CORE STANDARDS AND CONTRACT SERVICES SEGMENT

We have taken advantage of both supply chain needs and regulatory requirements such as the GMPs for dietary supplements to build our core standards and contract services segment. We believe that we create value throughout the supply chain of the pharmaceutical, dietary supplements, functional foods and personal care markets. ~~We do this by:~~

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~~Combining the analytical methodology and characterization of materials with the technical support for the sale of reference materials by our clients;~~

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~~Helping companies to comply with government regulations; and~~

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~~Providing value-added solutions to every layer of the supply chain in order to increase the overall quality of products being produced.~~

In addition, through regulatory consulting ~~segment,~~operations, we provide product regulatory approval and scientific advisory services to our clients in the food, supplement and pharmaceutical industries with effective solutions to manage potential health and regulatory risks. Our science-based solutions are for both new and existing products that may be subject to product liability and/or exposed to changing scientific standards or public perceptions; literature evaluations; and design and assessment of pre-clinical and clinical safety testing. We specialize in regulatory submissions for food and dietary supplement ingredients. For our clients involved in drug development within the pharmaceutical industry, we provide similar services as well as risk-based strategies, including intellectual property data and compliance gap identification, due diligence assessments and investigational new drug writing. By providing a more comprehensive suite of science-based and regulatory services, we will be able to more efficiently advance products in the dietary supplement, food and beverage, animal health, cosmetic and pharmaceutical markets.

We will continue to expand ~~this aspect of~~ our core standards and contract services business and, more importantly, 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 ~~our core standards and contract services~~this segment.

Our core standards and contract services segment provides us with the opportunity to become aware of the results from research and screening activities performed on thousands of potential natural product candidates through our relationships with various universities and research institutions. By selecting the most promising ingredients leveraged from this market-based screening model, which is grounded by primary research performed through leading universities and institutions, followed by selective investments in further research and development, new proprietary ingredient technologies can be identified and brought to various markets with a much lower investment cost and an increased chance of success.

We continue to identify and in-license novel, proprietary ingredients with significant potential health benefits. Among these next generation compounds are pterostilbene and caffeine co-crystal, which allows formulators of energy products to reduce the amount of caffeine in their products, and anthocyanins, which are compounds responsible for the dark pigment found in certain berries and flowers. Like NIAGEN® ~~and pTeroPure~~®, ~~these compounds also have potential in multiple markets.~~

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Overview of our Products and Services

Current products and services provided are as follows:

~~PROPRIETARY INGREDIENTS~~
CONSUMER PRODUCTS

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~~Proprietary ingredient technologies (ingredients segment).~~TRU NIAGEN® branded dietary supplements. We currently offer ~~bulk raw materials for inclusion in dietary supplements, food, beverage~~our NIAGEN® nicotinamide riboside through our TRU NIAGEN® finished bottles. We will continue to build our TRU NIAGEN® as a global brand and cosmetic products. This is an area where we are increasing our focus, as we believe we can secure and defend our market positions through patents and long-term manufacturing agreements with our customers and vendors.

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~~Nicotinamide riboside~~offer TRU NIAGEN® ~~(ingredients segment)~~.to consumers worldwide. We are ~~working to develop and conduct~~conducting additional clinical trials to validate the health benefits associated with ~~NR, a recently discovered vitamin found naturally~~NIAGEN® and TRU NIAGEN®.

INGREDIENTS

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Nicotinamide riboside NIAGEN®. We will continue to sell NIAGEN® in ~~milk. NR is the most efficient B3 vitamin~~ingredient form to ~~enhance NAD+ energetics. NR has shown promise for improving cardiovascular health, glucose levels and cognitive function and has demonstrated evidence of anti-aging effects.~~three remaining customers that we have supply contracts with.

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Pterostilbene pTeroPure® ~~(ingredients segment)~~. Pterostilbene is a polyphenol and a powerful antioxidant that shows promise in a range of ~~health related~~health-related fields. We have exclusive in-licensed patents and patents pending related to the use of pterostilbene for a number of these benefits, and have filed additional patents related to supplementary benefits, such as a patent jointly filed with University of California at Irvine related to its effects on non-melanoma skin cancer. We have successfully conducted a clinical trial, together with the University of Mississippi, related to its blood pressure lowering ~~effects and expect to conduct additional clinical trials on pterostilbene and anticipate entering the dietary supplement and, if clinical results are favorable, the pharmaceutical market.~~effects.

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Pterostilbene and caffeine co-crystal PURENERGY® ~~(ingredients segment)~~. We are working ~~to develop and conduct additional clinical trials~~ to validate the benefits of the co-crystal ingredient comprised of caffeine and pterostilbene. The first human study of this ingredient demonstrated that it delivers 30 percent more caffeine, stays in the blood stream longer, and is absorbed more slowly than ordinary caffeine. With this ingredient, formulators of energy products may have the ability to reduce the total amount of caffeine in their products by as much as 50% without sacrificing consumers’ expectations from such products.

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Anthocyanin AnthOrigin™ ~~(ingredients segment)~~. We plan to develop an extraction process to concentrate the anthocyanins in Suntava® Purple Corn which will be used to produce a concentrated anthocyanin ingredient. We will utilize the expertise of a toll manufacturer to produce the commercial ingredient. We believe there is a ready market for cost-effective concentrated anthocyanins having application in dietary supplements, sports nutrition, food &and beverage and skin care.

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Spirulina Extract Immulina™ ~~(ingredients segment)~~. IMMULINA™ is a spirulina extract and the predominant active compounds are Braun-type lipoproteins which are useful for improving human immune function. These lipoproteins are present at much greater levels than those found within commonly used immune enhancing botanicals such as Echinacea and ginseng.

~~ANALYTICAL & CHEMISTRY BASED~~CORE STANDARDS AND CONTRACT SERVICES ~~REGULATORY CONSULTING SERVICES AND NATURAL PRODUCT FINE CHEMICALS~~

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Supply of reference standards, materials & ~~kits (core standards and contract services segment).~~kits. We supply a wide range of products necessary to conduct quality control of raw materials and consumer products. Reference standards and materials and the kits created from them are used for research and quality control in the dietary supplements, cosmetics, food and beverages, and pharmaceutical industries.

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Supply of finefine chemicals and ~~phytochemicals (core standards and contract services segment).~~phytochemicals. As demand for new natural products and phytochemicals increases, we can scale up and supply our core products in the gram to kilogram scale for companies that require these products for research and new product development.

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~~Contract services~~ ~~(core standards and contract services segment)~~. We provide a wide range of contract services ranging from routine contract analysis for the production of dietary supplements, cosmetics, foods and other natural products to elaborate contract research for clients in these industries.

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Consulting services~~(regulatory consulting segment)~~. We provide a comprehensive range of consulting services in the areas of regulatory support, new ingredient or product development, risk management and litigation support. We provide and offer product regulatory approval and scientific advisory services.

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Process ~~development~~ ~~(core standards and contract services segment).~~development. Developing cost effective and efficient processes for manufacturing natural products can be very difficult and time consuming. We assist customers in creating processes for cost-effective manufacturing of natural products, using “green chemistry.”

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~~Quality verification seal program (core standards and contract services segment).~~ We intend to further develop and expand our offering of “ChromaDex® Quality Verified Seal” program which currently includes (i) supply chain facility audits and inspections to verify compliance with Good Manufacturing Practices as specified by the FDA; (ii) a comprehensive identity testing program for raw materials and finished products; (iii) finished product testing for potential contaminants such as microbials, heavy metals and residual solvents; and (iv) provisions for ongoing monitoring to be performed as part of a quality protocol design and managed by ChromaDex.

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Phytochemical ~~libraries (core standards and contract services segment).~~libraries. We intend to continue investing in the development of natural product based libraries by continuing to create these libraries internally as well as through product licensing.

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~~Databases for cross-referencing phytochemicals (core standards and contract services segment)~~. We are working on building a database for cross referencing phytochemicals against an extensive list of plants, including links to references to ethnopharmacological, ethnobotanical, and biological activity, as well as clinical evidence.

Sales and Marketing Strategy

~~Our~~For our consumer products segment, we employ a variety of strategies to drive sales ~~structure for the~~and consumer awareness of TRU NIAGEN®, including social media and internet advertising, managing websites, influencers, paid search, distribution of research publications and press releases.

For our ingredients segment and core standards and contract services segment, our strategy is based on a direct, technically-oriented model. We recruit and hire sales and marketing staff with appropriate commercial and scientific backgrounds. Our sales staff ~~currently operates out of our Irvine, California office and~~ performs sales duties by using combinations of telemarketing, e-mail, tradeshows and customer visits. The ~~Inside Sales~~inside sales portion of the organization also has customer service responsibilities. All sales and marking staff are compensated based on salary and performance-based bonus.

~~The~~ Our regulatory consulting ~~segment, operating out of Rockville, Maryland,~~operations, generates scientific and regulatory consulting revenue from an existing well-established list of Fortune 1000 customers and referrals. ~~Our sales staff for the ingredients, reference standards and analytical service business in Irvine, California also generates leads for the regulatory consulting segment.~~

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USA and Canada:

For our consumer products segment, we are distributing our TRU NIAGEN® products direct to consumers through our propriety ecommerce platform TRUNIAGEN.com, Amazon Prime and Amazon marketplace. Currently and for the near-term, we do not plan to sell TRU NIAGEN® to brick and mortar retailers in the US and Canada.

For our ingredients segment and core standards and contract services segment, ~~we employ a range of the following marketing activities to promote and sell our products and services:~~ w

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~~Catalogs, research publications, brochures and flyers~~

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~~Tradeshows and conferences~~

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~~Newsletters (via e-mail)~~

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~~Internet~~

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~~Website~~

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~~Advertising in trade publications~~

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~~Press releases~~

Wee intend to continue to use a direct marketing approach in the U.S. and Canada to promote our products and ~~services to all markets that we target for direct sales.~~services.

International:

For our consumer products segment, we will be utilizing strategic partners on a regional or local country basis to expand our distribution of TRU NIAGEN® products. Our strategic partnerships could include brick and mortar and/or ecommerce channels. We also are evaluating strategic joint ventures to rapidly expand our distribution in regions like Asia. We began our international expansion of TRU NIAGEN® products with the successful launch in Hong Kong and Macau with our strategic partner, Customer G, in the third quarter of 2017, followed by the launch in Singapore in the first quarter of 2018.

For our ingredients segment, most of our customers are based currently in U.S. We are looking to expand into international markets through our international business partners.

For our core standards contract services segment, we use international distributors to market and sell to several foreign countries or markets. The use of distributors in some international markets has proven to be more effective than direct sales. ~~Currently, we have distribution agreements in place with the following distributors for the following countries or regions:~~

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~~Europe (LGC Limited)~~

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~~China (MeiTech International LLC)~~

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~~Japan (Wako Pure Chemical Industries, Ltd.)~~

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~~Korea (Dongmyung Scientific Co.)~~

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~~Brazil (JMC, Inc.)~~

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~~Australia and New Zealand (Phenomenex)~~

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~~Taiwan (Uni Onward)~~

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~~South Africa (Industrial Analytical)~~

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~~India~~

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~~Indonesia, Malaysia, Singapore and Thailand~~

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~~Mexico~~

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For our regulatory consulting ~~segment,~~operations, we engage on consulting projects for customers all over the world, including Europe, South America, and Asia. Consulting revenues are generated from an existing well-established list of Fortune 1000 customers and referrals.

~~Business Market~~

~~According to data from the Nutrition Business Journal, the US consumer~~ ~~Dietary Supplement~~ market is estimated to be $41 billion in 2016 and growing at 6.0% per annum through 2020. This is the primary market that ChromaDex services for both ingredients and analytical testing and standards. The Dietary Supplement segment is part of the larger ~~US Nutrition Industry~~ which is estimated at $195 billion for 2016 and forecasted to grow at a rate of 8% through 2020. This larger segment includes Dietary Supplements as well as functional foods and beverages and personal care. This larger industry represents a secondary addressable market for our ingredients and services. The quality control, safety and assurance of the products in these markets are, as previously noted, largely “under regulated.” This scenario leads to the establishment of the basis of one of our business strategies: concentration on the overall content of products, as well as active/marker components, uniformity of production, and toxicology of products in these markets in ways similar to analysis by other companies focused in the pharmaceutical industry. There is an increasing demand for new products, ingredients and ideas for natural products. The pressure for new, innovative products, which are “natural” or “green” based, cuts across all markets including food, beverage, cosmetic and pharmaceutical.

While we believe that doctors and patients have become more receptive to the use of botanical and herbal-based and natural and dietary ingredients to prevent or treat illness and improve quality of life, the medical establishment has conditioned its acceptance on significantly improved demonstration of efficacy, safety and quality control comparable to that imposed on pharmaceuticals. Nevertheless, little is currently known about the constituents, active compounds and safety of many botanical and herbal natural ingredients and few qualified chemists and technology based companies exist to supply the information and products necessary to meet this burgeoning market need. Natural products are complex mixtures of many compounds, with significant variability arising from growing and extraction conditions. The following developments are some that highlight the need for standards control and quality assurance:

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~~The~~ ~~FDA~~ ~~published its draft guidance for GMPs for dietary supplements on March 13, 2003. The final rule from this guidance was made effective in June 2007, and full compliance was required by June 2010; and~~

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Regulatory agencies around the world have started to review the need for the regulation of herbal and natural supplements and are considering regulations that will include testing for the presence of toxic or adulterating compounds, drug/compound interactions and evidence that the products are biologically active for their intended use.

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Government Regulation

Some of our operations ~~for ingredients segment and core standards and contract services segment~~ are subject to regulation by various United States federal agencies and similar state and international agencies, including the FDA, the Federal Trade Commission (“FTC”), the Department of Commerce, the Department of Transportation, the Department of Agriculture and other state and international agencies. These regulators govern a wide variety of production activities, from design and development to labeling, manufacturing, handling, selling and distributing of products. From time to time, federal, state and international legislation is enacted that may have the effect of materially increasing the cost of doing business or limiting or expanding our permissible activities. We cannot predict whether or when potential legislation or regulations will be enacted, and, if enacted, the effect of such legislation, regulation, implementation, or any implemented regulations or supervisory policies would have on our financial condition or results of operations. In addition, the outcome of any litigation, investigations or enforcement actions initiated by state or federal authorities could result in changes to our operations being necessary and in increased compliance costs.

