2023 compared to 2022.
Our future capital requirements will remain dependent upon a variety of factors, including cash flow from operations, the ability to increase sales, increasing our gross profits from current levels, reducing sales and administrative expenses as a percentage of net sales, continued development of customer relationships, and our ability to market our new products successfully.
Our future capital requirements will be influenced by several factors, including cash flows from operations, sales growth, optimized gross profit margins, reduced selling and marketing expense as a percentage of net sales, continued customer relationship development, and the ability to successfully market new and existing products.
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®.
In 2013, we commercialized Niagen®, a proprietary form of NR, a novel form of vitamin B3, and one of the most well-studied and efficient NAD+ precursors on the market. Nicotinamide riboside and other NAD+ precursors are protected by our patent and/or licensed rights portfolio. We deliver Niagen® as the sole active ingredient in our 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. Additionally, the Company offers natural product fine chemicals, known as phytochemicals, and related research and development services. Our operations are subject to regulation by various state and federal agencies. Dietary supplements are subject to FDA, FTC and U.S.
Our Analytical Reference Standards and Services segment focuses on natural product fine chemicals, known as phytochemicals, and related research and development services. Our operations are subject to regulation by various state and federal agencies. Dietary supplements are subject to FDA, FTC and U.S. Department of Agriculture regulations relating to composition, labeling and advertising claims.
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 and changing prices We have in the past 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.
Any future developments and impacts of COVID-19, which cannot be predicted, including impacts to our partners, can also exacerbate other risks discussed in Part II, Item 1A Risk Factors and throughout this report. Inflation and changing prices We have experienced inflation in labor, raw materials, transportation and other costs.
However, based on our results from operations, we may determine that we need additional financing to implement our business plan. 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.
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.
As of December 31, 2022, we had approximately $8.5 million in trade receivables as compared to approximately $5.2 million as of December 31, 2021. The increase in 2022 is driven by the timing of customer orders and collections, including the upfront minimum purchase by NHSc during the fourth quarter of 2022. Inventories.
This reduction in trade receivables is primarily attributed to variations in the timing of customer orders and collections, notably influenced by the absence of an upfront minimum purchase by NHSc, which occurred in the fourth quarter of 2022. Inventories.
Changes in cost of sales, as a percentage of net sales, were primarily driven by the following: During 2022, we continued to explore cost saving processes and opportunities and benefit from favorable product mix. • Cost of sales, as a percentage of net sales, for the consumer products segment remained substantially similar with only a 1% increase in 2022 compared to 2021.
Changes in sales and marketing expense, as a percentage of net sales, were primarily driven by the following: • For our consumer products segment, sales and marketing expense, as a percentage of net sales, improved 900 basis points in 2023 compared to 2022.
The useful life of subsequent milestone payments that are capitalized match the remaining useful life of the initial licensing payment that was originally capitalized. Amortization expense of right-of-use assets for the year ended December 31, 2022 was approximately $0.8 million as compared to $0.5 million for the year ended December 31, 2021. Income Taxes.
Amortization expense of right-of-use assets for the year ended December 31, 2023 was $677,000 compared to $829,000 for the year ended December 31, 2022. Income Taxes.
Net cash used in operating activities for the year ended December 31, 2022 was approximately $15.1 million. The losses and the uses of cash are primarily attributable to expenses associated with the development and expansion of our operations, as well as legal expenditures.
Net cash provided by operating activities was approximately $7.1 million for the year ended December 31, 2023 compared to a net cash use of $15.1 million for the year ended December 31, 2022.
The decrease in cash provided during the year ended December 31, 2022 compared to 2021 was primarily due to decreased proceeds from issuance of our common stock of $19.0 million and no proceeds related to the exercise of employee stock options resulting in a decrease of $9.5 million. 44 Table of Contents Trade Receivables.
The decrease in cash provided during the year ended December 31, 2023 compared to 2022 was primarily due to decreased proceeds from issuance of our common stock as we did not have similar issuances in 2023. Dividend Policy We have not declared or paid any cash dividends on our common stock.
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. Net cash used in operating activities. Cash used in operating activities is net loss adjusted for certain non-cash items and changes in operating assets and liabilities.
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. Trade Receivables. As of December 31, 2023, we had approximately $5.2 million in trade receivables, reflecting a decrease from approximately $8.5 million as of December 31, 2022.
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. Dividend Policy We have not declared or paid any cash dividends on our common stock. We presently intend to retain earnings for use in our operations and to finance our business.
