Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 08, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | ChromaDex Corp. | |
Entity Central Index Key | 1,386,570 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,187,298 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash | $ 23,999,633 | $ 1,642,429 |
Trade receivables, net of allowances of $0.5 million and $1.1 million, respectively; Receivables from Related Party: $1.5 million and $0, respectively | 4,919,768 | 5,852,030 |
Inventories | 6,615,245 | 7,912,630 |
Prepaid expenses and other assets | 724,388 | 311,539 |
Current assets held for sale | 0 | 18,315 |
Total current assets | 36,259,034 | 15,736,943 |
Leasehold Improvements and Equipment, net | 2,690,527 | 1,778,171 |
Deposits | 392,342 | 377,532 |
Receivable held at escrow | 750,000 | 0 |
Intangible assets, net | 1,709,609 | 486,226 |
Longterm investment | 0 | 20,318 |
Noncurrent assets held for sale | 0 | 1,352,878 |
Total assets | 41,801,512 | 19,752,068 |
Current Liabilities | ||
Accounts payable | 4,346,700 | 5,978,288 |
Accrued expenses | 2,129,583 | 2,170,172 |
Current maturities of capital lease obligations | 190,892 | 255,461 |
Customer deposits and other | 321,119 | 389,010 |
Deferred rent, current | 120,894 | 76,219 |
Due to officer | 100,000 | 0 |
Total current liabilities | 7,209,188 | 8,869,150 |
Capital lease obligations, less current maturities | 360,748 | 343,589 |
Deferred rent, less current | 493,735 | 380,205 |
Noncurrent liabilities held for sale | 0 | 184,766 |
Total Liabilities | 8,063,671 | 9,777,710 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Common stock, $.001 par value; authorized 150,000,000 shares; issued and outstanding September 30, 2017 47,650,252 shares and December 31, 2016 37,544,531 shares | 47,650 | 37,545 |
Additional paid-in capital | 81,469,567 | 55,160,387 |
Accumulated deficit | (47,779,376) | (45,223,574) |
Total stockholders' equity | 33,737,841 | 9,974,358 |
Total liabilities and stockholders' equity | $ 41,801,512 | $ 19,752,068 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts and returns | $ 533,000 | $ 1,081,000 |
Receivables from Related Party | $ 1,500,000 | $ 0 |
Common Stock, Par Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 47,650,252 | 37,544,531 |
Common Stock, Shares, Outstanding | 47,650,252 | 37,544,531 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Oct. 01, 2016 | Sep. 30, 2017 | Oct. 01, 2016 | ||
Income Statement [Abstract] | |||||
Sales, net | $ 6,084,690 | $ 3,937,286 | $ 13,670,646 | $ 17,211,865 | |
Cost of sales | 3,169,321 | 2,074,325 | 7,028,340 | 8,831,400 | |
Gross profit | 2,915,369 | 1,862,961 | 6,642,306 | 8,380,465 | |
Operating expenses: | |||||
Sales and marketing | 1,103,157 | 286,941 | 2,058,178 | 1,190,013 | |
Research and development | 1,040,561 | 772,799 | 2,554,713 | 1,988,597 | |
General and administrative | 3,948,435 | 1,727,383 | 8,882,821 | 5,935,139 | |
Other | 0 | 0 | 745,773 | 0 | |
Operating expenses | 6,092,153 | 2,787,123 | 14,241,485 | 9,113,749 | |
Operating loss | (3,176,784) | (924,162) | (7,599,179) | (733,284) | |
Nonoperating expense: | |||||
Interest expense, net | (44,508) | (2,260) | (108,751) | (314,926) | |
Loss on debt extinguishment | 0 | 0 | 0 | (313,099) | |
Nonoperating expenses | (44,508) | (2,260) | (108,751) | (628,025) | |
Loss before income taxes | (7,707,930) | (1,361,309) | |||
Provision for taxes | 0 | (3,500) | |||
Loss from continuing operations | (3,221,292) | (926,422) | (7,707,930) | (1,364,809) | |
Income (loss) from discontinued operations | (108,899) | (31,121) | (315,140) | 583,377 | |
Gain on sale of discontinued operations | 5,467,268 | 0 | 5,467,268 | 0 | |
Provision for taxes | 0 | 3,153 | 0 | 0 | |
Income (loss) from discontinued operations, net | 5,358,369 | (27,968) | 5,152,128 | 583,377 | |
Net income (loss) | $ 2,137,077 | $ (954,390) | $ (2,555,802) | $ (781,432) | |
Basic earnings (loss) per common share: continuing operations | $ (0.07) | $ (0.02) | $ (.18) | $ (.04) | |
Basic earnings (loss) per common share: discontinued operations | .12 | (0.01) | .12 | .002 | |
Basic earnings (loss) per common share | .05 | (0.03) | (0.06) | (0.02) | |
Diluted earnings (loss) per common share: continuing operations | (0.07) | (0.02) | (.18) | (.04) | |
Diluted earnings (loss) per common share: discontinued operations | 0.11 | (0.01) | .12 | .02 | |
Diluted earnings (loss) per common share | $ 0.04 | $ (0.03) | $ (0.06) | $ (0.02) | |
Basic weighted average common shares outstanding | [1] | 47,065,009 | 37,868,672 | 42,405,616 | 37,090,916 |
Diluted weighted average common shares outstanding | 47,556,697 | 37,868,672 | 42,405,616 | 37,090,916 | |
[1] | Includes approximately 0.5 million weighted average nonvested shares of restricted stock for the three and nine month periods ending September 30, 2017, respectively, and approximately 0.4 million weighted average nonvested shares or restricted stock for the three and nine month periods ending October 1, 2016, respectively. These shares are participating securities that feature voting and dividend rights. |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (USD $) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2016 | 37,544,531 | |||
Beginning Balance, Amount at Dec. 31, 2016 | $ 37,545 | $ 55,160,387 | $ (45,223,574) | $ 9,974,358 |
Issuance of common stock associated with the acquisition of Healthspan Research LLC, Shares | 367,648 | |||
Issuance of common stock associated with the acquisition of Healthspan Research LLC, Amount | $ 367 | 999,635 | 1,000,002 | |
Exercise of stock options, Shares | 3,202 | |||
Exercise of stock options, Amount | $ 3 | 6,620 | 6,623 | |
Vested restricted stock, Shares | 2,667 | |||
Vested restricted stock, Amount | $ 3 | (3) | 0 | |
Share-based compensation | 319,830 | 319,830 | ||
Net loss | (1,928,755) | (1,928,755) | ||
Ending Balance, Shares at Apr. 01, 2017 | 37,918,048 | |||
Ending Balance, Amount at Apr. 01, 2017 | $ 37,918 | 56,486,469 | (47,152,329) | 9,372,058 |
Beginning Balance, Shares at Dec. 31, 2016 | 37,544,531 | |||
Beginning Balance, Amount at Dec. 31, 2016 | $ 37,545 | 55,160,387 | (45,223,574) | $ 9,974,358 |
Exercise of stock options, Shares | 114,813 | |||
Net loss | $ (2,555,802) | |||
Ending Balance, Shares at Sep. 30, 2017 | 47,650,252 | |||
Ending Balance, Amount at Sep. 30, 2017 | $ 47,650 | 81,469,567 | (47,779,376) | 33,737,841 |
Beginning Balance, Shares at Apr. 01, 2017 | 37,918,048 | |||
Beginning Balance, Amount at Apr. 01, 2017 | $ 37,918 | 56,486,469 | (47,152,329) | 9,372,058 |
Issuance of common stock, net of offering costs, Shares | 7,649,968 | |||
Issuance of common stock, net of offering costs, Amount | $ 7,650 | 18,698,634 | 18,706,284 | |
Exercise of stock options, Shares | 1,875 | |||
Exercise of stock options, Amount | $ 2 | 5,342 | 5,344 | |
Vested restricted stock, Shares | 2,000 | |||
Vested restricted stock, Amount | $ 2 | (2) | 0 | |
Share-based compensation | 399,861 | 399,861 | ||
Net loss | (2,764,124) | (2,764,124) | ||
Ending Balance, Shares at Jul. 01, 2017 | 45,571,891 | |||
Ending Balance, Amount at Jul. 01, 2017 | $ 45,572 | 75,590,304 | (49,916,453) | 25,719,423 |
Issuance of common stock, net of offering costs, Shares | 1,965,417 | |||
Issuance of common stock, net of offering costs, Amount | $ 1,965 | 5,005,512 | 5,007,477 | |
Exercise of stock options, Shares | 111,611 | |||
Exercise of stock options, Amount | $ 112 | 382,935 | 383,047 | |
Vested restricted stock, Shares | 1,333 | |||
Vested restricted stock, Amount | $ 1 | (1) | 0 | |
Share-based compensation | 490,817 | 490,817 | ||
Net loss | 2,137,077 | 2,137,077 | ||
Ending Balance, Shares at Sep. 30, 2017 | 47,650,252 | |||
Ending Balance, Amount at Sep. 30, 2017 | $ 47,650 | $ 81,469,567 | $ (47,779,376) | $ 33,737,841 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Equity (USD $) (Parenthetical) - USD ($) | 3 Months Ended | |
Sep. 30, 2017 | Jul. 01, 2017 | |
Statement of Stockholders' Equity [Abstract] | ||