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U.S. FDA Regulation

In the United States dietary supplements and food are subject to FDA regulations. For example, the FDA’s final rule on GMPs for dietary supplements published in June 2007 requires companies to evaluate products for identity, strength, purity and composition. These regulations in some cases, particularly for new ingredients, require a notification that must be submitted to the FDA along with evidence of safety. In addition, depending on the type of product, whether a dietary supplement, cosmetic, food, or pharmaceutical, the FDA, under the Food, Drug and Cosmetic Act, or ~~FDCA,~~(the "FDCA"), can regulate:

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product testing;

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ingredient testing;

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documentation process, batch records, specifications;

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product labeling;

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product manufacturing and storage;

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~~New Dietary Ingredient (NDI)~~NDI status;

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health claims, advertising and promotion; and

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product sales and distribution.

The FDCA has been amended several times with respect to dietary supplements, most notably by the Dietary Supplement Health and Education Act of 1994 ~~known as “DSHEA.”~~(“DSHEA”). DSHEA established a new framework for governing the composition and labeling of dietary supplements. Generally, under DSHEA, dietary ingredients that were marketed in the United States before October 15, 1994 may be used in dietary supplements without notifying the FDA. However, ~~a “new” dietary ingredient~~and NDI (a dietary ingredient that was not marketed in the United States before October 15, 1994) is subject to ~~a new dietary ingredient, or~~ NDI notification that must be submitted to the FDA unless the ingredient has previously been “present in the food supply as an article used for food” without being “chemically altered.” An NDI notification must provide the FDA with evidence of a “history of use or other evidence of safety” establishing that the use of the dietary ingredient “will reasonably be expected to be safe.” An NDI notification must be submitted to the FDA at least 75 days before the initial marketing of the NDI. There can be no assurance that the FDA will accept the evidence of safety for any NDIs that we may want to commercialize, and the FDA’s refusal to accept such evidence could prevent the marketing of such dietary ingredients. The FDA is in the process of developing guidance for the industry that will aim to clarify the FDA’s interpretation of the NDI notification requirements, and this guidance may raise new and significant regulatory barriers for NDIs.

~~In order for~~For any new ingredient developed by us to be used in conventional food or beverage products in the United States, the product ~~would~~ either ~~have to~~must be approved by the FDA as a food additive pursuant to a food additive petition ~~or FAP,~~("FAP") or be generally recognized as safe ~~or GRAS.~~("GRAS"). The FDA does not have to approve a company’s determination that an ingredient is GRAS. However, a company can notify the FDA of its determination. There can be no assurance that the FDA will approve any FAP for any ingredient that we may want to commercialize, or agree with our determination that an ingredient is GRAS, either of which could prevent the marketing of such ingredient.

U.S. Advertising Regulations

In addition to FDA regulations, the FTC regulates the advertising of dietary supplements, foods, cosmetics, and over-the-counter ~~or OTC,~~("OTC"), drugs. In recent years, the FTC has instituted numerous enforcement actions against dietary supplement companies for failure to adequately substantiate claims made in advertising or for the use of false or misleading advertising claims. These enforcement actions have often resulted in consent decrees and the payment of civil penalties, restitution, or both, by the companies involved. We may be subject to regulation under various state and local laws that include provisions governing, among other things, the formulation, manufacturing, packaging, labeling, advertising and distribution of dietary supplements, foods, cosmetics and OTC drugs.

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In addition, The National Advertising Division of the Council of Better Business Bureaus ~~(the “NAD”)~~ reviews national advertising for truthfulness and accuracy. The ~~NAD~~National Advertising Division of the Council of Better Business Bureaus uses a form of alternative dispute resolution, working closely with in-house counsel, marketing executives, research and development departments and outside consultants to decide whether claims have been substantiated.

International Regulations

Our international sales for the consumer products segment and ingredients segment are subject to foreign government regulations, which vary substantially from country to country. The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA approval, and the requirements may differ. In addition, the export by us of certain of our products that have not yet been cleared or approved for domestic distribution may be subject to FDA export restrictions. We may be unable to obtain on a timely basis, if at all, any foreign government or United States export approvals necessary for the marketing of our products abroad.

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Regulation in Europe is exercised primarily through the European Union, which regulates the combined market of each of its member states. Other countries, such as Switzerland, have voluntarily adopted laws and regulations that mirror those of the European Union with respect to dietary ingredients.

Major Customers

~~For our ingredients segment, there were three~~Major customers who accounted for more than 10% of the Company’s total sales in the last three years. In 2016, Customer C accounted for 19.3% of the Company’s total sales. In 2015, Customer B accounted for 11.0% of the Company’s total sales. In 2014, Customer A accounted for 10.2% of the Company’s total sales.from continuing operations were as follows:

Years Ended

Major Customers

2016

2015

2014

Customer C (Ingredients segment)
  19.3%
  *
  *
Customer B (Ingredients segment)
  *
  11.0%
  *
Customer A (Ingredients segment)
  *
  *
  10.2%




* Represents less than 10%.

	Years Ended
Major Customers	2017	2016	2015

Customer G - Related Party	19.4%	*	*
Customer D	10.2%	11.0%	*
Customer C	*	23.9%	*
Customer B	*	*	13.6%

* Represents less than 10%.

Generally, we do not depend upon a single customer, or a few customers, and the loss of any one or more would not have a material adverse effect on the ~~ingredients segment or the~~ Company. However, due to the volume of consumer products and ingredients we are selling in relation to the overall Company’s sales, we do expect that a few of our customers at times may account for more than 10% of the Company’s sales.

Competitive Business Conditions

For ~~the core standards and contract services segment and the regulatory consulting~~our consumer products segment, we ~~did not have any~~are in direct competition with some of our former and current ingredients segment customers ~~who accounted for more than 10% of the Company’s total sales~~that use NIAGEN® in the ~~last~~products. We will face reduced competition in the near term as we have reduced the number of NIAGEN® ingredient supply agreements to three ~~years.~~

~~Competitive Business Conditions~~as of March 2018.

For our ingredients segment, we face little direct competition as the ingredients we offer, such as NIAGEN® and pTeroPure® are backed by intellectual properties exclusively licensed to us. We, however, face strong indirect competition from other ingredient suppliers who may supply alternative ingredients that may have similar characteristics compared to the ingredients we offer. Below is a list of some of the competitors for our ingredients segment.

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Ingredients Business Segment Competitors

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Royal DSM (the Netherlands)

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Glanbia plc (Ireland)

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BASF (Germany)

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Lonza Group Ltd (Switzerland)

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Sabinsa Corporation (India/USA)

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For the core standards and contract services segment, we face competition within the standardization and quality testing niche of the natural products ~~market, though we know of no other companies that offer both reference standards and testing to their customers.~~market. Below is a current list of certain competitors. These competitors have already developed reference standards or contract services or are currently taking steps to develop botanical standards or contract services. Of the competitors listed, some currently sell fine chemicals, which, by default, are sometimes used as reference standards, and others are closely aligned with our market niche ~~so as~~ to reduce any barriers to entry if these companies wish to compete. Some of these competitors currently offer similar services and have the scale and resources to compete with us for larger customer accounts. Because some of our competitors are larger in total size and capitalization, they likely have greater access to capital markets, and are in a better position than we are to compete nationally and internationally.

Core Standards and Contract Services Segment Competitors

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Sigma-Aldrich (USA)

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Phytolab (Germany)

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US Pharmacopoeia (USA)

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Extrasynthese (France)

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~~Covance (USA)~~

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~~Eurofins (France)~~

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~~Silliker Canada Co. (Canada)~~

For regulatory consulting ~~segment,~~operations, there are numerous competitors, including some that are much larger companies with more resources. The success in winning and retaining clients is heavily dependent on the efforts and reputation of our consultants. We believe the barriers to entry ~~in particular~~ areas of our consulting expertise are low.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, Including Duration

~~For our ingredients segment, we~~We currently protect our intellectual property through patents, trademarks, designs and copyrights on our products and services. Our business strategy is to use the intellectual property harnessed from our core standards and contract services segment as the basis for providing new proprietary ingredients to our customers. Our strategy is to develop these proprietary ingredients on our own as well as to license our intellectual property to companies who will commercialize it. We anticipate that the net result will be a ~~long term~~long-term flow of intellectual property milestone and royalty payments to us.

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The following table sets forth our existing patents and those to which we have licensed rights:

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Patent Number	Title	Filing Date	Issued Date	Expires	Licensor
6,852,342	Compounds for altering food intake in humans	3/26/2002	2/8/2005	2/12/2022	Co-owned by Avoca, Inc. and ChromaDex
7,205,284	Potent immunostimulants from microalgae	7/10/2001	4/17/2007	3/9/2022	Licensed from University of Mississippi
7,776,326	Methods and compositions for treating neuropathies	6/3/2005	8/17/2010	6/3/2025	Licensed from Washington University
7,846,452	Potent immunostimulatory extracts from microalgae	7/28/2005	10/7/2010	7/28/2025	Licensed from University of Mississippi
8,106,184	Nicotinyl Riboside Compositions and Methods of Use	11/17/2006	1/31/2012	11/17/2026	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	3/26/2029	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	10/25/2030	Licensed from the University of Mississippi and U.S. Department of Agriculture
8,197,807	Nicotinamide Riboside Kinase compositions and Methods for using the same	11/20/2007	6/12/2012	11/20/2027	Licensed from Dartmouth College
8,227,510	Combine use of pterostilbene and quercetin ~~for the production of~~to produce cancer treatment medicaments	7/19/2005	7/24/2012	7/19/2025	Licensed from Green Molecular S.L.
8,252,845	Pterostilbene as an agonist for the peroxisome proliferator-activated receptor alpha isoform	2/1/2012	8/28/2012	2/1/2032	Licensed from the University of Mississippi and U.S. Department of Agriculture
8,318,807	Pterostilbene Caffeine Co-Crystal Forms	7/30/2010	11/27/2012	7/30/2030	Licensed from Laurus Labs Private Limited

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8,383,086	Nicotinamide Riboside Kinase compositions and Methods for using the same	4/12/2012	2/26/2013	4/12/2032	Licensed from Dartmouth College
8,399,712	Pterostilbene cocrystals	7/30/2010	3/19/2013	7/30/2020	Licensed from Laurus Labs Private Limited
8,524,782	Key intermediate for the preparation of Stilbenes, solid forms of Pterostilbene, and methods for making the same	6/1/2009	9/3/2013	6/1/2029	Licensed from Laurus Labs Private Limited
8,809,400	Method to Ameliorate Oxidative Stress and Improve Working Memory Via Pterostilbene Administration	6/10/2008	8/19/2014	6/10/2028	Licensed from the University of Mississippi and U.S. Department of Agriculture
8,841,350	Method for treating non-melanoma skin cancer by inducing UDP-Glucuronosyltransferase activity using pterostilbene	5/8/2012	9/22/2014	5/8/2032	Co-owned by ChromaDex and University of California
8,945,653	Extracted whole kernels and improved processed and processable corn produced thereby	5/23/2011	2/3/2015	5/23/2031	Licensed from Suntava, LLC
9,028,887	Method improve spatial memory via pterostilbene administration	5/22/2014	5/12/2015	5/22/2034	Licensed from the University of Mississippi and U.S. Department of Agriculture
9,439,875	Anxiolytic effect of pterostilbene	5/11/2011	9/13/2016	5/11/2031	Licensed from the University of Mississippi and U.S. Department of Agriculture

Manufacturing

~~For our ingredients segment and our core standards and contract services segment, we~~We currently utilize third-party manufacturers to produce and supply the ~~ingredients.~~dietary supplements, ingredients, products, and services. Following the receipt of products or product components from third-party manufacturers, we currently inspect products, as needed. We expect to reserve the right to inspect and ensure conformance of each product and product component to our specifications. We will also consider manufacturing certain products or product components internally, if our capacity permits, when demand or quality requirements make it appropriate to do so.

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We intend to work with manufacturing companies that can meet the standards imposed by the FDA, the International Organization for Standardization ~~or “ISO,”~~ and the quality standards that we will require for our own internal policies and procedures. We expect to monitor and manage supplier performance through a corrective action program developed by us. 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.

For certain reference standards, ChromaDex Analytics, Inc. operates laboratory operations and a manufacturing facility for our core standards and contract services segment. We currently maintain our own manufacturing equipment and have the ability to manufacture certain products in limited quantities, ranging from milligrams to kilograms. In addition, the new research and development laboratory in Longmont, Colorado will allow us to manufacture at a process scale for products that we are planning to take to market. We intend to contract for the manufacturing of products that we develop and enter into strategic relationships or license agreements for sales and marketing of products that we develop when the quantities we require exceed our capacity.

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Sources and Availability of Raw Materials ~~and the Names of Principal Suppliers~~

WeFor all three business segments, 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.

Research and Development

~~For our ingredients segment, we~~We have completed the first human clinical trial on our proprietary ingredient NR and the results demonstrated that a single dose of NR resulted in statistically significant increases in the co-enzyme NAD+ in healthy human volunteers. In addition, NR was also found to be safe as no adverse events were observed. In 2015, NR was recognized by the FDA as a “New Dietary Ingredient.” NR was also “Generally Recognized Asas Safe” by an independent panel of expert toxicologists and in August 2016, the ~~U.S.~~ FDA issued a GRAS No Objection Letter.

We are currently ~~conducting~~completing a second human clinical trial on NR which ~~will evaluate~~evaluated the effect of repeated doses of NIAGEN® on NAD+ metabolite concentrations in blood, urine and muscle in healthy adults. This study ~~will evaluate~~evaluated the impacts of 3three dose levels of NIAGEN® compared to a placebo. One quarter of subjects ~~will receive~~received the low dose of NIAGEN® (100 mg), one quarter ~~will receive~~received the moderate dose of NIAGEN® (300 mg), one quarter ~~will receive~~received the higher dose of NIAGEN® (1,000 mg) and one quarter ~~will receive~~received the placebo. ~~The recruitment~~Preliminary results show that NAD levels rose in response to the dose of NIAGEN® and ~~dosing portions of~~ the ~~trial are currently in~~elevated blood NAD levels were sustained throughout the ~~final stages as the last participant is currently on study.~~8-week treatment period.

We have also been working closely with the National Institute of Health under a collaborative agreement on a therapeutic indication for NR as a treatment of Cockayne Syndrome, a rare pediatric orphan ~~disease, Cockayne Syndrome. We completed a pre-Investigational New Drug (“IND”) meeting with the FDA in November 2016 and we expect to file an IND application with the FDA in 2017.~~

We have also successfully conducted a clinical trial, together with the University of Mississippi, on our proprietary ingredient pterostilbene for its blood pressure lowering effects. We expect to conduct additional clinical trials on this compound and we anticipate entering the dietary supplement and, if clinical results are favorable, possibly the pharmaceutical markets as well. We also have completed a study on our proprietary ingredient pterostilbene with caffeine co-crystal. The first human study of this ingredient demonstrated that it delivers 30 percent more caffeine, stays in the blood stream longer, and is absorbed more slowly than ordinary caffeine. We anticipate conducting additional clinical trials on NR and other compounds in our pipeline to provide differentiation as we market these proprietary ingredients and support various health-related claims or obtain additional regulatory clearances.disease.