If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. Net cash provided by (used in) operating activities. Cash provided by and used in operating activities is net loss adjusted for certain non-cash items and changes in operating assets and liabilities.
We have successfully adapted and have been able to conduct business virtually. Today, many of our employees continue to work remotely efficiently and we plan to continue to offer this flexible work environment. Under the Coronavirus Aid, Relief, and Economic Security Act the employee retention tax credit (ERTC) was established and subsequently amended by other Acts.
Grace, for NR and a limited number of third-party suppliers for the raw materials required to produce our products." Impact of COVID-19 Under the Coronavirus Aid, Relief, and Economic Security Act the employee retention tax credit (ERTC) was established and subsequently amended by other Acts.
Amortization expense of intangible assets was approximately $0.2 million for each of the years ended December 31, 2022 and 2021. 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.
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 life of subsequent milestone payments that are capitalized match the remaining useful life of the initial licensing payment that was originally capitalized.
Net cash used in operating activities was approximately $15.1 million and $24.2 million in 2022 and 2021, respectively. The decrease in cash used during the year ended December 31, 2022 compared to 2021 was primarily driven by improvements in our net loss of $8.5 million excluding Other income from the Employee Retention Tax Credit of $2.1 million.
Net cash used in financing activities was $0.1 million for the year ended December 31, 2023 compared to net cash provided by financing activities of $7.7 million for year ended December 31, 2022.
Beginning in January 2019, Grace was issued patents related to the manufacturing of the crystalline form of NR (Grace Patents). Pursuant to the Eighth Amendment, we are committed to purchase approximately $18.0 million of total inventory during fiscal year 2023, which is our only future purchase commitment with Grace.
Pursuant to the Ninth Amendment and the manufacturing and supply agreement with the aforementioned third party, the Company is committed to purchase approximately $15.9 million of total inventory between January 1, 2024 and December 31, 2024, which is the only future purchase commitment with Grace and the third-party.
Accordingly, due to the increased head count for supply chain labor paired with a decrease in sales during 2022, we experienced lower labor and overhead utilization rates resulting in higher cost of sales, as a percentage of net sales, compared to 2021. Gross Profit.
Consequently, higher net sales result in improved labor and overhead utilization rates, while lower net sales lead to lower utilization rates. In the ingredients segment, higher sales during the year ended December 31, 2023 contributed to an improvement of 600 basis points in cost of sales as a percentage of net sales compared to the year ended December 31, 2022.
Watson’s. This growth was partially offset by declines of $0.7 million in business-to-business sales to our distributor partners. Our distributor partners have experienced lower growth during fiscal year 2022 due to COVID-19 headwinds and other macroeconomic factors.
This growth was primarily driven by strong performance from our e-commerce business which accounted for $6.0 million in higher sales, paired with $2.8 million in higher sales to A.S. Watson, a related party. Additionally, in 2022, our distributor partners were negatively impacted by COVID-19 headwinds and other macroeconomic factors.
Removed
Recent Activities Securities Purchase Agreement and Registration Rights Agreement - Related Parties On September 30, 2022, we entered into a Securities Purchase Agreement with Pioneer Step Holdings Limited (Pioneer Step), Champion River Ventures Limited (Champion) and Robert Fried (collectively, the “Purchasers”) pursuant to which we agreed to sell and issue approximately 2.5 million shares of common stock at a price of $1.25 per share (the “Financing”).
Added
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.
Removed
Champion is indirectly owned by Li Ka-Shing and Pioneer Step is indirectly owned by Solina Chau, and each of Mr. Ka-Shing and Ms. Chau own through affiliated entities more than 5% of the Company’s common stock. Pursuant to previous agreements, each of Pioneer Step and Champion have appointed a member of our Board. Mr. Fried is our Chief Executive Officer.
Added
We additionally offer consumer products containing Niagen® in combination with other nutrients, such as, but not limited to, Tru Niagen® Immune. Our ingredients segment develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw material to the manufacturers of consumer products.
Removed
The transaction and related agreements were approved by the Audit Committee of the Board in accordance with our Related-Persons Transaction Policy.
Added
Recent Activities Lease Amendment On October 11, 2023, we entered into a lease amendment for our existing lease in Los Angeles, California. In accordance with Accounting Standards Codification (ASC) 842, the amended lease agreement is considered modified and subject to lease modification guidance.