Offering costs | $ 103,000 | $ 1,184,000 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Cash Flows From Operating Activities | ||
Net loss | $ (2,555,802) | $ (781,432) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation of leasehold improvements and equipment | 396,000 | 234,408 |
Amortization of intangibles | 148,005 | 63,116 |
Share-based compensation expense | 1,210,508 | 930,026 |
Allowance for doubtful trade receivables | (547,811) | 235,591 |
Gain from disposal of assets | (5,467,268) | 0 |
Loss from disposal of equipment | 4,649 | 0 |
Loss on debt extinguishment | 0 | 313,099 |
Non-cash financing costs | 89,481 | 94,080 |
Changes in operating assets and liabilities: | ||
Trade receivables | 1,491,529 | (4,296,439) |
Inventories | 1,358,299 | 1,840,572 |
Prepaid expenses and other assets | (480,353) | (230,667) |
Accounts payable | (1,735,361) | (2,125,180) |
Accrued expenses | (43,796) | 406,797 |
Customer deposits and other | (61,071) | 5,613 |
Deferred rent | 188,290 | 182,634 |
Due to officer | (32,500) | 0 |
Net cash used in operating activities | (6,037,201) | (3,127,782) |
Cash Flows From Investing Activities | ||
Proceeds from disposal of assets, net of transaction costs | 5,953,390 | 0 |
Purchases of leasehold improvements and equipment | (872,215) | (940,978) |
Purchases of intangible assets | (183,958) | (205,000) |
Net cash provided by (used in) investing activities | 4,897,217 | (1,145,978) |
Cash Flows From Financing Activities | ||
Proceeds from issuance of common stock, net of issuance costs | 23,713,762 | 5,717,474 |
Proceeds from exercise of stock options | 395,014 | 716,612 |
Payment of debt issuance cost | (49,279) | 0 |
Principal payments on loan payable | 0 | (5,000,000) |
Cash paid for debt extinguisment costs | 0 | (281,092) |
Principal payments on capital leases | (562,309) | (164,150) |
Net cash provided by financing activities | 23,497,188 | 988,844 |
Net increase (decrease) in cash | 22,357,204 | (3,284,916) |
Cash Beginning of Period | 1,642,429 | 5,549,672 |
Cash Ending of Period | 23,999,633 | 2,264,756 |
Supplemental Disclosures of Cash Flow Information | ||
Cash payments for interest | 43,912 | 251,231 |
Supplemental Schedule of Noncash Investing Activity | ||
Noncash consideration transferred for the acquisition of Healthspan Research LLC | 1,187,430 | 0 |
Capital lease obligation incurred for purchases of equipment | 514,899 | 0 |
Receivable from disposal of assets held at escrow | 750,000 | 0 |
Inventory supplied to Healthspan Research, LLC for equity interest, at cost | 0 | 20,318 |
Retirement of fully depreciated equipment - cost | 55,947 | 28,083 |
Retirement of fully depreciated equipment - accumulated depreciation | $ (55,947) | $ (28,083) |
Interim Financial Statements
Interim Financial Statements | 9 Months Ended |
Sep. 30, 2017 | |
Interim Financial Statements | |
Interim Financial Statements | The accompanying financial statements of ChromaDex Corporation and its wholly owned subsidiaries, ChromaDex, Inc., Healthspan Research, LLC, ChromaDex Analytics, Inc. and ChromaPharma, Inc. (collectively referred to herein as “ChromaDex” or the “Company” or, in the first person as “we”, “us” and “our”) include all adjustments, consisting of normal recurring adjustments and accruals, that, in the opinion of the management of the Company, are necessary for a fair presentation of the Company’s financial position as of September 30, 2017 and results of operations and cash flows for the three and nine months ended September 30, 2017 and October 1, 2016. These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2016 appearing in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “Commission”) on March 16, 2017. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of the results to be achieved for the full year ending on December 30, 2017. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. The balance sheet at December 31, 2016 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. |
Nature of Business and Liquidit
Nature of Business and Liquidity | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Liquidity | Nature of business With the acquisition of Healthspan Research, LLC in March 2017, the Company established a consumer product segment, which offers finished bottled dietary supplement products that contain NIAGEN®. The Company also has a core standards and contract services segment, which focuses on natural product fine chemicals (known as “phytochemicals”) and regulatory consulting services. As a result of the Company’s relationships with leading universities and research institutions, the Company discovers and licenses early stage, intellectual property-backed ingredient technologies. The Company then utilizes its business to develop commercially viable proprietary ingredients. The Company’s proprietary ingredient portfolio is backed with clinical and scientific research, as well as extensive intellectual property protection. On September 5, 2017, the Company completed the sale of its operating assets (the "Lab Business Disposition") that were used with the Company's quality verification program testing and analytical chemistry business for food and food related products (the "Lab Business") to Covance Laboratories Inc. ("Covance"). With the Lab Business Disposition, the Company will focus on accelerating the expansion of nicotinamide riboside and its other proprietary ingredient technologies. Liquidity In consideration for the sale of the Lab Business, the Company received net proceeds of approximately $6.0 million, net of transaction costs from Covance. Additional cash consideration of $0.8 million is held in escrow to satisfy any indemnification claims by Covance. Subsequent to the period ended September 30, 2017, the Company entered into a securities purchase agreement under which it agreed to sell approximately $23.0 million of its common stock in a private placement, in return for which the purchaser will receive. The Company agreed to sell approximately 5.6 million shares at a per share price of $4.10. The private placement is expected to close on or about November 17, 2017, subject to the satisfaction of customary closing conditions. While we anticipate that our current cash, cash equivalents, cash to be generated from operations and cash to be received from the private placement described above will be sufficient to meet our projected operating plans 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 ma |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Basis of presentation Adopted Accounting Pronouncements Fiscal 2017 Note 5. Related Party Transactions In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting to simplify the accounting for stock compensation. It focuses on income tax accounting, award classification, estimating forfeitures, and cash flow presentation. The Company adopted the amendments in this ASU effective as of January 1, 2017. The adoption of ASU 2016-09 did not have a material effect on our consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330) - Simplifying the Measurement of Inventory, which requires that inventories, other than those accounted for under Last-In-First-Out, will be reported at the lower of cost or net realizable value. Net realizable value is the estimated selling price less costs of completion, disposal and transportation. The Company adopted the amendments in this ASU effective as of January 1, 2017. The adoption of ASU 2015-11 did not have a material effect on our consolidated financial statements. Recent accounting standards |
Earnings Per Share Applicable t
Earnings Per Share Applicable to Common Stockholders | 9 Months Ended |
Sep. 30, 2017 | |
Loss Per Share Applicable To Common Stockholders | |