Through our ~~newly opened~~ research and development laboratory in Longmont, Colorado, we intend to manufacture at a process scale for products that we are planning to take to market as well as explore cost saving processes for existing products.

We plan to utilize our expertise in natural products to license and develop new intellectual property that can be sold to clients in our target industries.

Research and development costs for ~~our ingredients segment for~~ the fiscal years ended December 30, 2017, December 31, 2016 and January 2, 2016 ~~and January 3, 2015~~ were approximately ~~$2,488,000, $892,000~~$4.0 million, $2.5 million and ~~$514,000,~~$0.9 million, respectively. Please refer to Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K for research and development costs for each of the business segments for the last three fiscal years.

Environmental Compliance

We will incur significant expense in complying with GMPs and safe handling and disposal of materials used in our research and manufacturing activities. We do not anticipate incurring additional material expense ~~in order~~ to comply with ~~Federal,~~federal, state and local environmental laws and regulations.

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Working Capital

The Company’s working capital at the end of years ~~2016~~2017 and ~~2015~~2016 was approximately ~~$7.8~~$7.4 million and ~~$4.4~~$7.8 million, respectively. The Company measures working capital by adding trade receivables and inventories, and subtracting accounts payable. ~~The majority~~Most of the working capital is consumed by our consumer products segment and ingredients segment as the operations require a large amount of inventory to be on hand. As the consumer products segment and ingredients segment ~~grows,~~grow, more working capital will likely be needed to support the operations. ~~As of December 31, 2016, the Company had approximately $7.0 million of inventory for our ingredients segment, which represented approximately 36% of the Company’s total assets.~~

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Backlog Orders

For our consumer products segment where we ship products internationally to a distributor, we may have a backlog from time to time as the production of TRU NIAGEN® finished bottles require up to three months lead time by our third-party contract manufacturers. As of December 30, 2017, we did not have any backlog orders from the distributor as all orders received have been shipped. For products that are directly shipped to consumers, we have minimal backlog orders as we carry inventory on hand to ship upon the receipt of order.

For our ingredients segment, we also have minimal backlog orders as we carry inventory on hand for most of the ~~ingredients~~products we offer and we ship upon the receipt of customer’s ~~purchase orders.~~order.

For ~~the~~our core standards and contract services segment, we normally have a small backlog of orders for reference standards. These orders amount to approximately $25,000 or less. Because we list over 1,800 phytochemicals and 400 botanical reference materials in our catalog, we may not always have the items in stock at the time of customers’ orders. These backlog orders are normally fulfilled within 2 to 3 months.

Facilities

For information on our facilities, see “Properties” in Item 2 of this Form 10-K.

Employees

As of December ~~31, 2016,~~30, 2017, ChromaDex (including Healthspan Research LLC and ChromaDex Analytics, Inc.) had 9374 employees, 8471 of whom were full-time and 9three of whom were part-time. We consider our relationships with our employees to be satisfactory. None of our employees is covered by a collective bargaining agreement.

Financial Information about Geographic Areas

Please refer to Item ~~1A.~~ 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K for financial information about geographic areas.

Available Information

Our Internet website address is www.chromadex.com. We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practical after we file such material with, or furnish it to, the Securities and Exchange Commission, or SEC. This information is also available in print to any shareholder who requests it, with any such requests addressed to ChromaDex Corporation, 10005 Muirlands Blvd. Ste G, Irvine, CA 92618. Certain of these documents may also be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, and other information regarding issuers that file electronically with the SEC at www.sec.gov. We also make available free of charge on our website our Code of Business Conduct and Ethics, and the Charters of our Audit Committee, Nominating and Corporate Governance Committee, and Compensation Committee of our Board of Directors.

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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. If any of the following risks ~~actually~~ occurs, our business, financial condition, results of operations and our future growth prospects would be materially and adversely affected. Under these circumstances, the trading price and value of our common stock could decline, resulting in a loss of all or part of your investment. The risks and uncertainties described in this Form 10-K are not the only ones facing our Company. Additional risks and uncertainties of which we are not presently aware, or that we currently consider immaterial, may also affect our business operations.

Risks Related to our Company and our Business

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

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 ~~$2,928,000, $2,771,000~~$11.4 million, $2.9 million and ~~$5,388,000~~$2.8 million for the years ended December 30, 2017, December 31, 2016 and January 2, 2016, ~~and January 3, 2015,~~ respectively. As of December 30, 2017, our accumulated deficit was approximately $56.6 million. We have not achieved profitability on an annual basis. We may not be able to reach a level of revenue to continue to achieve and sustain profitability. If our revenues grow slower than anticipated, or if operating expenses exceed expectations, then we may not be able to achieve and sustain profitability in the near future or at all, which may depress our stock price.

~~On November 4, 2016, we entered into a business financing agreement with Western Alliance Bank, in order to establish a formula based revolving credit line up to $5.0 million.~~ As of December ~~31, 2016, the Company failed to meet one of the covenants of the business financing agreement, which was to at least meet 50% of projections of EBDAS~~30, 2017, our cash and was in default under the agreement (the “Existing Default.”). On March 12, 2017, the Company entered into a modification agreement with Western Alliance under which Western Alliance waived the Existing Default.cash equivalents totaled approximately $45.4 million. While we anticipate that our current cash, cash equivalents and cash to be generated from operations ~~and the established $5.0 million revolving credit line~~ will be sufficient to meet our projected operating plans ~~through at least March 17, 2018,~~into 2019, we may require additional funds, either through additional equity or debt financings 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. 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.

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Our capital requirements will depend on many factors.

Our capital requirements will depend on many factors, including:

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the revenues generated by sales of our products;

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the costs associated with expanding our sales and marketing efforts, including efforts to hire independent agents and sales representatives and obtain required regulatory approvals and clearances;

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the expenses we incur in developing and commercializing our products, including the cost of obtaining and maintaining regulatory approvals; and

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unanticipated general and administrative ~~expenses.~~expenses, including expenses involved with our ongoing litigation with Elysium.

~~As a result~~

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Because of these factors, we may seek to raise additional capital prior to March ~~17, 2018~~2019 both to meet our projected operating plans after March ~~17, 2018~~2019 and to fund our longer term strategic objectives. Additional capital may come from public and private equity or debt offerings, borrowings under lines of credit or other sources. These additional funds may not be available on favorable terms, or at all. There can be no assurance we will be successful in raising these additional funds. Furthermore, if we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution and the new equity or debt securities we issue may have rights, preferences and privileges senior to those of our existing stockholders. In addition, if we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to our products or proprietary technologies, or grant licenses on terms that are not favorable to us. If we cannot raise funds on acceptable terms, we may not be able to develop or enhance our products, obtain the required regulatory clearances or approvals, execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements. Any of these events could adversely affect our ability to achieve our development and commercialization goals, which could have a material and adverse effect on our business, results of operations and financial condition.

We are currently engaged in substantial and complex litigation with Elysium Health, Inc. and Elysium Health LLC ~~that may~~(“Elysium”), the outcome of which could materially harm our business and ~~a disruption in sales to or the ability to collect from this customer or other significant customers in the future, could also materially harm our~~ financial results.

We are currently engaged in litigation with Elysium, ~~Health, LLC~~a customer that represented 19% of our net sales for the year ~~ending~~ended December 31, 2016. Elysium has made no purchases from us since August 9, 2016. The litigation includes multiple complaints and counterclaims by us and Elysium in venues in California and New York, as well as a petition by Elysium with the U.S. Patent and Trademark Office for inter partes review of one patent to which we are the exclusive licensee. For further details on this litigation, please refer to Part I, Item 3 of this Annual Report on Form 10-K. This customer has not paid us approximately $3.0 million for previous purchase orders. We may not collect the full amount owed to us by this customer, and as a result, we may have to write off a large portion of that amount as uncollectible expense. We may also have to discount future sales, if any, to this customer.

The litigation ~~may turn out to be~~is substantial and complex, and it has and could continue to cause us to incur significant costs, ~~and~~as well as distract our management over an extended ~~period of time.~~period. The litigation may substantially disrupt our business and we cannot assure you that we will be able to resolve the litigation on terms favorable to us. ~~The customer has filed a counterclaim against us, and if~~If we are unsuccessful in resolving the litigation on favorable terms to us, we may be forced to pay compensatory and punitive damages and restitution for any royalty payments that we received from Elysium, which payments could materially harm our business, or be subject to other remedies, including injunctive relief. Further, if we are unsuccessful in resolving the ~~customer.~~Patent Claim on favorable terms, or if the U.S. Patent and Trademark Office invalidates the patent subject to the inter partes review, we may lose the competitive advantage that is provided by the subject intellectual property rights, which would have a material adverse effect on our business. In addition, Elysium has not paid us approximately $2.7 million for previous purchase orders. We may not collect the full amount owed to us by Elysium, and as a result, we may have to write off a large portion of that amount as uncollectible expense. We cannot ~~guarantee~~predict the outcome of our litigation with Elysium, which could have any of the results described above or other results that ~~the customer will continue to make purchases at previous volumes or prices, which may~~could materially harm our ~~future sales if we cannot replace their volume with other existing and new customers and which may materially affect our future financial results.~~business.

~~Going forward, we may have additional~~Interruptions in our relationships or declines in our business with major customers ~~which~~could materially ham our business and financial results.

Two of our customers accounted for approximately 30% of our sales during the year ended December 30, 2017. Any interruption in our relationship or decline in our business with these customers or other customers upon whom we become highly dependent ~~on.~~could cause harm to our business. Factors that could influence our relationship with our ~~significant customer and other~~ customers ~~which~~upon whom we may become highly dependent on include:

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our ability to maintain our products at prices that are competitive with those of our competitors;

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our ability to maintain quality levels for our products sufficient to meet the expectations of our customers;

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our ability to produce, ship and deliver a sufficient quantity of our products in a timely manner to meet the needs of our customers;

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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;

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our ability to provide timely, responsive and accurate customer support to our customers; and

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the ability of our customers to effectively deliver, market and increase sales of their own products based on ours.

In an effort to promote and better market our consumer products, we have made a strategic decision to not ship NIAGEN® to certain ingredient segment customers, which could potentially harm our overall sales.

By developing and selling TRU NIAGEN®, our own consumer standalone NIAGEN® supplement product, we are in direct competition with some of our current ingredients segment customers that use NIAGEN® in the products that are sold to consumers. In an effort to promote and better market our consumer product, we have made a strategic decision not to ship NIAGEN® to certain ingredients segment customers, which will have a negative effect on our ingredient segment sales. For example, sales for our ingredients segment for the year ended December 30, 2017 decreased 34% compared to the year ended December 31, 2016. Additionally, as our own consumer product becomes more prominent and widely adopted by consumers, the competition with our consumer product could potentially further harm the sales of our ingredients segment business, and our sales of NIAGEN® for our ingredients segment may further decrease. The sales of our consumer product may not outweigh the decrease in sales of our ingredients segment, which would lead to an overall decrease in our sales. Sales for our ingredients segment represented approximately 53% of the Company’s revenue for 2017, and sales of NIAGEN® accounted for approximately 70% of our ingredient segment’s total sales in 2017, or 37% of our overall revenue, so any harm to our NIAGEN® ingredient sales, if not compensated for by sales of our consumer product, may materially and negatively affect our business.

Our future success largely depends on sales of our TRU NIAGEN®product.

In connection with our strategic shift from an ingredient and testing company to a consumer focused company, we expect to generate a significant percentage of our future revenue from sales of our TRU NIAGEN® product. As a result, the market acceptance of TRU NIAGEN® is critical to our continued success, and if we are unable to expand market acceptance of TRU NIAGEN®, our business, results of operations, financial condition, liquidity and growth prospects would be adversely affected.

Decline in the state of the global economy and financial market conditions could adversely affect our ability to conduct business and our results of operations.

Global economic and financial market conditions, including disruptions in the credit markets and the impact of the global economic deterioration may materially impact our customers and other parties with whom we do business. These conditions could negatively affect our future sales of our ingredient ~~line~~lines as many consumers consider the purchase of nutritional products discretionary. Decline in general economic and financial market conditions could materially adversely affect our financial condition and results of operations. 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. 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.

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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.

Our significant increase in the scope and the scale of our product launches, including the hiring of additional personnel, has resulted in significantly higher operating expenses. As a result, we anticipate that our operating expenses will continue to increase. Expansion of our operations may also cause a significant demand on our management, finances and other resources. Our ability to manage the anticipated future growth, should it occur, will depend upon a significant expansion of our accounting and other internal management systems and the implementation and subsequent improvement of a variety of systems, procedures and controls. There can be no assurance that significant problems in these areas will not occur. Any failure to expand these areas and implement and improve such systems, procedures and controls in an efficient manner at a pace consistent with our business could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that our attempts to expand our marketing, sales, manufacturing and customer support efforts will be successful or will result in additional sales or profitability in any future period. As a result of the expansion of our operations and the anticipated increase in our operating expenses, as well as the difficulty in forecasting revenue levels, we expect to continue to experience significant fluctuations in ~~its~~our results of operations.

Changes in our business strategy, including entering the consumer product market, or restructuring of our businesses may increase our costs or otherwise affect the profitability of our businesses.

As changes in our business environment occur we may adjust our business strategies to meet these changes or we may otherwise decide to restructure our operations or ~~particular~~ businesses or assets. In addition, external events including changing technology, changing consumer patterns and changes in macroeconomic conditions may impair the value of our assets. When these changes or events occur, we may incur costs to change our business strategy and may need to write down the value of assets. In any of these events, our costs may increase, we may have significant charges associated with the write-down of assets or returns on new investments may be lower than prior to the change in strategy or restructuring. For example, ~~we may change the strategy of our ingredients segment by focusing on selling products with our ingredients direct to consumers, and may decide to invest in building a direct-to-consumer business. If~~if we are not successful in developing ~~a direct-to-consumer~~our consumer product business, our sales may decrease and our costs may increase.

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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.

An adverse change in the size or growth rate of the vitamin, mineral and dietary supplement market could have a material adverse effect on our business. Underlying market conditions are subject to change based on economic conditions, consumer preferences and other factors that are beyond our control, including media attention and scientific research, which may be positive or negative.