Removed
On October 7, 2022, we closed the Financing and received proceeds of approximately $2.9 million, net of offering costs of $0.2 million. 37 Table of Contents In connection with the Financing, on September 30, 2022, we also entered into a Registration Rights Agreement with the Purchasers (the “Registration Rights Agreement”), pursuant to which we agreed to (i) file one or more registration statements with the SEC to cover the resale of the shares of Common Stock issued to the Purchasers, (ii) use reasonable best efforts to have all such registration statements declared effective within the timeframes set forth in the Registration Rights Agreement, and (iii) use commercially reasonable efforts to keep such registration statements effective during the timeframes set forth in the Registration Rights Agreement.
Added
The right-of-use (ROU) asset and lease liability related to the lease agreement were remeasured based on the change in the lease conditions, which included rent abatement totaling approximately $355,000. The reassessed value of the ROU asset and lease liability as of the modification date was $1.0 million and $1.2 million, respectively.
Removed
We filed a Registration Statement registering the resale of the shares of Common Stock in November 2022.
Added
The lease term remained unchanged and extends through March 31, 2027 and provides one option to extend for an additional five years. 37 Table of Contents Purchase Commitments Effective November 2, 2023, the Company entered into a Ninth Amendment to the Manufacturing and Supply Agreement (the “Grace Manufacturing Agreement”), initially effective in January 2016.
Removed
In the event that such registration statement subsequently becomes unavailable, or the Purchasers are unable to sell the shares of Common Stock issued pursuant to the Financing due to failure by us to satisfy the current public information requirement of Rule 144 under the Securities Act, we would be required to pay liquidated damages to the Purchasers equal to 1.0% of the aggregate purchase price per month for each default (up to a maximum of 5.0% of such aggregate purchase price) Joint Venture 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 pursuant to which, among other details, Taikuk will receive an 11% non-voting equity interest in ChromaDex Asia Pacific Ventures Limited, a subsidiary of Asia Pacific Scientific, Inc.
Added
In January 2019, Grace was issued patents related to the crystalline form of NR chloride which limit the Company’s ability to find alternatives for supply (Grace Patents). In December 2023, the Company and Grace executed a Limited Licensing Agreement.
Removed
(the “Joint Venture” or “JV”). We indirectly own an 89% equity interest (and all of the voting interests) in the JV and have the right to elect all three directors of the JV.
Added
Pursuant to this agreement, the Company is authorized to procure NR supply from a designated third party in explicitly defined quantities for purchase in 2024.
Removed
The purpose of the JV is to commercialize Tru Niagen® and other products containing nicotinamide riboside to be developed by us (the “Products”) in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan (the “Territory”).
Added
Any acquisitions of NR within the stipulated quantity from this third-party source will result in a corresponding reduction of the minimum purchase commitment quantities that the Company has established directly with Grace for the same specific period.
Removed
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 our name or our designee (collectively, the “Blue Hat Registration”).
Added
Additionally, the Company has entered into a manufacturing and supply agreement with the aforementioned third party, committing to the purchase of the full allowable amount during the specified period.
Removed
For further discussion, see Note 12, Joint Venture .
Added
The Grace Manufacturing Agreement is set to expire on December 31, 2024, subject to potential renewal, the terms of which will be negotiated by both parties. Any failure to extend the Grace Manufacturing Agreement on satisfactory terms could potentially have a material adverse impact on the Company’s financial results and strategic position, as outlined in Item 1A.
Removed
Supply Agreement and Securities Purchase Agreement - NHSc On October 10, 2022, we along with Société des Produits Nestlé SA, a société anonyme organized under the laws of Switzerland (NHSc), as successor-in-interest to NESTEC Ltd., entered into an amended and restated supply agreement (the “Supply Agreement”), which amends and restates the supply agreement, dated December 19, 2018, entered into by the Company and NESTEC Ltd.
Added
Risk Factors in this Annual Report on Form 10-K, "We rely on a single supplier, W.R.
Removed
Pursuant to the Supply Agreement, NHSc and its affiliates will exclusively purchase nicotinamide riboside chloride (NRCL) from us and NHSc and its affiliates will have the non-exclusive right to manufacture, market, distribute, and sell products using NRCL for human use in the (i) medical nutritional, (ii) functional food and beverage and (iii) multi-ingredient dietary supplements categories sold under one of the NHSc brands (the “Approved Products”) world-wide, but excluding certain countries and ingredient combinations.
Added
As of December 31, 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.
Removed
For further discussion, see Note 14, NHSc Revenue .

… 61 more changes not shown on this page.

Other NAGE 10-K year-over-year comparisons