Earnings Per Share Applicable to Common Stockholders | The following table sets forth the computations of earnings per share amounts applicable to common stockholders for the three and nine months ended September 30, 2017 and October 1, 2016: Three Months Ended Nine Months Ended Sep. 30, 2017 Oct. 1, 2016 Sep. 30, 2017 Oct. 1, 2016 Net income (loss) $ 2,137,077 $ (954,390 ) $ (2,555,802 ) $ (781,432 ) Basic weighted average common shares outstanding (1): 47,065,009 37,868,672 42,405,616 37,090,916 Basic earnings (loss) per common share $ 0.05 $ (0.03 ) $ (0.06 ) $ (0.02 ) Dilutive effect of stock options, net 473,736 — — — Dilutive effect of warrants, net 17,952 — — — Diluted weighted average common shares outstanding : 47,556,697 37,868,672 42,405,616 37,090,916 Diluted earnings (loss) per common share $ 0.04 $ (0.03 ) $ (0.06 ) $ (0.02 ) Potentially dilutive securities, total (2): Stock options 5,448,552 5,217,508 5,922,288 5,217,508 Warrants 452,492 487,111 470,444 487,111 (1) Includes approximately 0.5 million weighted average nonvested shares of restricted stock for the three and nine month periods ending September 30, 2017, respectively, and approximately 0.4 million weighted average nonvested shares or restricted stock for the three and nine month periods ending October 1, 2016, respectively. These shares are participating securities that feature voting and dividend rights. (2) Excluded from the computation of diluted earnings (loss) per share as their impact is antidilutive. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Asset On March 12, 2017, the Company acquired all of the outstanding equity interests of Healthspan from Robert Fried, Jeffrey Allen and Dr. Charles Brenner (the "Sellers"). Robert Fried is a member of the Board of Directors ("Board") of the Company, a position he has held since July 2015. Upon the closing of, and as consideration for, the acquisition, the Company issued an aggregate of 367,648 shares of the Company’s common stock to the Sellers. The fair value of these shares was approximately $1.0 million based on the closing price of $2.72 per share on March 12, 2017. Also on March 12, 2017, the Company appointed Robert Fried as President and Chief Strategy Officer, effective immediately. Mr. Fried continues to serve as a member of the Board, but resigned as a member of the Nominating and Corporate Governance Committee of the Board. Healthspan was formed in August 2015 to offer and sell finished bottle products that contain NIAGEN® directly to consumers through internet-based selling platforms. NIAGEN® is the leading ingredient the Company currently sells. Prior to the acquisition, the Company has supplied certain amount of NIAGEN® to Healthspan as a raw material inventory in exchange for a 4% equity interest in Healthspan. An additional 5% equity interest was received for granting certain exclusive rights to resell NIAGEN®. The Company acquired the consumer product business model that Healthspan has established. Included in the business model acquired is the know-how marketing to date, and the designs and procedures needed to operate a consumer product business. This transaction was accounted for as an acquisition of assets. An intangible asset of approximately $1.35 million was recorded as a result of this acquisition, which is the difference of consideration transferred and the net amount of assets acquired and liabilities assumed. (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 ) The acquired intangible asset is considered to have a useful life of 10 years as we believe the economic benefits from the acquisition will last at least 10 years. The expense is amortized using the straight-line method over the useful life and the Company recognized an amortization expense of approximately $75,000 for the nine months ended September 30, 2017. In cancellation of a loan owed by Healthspan to Mr. Fried prior to the acquisition, the Company repaid $32,500 to Mr. Fried on March 13, 2017 and will also repay $100,000 on March 12, 2018. No interest is to be paid for the outstanding $100,000 due to Mr. Fried. Sale of consumer During July 2017, the Company entered into an exclusivity agreement (the "Customer G Agreement") with Customer G, whereby the Company agreed to exclusively sell its TRU NIAGEN® dietary supplement product to Customer G in certain territories in Asia. During the three months ended September 30, 2017, the Company sold approximately $2.3 million of TRU NIAGEN® dietary supplement product pursuant to the Customer G Agreement. As of September 30, 2017, the trade receivable from Customer G was approximately $1.5 million. Li Ka Shing, who beneficially owns more than 10% of the Company's common stock, beneficially owns approximately 30% of Entity A and Entity A beneficially owns approximately 75% of Customer G. In accordance with the Company's Related-Person Transactions Policy, the Audit Committee of the Company's Board of Directors ratified the partnership with Customer G. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2017 | |
Discontinued Operations | |
Discontinued Operations | On September 5, 2017, the Company completed the sale of the Lab Business to Covance. In consideration of the Lab Business sale, the Company received $6.75 million from Covance and additional cash consideration of $0.8 million is currently held in escrow to satisfy any potential indemnification claims by Covance. Further, the Company is eligible to receive an additional earnout payment from Covance in an amount equal to up to $1.0 million, subject to certain escrow provisions. The Company recorded a gain of approximately $5.5 million from the disposal. The contingent earnout consideration up to $1.0 million is tied to 2017 revenue of the Lab Business and the Company made an election to record the contingent consideration portion when the consideration is determined to be realizable and has not recorded any contingent consideration to date. (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. The sale of the Lab Business qualifies as a discontinued operation as the sale represents a strategic shift that has (or will have) a major effect on operations and financial results. The results of operations from the discontinued operations for the three and nine months ended September 30, 2017 and October 1, 2016 are as follows: Three Months Ended Nine Months Ended Sep. 30, 2017 Oct. 1, 2016 Sep. 30, 2017 Oct. 1, 2016 Sales $ 650,610 $ 1,070,164 $ 2,820,631 $ 3,957,109 Cost of sales 597,291 890,655 2,478,827 2,716,238 Gross profit 53,319 179,509 341,804 1,240,871 Operating expenses: Sales and marketing 112,694 161,044 482,134 500,725 General and administrative 43,838 41,019 150,171 128,381 Operating expenses 156,532 202,063 632,305 629,106 Operating income (loss) (103,213 ) (22,554 ) (290,501 ) 611,765 Nonoperating income (expense): Interest expense, net (5,686 ) (8,567 ) (24,639 ) (28,388 ) Nonoperating expenses (5,686 ) (8,567 ) (24,639 ) (28,388 ) Loss before taxes from discontinued operations (108,899 ) (31,121 ) (315,140 ) 583,377 Provision for taxes - 3,153 - - Income (loss) from discontinued operations $ (108,899 ) $ (27,968 ) $ (315,140 ) $ 583,377 The assets and liabilities that are classified as held for sale as of December 31, 2016 are as follows: Dec. 31, 2016 Current assets held for sale Prepaid expenses $ 18,135 Leasehold Improvements and Equipment, net 1,333,203 Deposits 19,675 Total assets held for sale 1,371,013 Deferred rent 184,766 Total liabilities held for sale $ 184,766 Depreciation, capital expenditures and significant noncash investing activities of the discontinued operations for the nine months ended September 30, 2017 and October 1, 2016 are as follows: Nine Months Ended September 30, 2017 and October 1, 2016 Sep. 30, 2017 Oct. 1, 2016 Depreciation $ 169,250 $ 192,381 Purchase of leasehold improvements and equipment $ 111,232 $ 250,420 Noncash investing activity Retirement of fully depreciated equipment - cost $ 55,947 $ 13,330 Retirement of fully depreciated equipment - accumulated depreciation $ (55,947 ) $ (13,330 ) |
Trade Receivables Allowances
Trade Receivables Allowances | 9 Months Ended |
Sep. 30, 2017 | |
Trade Receivables Allowances | |