Our 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 advertise.

Our consumer products business success depends on our ability to attract and retain customers, which significantly depends on our marketing practices. Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our marketing efforts, including our ability to:

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create greater awareness of our brand;

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identify the most effective and efficient levels of spending in each market, media and specific media vehicle;

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determine the appropriate creative messages and media mix for advertising, marketing and promotional expenditures;

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effectively manage marketing costs (including creative and media) to maintain acceptable customer acquisition costs;

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acquire cost-effective television advertising;

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select the most effective markets, media and specific media vehicles in which to advertise; and

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convert consumer inquiries into actual orders.

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

We 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. Consumer perception of our products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, national media attention and other publicity regarding the consumption of nutritional supplements. We cannot assure you that future scientific research, findings, regulatory proceedings, litigation, media attention or other favorable research findings or publicity will be favorable to the nutritional supplement market or any ~~particular~~ product, or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, such earlier research reports, findings or publicity could have a material adverse effect on the demand for our products and consequently on our business, results of operations, financial condition and cash flows.

Our dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, ~~whether or not~~if accurate or with merit, could have a material adverse effect on the demand for our products, the availability and pricing of our ingredients, and our business, results of operations, financial condition and cash flows. 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. Any such adverse public reports or other media attention could arise even if the adverse effects associated with such products resulted from consumers’ failure to consume such products appropriately or as directed and the content of such public reports and other media attention may be beyond our control.

We may incur material product liability claims, which could increase our costs and adversely affect our reputation, revenues and operating income.

As ana consumer product and ingredient supplier ~~marketer~~we market and ~~manufacturer of~~manufacture products designed for human and animal consumption, we are subject to product liability claims if the use of our products is alleged to have resulted in injury. Our products consist of vitamins, minerals, herbs and other ingredients that are classified as foods, dietary supplements, or natural health products, and, in most cases, are not necessarily subject to pre-market regulatory approval in the United States. Some of our products contain innovative ingredients that do not have long histories of human consumption. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur. In addition, the products we sell are produced by third-party manufacturers. As a marketer of products manufactured by third parties, we also may be liable for various product liability claims for products we do not manufacture. We may, in the future, be subject to various product liability claims, including, among others, that our products include inadequate instructions for use or inadequate warnings concerning possible side effects and interactions with other substances. A product liability claim 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.

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We acquire a significant amount of key ingredients for our products from foreign suppliers, and may be negatively affected by the risks associated with international trade and importation issues.

We acquire a significant amount of key ingredients for a number of our products from suppliers outside of the United States, particularly India and China. 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, quality assurance, nonconformity to specifications or laws and regulations, tariffs, trade disputes and foreign currency fluctuations. While we have a supplier certification program and audit and inspect our suppliers’ facilities as necessary both in the United States and internationally, we cannot assure you that raw materials received from suppliers outside of the United States will conform to all specifications, laws and regulations. There have in the past been quality and safety issues in our industry with certain items imported from overseas. We may incur additional expenses and experience shipment delays due to preventative measures adopted by the Indian and U.S. governments, our suppliers and our company.

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, such as product liability, product recall, property and directors’ and officers’ liability insurance. Our current insurance program is consistent with both our past level of coverage and our risk management policies. However, we cannot assure you that we will be able to obtain comparable insurance coverage on favorable terms, or at all, in the future. Certain of our customers as well as prospective customers require that we maintain minimum levels of coverage for our products. Lack of coverage or coverage below these minimum required levels could cause these customers to materially change business terms or to cease doing business with us entirely.

If we experience product recalls, we may incur significant and unexpected costs, and our business reputation could be adversely affected.

We may be exposed to product recalls and adverse public relations if our products are alleged to be mislabeled or cause injury or illness, or if we are alleged to have violated governmental regulations. A product recall could result in substantial and unexpected expenditures, which would reduce operating profit and cash flow. In addition, a product recall may require significant management attention. Product recalls may hurt the value of our brands and lead to decreased demand for our products. Product recalls also may lead to increased scrutiny by federal, state or international regulatory agencies of our operations and increased litigation and could have a material adverse effect on our business, results of operations, financial condition and cash flows.

We depend on key personnel, the loss of any of which could negatively affect our business.

We depend greatly on Frank L. Jaksch Jr., ~~Thomas C. Varvaro,~~Robert N. Fried, Kevin M. Farr, Mark J. Friedman and Troy A. Rhonemus, ~~and Robert N. Fried~~ who are our Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer, ~~Chief Operating Officer,~~General Counsel and ~~recently hired~~Executive Vice President, ~~and Chief Strategy Officer,~~ respectively. We also depend greatly on other key employees, including key scientific and marketing personnel. In general, only highly qualified and trained scientists have the necessary skills to develop our products and provide our services. Only marketing personnel with specific experience and knowledge in health care are able to effectively market our products. In addition, some of our manufacturing, quality control, safety and compliance, information technology, sales and e-commerce related positions are highly technical as well. We face intense competition for these professionals from our competitors, customers, marketing partners and other companies throughout the industries in which we compete. Our success will depend, in part, upon our ability to attract and retain additional skilled personnel, which will require substantial additional funds. There can be no assurance that we will be able to find and attract additional qualified employees or retain any such personnel. Our inability to hire qualified personnel, the loss of services of our key personnel, or the loss of services of executive officers or key employees that may be hired in the future may have a material and adverse effect on our business.

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Our operating results may fluctuate significantly as a result of a variety of factors, many of which are outside of our control.

We are subject to the following factors, among others, that may negatively affect our operating results:

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the announcement or introduction of new products by our competitors;

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our ability to upgrade and develop our systems and infrastructure to accommodate growth;

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the decision by significant customers to reduce purchases;

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disputes and litigation with ~~significant customers, including the ongoing litigation as described in Item 3 of this Annual Report on Form 10-K;~~competitors;

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our ability to attract and retain key personnel in a timely and ~~cost effective~~cost-effective manner;

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technical difficulties;

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the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure;

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regulation by federal, state or local governments; and

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general economic conditions as well as economic conditions specific to the healthcare industry.

As a result of our limited operating history and the nature of the markets in which we compete, it is extremely difficult for us to make accurate forecasts. We have based our current and future expense levels largely on our investment plans and estimates of future events although certain of our expense levels are, to a large extent, fixed. Assuming our products reach the market, we may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues relative to our planned expenditures would have an immediate adverse effect on our business, results of operations and financial condition. Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions that could have a material and adverse effect on our business, results of operations and financial condition. Due to the foregoing factors, our revenues and operating results are and will remain difficult to forecast.

We face significant competition, including changes in pricing.

The markets for our products and services are both competitive and price sensitive. Many of our competitors have significant financial, operations, sales and marketing resources and experience in research and development. Competitors could develop new technologies that compete with our products and services or even render our products obsolete. If a competitor develops superior technology or cost-effective alternatives to our products and services, our business could be seriously harmed.

The markets for some of our products are also subject to specific competitive risks because these markets are highly price competitive. Our competitors have competed in the past by lowering prices on certain products. If they do so again, we may be forced to respond by lowering our prices. This would reduce sales revenues and increase losses. Failure to anticipate and respond to price competition may also impact sales and aggravate losses.

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.

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 could be marketed by well-established, successful companies that possess greater financial, marketing, distributional, personnel and other resources than we possess. Using these resources, these companies can implement extensive advertising and promotional campaigns, both generally and in response to specific marketing efforts by competitors, and enter into new markets more rapidly to introduce new products. In certain instances, competitors with greater financial resources also may be able to enter a market in direct competition with us, offering attractive marketing tools to encourage the sale of products that compete with our products or present cost features that consumers may find attractive.

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We may never develop any additional products to commercialize.

We have invested a substantial amount of our time and resources in developing various new products. Commercialization of these products will require additional development, clinical evaluation, regulatory approval, significant marketing efforts and substantial additional investment before they can provide us with any revenue. Despite our efforts, these products may not become commercially successful products for a number of reasons, including but not limited to:

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we may not be able to obtain regulatory approvals for our products, or the approved indication may be narrower than we seek;

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our products may not prove to be safe and effective in clinical trials;

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we may experience delays in our development program;

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any products that are approved may not be accepted in the marketplace;

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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;

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we may not be able to manufacture any of our products in commercial quantities or at an acceptable cost;

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rapid technological change may make our products obsolete;

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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

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we may be unable to obtain or defend patent rights for our products.

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. We are committed to attempting to keep pace with technological change, to stay abreast of technology changes and to look for partners that will develop new products and services for our customer base. 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~~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.

If we fail to maintain adequate quality standards for our products and services, our business may be adversely affected and our reputation harmed.

Dietary supplement, nutraceutical, food and beverage, functional food, analytical laboratories, pharmaceutical and cosmetic customers are often subject to rigorous quality standards to obtain and maintain regulatory approval of their products and the manufacturing processes that generate them. 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 substantial sales losses.

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

Our success depends significantly on our ability to protect our proprietary rights to the technologies used in our products. We rely on patent protection, as well as a combination of copyright, trade secret and trademark laws and nondisclosure, confidentiality and other contractual restrictions to protect our proprietary technology, including our licensed technology. However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. For example, our pending United States and foreign patent applications may not issue as patents in a form that will be advantageous to us or may issue and be subsequently successfully challenged by others and invalidated. In addition, our pending patent applications include claims to material aspects of our products and procedures that are not currently protected by issued patents. Both the patent application process and the process of managing patent disputes can be ~~time-consuming~~time consuming and expensive. Competitors may be able to design around our patents or develop products which provide outcomes which are comparable or even superior to ours. Steps that we have taken to protect our intellectual property and proprietary technology, including entering into confidentiality agreements and intellectual property assignment agreements with some of our officers, employees, consultants and advisors, may not provide us with meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements. 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.

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In the event a competitor infringes ~~upon~~ our licensed or pending patent or other intellectual property rights, enforcing those rights may be costly, uncertain, difficult and time consuming. Even if successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be expensive and time consuming and could divert our management’s attention. As further described in Part I, Item 3 of this Annual Report on Form 10-K, we are currently involved in patent litigation, as Elysium is claiming that we misused certain patent rights, and has filed a petition with the U.S. Patent and Trademark Office for inter partes review of two patents to which we are the exclusive licensee. The U.S. Patent Trial and Appeal Board denied institution of an inter partes review for one patent, but granted institution on an inter partes review as to certain claims for the other patent. If we are unsuccessful in resolving the patent misuse claim on favorable terms, or if the U.S. Patent and Trademark Office invalidates the patent still subject to the inter partes review, we may lose the competitive advantage that is provided by the subject intellectual property rights, which could have a material adverse effect on our business. We may not have sufficient resources to enforce our intellectual property rights or to defend our patents rights against a challenge. The failure to obtain patents and/or protect our intellectual property rights could have a material and adverse effect on our business, results of operations and financial condition.

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

We rely on our patents, patent applications, licenses and other intellectual property rights to give us a competitive advantage. Whether a patent is valid, or whether a patent application should be granted, is a complex matter of science and law, and therefore we cannot be certain that, if challenged, our patents, patent applications and/or other intellectual property rights would be upheld. If one or more of those patents, patent applications, licenses and other intellectual property rights are invalidated, rejected or found unenforceable, that could reduce or eliminate any competitive advantage we might otherwise have had. For example, as further described in Part I, Item 3 of this Annual Report on Form 10-K, we are currently involved in patent litigation, as Elysium is claiming that we misused certain patent rights, and has filed a petition with the U.S. Patent and Trademark Office for inter partes review of two patents to which we are the exclusive licensee. The U.S. Patent Trial and Appeal Board denied institution of an inter partes review for one patent, but granted institution on an inter partes review as to certain claims for the other patent. If we are unsuccessful in resolving the patent misuse claim on favorable terms, or if the U.S. Patent and Trademark Office invalidates the patent subject to the inter partes review, we may lose the competitive advantage that is provided by the subject intellectual property rights, which could have a material adverse effect on our business.

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.

Third parties could, in the future, assert infringement or misappropriation claims against us with respect to products we develop. Whether a product infringes a patent or misappropriates other intellectual property involves complex legal and factual issues, the determination of which is often uncertain. Therefore, we cannot be certain that we have not infringed the intellectual property rights of others. ~~Our~~There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for use related to the use or manufacture of our products, and our potential competitors may assert that some aspect of our product infringes their patents. Because patent applications may take years to issue, there also may be applications now pending of which we are unaware that may later result in issued patents upon which our products could infringe. There also may be existing patents or pending patent applications of which we are unaware upon which our products may inadvertently infringe.

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Any infringement or misappropriation claim could cause us to incur significant costs, place significant strain on our financial resources, divert management’s attention from our business and harm our reputation. If the relevant patents in such claim were upheld as valid and enforceable and we were found to infringe them, we could be prohibited from manufacturing or selling any product that is found to infringe unless we could obtain licenses to use the technology covered by the patent or are able to design around the patent. We may be unable to obtain such a license on terms acceptable to us, if at all, and we may not be able to redesign our products to avoid ~~infringement.~~infringement, which could materially impact our revenue. A court could also order us to pay compensatory damages for such infringement, plus prejudgment interest and could, in addition, treble the compensatory damages and award attorney fees. These damages could be substantial and could harm our reputation, business, financial condition and operating results. A court also could enter orders that temporarily, preliminarily or permanently enjoin us and our customers from making, using, or selling products, and could enter an order mandating that we undertake certain remedial activities. Depending on the nature of the relief ordered by the court, we could become liable for additional damages to third parties.

The prosecution and enforcement of patents licensed to us by third parties are not within our control. Without these technologies, our ~~product~~products may not be successful and our business would be harmed if the patents were infringed on or misappropriated without action by such third parties.

We have obtained licenses from third parties for patents and patent application rights related to the products we are developing, allowing us to use intellectual property rights owned by or licensed to these third parties. We do not control the maintenance, prosecution, enforcement or strategy for many of these patents or patent application rights and as such are dependent in part on the owners of the intellectual property rights to maintain their viability. 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.

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~~Table~~ As further described in Part I, Item 3 of ~~Contents~~

this Annual Report on Form 10-K, Elysium has filed a petition with the U.S. Patent and Trademark Office for inter partes review of two patents to which we are the exclusive licensee. The U.S. Patent Trial and Appeal Board denied institution of an inter partes review for one patent, but granted institution on an inter partes review as to certain claims for the other patent. Pursuant to the exclusive license agreement with the Trustees of Dartmouth College (“Dartmouth”), Dartmouth controls all future preparation, filing, prosecution and maintenance of the patent subject to such inter partes review.

We may be subject to damages resulting from claims that we, our employees, or our independent contractors have wrongfully used or disclosed alleged trade secrets of others.

Some of our employees were previously employed at other dietary supplement, nutraceutical, food and beverage, functional food, analytical laboratories, pharmaceutical and cosmetic companies. We may also hire additional employees who are currently employed at other such companies, including our competitors. Additionally, consultants or other independent agents with which we may contract may be or have been in a contractual arrangement with one or more of our competitors. We may be subject to claims that these employees or independent contractors have used or disclosed such other party’s trade secrets or other proprietary information. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management. 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.

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Litigation may harm our business.

Substantial, complex or extended litigation could cause us to incur significant costs and distract our management. 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 or on terms favorable to us. As further described in Part I, Item 3 of this Annual Report on Form 10-K, we are currently involved in substantial and complex litigation with Elysium. Unexpected results could cause us to have financial exposure in these matters in excess of recorded reserves and insurance coverage, requiring us to provide additional reserves to address these liabilities, therefore impacting profits.

Our sales and results of operations for our core standards and contract services segment depend on our customers’ research and development efforts and their ability to obtain funding for these efforts.

Our core standards and contract services segment customers include researchers at pharmaceutical and biotechnology companies, chemical and related companies, academic institutions, government laboratories and private foundations. Fluctuations in the research and development budgets of these researchers and their organizations could have a significant effect on the demand for our products. Our customers determine their research and development budgets based on several factors, including the need to develop new products, the availability of governmental and other funding, competition and the general availability of resources. As we continue to expand our international operations, we expect research and development spending levels in markets outside of the United States will become increasingly important to us.

Research and development budgets fluctuate due to changes in available resources, spending priorities, general economic conditions, institutional and governmental budgetary limitations and mergers of pharmaceutical and biotechnology companies. Our business could be harmed by any significant decrease in life science and high technology research and development expenditures by our customers. In particular, a small portion of our sales has been to researchers whose funding is dependent on grants from government agencies such as the United States National Institute of Health, the National Science Foundation, the National Cancer Institute and similar agencies or organizations. Government funding of research and development is subject to the political process, which is often unpredictable. Other departments, such as Homeland Security or Defense, or general efforts to reduce the United States federal budget deficit could be viewed by the government as a higher priority. Any shift away from funding of life science and high technology research and development or delays surrounding the approval of governmental budget proposals may cause our customers to delay or forego purchases of our products and services, which could seriously damage our business.

Some of our customers receive funds from approved grants at a particular time of year, many times set by government budget cycles. In the past, such grants have been frozen for extended periods or have otherwise become unavailable to various institutions without ~~advance~~ notice. The timing of the receipt of grant funds may affect the timing of purchase decisions by our customers and, as a result, cause fluctuations in our sales and operating results.

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Demand for our products and services are subject to the commercial success of our customers’ products, which may vary for reasons outside our control.

Even if we are successful in securing utilization of our products in a customer’s manufacturing process, sales of many of our products and services remain dependent on the timing and volume of the customer’s production, over which we have no control. The demand for our products depends on regulatory approvals and frequently depends on the commercial success of the customer’s supported product. Regulatory processes are complex, lengthy, expensive, and can often take years to complete.

We may bear financial risk if we under-price 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 under-price our contracts or otherwise overrun our cost estimates. Such ~~under-pricing~~underpricing or significant cost overruns could have a material adverse effect on our business, results of operations, financial condition and cash flows.

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We rely on single or a limited number of third-party suppliers for the raw materials required ~~for the production of~~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. We cannot be certain that our current suppliers will continue to provide us with the quantities of these raw materials that we require or satisfy our anticipated specifications and quality requirements. Any supply interruption in limited or sole sourced raw materials could materially harm our ability to manufacture our products until a new source of supply, if any, could be identified and qualified. Although we believe there are other suppliers of these raw materials, we may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms. 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.

We maynot be successful in acquiring complementary businesses or products on favorable terms.

As part of our business strategy, we intend to consider acquisitions of similar or complementary ~~businesses.~~businesses or products. No assurance can be given that we will be successful in identifying attractive acquisition candidates or completing acquisitions on favorable terms. In addition, any future acquisitions will be accompanied by the risks commonly associated with acquisitions. These risks include potential exposure to unknown liabilities of acquired companies or to acquisition costs and expenses, the difficulty and expense of integrating the operations and personnel of the acquired companies, the potential disruption to the business of the combined company and potential diversion of our management's time and attention, the impairment of relationships with and the possible loss of key employees and clients as a result of the changes in management, the incurrence of amortization expenses and write-downs and dilution to the shareholders of the combined company if the acquisition is made for stock of the combined company. In addition, successful completion of an acquisition may depend on consents from third parties, including regulatory authorities and private parties, which consents are beyond our control. There can be no assurance that products, technologies or businesses of acquired companies will be effectively assimilated into the business or product offerings of the combined company or will have a positive effect on the combined company's revenues or earnings. Further, the combined company may incur significant expense to complete acquisitions and to support the acquired products and businesses. Any such acquisitions may be funded with cash, debt or equity, which could have the effect of diluting or otherwise adversely affecting the holdings or the rights of our existing ~~stockholders.~~stockholders.

If we experience a significant disruption in our information technology systems or if we fail to implement new systems and software successfully, our business could be adversely affected.

We depend on information systems throughout our company to control our manufacturing processes, process orders, manage inventory, process and bill shipments and collect cash from our customers, respond to customer inquiries, contribute to our overall internal control processes, maintain records of our property, plant and equipment, and record and pay amounts due vendors and other creditors. If we were to experience a prolonged disruption in our information systems that involve interactions with customers and suppliers, it could result in the loss of sales and customers and/or increased costs, which could adversely affect our overall business operation.

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Our cash flows and capital resources may be insufficient to make required payments on future indebtedness.

On November 4, 2016, we entered into entered into a business financing agreement (the “Financing Agreement”) with Western Alliance Bank (“Western Alliance”), ~~in order~~ to establish a formula based revolving credit line pursuant to which the Company may borrow an aggregate principal amount of up to $5,000,000, subject to the terms and conditions of the Financing Agreement. The interest rate will be calculated at a floating rate per month equal to (a) the greater of (i) 3.50% per year or (ii) the Prime Rate published in the Money Rates section of the Western Edition of The Wall Street Journal, or such other rate of interest publicly announced by Lender as its Prime Rate, plus (b) 2.50 percentage points. Any borrowings, interest or other fees or obligations that the Company owes Western Alliance pursuant to the Financing Agreement (the “Obligations”) will be become due and payable on November 4, 2018. ~~For further details on the Loan Agreement, please refer to Note 8. Loan Payable appearing in Item 8~~

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Table of ~~this Annual Report on Form 10-K.~~Contents

As of December ~~31, 2016~~30, 2017, and March ~~15, 2017,~~14, 2018, we did not have any indebtedness under the Financing Agreement. However, we may incur indebtedness in the future and such indebtedness could have important consequences to you. For example, it could:

●

make it difficult for us to satisfy our other debt obligations;

●

make us more vulnerable to general adverse economic and industry conditions;

●

limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other general corporate requirements;

●

expose us to interest rate fluctuations because the interest rate on the debt under the Financing Agreement is variable;

●

require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow for operations and other purposes;

●

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

●

place us at a competitive disadvantage compared to competitors that may have proportionately less debt and greater financial resources.

In addition, our ability to make payments or refinance our obligations depends on our successful financial and operating performance, cash flows and capital resources, which in turn depend upon prevailing economic conditions and certain financial, business and other factors, many of which are beyond our control. These factors include, among others:

●

economic and demand factors affecting our industry;

●

pricing pressures;

●

increased operating costs;

●

competitive conditions; and

●

other operating difficulties.

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If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt. In the event that we are required to dispose of material assets or operations to meet our debt service and other obligations, the value realized on such assets or operations will depend on market conditions and the availability of buyers. Accordingly, any such sale may not, among other things, be for a sufficient dollar amount. Our obligations pursuant to the Financing Agreement are secured by a security interest in all of our assets, exclusive of intellectual property. The foregoing encumbrances may limit our ability to dispose of material assets or operations. We also may not be able to restructure our indebtedness on favorable economic terms, if at all.

We may incur additional indebtedness in the future. Our incurrence of additional indebtedness would intensify the risks described above.

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The Financing Agreement contains various covenants limiting the discretion of our management in operating our business.

The Financing Agreement contains various restrictive covenants that limit our management's discretion in operating our business. ~~In particular, these~~These instruments limit our ability to, among other things:

●

incur additional debt;

●

grant liens on assets;

●

make investments, including capital expenditures;

●

sell or acquire assets outside the ordinary course of business; and

●

make fundamental business changes.

If we fail to comply with the restrictions in the Financing Agreement, a default may allow the creditors under the relevant instruments to accelerate the related debt and to exercise their remedies under these agreements, which will typically include the right to declare the principal amount of that debt, together with accrued and unpaid interest and other related amounts, immediately due and payable, to exercise any remedies the creditors may have to foreclose on assets that are subject to liens securing that debt and to terminate any commitments they had made to supply further funds.

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. 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. Similarly, qualified independent sales representatives both within and outside the United States are in high demand, and we may not be able to build an effective network for the distribution of our product through such representatives. There can be no assurance that we will be able to enter into contracts with representatives on terms acceptable to us. Furthermore, there can be no assurance that we will be able to build an alternate distribution framework should we attempt to do so.

We may also need to contract with third parties in order to market our products. To the extent that we enter into arrangements with third parties to perform marketing and distribution services, our product revenue could be lower and our costs higher than if we directly marketed our products. Furthermore, to the extent that we enter into co-promotion or other marketing and sales arrangements with other companies, any revenue received will depend on the skills and efforts of others, and we do not know whether these efforts will be successful. If we are unable to establish and maintain adequate sales, marketing and distribution capabilities, independently or with others, we will not be able to generate product revenue, and may not become profitable.

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Risks Related to Regulatory Approval of Our Products and Other Government Regulations

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. Failure to comply with these regulations could subject us to fines, penalties and additional costs.

Some of our operations are subject to regulation by various United States federal agencies and similar state and international agencies, including the Department of Commerce, the FDA, the FTC, the Department of Transportation and the Department of Agriculture. These regulations govern a wide variety of product activities, from design and development to labeling, manufacturing, handling, sales and distribution of products. If we fail to comply with any of these regulations, we may be subject to fines or penalties, have to recall products and/or cease their manufacture and distribution, which would increase our costs and reduce our sales.

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We are also subject to various federal, state, local and international laws and regulations that govern the handling, transportation, manufacture, use and sale of substances that are or could be classified as toxic or hazardous substances. Some risk of environmental damage is inherent in our operations and the products we manufacture, sell, or distribute. Any failure by us to comply with the applicable government regulations could also result in product recalls or impositions of fines and restrictions on our ability to carry on with or expand in a portion or possibly all of our operations. If we fail to comply with any or all of these regulations, we may be subject to fines or penalties, have to recall products and/or cease their manufacture and distribution, which would increase our costs and reduce our sales.

Government regulations of our customer’s business are extensive and are constantly changing. Changes in these regulations can significantly affect customer demand for our products and services.

The process by which our customers’ industries are regulated is controlled by government agencies and depending on the market segment can be very expensive, ~~time-consuming,~~time consuming, and uncertain. Changes in regulations or the enforcement practices of current regulations could have a negative impact on our customers and, in turn, our business. At this time, it is unknown how the FDA will interpret and to what extent it will enforce GMPs, regulations that will likely affect many of our customers. These uncertainties may have a material impact on our results of operations, as lack of enforcement or an interpretation of the regulations that lessens the burden of compliance for the dietary supplement marketplace may cause a reduced demand for our products and services.

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

Governmental agencies throughout the world, including in the United States, strictly regulate ~~these~~the pharmaceutical, dietary supplement, food and cosmetic industries. Our business involves helping pharmaceutical and biotechnology companies navigate the regulatory drug approval process. 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. Also, if the government makes efforts to contain drug costs and pharmaceutical and biotechnology company profits from new drugs, our customers may spend less, or reduce their spending on research and development. If health insurers were to change their practices with respect to reimbursements for pharmaceutical products, our customers may spend less, or reduce their spending on research and development.

If we should in the future become required to obtain regulatory approval to market and sell our goods we will not be able to generate any revenues until such approval is received.

The pharmaceutical industry is subject to stringent regulation by a wide range of authorities. While we believe that, given our present business, we are not currently required to obtain regulatory approval to market our goods because, among other things, we do not (i) produce or market any clinical devices or other products, or (ii) sell any medical products or services to the customer, we cannot predict whether regulatory clearance will be required in the future and, if so, whether such clearance will at such time be obtained for any products that we are developing or may attempt to develop. Should such regulatory approval in the future be required, our goods may be suspended or may not be able to be marketed and sold in the United States until we have completed the regulatory clearance process as and if implemented by the FDA. 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.

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If regulatory clearance of a good that we propose to 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. We cannot ensure that any good that we develop will meet all of the applicable regulatory requirements needed to receive marketing clearance. Failure to obtain regulatory approval will prevent commercialization of our goods where such clearance is necessary. There can be no assurance that we will obtain regulatory approval of our proposed goods that may require it.

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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.

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 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;

~~Note 17.~~

Note 18.

Subsequent Events

~~Acquisition of Healthspan Research, LLC~~

On March 12, 2017, ChromaDex Corporation acquired all of the outstanding equity interests of Healthspan Research, LLC (“Healthspan”) pursuant to a Membership Interest Purchase Agreement (the “Purchase Agreement”) by and among (i) Robert Fried, Jeffrey Allen and Dr. Charles Brenner (the “Sellers”) and (ii) ChromaDex Corporation (the “Acquisition”). PursuantSubsequent to the ~~Purchase Agreement, ChromaDex purchased all of the outstanding membership interests from the Sellers.~~

Upon the closing of, and as consideration for, the Acquisition, ChromaDex Corporation issued an aggregate of 367,648 unregistered shares of ChromaDex Corporation’s common stock to the Sellers (the “Stock Consideration”) and, in cancellation of a loan owed by Healthspan to Mr. Fried, paid $32,500 to Mr. Fried and will also pay Mr. Fried $100,000 on March 12, 2018. The issuance of the Stock Consideration was not registered under the Securities Act of 1933, as amended (the “Securities Act”), and therefore may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. ChromaDex Corporation is relying on the exemption from federal registration under Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder.