Trade Receivables Allowances | The allowance amounts for the periods ended September 30, 2017 and December 31, 2016 are as follows: Sep. 30, 2017 Dec. 31, 2016 Allowances related to Customer C $ 500,000 $ 800,000 Customer E - 198,000 Other allowances 33,000 83,000 $ 533,000 $ 1,081,000 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventories Abstract | |
Inventories | The amounts of major classes of inventory as of September 30, 2017 and December 31, 2016 are as follows: Sep. 30, 2017 Dec. 31, 2016 Bulk ingredients $ 4,830,000 $ 7,044,000 Reference standards 1,067,000 1,033,000 Dietary supplement - finished bottles 9,000 - Dietary supplement - work-in-process 875,000 - 6,781,000 8,077,000 Less valuation allowance (166,000 ) (164,000 ) $ 6,615,000 $ 7,913,000 |
Employee Share-Based Compensati
Employee Share-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Share-based Compensation | |
Employee Share-Based Compensation | Stock Option Plans On June 20, 2017, the stockholders of the Company approved the ChromaDex Corporation 2017 Equity Incentive Plan (the "2017 Plan"). The 2017 Plan is intended to be the successor to the ChromaDex Corporation Second Amended and Restated 2007 Equity Incentive Plan (the "2007 Plan"). Under the 2017 Plan, the Company is authorized to issue stock options that total no more than the sum of (i) 3,000,000 new shares, (ii) approximately 384,000 unallocated shares remaining available for the grant of new awards under the 2007 Plan, and (iii) any returning shares from the 2007 Plan or the 2017 Plan, such as forfeited, cancelled, or expired shares. Service Period Based Stock Options The following table summarizes activity of service period based stock options granted to employees at September 30, 2017 and changes during the nine months then ended: Weighted Average Remaining Aggregate Number of Exercise Contractual Fair Intrinsic Shares Price Term Value Value Outstanding at Dec. 31, 2016 4,281,151 $ 3.52 6.36 Options Granted 773,334 2.93 10.00 $ 1.88 Options Exercised (114,813 ) 3.40 $ 104,000 Options Expired (3,334 ) 4.50 Options Forfeited (41,358 ) 3.54 Outstanding at Sep. 30, 2017 4,894,980 $ 3.43 6.19 $ 4,786,803 Exercisable at Sep. 30, 2017 3,496,750 $ 3.45 5.06 $ 3,433,000 The aggregate intrinsic values in the table above are based on the Company’s stock price of $4.30, which is the closing price of the Company’s stock on the last day of business for the period ended September 30, 2017. The fair value of the Company’s stock options was estimated at the date of grant using the Black-Scholes option pricing model. The table below outlines the weighted average assumptions for options granted to employees during the nine months ended September 30, 2017. Nine Months Ended Sep. 30, 2017 Expected term 5.8 years Expected volatility 73 % Expected dividends 0.00 % Risk-free rate 2.11 % As of September 30, Employee Share-Based Compensation The Company recognized compensation expense of approximately $0.4 million and $1.1 million in general and administrative expenses in the statement of operations for the three and nine months ended September 30, 2017, respectively, and approximately $0.3 million and $0.9 million for the three and nine months ended October 1, 2016, respectively. |
Stock Issuance
Stock Issuance | 9 Months Ended |
Sep. 30, 2017 | |
Stock Issuance | |
Stock Issuance | On April 26, 2017, the Company entered into a Securities Purchase Agreement (the "SPA") with certain purchasers named therein, pursuant to which the Company agreed to sell and issue up to $25.0 million of its common stock at a purchase price of $2.60 per share in three tranches of approximately $3.5 million, $16.4 million and $5.1 million, respectively. All three tranches closed during the nine months ended September 30, 2017, whereby approximately 9.6 million shares were issued for proceeds of $23.7 million, net of offering costs. Subsequent to the period ended September 30, 2017, the Company entered into a securities purchase agreement for the sale of approximately $23.0 million of its common stock in a private placement, in return for which the purchaser will receive approximately 5.6 million shares at a per share price of $4.10. The private placement is expected to close on or about November 17, 2017, subject to the satisfaction of customary closing conditions. |
Business Segments
Business Segments | 9 Months Ended |
Sep. 30, 2017 | |
Business Segments | |
Business Segments | Since the year ended December 31, 2016, the Company has made operational changes to merge its scientific and regulatory consulting segment into core standards and contract services segment. Additionally, with the acquisition of Healthspan in March 2017, the Company began selling consumer products that contain the Company's branded NIAGEN® ingredient. The Company made operational changes and began segregating its financial results for consumer products operations. As a result, the Company has the following three reportable segments: ● Ingredients segment develops and commercializes proprietary-based ingredient technologies and supplies these ingredients to consumers in finished products or as raw materials to the manufacturers of consumer products in various industries including the nutritional supplement, food and beverage and animal health industries. ● Consumer products segment provides directly to consumers as well as to distributors finished dietary supplement products that contain the Company's proprietary ingredients. ● Core standards and contract services segment includes (i) supply of phytochemical reference standards, (ii) scientific and regulatory consulting and (iii) other R&D services. On September 5, 2017, the Company completed the sale of the Lab Business which was a part of the core standards and contract services segment. The discontinued operations related to the Lab Business are not included in following statement of operations for business segments. The “Corporate and other” classification includes corporate items not allocated by the Company to each reportable segment. Further, there are no intersegment sales that require elimination. The Company evaluates performance and allocates resources based on reviewing gross margin by reportable segment. Core Standards Three months ended September 30, 2017 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Net sales $ 2,459,905 $ 2,647,300 $ 977,485 $ 6,084,690 Cost of sales 1,384,221 1,095,128 689,972 — 3,169,321 Gross profit 1,075,684 1,552,172 287,513 — 2,915,369 Operating expenses: Sales and marketing 390,568 548,827 163,762 — 1,103,157 Research and development 558,677 481,884 — — 1,040,561 General and administrative — — — 3,948,435 3,948,435 Operating expenses 949,245 1,030,711 163,762 3,948,435 6,092,153 — — Operating income (loss) $ 126,439 $ 521,461 $ 123,751 $ (3,948,435 ) $ (3,176,784 ) Three months ended Ingredients Consumer Products Core Standards and Contract Services Corporate segment segment segment and other Total Net sales $ 2,663,095 $ — $ 1,274,191 $ — $ 3,937,286 Cost of sales 1,287,421 — 786,904 — 2,074,325 Gross profit 1,375,674 — 487,287 — 1,862,961 Operating expenses: Sales and marketing 199,130 — 87,811 — 286,941 Research and development 760,299 — 12,500 — 772,799 General and administrative — — — 1,727,383 1,727,383 Operating expenses 959,429 — 100,311 1,727,383 2,787,123 Operating income (loss) $ 416,245 $ — $ 386,976 $ (1,727,383 ) $ (924,162 ) Core Standards Nine months ended September 30, 2017 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Net sales $ 7,393,389 $ 2,802,875 $ 3,474,382 $ — $ 13,670,646 Cost of sales 3,615,097 1,135,864 2,277,379 — 7,028,340 Gross profit 3,778,292 1,667,011 1,197,003 — 6,642,306 Operating expenses: Sales and marketing 959,761 738,647 359,770 — 2,058,178 Research and development 2,022,151 532,562 — — 2,554,713 General and administrative — — — 8,882,821 8,882,821 Other 745,773 — — — 745,773 Operating expenses 3,727,685 1,271,209 359,770 8,882,821 14,241,485 Operating income (loss) $ 