~~Hiring of Robert Fried as President and Chief Strategy Officer~~

~~Also on March 12,~~year ended December 30, 2017, the Board granted a total of ~~Directors (“Board”)~~470,000 stock options at an exercise price of ~~ChromaDex Corporation appointed Robert Fried, a member of the Board since July 2015, as President~~$5.85 per share and ~~Chief Strategy Officer, effective immediately. Mr. Fried will continue to serve as a member of the Board, but resigned as a member of the Nominating and Corporate Governance Committee of the Board.~~

~~In connection with his appointment as President and Chief Strategy Officer, ChromaDex and Mr. Fried entered into~~500,000 stock options at an ~~Executive Employment Agreement (the “Employment Agreement”). Pursuant~~exercise price $5.65 per share to the Employment Agreement, Mr. Fried is entitled to: (i) an annual base salary of $300,000; (ii) an annual cash bonus equal to (a) 1% of net direct-to-consumer sales of products with nicotinamide riboside as a lead ingredient by ChromaDex plus (b) 2% of direct to consumer net sales of products with nicotinamide riboside as a lead ingredient for the portion of such sales that exceeded prior year sales plus (c) 1% of the gross profit derived from nicotinamide riboside ingredient sales to dietary supplement producers; (iii) an option to purchase up to 500,000 shares of ChromaDex common stock under the ChromaDex Second Amended and Restated 2007 Equity Incentive Plan or any subsequent equity plan (the “Plan”), subject to monthly vesting over a three-year period; and (iv) 166,667 shares of restricted ChromaDex Corporation common stock, subject to annual vesting over a three-year period.Company's executive officers.

Subject to requisite stockholder approval and Mr. Fried’s continuous service through such date, Mr. Fried is also eligible to receive (i) on March 12, 2018, 166,667 shares of restricted ChromaDex Corporation common stock, subject to annual vesting over a two-year period, (ii) on March 12, 2019, 166,666 shares of restricted ChromaDex Corporation common stock that vest in full on the one year anniversary of the grant date and (iii) up to 500,000 shares of fully-vested restricted ChromaDex Corporation common stock that will be granted upon the achievement of certain performance goals.

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~~Item 9.~~ C~~hanges in and Disagreements with Accountants on Accounting and Financial Disclosure~~

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

~~Item 9A.~~

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as of December ~~31, 2016.~~30, 2017. Pursuant to Rule13a−15(e) promulgated by the Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) “disclosure controls and procedures” means controls and other procedures that are designed to insure that information required to be disclosed by us in the reports that we file with the Commission is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to insure that information that we are required to disclose in the reports we file with the Commission is accumulated and communicated to our principal executive officer and principal financial officer as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December ~~31, 2016.~~30, 2017.

Inherent Limitations on Disclosure Controls and Procedures

The effectiveness of our disclosure controls and procedures is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures, no matter how well conceived, will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.

Changes in Internal Control over Financial Reporting

There were no change in internal controls over financial reporting (as defined in Rule 13a−15(f) promulgated under the Exchange Act) that occurred during our fourth fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Management Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting include those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

~~-85-~~

~~Table of Contents~~

Our management, including the undersigned principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December ~~31, 2016.~~30, 2017. In conducting its assessment, our management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework in 2013. Based on this assessment, our management concluded that, as of December ~~31, 2016,~~30, 2017, our internal control over financial reporting was effective based on those criteria.

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Inherent Limitations on Internal Control

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of control. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, our internal control over financial reporting is designed to provide reasonable assurance of achieving their objectives.

Attestation Report of the Registered Public Accounting Firm

The effectiveness of our internal control over financial reporting has been audited by Marcum LLP, an independent registered public accounting firm, as stated in their attestation report ~~herein,~~in Item 8 of this Annual Report on Form 10-K, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December ~~31, 2016.~~30, 2017.

Item 9B.

Other Information

None.

~~-86-~~

~~Table of Contents~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON~~

~~INTERNAL CONTROL OVER FINANCIAL REPORTING~~

~~To the Audit Committee of the~~

~~Board of Directors and Shareholders of~~

~~ChromaDex Corporation~~

We have audited ChromaDex Corporation and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management Annual Report on Internal Control over Financial Reporting”. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.

In our opinion, ChromaDex Corporation and Subsidiaries maintained, in all material aspects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of December 31, 2016 and January 2, 2016 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2016, January 2, 2016 and January 3, 2015 of the Company and our report dated March 16, 2017 expressed an unqualified opinion on those financial statements.

~~/s/ Marcum LLP~~

~~Marcum LLP~~

~~New York, NY~~

~~March 16, 2017~~

~~-87-~~

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~~Item 9B.Other Information~~

~~Acquisition of Healthspan Research, LLC~~

On March 12, 2017, ChromaDex Corporation acquired all of the outstanding equity interests of Healthspan Research, LLC (“Healthspan”) pursuant to a Membership Interest Purchase Agreement (the “Purchase Agreement”) by and among (i) Robert Fried, Jeffrey Allen and Dr. Charles Brenner (the “Sellers”) and (ii) ChromaDex Corporation (the “Acquisition”). Pursuant to the Purchase Agreement, ChromaDex purchased all of the outstanding membership interests from the Sellers.

~~Hiring of Robert Fried as President and Chief Strategy Officer~~

Also on March 12, 2017, the Board of Directors (“Board”) of ChromaDex Corporation appointed Robert Fried, a member of the Board since July 2015, as President and Chief Strategy Officer, effective immediately. Mr. Fried will continue to serve as a member of the Board, but resigned as a member of the Nominating and Corporate Governance Committee of the Board.

Mr. Fried, age 57, has served as a director of ChromaDex since July 2015. Mr. Fried served as Chairman of the Board of Directors of IDI, Inc. (formerly Tiger Media, Inc.), an information solutions provider focused on the data fusion market and formerly a Chinese advertising company prior to its merger with the parent company of Interactive Data, LLC, from 2011 until June 2015. From 2007 through 2009, he was the president, Chief Executive Officer and a director of Ideation Acquisition Corporation, a special purpose acquisition company. Mr. Fried is the founder and Chief Executive Officer of Feeln, a subscription streaming video service, which was acquired by Hallmark Cards Inc. in 2012. Since then, Mr. Fried manages digital businesses for Hallmark including Feeln, Hallmark e-cards, and Hallmark Print on Demand. Mr. Fried is also an Academy Award winning motion picture producer whose credits include Rudy, Collateral, Boondock Saints, So I Married an Axe Murderer, Godzilla, and numerous others. From December 1994 until June 1996, he was President and Chief Executive Officer of Savoy Pictures, a unit of Savoy Pictures Entertainment, Inc., which was sold in 1996 to Silver King Communications, which is now a part of InterActive Corp. Mr. Fried has also held several executive positions including Executive Vice President in charge of Production for Columbia Pictures, Director of Film Finance and Special Projects for Columbia Pictures, and Director of Business Development at Twentieth Century Fox. Mr. Fried holds an M.S. from Cornell University and an M.B.A. from the Columbia University Graduate School of Business.

In connection with his appointment as President and Chief Strategy Officer, ChromaDex and Mr. Fried entered into an Executive Employment Agreement (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr. Fried is entitled to: (i) an annual base salary of $300,000; (ii) an annual cash bonus equal to (a) 1% of net direct-to-consumer sales of products with nicotinamide riboside as a lead ingredient by ChromaDex plus (b) 2% of direct to consumer net sales of products with nicotinamide riboside as a lead ingredient for the portion of such sales that exceeded prior year sales plus (c) 1% of the gross profit derived from nicotinamide riboside ingredient sales to dietary supplement producers; (iii) an option to purchase up to 500,000 shares of ChromaDex common stock under the ChromaDex Second Amended and Restated 2007 Equity Incentive Plan or any subsequent equity plan (the “Plan”), subject to monthly vesting over a three-year period; and (iv) 166,667 shares of restricted ChromaDex Corporation common stock, subject to annual vesting over a three-year period. Subject to requisite stockholder approval and Mr. Fried’s continuous service through such date, Mr. Fried is also eligible to receive (i) on March 12, 2018, 166,667 shares of restricted ChromaDex Corporation common stock, subject to annual vesting over a two-year period, (ii) on March 12, 2019, 166,666 shares of restricted ChromaDex Corporation common stock that vest in full on the one year anniversary of the grant date and (iii) up to 500,000 shares of fully-vested restricted ChromaDex Corporation common stock that will be granted upon the achievement of certain performance goals. Any unvested options or shares of restricted stock will vest in full upon (a) a change of control of ChromaDex Corporation, (b) Mr. Fried’s death, (c) Mr. Fried’s disability, (d) termination by ChromaDex Corporation of Mr. Fried’s employment without cause or (e) Mr. Fried’s resignation for good reason, subject in each case to Mr. Fried’s continuous service as an employee or consultant of ChromaDex Corporation or any of its subsidiaries though such event.

~~-88-~~

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If (i) Mr. Fried’s employment is terminated by ChromaDex Corporation without cause, for death or disability, or Mr. Fried resigns for good reason, or (ii) (a) a change of control of ChromaDex Corporation occurs and (b) within one month prior to the date of such change of control or twelve months after the date of such change of control R. Fried’s employment is terminated by ChromaDex Corporation other than for cause, then, subject to executing a release, Mr. Fried will receive (w) continuation of his base salary for 12 months, (x) COBRA premiums for 12 months, (y) a prorated annual cash bonus and (z) an extended exercise period for his options.

~~Mr. Fried is a party to ChromaDex Corporation’s form of indemnity agreement for directors and officers. Mr. Fried will receive no additional compensation for his service on the Board.~~

The foregoing summary of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the complete Employment Agreement, a copy of which is attached hereto as Exhibit 10.65, and is incorporated herein by reference.

Prior to the Acquisition, Mr. Fried owned approximately 84.7% of the outstanding equity interest of Healthspan. On August 28, 2015, ChromaDex entered into an Exclusive Supply Agreement (the “Supply Agreement”) with Healthspan. Under the terms of the Supply Agreement, Healthspan agreed to purchase NIAGEN® from ChromaDex and ChromaDex granted to Healthspan worldwide rights for resale of specific dietary supplements containing NIAGEN® in certain direct response channels. Pursuant to the terms of the Supply Agreement, in exchange for a 4% equity interest in Healthspan, ChromaDex agreed to initially supply NIAGEN® to Healthspan up to a certain amount, and in exchange for an additional 5% equity interest in Healthspan, ChromaDex would grant to Healthspan certain exclusive rights to resell NIAGEN®. In connection with the foregoing, also on August 28, 2015, ChromaDex and Healthspan entered into an interest purchase agreement and limited liability company agreement pursuant to which ChromaDex was issued 9% of the outstanding equity interests of Healthspan. During the year ended December 31, 2016, ChromaDex shipped NIAGEN® to Healthspan to satisfy part of its obligation to supply a certain amount of NIAGEN® in exchange for the 4% equity interest in Healthspan, which ChromaDex’s cost was approximately $~~20,000~~.

In connection with the Acquisition, Mr. Fried received 339,595 unregistered shares of ChromaDex’s common stock and, in cancellation of a loan owed by Healthspan to Mr. Fried, a cash payment of $32,500, and will receive an additional cash payment of $100,000 on March 12, 2018.

There are no arrangements or understandings between Mr. Fried and any other persons pursuant to which he was selected as ChromaDex Corporation’s President and Chief Strategy Officer. There are also no family relationships between Mr. Fried and any of ChromaDex Corporation’s directors or executive officers and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K, other than the transactions listed above.

~~Cash Bonuses~~

On March 14, 2017, the Board approved 2016 incentive cash bonus payments to our executive officers. The bonus payments were based on an assessment of the achievement of corporate goals set out and approved by the Board of Directors in 2016. The 2016 cash bonuses approved for each of our named executive officers were as follows:

~~Name~~	~~2016~~ ~~Cash Bonus~~
~~Frank L. Jaksch, Jr.~~	$~~122,562~~
~~Thomas Varvaro~~	$~~79,500~~
~~Troy Rhonemus~~	$~~46,706~~

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PART III

~~Item 10.~~

Item 10.

Directors, Executive Officers and Corporate Governance

Information required by this item will be contained in the Proxy Statement under the headings “Management and Corporate Governance,” and “Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

Item 11.

~~Item 11.~~Executive Compensation

The information required by this item regarding executive compensation is incorporated by reference to the information set forth in the sections titled “Executive Compensation” in the Proxy Statement.

Item 12.

~~Item 12.~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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

10005 Muirlands Blvd. Suite G, Irvine, California		92618
(Address of Principal Executive Offices)		(Zip Code)

Title of each class		Name of Each Exchange on Which Registered
Common Stock, $0.001 par value		The NASDAQ Capital Market

Fiscal Years	Ingredients Segment	Consumer Products Segment	Core Standards and Contract Services Segment	~~Regulatory~~ ~~Consulting Segment~~	Total
2017	$11.1 million	$5.5 million	$4.6 million	$21.2 million
2016	$16.8 million	-	$~~9.4~~4.9 million	$~~0.6 million~~	~~$26.8~~21.7 million
2015	$12.5 million	-	$~~8.4~~5.4 million	$~~1.1 million~~	~~$22.0 million~~
~~2014~~	~~$6.8 million~~	~~$7.5 million~~	~~$1.0 million~~	~~$15.3~~17.9 million

Business Segment	Property Used
Ingredients	All properties
Consumer Products	All properties
Core Standards and Contract Services	Irvine, CA, ~~Boulder,~~Longmont, CO and ~~Longmont, CO~~
~~Regulatory Consulting~~	~~Primarily~~ Rockville, MD

Fiscal Year Ending December 31, 2016
Quarter Ended	High	Low
December 31, 2016	$3.31	$2.31
October 1, 2016	$4.39	$2.88
July 2, 2016	$5.76	$2.84
April 2, 2016	$4.77	$3.60

Item
	PART I		PART I

	Cautionary Notice Regarding Forward-Looking Statements	1	Cautionary Notice Regarding Forward-Looking Statements	1
1.	Business	2	Business	2
1A.	Risk Factors	17	Risk Factors	15
1B.	Unresolved Staff Comments	32	Unresolved Staff Comments	32
2.	Properties	32	Properties	32
3.	Legal Proceedings	32	Legal Proceedings	32
4.	Mine Safety Disclosures	33	Mine Safety Disclosures	34

	PART II		PART II

5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	34	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	35
6.	Selected Financial Data	36	Selected Financial Data	37
7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
7A	Quantitative and Qualitative Disclosures About Market Risk	51	Quantitative and Qualitative Disclosures About Market Risk	52
8.	Financial Statements and Supplementary Data	52	Financial Statements and Supplementary Data	53
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	85	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	91
9A	Controls and Procedures	85	Controls and Procedures	91
9B.	Other Information	88	Other Information	92

	PART III		PART III

10.	Directors, Executive Officers and Corporate Governance	90	Directors, Executive Officers and Corporate Governance	93
11.	Executive Compensation	90	Executive Compensation	93
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	90	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	93
13.	Certain Relationships and Related Transactions, and Director Independence	90	Certain Relationships and Related Transactions, and Director Independence	93
14.	Principal Accounting Fees and Services	90	Principal Accounting Fees and Services	93

	PART IV		PART IV

15.	Exhibits, Financial Statement Schedules	91	Exhibits, Financial Statement Schedules	94
16.			Form 10-K Summary	100
	Signatures	92	Signatures

Fiscal Year Ending December 30, 2017
Quarter Ended	High	Low
December 30, 2017	$6.96	$3.88
September 30, 2017	$4.71	$2.91
July 1, 2017	$3.96	$2.26
April 1, 2017	$3.67	$2.50

Fiscal Year Ending January 2, 2016
Quarter Ended	High	Low
January 2, 2016	$4.56	$3.36
October 3, 2015	$4.26	$3.06
July 4, 2015	$4.44	$3.39
April 4, 2015	$4.62	$2.55

	12/31/11	12/29/12	12/28/13	1/3/15	1/2/16	12/31/16	12/29/12	12/28/13	1/3/15	1/2/16	12/31/16	12/30/17

ChromaDex Corporation	100.00	101.00	290.91	163.64	221.82	200.61	100.00	288.03	162.02	219.62	198.62	352.84
NASDAQ Composite	100.00	116.41	165.47	188.69	200.32	216.54	100.00	141.58	162.13	173.35	187.34	242.49
S&P Small Cap 600 Health Care Index	100.00	109.85	159.94	170.04	184.79	180.61	100.00	135.35	152.67	165.19	159.35	211.40

	At The End of Year
	2016	2015	2014	2013	2012
Consolidated Balance Sheet Data

Cash	$1,642,429	$5,549,672	$3,964,750	$2,261,336	$520,000

Working capital (1)	7,786,372	4,400,432	2,189,442	1,602,008	3,717,610

Total assets	19,752,068	18,749,209	11,516,847	8,986,892	9,034,521

Long term debt	-	3,345,335	1,977,113	-	-

Total stockholders' equity	$9,974,358	$5,274,674	$3,998,391	$5,665,451	$3,993,329

(1) Trade receivables plus inventories less accounts payable.


	Years Ended
	2016	2015	2014	2013	2012
Consolidated Cash Flow Data

Net cash used in operating activities	$(2,936,596)	$(2,111,138)	$(2,580,406)	$(3,906,011)	$(10,119,713)

Net cash provided by (used in) investing activities	(1,724,922)	(647,731)	1,590,275	998,651	(76,565)

Net cash provided by financing activities	$754,275	$4,343,791	$2,693,545	$4,648,696	$10,296,126

	Years Ended
Consolidated Statement of Operations Data	2017	2016	2015	2014	2013

Sales, net	$21,201,482	$21,664,648	$17,884,886	$11,861,099	$7,438,857
Cost of sales	10,724,177	11,274,114	10,350,281	6,855,690	3,926,765
Gross profit	10,477,305	10,390,534	7,534,605	5,005,409	3,512,092

Operating expenses:
Sales and marketing	4,459,224	1,558,213	1,507,868	1,482,784	1,627,795
Research and development	4,007,381	2,522,768	891,601	513,671	134,040
General and administrative	17,641,889	9,214,763	7,201,231	7,648,773	4,747,561
Loss from investment in affiliate	-	-	-	45,829	44,961
Other	745,773	-	-	-	-
Operating expenses	26,854,267	13,295,744	9,600,700	9,691,057	6,554,357
Operating loss	(16,376,962)	(2,905,210)	(2,066,095)	(4,685,648)	(3,042,265)

Nonoperating income (expense):
Interest expense, net	(152,784)	(333,286)	(566,917)	(123,976)	(4,006)
Loss on debt extinguishment	-	(313,099)	-	-	-
Nonoperating expenses	(152,784)	(646,385)	(566,917)	(123,976)	(4,006)
Loss before income taxes	(16,529,746)	(3,551,595)	(2,633,012)	(4,809,624)	(3,046,271)
Provision for income taxes	-	-	(4,527)	-	-
Loss from continuing operations	(16,529,746)	(3,551,595)	(2,637,539)	(4,809,624)	(3,046,271)

Income (loss) from discontinued operations	(315,140)	623,410	(133,528)	(578,561)	(1,373,254)
Gain on sale of discontinued operations	5,467,268	-	-	-	-
Income (loss) from discontinued operations, net	5,152,128	623,410	(133,528)	(578,561)	(1,373,254)
Net loss	$(11,377,618)	$(2,928,185)	$(2,771,067)	$(5,388,185)	$(4,419,525)

Basic and diluted earnings (loss) per common share:
Loss from continuing operations	$(0.37)	$(0.10)	$(0.07)	$(0.14)	$(0.09)
Earnings (loss) from discontinued operations	$0.11	$0.02	$(0.01)	$(0.01)	$(0.04)
Basic and diluted loss per common share	$(0.26)	$(0.08)	$(0.08)	$(0.15)	$(0.13)
Basic and diluted weighted average
common shares outstanding	44,598,879	37,294,321	35,877,341	35,486,460	33,329,148

	Twelve months ending			Twelve months ending
	Dec. 31, 2016	Jan. 2, 2016	Jan. 3, 2015	Dec. 30, 2017	Dec. 31, 2016	Jan. 2, 2016
Sales	$26,811,086	$22,014,140	$15,313,179	$21,201,482	$21,664,648	$17,884,886
Cost of sales	14,889,954	13,533,132	9,987,514	10,724,177	11,274,114	10,350,281
Gross profit	11,921,132	8,481,008	5,325,665	10,477,305	10,390,534	7,534,605
Operating expenses -Sales and marketing	2,250,589	2,326,788	2,136,584	4,459,224	1,558,213	1,507,868
-Research and development	2,522,768	891,601	513,671	4,007,381	2,522,768	891,601
-General and administrative	9,393,209	7,416,451	7,860,930	17,641,889	9,214,763	7,201,231
-Loss from investment in affiliate	-		45,829
Nonoperating -Interest income	2,247	3,325	2,013
-Interest expenses	(371,899)	(616,033)	(158,849)
-Other				745,773	-
Nonoperating -Interest expense, net				(152,784)	(333,286)	(566,917)
-Loss on debt extinguishment	(313,099)	-		-	(313,099)	-
Provision for income taxes	-	(4,527)	-	-		(4,527)
Loss from continuing operations				(16,529,746)	(3,551,595)	(2,637,539)
Income (loss) from discontinued operations, net				5,152,128	623,410	(133,528)
Net loss	$(2,928,185)	$(2,771,067)	$(5,388,185)	$(11,377,618)	$(2,928,185)	$(2,771,067)

	Twelve months ending
	January 2, 2016	January 3, 2015	Change
Net sales:
Ingredients	$12,542,000	$6,857,000	83%
Core standards and contract services	8,419,000	7,487,000	12%
Scientific and regulatory consulting	1,053,000	969,000	9%

Total net sales	$22,014,000	$15,313,000	44%

	Payments due by period						Payments due by period
	Total	2017	2018	2019	2020	2021	Total	2018	2019	2020	2021	2022

Capital leases	670,000	297,000	248,000	89,000	36,000	-	$576,000	$236,000	$196,000	$126,000	$18,000	$-
Operating leases	2,949,000	682,000		644,000	479,000	462,000	2,093,000	601,000	590,000	424,000	340,000	138,000
Purchase obligations	3,524,000	3,096,000	428,000	-			3,571,000	3,489,000	82,000	-
Total	$7,143,000	$4,075,000	$1,358,000	$733,000	$515,000	$462,000	$6,240,000	$4,326,000	$868,000	$550,000	$358,000	$138,000

	Page
~~Report~~ Reports of Independent Registered Public Accounting Firm	5354
Consolidated Balance Sheets at December 30, 2017 and December 31, 2016 ~~and January 2, 2016~~	5456
Consolidated Statements of Operations for the Years Ended December 30, 2017, December 31, 2016 and January 2, 2016 ~~and January 3, 2015~~	5557
Consolidated Statements of Stockholders’ Equity for the Years Ended December 30, 2017, December 31, 2016 and January 2, 2016 ~~and January 3, 2015~~	5658
Consolidated Statements of Cash Flows for the Years Ended December 30, 2017, December 31, 2016 and January 2, 2016 ~~and January 3, 2015~~	5759
Notes to Consolidated Financial Statements	5860

ChromaDex Corporation and Subsidiaries

Consolidated Balance Sheets
December 31, 2016 and January 2, 2016

	2016	2015
Assets

Current Assets
Cash	$1,642,429	$5,549,672
Trade receivables	5,852,030	2,450,591
Inventories	7,912,630	8,173,799
Prepaid expenses and other assets	329,854	373,567
Total current assets	15,736,943	16,547,629

Leasehold Improvements and Equipment, net	3,111,374	1,788,645
Deposits	397,207	58,883
Intangible assets, net	486,226	354,052
Long-term investment, related party	20,318	-

Total assets	$19,752,068	$18,749,209

Liabilities and Stockholders' Equity

Current Liabilities
Accounts payable	$5,978,288	$6,223,958
Accrued expenses	2,170,172	1,302,865
Current maturities of loan payable	-	1,528,578
Current maturities of capital lease obligations	255,461	219,689
Customer deposits and other	389,010	272,002
Deferred rent, current	76,219	39,529
Total current liabilities	8,869,150	9,586,621

Loan payable, less current maturities, net	-	3,345,335
Capital lease obligations, less current maturities	343,589	444,589
Deferred rent, less current	564,971	97,990

Total liabilities	9,777,710	13,474,535

Commitments and contingencies

Stockholders' Equity
Common stock, $.001 par value; authorized 150,000,000 shares;
issued and outstanding 2016 37,544,531 and 2015 36,003,589 shares	37,545	36,004
Additional paid-in capital	55,160,387	47,534,059
Accumulated deficit	(45,223,574)	(42,295,389)
Total stockholders' equity	9,974,358	5,274,674

Total liabilities and stockholders' equity	$19,752,068	$18,749,209

See Notes to Consolidated Financial Statements.

ChromaDex Corporation and Subsidiaries

Consolidated Statements of Operations
Years Ended December 31, 2016, January 2, 2016 and January 3, 2015

	2016	2015	2014

Sales, net	$26,811,086	$22,014,140	$15,313,179
Cost of sales	14,889,954	13,533,132	9,987,514

Gross profit	11,921,132	8,481,008	5,325,665

Operating expenses:
Sales and marketing	2,250,589	2,326,788	2,136,584
Research and development	2,522,768	891,601	513,671
General and administrative	9,393,209	7,416,451	7,860,930
Loss from investment in affiliate	-	-	45,829
Operating expenses	14,166,566	10,634,840	10,557,014

Operating loss	(2,245,434)	(2,153,832)	(5,231,349)

Nonoperating income (expense):
Interest income	2,247	3,325	2,013
Interest expense	(371,899)	(616,033)	(158,849)
Loss on debt extinguishment	(313,099)	-	-
Nonoperating expenses	(682,751)	(612,708)	(156,836)

Loss before income taxes	(2,928,185)	(2,766,540)	(5,388,185)
Provision for income taxes	-	(4,527)	-

Net loss	$(2,928,185)	$(2,771,067)	$(5,388,185)

Basic and Diluted loss per common share	$(0.08)	$(0.08)	$(0.15)

Basic and Diluted weighted average common shares outstanding	37,294,321	35,877,341	35,486,460

ChromaDex Corporation and Subsidiaries
Consolidated Statement of Stockholders' Equity Years Ended December 31, 2016, January 2, 2016 and January 3, 2015

					Total
	Common Stock		Additional	Accumulated	Stockholders'
	Shares	Amount	Paid-in Capital	Deficit	Equity
Balance, December 28, 2013	34,841,579	$34,841	$39,766,747	$(34,136,137)	$5,665,451

Issuance of warrant	-	-	246,189	-	246,189

Exercise of stock options	178,238	178	466,971	-	467,149

Issuance of unvested restricted stock	395,333	395	791	-	1,186

Unvested restricted stock	(395,333)	(395)	(791)	-	(1,186)

Share-based compensation	28,333	29	2,861,264	-	2,861,293

Stock issued to settle outstanding payable balance	42,202	42	146,452	-	146,494

Net loss	-	-	-	(5,388,185)	(5,388,185)

Balance, January 3, 2015	35,090,352	35,090	43,487,623	(39,524,322)	3,998,391

Issuance of common stock, net of offering costs of $25,000	533,334	534	1,974,359	-	1,974,893

Exercise of stock options	40,236	40	94,806	-	94,846

Vested restricted stock	228,000	228	(228)	-	-

Share-based compensation	111,667	112	1,977,499	-	1,977,611

Net loss	-	-	-	(2,771,067)	(2,771,067)

Balance, January 2, 2016	36,003,589	36,004	47,534,059	(42,295,389)	5,274,674

1 for 3 reverse stock split, isssuance due to fractional shares round up	1,632	2	(2)	-	-

Issuance of common stock, net of offering costs of $33,000	1,245,227	1,245	5,716,230	-	5,717,475

Exercise of stock options	280,086	280	716,332	-	716,612

Vested restricted stock	13,997	14	(14)	-	-

Share-based compensation	-	-	1,193,782	-	1,193,782

Net loss	-	-	-	(2,928,185)	(2,928,185)

Balance, December 31, 2016	37,544,531	$37,545	$55,160,387	$(45,223,574)	$9,974,358

ChromaDex Corporation and Subsidiaries
Consolidated Balance Sheets
December 30, 2017 and December 31, 2016
	2017	2016
Assets

Current Assets
Cash	$45,388,848	$1,642,429
Trade receivables, net of allowance of $0.7 million and $1.1 million, repectively;
Receivables from Related Party: $1.0 million and $0, respectively	5,337,868	5,852,030
Inventories	5,796,281	7,912,630
Prepaid expenses and other assets	655,321	311,539
Current assets held for sale	-	18,315
Total current assets	57,178,318	15,736,943

Leasehold Improvements and Equipment, net	2,871,886	1,778,171
Deposits	271,631	377,532
Receivable held at escrow	750,358	-
Intangible assets, net	1,651,407	486,226
Long-term investment, related party	-	20,318
Noncurrent assets held for sale	-	1,352,878
Total assets	$62,723,600	$19,752,068

Liabilities and Stockholders' Equity

Current Liabilities
Accounts payable	$3,718,407	$5,978,288
Accrued expenses	3,645,355	2,170,172
Current maturities of capital lease obligations	195,533	255,461
Customer deposits and other	314,335	389,010
Deferred rent, current	114,304	76,219
Due to officer	100,000	-
Total current liabilities	8,087,934	8,869,150

Capital lease obligations, less current maturities	310,089	343,589
Deferred rent, less current	491,909	380,205
Noncurrent liabilities held for sale	-	184,766
Total liabilities	8,889,932	9,777,710

Commitments and contingencies

Stockholders' Equity
Common stock, $.001 par value; authorized 150,000,000 shares;
issued and outstanding 2017 54,696,741 shares and 2016 37,544,531 shares	54,697	37,545
Additional paid-in capital	110,380,163	55,160,387
Accumulated deficit	(56,601,192)	(45,223,574)
Total stockholders' equity	53,833,668	9,974,358
Total liabilities and stockholders' equity	$62,723,600	$19,752,068

See Notes to Consolidated Financial Statements.