50,607 $ 395,802 $ 837,233 $ (8,882,821 ) $ (7,599,179 ) Core Standards Nine months ended October 1, 2016 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Net sales $ 13,505,470 $ — $ 3,706,395 $ — $ 17,211,865 Cost of sales 6,420,972 — 2,410,428 — 8,831,400 Gross profit 7,084,498 — 1,295,967 — 8,380,465 Operating expenses: Sales and marketing 930,573 — 259,440 — 1,190,013 Research and development 1,961,097 — 27,500 — 1,988,597 General and administrative — — — 5,935,139 5,935,139 Operating expenses 2,891,670 — 286,940 5,935,139 9,113,749 Operating income (loss) $ 4,192,828 $ — $ 1,009,027 $ (5,935,139 ) $ (733,284 ) Core Standards At September 30, 2017 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Total assets $ 9,761,568 $ 4,012,200 $ 2,589,857 $ 25,437,887 $ 41,801,512 Core Standards At December 31, 2017 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Total assets $ 13,257,289 $ - $ 2,547,427 $ 3,947,352 $ 19,752,068 Disclosure of major customers Major customers who accounted for more than 10% of the Company’s total sales were as follows: Three months ended Nine months ended Major Customers Sep. 30, 2017 Oct. 1, 2016 Sep. 30, 2017 Oct. 1, 2016 Customer G - Related Party 37.8 % * 16.8 % * Customer D 12.1 % 12.3 % * * Customer C * * * 24.5 % * Represents less than 10%. Major customers who accounted for more than 10% of the Company’s total trade receivables were as follows: Percentage of the Company's Total Trade Receivables Major Customers At September 30, 2017 At December 31, 2016 Customer C 45.4 % 45.8 % Customer G - Related Party 30.3 % * Customer D * 10.2 % * Represents less than 10%. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Legal proceedings On December 29, 2016, ChromaDex, Inc. filed a complaint (the “Complaint”) in the United States District Court for the Central District of California, naming Elysium Health, Inc. (together with Elysium Health, LLC, “Elysium”) as defendant. Among other allegations, ChromaDex, Inc. alleged in the Complaint that (i) Elysium breached the Supply Agreement, dated June 26, 2014, by and between ChromaDex, Inc. and Elysium (the “pTeroPure® Supply Agreement”), by failing to make payments to ChromaDex, Inc. for purchases of pTeroPure® pursuant to the pTeroPure® Supply Agreement, (ii) Elysium breached the Supply Agreement, dated February 3, 2014, by and between ChromaDex, Inc. and Elysium, as amended (the “NIAGEN® Supply Agreement”), by failing to make payments to ChromaDex, Inc. for purchases of NIAGEN® pursuant to the NIAGEN® Supply Agreement, (iii) Elysium breached the Trademark License and Royalty Agreement, dated February 3, 2014, by and between ChromaDex, Inc. and Elysium (the “License Agreement”), by failing to make payments to ChromaDex, Inc. for royalties due pursuant to the License Agreement and (iv) certain officers of Elysium made false promises and representations to induce ChromaDex, Inc. into providing large supplies of pTeroPure® and NIAGEN® to Elysium pursuant to the pTeroPure® Supply Agreement and NIAGEN® Supply Agreement. ChromaDex, Inc. is seeking punitive damages, money damages and interest. On January 25, 2017, Elysium filed an answer and counterclaims (the “Counterclaim”) in response to the Complaint. Among other allegations, Elysium alleges in the Counterclaim that (i) ChromaDex, Inc. breached the NIAGEN® Supply Agreement by not issuing certain refunds or credits to Elysium and for violating certain confidential information provisions, (ii) ChromaDex, Inc. breached the implied covenant of good faith and fair dealing pursuant to the NIAGEN® Supply Agreement, (iii) ChromaDex, Inc. breached certain confidential provisions of the pTeroPure® Supply Agreement, (iv) ChromaDex, Inc. fraudulently induced Elysium into entering into the License Agreement (the “Fraud Claim”), (v) ChromaDex, Inc.’s conduct constitutes misuse of its patent rights (the “Patent Claim”) and (vi) ChromaDex, Inc. has engaged in unlawful or unfair competition under California state law (the “Unfair Competition Claim”). Elysium is seeking damages for ChromaDex, Inc.’s alleged breaches of the NIAGEN® Supply Agreement and pTeroPure® Supply Agreement, and compensatory damages, punitive damages and/or rescission of the License Agreement and restitution of any royalty payments conveyed by Elysium pursuant to the License Agreement, and a declaratory judgement that ChromaDex, Inc. has engaged in patent misuse. On February 15, 2017, ChromaDex, Inc. filed an amended complaint. In the amended complaint, ChromaDex, Inc. re-alleges the claims in the Complaint, and also alleges that Elysium willfully and maliciously misappropriated ChromaDex, Inc.’s trade secrets. On February 15, 2017, ChromaDex, Inc. also filed a motion to dismiss the Fraud Claim, the Patent Claim and the Unfair Competition Claim. On March 1, 2017, Elysium filed a motion to dismiss ChromaDex, Inc.'s fraud and trade secret misappropriation causes of action. On March 6, 2017, Elysium filed a first amended counterclaim. On March 20, 2017, ChromaDex, Inc. moved to dismiss Elysium's amended fraud, patent misuse and the Unfair Competition Claim. On May 10, 2017, the court ruled on the motions to dismiss, denying ChromaDex, Inc.’s motion as to Elysium’s fraud and patent misuse claims and granting ChromaDex, Inc.’s motion with prejudice as to Elysium’s Unfair Competition Claim. With respect to Elysium’s motion, the court granted the motion with prejudice as to ChromaDex, Inc.’s fraud claim and granted with leave to amend the motion as to ChromaDex, Inc.’s trade secret misappropriation claims. On May 24, 2017, ChromaDex, Inc. answered the first amended counterclaim and asserted several affirmative defenses. Also on May 24, 2017, ChromaDex, Inc. filed a second amended complaint, amending the trade secret misappropriation claims and addressing Elysium’s patent misuse counterclaim. On June 7, 2017, ChromaDex, Inc. filed a third amended complaint dismissing the trade secret misappropriation claims and asserting two breach of contract claims for Elysium’s failure to pay for the product delivered. On June 16, 2017, Elysium answered the third amended complaint. On August 14, 2017, ChromaDex, Inc. moved for judgment on the pleadings as to Elysium’s declaratory judgment of patent misuse counterclaim. On September 26, 2017, the court denied ChromaDex’s motion without prejudice and directed Elysium to file an amended counterclaim if it intended to maintain its declaratory judgment counterclaim. On October 11, 2017, Elysium filed a second amended counterclaim, re-alleging the claims in the first amended counterclaim and adding a claim for unjust enrichment and restitution of the royalties Elysium paid to ChromaDex, Inc. pursuant to the License Agreement. On October 25, 2017, ChromaDex, Inc. filed a motion to dismiss the declaratory judgment of patent misuse and unjust enrichment claims and/or strike allegations in the unjust enrichment claim contained in the second amended counterclaim. The court has not yet ruled on the motion. On July 17, 2017, Elysium filed petitions with the U.S. Patent and Trademark Office for inter partes review of U.S. Patent No. 8,197,807 and 8,383,086, patents to which ChromaDex, Inc. is the exclusive licensee. On September 27, 2017, Elysium filed a complaint in the United States District Court for the Southern District of New York, naming ChromaDex, Inc. as defendant (the “SDNY Complaint”). Elysium alleges in the SDNY Complaint that ChromaDex, Inc. made false and misleading statements in a citizen petition to the Food and Drug Administration it filed on or about August 18, 2017. Among other allegations, Elysium avers that the citizen petition was filed with intent to injure Elysium’s position in the marketplace, that it falsely described Elysium’s product as dangerous, and that it misleadingly omitted material facts which made Elysium’s product appear dangerous, while casting ChromaDex, Inc.’s own products as safe. The SDNY Complaint asserts four claims for relief: (i) false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1); (ii) trade libel; (iii) deceptive business practices under New York General Business Law § 349; and (iv) tortious interference with business relations. ChromaDex, Inc. disputes the claims in the SDNY Complaint and intends to defend against them vigorously. On October 19, 2017, ChromaDex, Inc. filed a motion to dismiss the SDNY Complaint. In its motion, ChromaDex, Inc. argued that the SDNY Complaint should be dismissed because its statements in the citizen petition are immunized from all of Elysium’s claims under the Noerr-Pennington Doctrine, the litigation privilege, and New York’s Anti-SLAPP statute, and because the SDNY Complaint failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). Elysium filed its opposition papers on November 2, 2017. ChromaDex, Inc.’s reply, if any, is due on November 9, 2017. On October 26, 2017, ChromaDex, Inc. filed a complaint in the United States District Court for the Southern District of New York, naming Elysium as defendant (the “ChromaDex SDNY Complaint”). ChromaDex alleges in the ChromaDex SDNY Complaint that Elysium Health Inc. made material false and misleading statements to consumers in the promotion, marketing, and sale of its health supplement product, Basis, by deceiving consumers into erroneously believing: (1) the product is “safe” and “pure” when its current Basis product has not been sufficiently tested to support those claims; (2) the product has been approved or otherwise endorsed by the Food and Drug Administration; and (3) the product has been approved or endorsed by prominent scientists and prestigious academic institutions, among other allegations. The ChromaDex SDNY Complaint asserts five claims for relief: (i) false advertising under the Lanham Act, 15 U.S.C. §1125(a); (ii) unfair competition under 15 U.S.C. § 1225(a); (iii) deceptive business practices under New York General Business Law § 349; (iv) deceptive business practices under New York General Business Law § 350; and (v) tortious interference with prospective economic advantage.. Elysium has indicated that it intends on moving to dismiss the ChromaDex SDNY Complaint. On November 3, 2017, the Court consolidated the SDNY Complaint and the ChromaDex SDNY Complaint actions, and stayed discovery in both actions pending a Court ordered mediation. Briefing on the motion to dismiss the SDNY Complaint and the expected motion to dismiss the ChromaDex SDNY Complaint will continue in the interim. As of September 30, 2017, ChromaDex, Inc. did not accrue a potential loss for the Counterclaim or the SDNY Complaint because ChromaDex, Inc. believes that the allegations are without merit and thus it is not probable that a liability had been incurred, and the amount of loss cannot be reasonably estimated. From time to time we are involved in legal proceedings arising in the ordinary course of our business. We believe that there is no other litigation pending that is likely to have, individually or in the aggregate, a material adverse effect on our financial condition or results of operations. Lease On July 6, 2017, the Company entered into a lease for an office space located in Los Angeles, California through September 2021. Pursuant to the lease, the Company will make monthly lease payments ranging from approximately $11,000 to $21,000, as the payments escalate during the term of the lease. Employment agreement with Robert Fried On March 12, 2017, the Company entered into an Employment Agreement (the "Fried Agreement") with Robert Fried. Mr. Fried is entitled to receive certain severance payments per the terms of the Fried Agreement. The key terms of the Fried Agreement, including the severance terms are as follows: 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 the Company 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 Common Stock under the 2007 plan, subject to monthly vesting over a three-year period; and (iv) 166,667 shares of restricted Common Stock, subject to annual vesting over a three-year period. Subject to 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 Common Stock, subject to annual vesting over a two-year period, (ii) on March 12, 2019, 166,666 shares of restricted 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 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 in control of the Company, (b) Mr. Fried’s death, (c) Mr. Fried’s disability, (d) termination by the Company 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 the Company or any of its subsidiaries though such event. The severance terms of the Fried Agreement provide that if (i) Mr. Fried’s employment is terminated by the Company without cause, for death or disability, or Mr. Fried resigns for good reason, or (ii) (a) a change in control of the Company occurs and (b) within one month prior to the date of such change in control or twelve months after the date of such change in control R. Fried’s employment is terminated by the Company other than for cause, then, subject to executing a release, Mr. Fried will receive (w) continuation of his base salary for 12 months, (x) health care continuation coverage payments premiums for 12 months, (y) a prorated annual cash bonus earned for the fiscal year in which such termination or resignation occurs, and (z) an extended exercise period for his options. Employment agreement with Kevin Farr Subsequent to the period ended September 30, 2017, the Company entered into an agreement with Thomas C. Varvaro whereby Mr. Varvaro will no longer serve as the Company's Chief Financial Officer, Secretary, principal financial officer and principal accounting officer. The Company expects that Mr. Varvaro will transition from the Company over the coming months to pursue other opportunities. During this transition Mr. Varvaro will serve as the Company’s Senior Vice President, Finance. Subsequent to the period ended September 30, 2017, the Company entered into an Employee Agreement (the Farr Agreement) with Kevin M. Farr who was appointed by the Board to serve as Chief Financial Officer, Secretary, principal accounting officer and principal financial officer, to replace the vacancies created by Mr. Varvaro's transition. Mr. Farr is entitled to receive certain severance payments per the terms of the Farr Agreement. The key terms of the Farr Agreement, including the severance terms are as follows: Mr. Farr is entitled to: (i) an annual base salary of $300,000 and (ii) a discretionary annual bonus based on the achievement of certain performance goals to be determined by the Board. Pursuant to the Farr Agreement, Mr. Farr also received an option to purchase up to 1,000,000 shares of ChromaDex common stock under the ChromaDex 2017 Equity Incentive Plan, subject to monthly vesting over a three-year period, with an exercise price equal to $4.24 per share. The options will fully vest if the Company's stock price equals or exceeds $10 per share for over the previous 20 trading days. If Mr. Farr’s employment is terminated by the Company without cause or Mr. Farr resigns for good reason, then, subject to executing a release, Mr. Farr will receive (i) continuation of his base salary for 12 months, (ii) COBRA premiums for 12 months, (iii) a prorated annual cash bonus, based on the good faith determination of the Board of the actual results and period of employment during the year of such termination, (iv) accelerated vesting of time-based equity that would have otherwise become vested by the one year anniversary of such termination date and (v) an extended exercise period for his options. |
Other Expense
Other Expense | 9 Months Ended |
Sep. 30, 2017 | |
Other Expense | |
Other Expense | Loss from an ongoing litigation, Elysium During the nine months ended September 30, 2017, the Company, in relation to the ongoing litigation, incurred a write-off of approximately $746,000 in gross trade receivable from Elysium related to royalties. As a result of this write-off and after further analysis, the Company made an adjustment to the total allowance amount from ($800,000) to ($500,000). |