ChromaDex Corporation and Subsidiaries

Consolidated Statements of Cash Flows
Years Ended December 31, 2016, January 2, 2016 and January 3, 2015
	2016	2015	2014

Cash Flows From Operating Activities
Net loss	$(2,928,185)	$(2,771,067)	$(5,388,185)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of leasehold improvements and equipment	331,734	285,536	222,721
Amortization of intangibles	87,826	45,014	35,589
Share-based compensation expense	1,193,782	1,977,611	2,916,924
Allowance for doubtful trade receivables	713,122	329,844	28,779
Loss from disposal of equipment	7,114	19,643	20,400
Loss from impairment of intangibles	-	19,495	-
Loss from investment in affiliate	-	-	45,829
Loss on debt extinguishment	313,099	-	-
Non-cash financing costs	110,161	188,442	49,527
Changes in operating assets and liabilities:
Trade receivables	(4,114,561)	(873,726)	(1,096,695)
Other receivable	-	-	215,000
Inventories	240,851	(4,439,458)	(1,530,216)
Prepaid expenses and other assets	(133,855)	(82,124)	(91,053)
Accounts payable	(245,670)	2,772,350	2,157,192
Accrued expenses	867,307	449,180	196,978
Customer deposits and other	117,008	37,567	(311,609)
Deferred rent	503,671	(69,445)	(51,587)
Net cash used in operating activities	(2,936,596)	(2,111,138)	(2,580,406)

Cash Flows From Investing Activities
Purchases of leasehold improvements and equipment	(1,504,922)	(525,231)	(123,096)
Purchases of intangible assets	(220,000)	(122,500)	(130,000)
Proceeds from sales of equipment	-	-	1,356
Proceeds from investment in affiliate	-	-	1,842,015
Net cash provided by (used in) investing activities	(1,724,922)	(647,731)	1,590,275

Cash Flows From Financing Activities
Proceeds from issuance of common stock, net of issuance costs	5,717,474	1,974,893	-
Proceeds from exercise of stock options	716,612	94,846	467,149
Proceeds from loan payable	-	2,500,000	2,500,000
Payment of debt issuance costs	(176,836)	(15,000)	(102,866)
Principal payment on loan payable	(5,000,000)	-	-
Cash paid for debt extinguishment costs	(281,092)	-	-
Principal payments on capital leases	(221,883)	(210,948)	(170,738)
Net cash provided by financing activities	754,275	4,343,791	2,693,545

Net increase in cash	(3,907,243)	1,584,922	1,703,414

Cash Beginning of Year	5,549,672	3,964,750	2,261,336

Cash Ending of Year	$1,642,429	$5,549,672	$3,964,750

Supplemental Disclosures of Cash Flow Information
Cash payments for interest	$261,738	$427,591	$74,996

Supplemental Schedule of Noncash Investing Activity
Capital lease obligation incurred for the purchase of equipment	$156,655	$303,933	$322,802
Inventory supplied to Healthspan Research, LLC for equity interest, at cost	$20,318	$-	$-
Retirement of fully depreciated equipment - cost	$90,803	$121,213	$56,110
Retirement of fully depreciated equipment - accumulated depreciation	$(90,803)	$(121,213)	$(56,110)

Supplemental Schedule of Noncash Operating Activity
Stock issued to settle outstanding payable balance	$-	$-	$146,494

Supplemental Schedule of Noncash Share-based Compensation
Changes in prepaid expenses associated with share-based compensation	$-	$-	$55,631
Warrant issued, related to loan payable	$-	$-	$246,189

See Notes to Consolidated Financial Statements.

ChromaDex Corporation and Subsidiaries
Consolidated Statements of Operations
Years Ended December 30, 2017, December 31, 2016 and January 2, 2016
	2017	2016	2015

Sales, net	$21,201,482	$21,664,648	$17,884,886
Cost of sales	10,724,177	11,274,114	10,350,281

Gross profit	10,477,305	10,390,534	7,534,605

Operating expenses:
Sales and marketing	4,459,224	1,558,213	1,507,868
Research and development	4,007,381	2,522,768	891,601
General and administrative	17,641,889	9,214,763	7,201,231
Other	745,773	-	-
Operating expenses	26,854,267	13,295,744	9,600,700

Operating loss	(16,376,962)	(2,905,210)	(2,066,095)

Nonoperating income (expense):
Interest expense, net	(152,784)	(333,286)	(566,917)
Loss on debt extinguishment	-	(313,099)	-
Nonoperating expenses	(152,784)	(646,385)	(566,917)

Loss before income taxes	(16,529,746)	(3,551,595)	(2,633,012)
Provision for income taxes	-	-	(4,527)

Loss from continuing operations	(16,529,746)	(3,551,595)	(2,637,539)

Income (loss) from discontinued operations	(315,140)	623,410	(133,528)
Gain on sale of discontinued operations	5,467,268	-	-

Income (loss) from discontinued operations, net	5,152,128	623,410	(133,528)

Net loss	$(11,377,618)	$(2,928,185)	$(2,771,067)

Basic and diluted earnings (loss) per common share:
Loss from continuing operations	$(0.37)	$(0.10)	$(0.07)
Earnings (loss) from discontinued operations	$0.11	$0.02	$(0.01)

Basic and diluted loss per common share	$(0.26)	$(0.08)	$(0.08)

Basic and diluted weighted average common shares outstanding	44,598,879	37,294,321	35,877,341

See Notes to Consolidated Financial Statements.

	2016	2015
Bulk ingredients	$7,044,000	$7,196,000
Reference standards	1,033,000	1,239,000
	8,077,000	8,435,000
Less valuation allowance	164,000	261,000
	$7,913,000	$8,174,000

	2016	2015	Remaining Weighted Average Amortization Period as of December 31, 2016	2017	2016	Weighted Average Total Amortization Period

Healthspan Research LLC Acquisition (See Note 9)				$1,346,000	$-	10 years
License agreements and other	$1,469,000	$1,249,000	5.4 years	1,494,000	1,469,000	9 years
Less accumulated depreciation	983,000	895,000		(1,189,000)	(983,000)
	$486,000	$354,000		$1,651,000	$486,000

Years ending December:
2017	$94,000
2018	94,000	$233,000
2019	94,000	233,000
2020	89,000	228,000
2021	70,000	209,000
2022		171,000
Thereafter	45,000	577,000
	$486,000	$1,651,000

	2016	2015	Useful Life	2017	2016	Useful Life

Laboratory equipment	$3,851,000	$3,739,000	10 years	$1,869,000	$1,142,000	10 years
Leasehold improvements	1,721,000	513,000	Lesser of lease term or estimated useful life	1,699,000	1,332,000	Lesser of lease term or estimated useful life
Computer equipment	441,000	404,000	3 to 5 years	511,000	400,000	3 to 5 years
Furniture and fixtures	42,000	17,000	7 years	90,000	41,000	7 years
Office equipment	28,000	22,000	10 years	18,000	10,000	10 years
Construction in progress	170,000	4,000		131,000	170,000
	6,253,000	4,699,000		4,318,000	3,095,000
Less accumulated depreciation	3,142,000	2,910,000		1,446,000	1,317,000
	$3,111,000	$1,789,000		$2,872,000	$1,778,000

Year ending December:
2017	$297,000
2018	249,000	$236,000
2019	89,000	196,000
2020	35,000	126,000
2021		18,000
Total minimum lease payments	670,000	576,000
Less amount representing interest at a rate of approximately 8.9% per year	71,000
Less amount representing interest at a rate of approximately 9.8% per year		70,000
Present value of net minimum lease payments	599,000	506,000
Less current portion	255,000	196,000
Long-term obligations under capital leases	$344,000	$310,000

~~Payoff Amount~~

~~Principal~~	$~~4,554,659~~
~~Accrued interest~~	~~15,790~~
~~End of term charge~~	~~187,500~~
~~Prepayment fee~~	~~91,093~~
~~Other fees~~	~~2,500~~

~~Total~~	$~~4,851,542~~

Net Carrying Amount		Payoff Amount (Excluding Interest)

Principal	$4,554,659	Principal	$4,554,659
Accrued end of term charge	103,909	End of term charge	187,500
Deferred financing cost	(45,606)	Prepayment fee	91,093
Warrant discount	(90,309)	Other fees	2,500

Total	$4,522,653	Total	$4,835,752
	(A)		(B)

Loss on debt extinguishment	$(313,099)
	(A) - (B)

Note 8.	~~September 29, 2014~~
~~Fair value of common stock~~	$~~3.24~~
~~Volatility~~	~~72.40~~%
~~Expected dividends~~	~~0.00~~%
~~Contractual term~~	~~5.0 years~~
~~Risk-free rate~~	~~1.76~~% Income Taxes

(A) Consideration transferred		(B) Net amount of assets and liabilities
	Fair value	Assets acquired	Fair value
Common Stock	$1,000,000	Cash and cash equivalents	$19,000
Transaction costs	178,000	Trade receivables	11,000
Previously held equity interest	20,000	Inventory	61,000

	$1,198,000	Liabilities assumed
		Due to officer	(132,000)
		Accounts payable	(74,000)
		Credit card payable	(30,000)
		Other accrued expenses	(3,000)
Consumer product business model,
intangible asset (A) -(B)	$1,346,000	Net assets	$(148,000)

(A) Consideration received		(C) Carrying value of the Lab Business

	Amount	Assets disposed	Carrying value
Cash payment	$6,750,000	Leasehold improvements and equipment, net	$1,427,000
Cash payment held in escrow (1)	750,000	Prepaid expenses	11,000
Additional earnout payment	-	Deposits	20,000
	$7,500,000
		Liabilities disposed
(B) Selling costs		Deferred revenue	(7,000)
	Amount	Deferred rent	(215,000)
Legal	$428,000
Financial consulting	250,000
Other	118,000
	$796,000	Net assets	$1,236,000
Gain from disposal (A) - (B) - (C)	$5,468,000

(1) $750,000 is expected to be held in escrow until March 2019 to satisfy any indemnification claims.

Statements of Operations - Discontinued operations
Years Ended December 30, 2017, December 31, 2016 and January 2, 2016

	2017	2016	2015

Sales	$2,820,631	$5,146,438	$4,129,254
Cost of sales	2,478,827	3,615,840	3,182,851

Gross profit	341,804	1,530,598	946,403

Operating expenses:
Sales and marketing	482,134	692,376	818,920
General and administrative	150,171	178,446	215,220
Operating expenses	632,305	870,822	1,034,140

Operating income (loss)	(290,501)	659,776	(87,737)

Nonoperating income (expense):
Interest expense, net	(24,639)	(36,366)	(45,791)
Nonoperating expenses	(24,639)	(36,366)	(45,791)

Income (loss) from discontinued operations	$(315,140)	$623,410	$(133,528)

Year Ended December	2016	2015	2014
Expected term	6 years	6 years	6 years
Expected Volatility	73.2%	75.8%	74.6%
Expected dividends	0.0%	0.0%	0.0%
Risk-free rate	1.4%	1.7%	1.9%

		Weighted Average					Weighted Average
			Remaining		Aggregate			Remaining		Aggregate
	Number of	Exercise	Contractual	Fair	Intrinsic	Number of	Exercise	Contractual	Fair	Intrinsic
	Shares	Price	Term	Value		Shares	Price	Term	Value
Outstanding at December 28, 2013	4,038,070	$3.18	7.43

Options Granted	744,662	4.17	10.00	$2.70
Options Classification from Employee to Non-Employee	(37,717)	2.28	8.68
Options Exercised	(178,238)	2.61			$156,000
Options Expired	(84,633)	3.00
Options Forfeited	(240,758)	3.39
Outstanding at January 3, 2015	4,241,386	$3.39	7.00			4,241,386	$3.39	7.00

Options Granted	730,562	3.66	10.00	$2.28		730,562	3.66	10.00	$2.28
Options Classification from Employee to Non-Employee	(514,024)	2.79	7.78			(514,024)	2.79	7.78
Options Exercised	(40,236)	2.37			$58,000	(40,236)	2.37			$58,000
Options Forfeited	(103,425)	3.93				(103,425)	3.93
Outstanding at January 2, 2016	4,314,263	$3.50	6.44			4,314,263	$3.50	6.44

Options Granted	742,485	3.91	10.00	$2.49		742,485	3.91	10.00	$2.49
Options Exercised	(238,423)	2.67			$502,000	(238,423)	2.67			$502,000
Options Expired	(183,334)	4.50				(183,334)	4.50
Options Forfeited	(353,840)	4.15				(353,840)	4.15
Outstanding at December 31, 2016	4,281,151	$3.52	6.36		$1,352,000	4,281,151	$3.52	6.36		$1,352,000

Exercisable at December 31, 2016	3,192,519	$3.40	5.42		$1,234,000
Options Granted						1,110,404	3.25	10.00	$2.07
Options Exercised						(863,712)	2.42			$2,455,000
Options Expired						(3,334)	4.50
Options Forfeited						(73,483)	3.88
Outstanding at December 30, 2017						4,451,026	$4.45	5.76		$10,740,000*

Exercisable at December 30, 2017						2,937,613	$3.54	5.18		$7,230,000*

	Volatility:	67%
	Contractual Term:	10 years
	Risk Free Rate:	2.4%
	Cost of Equity:	15.7%