Significant Accounting Polici21
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation |
Accounting Pronouncements and Standards | Adopted Accounting Pronouncements Fiscal 2017 Note 5. Related Party Transactions In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting to simplify the accounting for stock compensation. It focuses on income tax accounting, award classification, estimating forfeitures, and cash flow presentation. The Company adopted the amendments in this ASU effective as of January 1, 2017. The adoption of ASU 2016-09 did not have a material effect on our consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330) - Simplifying the Measurement of Inventory, which requires that inventories, other than those accounted for under Last-In-First-Out, will be reported at the lower of cost or net realizable value. Net realizable value is the estimated selling price less costs of completion, disposal and transportation. The Company adopted the amendments in this ASU effective as of January 1, 2017. The adoption of ASU 2015-11 did not have a material effect on our consolidated financial statements. Recent accounting standards |
Earnings Per Share Applicable22
Earnings Per Share Applicable to Common Stockholders (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Loss Per Share Applicable To Common Stockholders Tables | |
Loss per share amounts applicable to common stockholders | Three Months Ended Nine Months Ended Sep. 30, 2017 Oct. 1, 2016 Sep. 30, 2017 Oct. 1, 2016 Net income (loss) $ 2,137,077 $ (954,390 ) $ (2,555,802 ) $ (781,432 ) Basic weighted average common shares outstanding (1): 47,065,009 37,868,672 42,405,616 37,090,916 Basic earnings (loss) per common share $ 0.05 $ (0.03 ) $ (0.06 ) $ (0.02 ) Dilutive effect of stock options, net 473,736 — — — Dilutive effect of warrants, net 17,952 — — — Diluted weighted average common shares outstanding : 47,556,697 37,868,672 42,405,616 37,090,916 Diluted earnings (loss) per common share $ 0.04 $ (0.03 ) $ (0.06 ) $ (0.02 ) Potentially dilutive securities, total (2): Stock options 5,448,552 5,217,508 5,922,288 5,217,508 Warrants 452,492 487,111 470,444 487,111 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions Tables | |
Net amount of assets and liabilities acquired | (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 ) |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Discontinued Operations Tables | |
Discontinued operations | (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. The results of operations from the discontinued operations for the three and nine months ended September 30, 2017 and October 1, 2016 are as follows: Three Months Ended Nine Months Ended Sep. 30, 2017 Oct. 1, 2016 Sep. 30, 2017 Oct. 1, 2016 Sales $ 650,610 $ 1,070,164 $ 2,820,631 $ 3,957,109 Cost of sales 597,291 890,655 2,478,827 2,716,238 Gross profit 53,319 179,509 341,804 1,240,871 Operating expenses: Sales and marketing 112,694 161,044 482,134 500,725 General and administrative 43,838 41,019 150,171 128,381 Operating expenses 156,532 202,063 632,305 629,106 Operating income (loss) (103,213 ) (22,554 ) (290,501 ) 611,765 Nonoperating income (expense): Interest expense, net (5,686 ) (8,567 ) (24,639 ) (28,388 ) Nonoperating expenses (5,686 ) (8,567 ) (24,639 ) (28,388 ) Loss before taxes from discontinued operations (108,899 ) (31,121 ) (315,140 ) 583,377 Provision for taxes - 3,153 - - Income (loss) from discontinued operations $ (108,899 ) $ (27,968 ) $ (315,140 ) $ 583,377 The assets and liabilities that are classified as held for sale as of December 31, 2016 are as follows: Dec. 31, 2016 Current assets held for sale Prepaid expenses $ 18,135 Leasehold Improvements and Equipment, net 1,333,203 Deposits 19,675 Total assets held for sale 1,371,013 Deferred rent 184,766 Total liabilities held for sale $ 184,766 Depreciation, capital expenditures and significant noncash investing activities of the discontinued operations for the nine months ended September 30, 2017 and October 1, 2016 are as follows: Nine Months Ended September 30, 2017 and October 1, 2016 Sep. 30, 2017 Oct. 1, 2016 Depreciation $ 169,250 $ 192,381 Purchase of leasehold improvements and equipment $ 111,232 $ 250,420 Noncash investing activity Retirement of fully depreciated equipment - cost $ 55,947 $ 13,330 Retirement of fully depreciated equipment - accumulated depreciation $ (55,947 ) $ (13,330 ) |
Trade Receivables Allowances (T
Trade Receivables Allowances (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Trade Receivables Allowances Tables | |
Trade Receivables Allowances | Sep. 30, 2017 Dec. 31, 2016 Allowances related to Customer C $ 500,000 $ 800,000 Customer E - 198,000 Other allowances 33,000 83,000 $ 533,000 $ 1,081,000 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Inventories | Sep. 30, 2017 Dec. 31, 2016 Bulk ingredients $ 4,830,000 $ 7,044,000 Reference standards 1,067,000 1,033,000 Dietary supplement - finished bottles 9,000 - Dietary supplement - work-in-process 875,000 - 6,781,000 8,077,000 Less valuation allowance (166,000 ) (164,000 ) $ 6,615,000 $ 7,913,000 |
Employee Share-Based Compensa27
Employee Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Share-based Compensation Tables | |
Service Period Based Stock Options | Weighted Average Remaining Aggregate Number of Exercise Contractual Fair Intrinsic Shares Price Term Value Value Outstanding at Dec. 31, 2016 4,281,151 $ 3.52 6.36 Options Granted 773,334 2.93 10.00 $ 1.88 Options Exercised (114,813 ) 3.40 $ 104,000 Options Expired (3,334 ) 4.50 Options Forfeited (41,358 ) 3.54 Outstanding at Sep. 30, 2017 4,894,980 $ 3.43 6.19 $ 4,786,803 Exercisable at Sep. 30, 2017 3,496,750 $ 3.45 5.06 $ 3,433,000 |
Weighted average assumptions of stock options granted | Nine Months Ended Sep. 30, 2017 Expected term 5.8 years Expected volatility 73 % Expected dividends 0.00 % Risk-free rate 2.11 % |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Segmentation | Three months ended Core Standards September 30, 2017 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Net sales $ 2,459,905 $ 2,647,300 $ 977,485 $ 6,084,690 Cost of sales 1,384,221 1,095,128 689,972 — 3,169,321 Gross profit 1,075,684 1,552,172 287,513 — 2,915,369 Operating expenses: Sales and marketing 390,568 548,827 163,762 — 1,103,157 Research and development 558,677 481,884 — — 1,040,561 General and administrative — — — 3,948,435 3,948,435 Operating expenses 949,245 1,030,711 163,762 3,948,435 6,092,153 — — Operating income (loss) $ 126,439 $ 521,461 $ 123,751 $ (3,948,435 ) $ (3,176,784 ) Three months ended Ingredients Consumer Products Core Standards and Contract Services Corporate segment segment segment and other Total Net sales $ 2,663,095 $ — $ 1,274,191 $ — $ 3,937,286 Cost of sales 1,287,421 — 786,904 — 2,074,325 Gross profit 1,375,674 — 487,287 — 1,862,961 Operating expenses: Sales and marketing 199,130 — 87,811 — 286,941 Research and development 760,299 — 12,500 — 772,799 General and administrative — — — 1,727,383 1,727,383 Operating expenses 959,429 — 100,311 1,727,383 2,787,123 Operating income (loss) $ 416,245 $ — $ 386,976 $ (1,727,383 ) $ (924,162 ) Nine months ended Core Standards September 30, 2017 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Net sales $ 7,393,389 $ 2,802,875 $ 3,474,382 $ — $ 13,670,646 Cost of sales 3,615,097 1,135,864 2,277,379 — 7,028,340 Gross profit 3,778,292 1,667,011 1,197,003 — 6,642,306 Operating expenses: Sales and marketing 959,761 738,647 359,770 — 2,058,178 Research and development 2,022,151 532,562 — — 2,554,713 General and administrative — — — 8,882,821 8,882,821 Other 745,773 — — — 745,773 Operating expenses 3,727,685 1,271,209 359,770 8,882,821 14,241,485 Operating income (loss) $ 50,607 $ 395,802 $ 837,233 $ (8,882,821 ) $ (7,599,179 ) Nine months ended Core Standards October 1, 2016 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Net sales $ 13,505,470 $ — $ 3,706,395 $ — $ 17,211,865 Cost of sales 6,420,972 — 2,410,428 — 8,831,400 Gross profit 7,084,498 — 1,295,967 — 8,380,465 Operating expenses: Sales and marketing 930,573 — 259,440 — 1,190,013 Research and development 1,961,097 — 27,500 — 1,988,597 General and administrative — — — 5,935,139 5,935,139 Operating expenses 2,891,670 — 286,940 5,935,139 9,113,749 Operating income (loss) $ 4,192,828 $ — $ 1,009,027 $ (5,935,139 ) $ (733,284 ) Core Standards At September 30, 2017 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Total assets $ 9,761,568 $ 4,012,200 $ 2,589,857 $ 25,437,887 $ 41,801,512 Core Standards At December 31, 2017 Ingredients Consumer Products and Contract Services Corporate segment segment segment and other Total Total assets $ 13,257,289 $ - $ 2,547,427 $ 3,947,352 $ 19,752,068 |
Sales Revenue, Net [Member] | |
Percentage of Sales Table | Disclosure of major customers Major customers who accounted for more than 10% of the Company’s total sales were as follows: Three months ended Nine months ended Major Customers Sep. 30, 2017 Oct. 1, 2016 Sep. 30, 2017 Oct. 1, 2016 Customer G - Related Party 37.8 % * 16.8 % * Customer D 12.1 % 12.3 % * * Customer C * * * 24.5 % * Represents less than 10%. |
Accounts Receivable [Member] | |
Percentage of Sales Table | Disclosure of major customers Major customers who accounted for more than 10% of the Company’s total trade receivables were as follows: Percentage of the Company's Total Trade Receivables Major Customers At September 30, 2017 At December 31, 2016 Customer C 45.4 % 45.8 % Customer G - Related Party 30.3 % * Customer D * 10.2 % * Represents less than 10%. |
Nature of Business and Liquid29
Nature of Business and Liquidity (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Nov. 08, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Oct. 01, 2016 | Sep. 30, 2017 | Oct. 01, 2016 | Apr. 26, 2017 | Dec. 31, 2016 | |
Loss from continuing operations | $ (3,221,292) | $ (926,422) | $ (7,707,930) | $ (1,364,809) | |||||
Net (loss) | 2,137,077 | $ (2,764,124) | $ (1,928,755) | (954,390) | (2,555,802) | (781,432) | |||
Cash and cash equivalents | 23,999,633 | $ 2,264,756 | 23,999,633 | $ 2,264,756 | $ 1,642,429 | ||||
Proceeds from Lab Business Sold | 6,000,000 | ||||||||
Additional Held at Escrow | $ 800,000 | 800,000 | |||||||
Private Placement | $ 23,700,000 | ||||||||
Shares agreed to sell under Private Placement | 9,600,000 | ||||||||
Private placement Subsequent to the period ended, price per share | $ 2.60 | ||||||||
Private Placement Committment [Member] | |||||||||
Private Placement | $ 23,000,000 | ||||||||
Shares agreed to sell under Private Placement | 5,600,000 | ||||||||
Private placement Subsequent to the period ended, price per share | $ 4.10 |
Earnings Per Share Applicable30
Earnings Per Share Applicable to Common Stockholders (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Oct. 01, 2016 | Sep. 30, 2017 | Oct. 01, 2016 | ||
Net income (loss) | $ 2,137,077 | $ (2,764,124) | $ (1,928,755) | $ (954,390) | $ (2,555,802) | $ (781,432) | |
Basic weighted average common shares outstanding | [1] | 47,065,009 | 37,868,672 | 42,405,616 | 37,090,916 | ||
Basic earnings (loss) per common share | $ .05 | $ (0.03) | $ (0.06) | $ (0.02) | |||
Dilutive effect of stock options, net | 473,736 | 0 | 0 | 0 | |||
Dilutive effect of warrants, net | 17,952 | 0 | 0 | 0 | |||
Diluted weighted average common shares outstanding : | 47,556,697 | 37,868,672 | 42,405,616 | 37,090,916 | |||
Diluted earnings (loss) per common share | $ 0.04 | $ (0.03) | $ (0.06) | $ (0.02) | |||
Stock Option [Member] | |||||||
Potentially dilutive securities | [2] | 5,448,552 | 5,217,508 | 5,922,288 | 5,217,508 | ||
Warrant [Member] | |||||||
Potentially dilutive securities | [2] | 452,492 | 487,111 | 470,444 | 487,111 | ||
[1] | Includes approximately 0.5 million weighted average nonvested shares of restricted stock for the three and nine month periods ending September 30, 2017, respectively, and approximately 0.4 million weighted average nonvested shares or restricted stock for the three and nine month periods ending October 1, 2016, respectively. These shares are participating securities that feature voting and dividend rights. | ||||||
[2] | Excluded from the computation of diluted earnings (loss) per share as their impact is antidilutive. |
Related Party Transactions (Det
Related Party Transactions (Details) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Related Party Transactions Details | |
Common Stock | $ 1,000,000 |
Transaction costs | 178,000 |
Previously held equity interest | 20,000 |
Consideration transferred (A) | 1,198,000 |
Assets acquired | |
Cash and cash equivalents | 19,000 |
Trade receivables | 11,000 |
Inventory | 61,000 |
Liabilities assumed | |
Due to officer | (132,000) |
Accounts payable | (74,000) |
Credit card payable | (30,000) |
Other accrued expenses | (3,000) |
Net assets (B) | (148,000) |
Consumer product business model, intangible asset (A) -(B) | $ 1,346,000 |
Related Party Transactions (D32
Related Party Transactions (Details Narrative) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Amortized expense for the acquired intangible asset | $ 75,000 |
Useful life of the acquired intangible asset | 10 years |
Repayment of loan to Mr. Robert Fried | $ 32,500 |
Additional amount to repay to Mr. Fried on March 12, 2018 | $ 100,000 |
Li Ka Shing [Member] | Entity A [Member | |
Beneficial ownership | 30.00% |
Li Ka Shing [Member] | Minimum [Member] | |
Beneficial ownership | 10.00% |
Entity A [Member | Entity G [Member | |
Beneficial ownership | 75.00% |
Customer G [Member] | |
Sales to Customer G | $ 2,300,000 |
Trade receivable to Customer G | $ 1,500,000 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Oct. 01, 2016 | Sep. 30, 2017 | Oct. 01, 2016 | Dec. 31, 2016 | ||
Discontinued Operations Details | ||||||
Cash payment | $ 6,750,000 | $ 6,750,000 | ||||
Cash payment held in escrow | [1] | 750,000 | 750,000 | |||
Additional earnout payment | 0 | 0 | ||||
Consideration received | 7,500,000 | 7,500,000 | ||||
Legal | 428,000 | |||||
Financial consulting | 250,000 | |||||
Other | 118,000 | |||||
Selling costs | 796,000 | |||||
Assets disposed: Leasehold improvements and equipment, net | 1,427,000 | 1,427,000 | ||||
Assets disposed: Prepaid expenses | 11,000 | 11,000 | ||||
Assets disposed:Deposits | 20,000 | 20,000 | ||||
Liabilities disposed: Deferred revenue | (7,000) | (7,000) | ||||
Liabilities disposed: Deferred rent | (215,000) | (215,000) | ||||
Net assets | 1,236,000 | 1,236,000 | $ 1,371,013 | |||
Gain from disposal | $ 5,467,268 | $ 0 | $ 5,467,268 | $ 0 | ||
[1] | $750,000 is expected to be held in escrow until March 2019 to satisfy any indemnification claims. |
Discontinued Operations (Deta34
Discontinued Operations (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Oct. 01, 2016 | Sep. 30, 2017 | Oct. 01, 2016 | |
Discontinued Operations Details 1 | ||||
Sales | $ 650,610 | $ 1,070,164 | $ 2,820,631 | $ 3,957,109 |
Cost of sales | 597,291 | 890,655 | 2,478,827 | 2,716,238 |
Gross profit | 53,319 | 179,509 | 341,804 | 1,240,871 |
Sales and marketing | 112,694 | 161,044 | 482,134 | 500,725 |
General and administrative | 43,838 | 41,019 | 150,171 | 128,381 |
Operating expenses | 156,532 | 202,063 | 632,305 | 629,106 |
Operating income (loss) | (103,213) | (22,554) | (290,501) | 611,765 |
Interest expense, net | (5,686) | (8,567) | (24,639) | (28,388) |
Nonoperating expenses | (5,686) | (8,567) | (24,639) | (28,388) |
Loss before taxes from discontinued operations | (108,899) | (31,121) | (315,140) | 583,377 |
Provision for taxes | 0 | 3,153 | 0 | 0 |
Income (loss) from discontinued operations | $ (108,899) | $ (27,968) | $ (315,140) | $ 583,377 |
Discontinued Operations (Deta35
Discontinued Operations (Details 2) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets held for sale | $ 0 | $ 18,315 |
Noncurrent assets held for sale | 0 | 1,352,878 |
Assets held for sale | 1,236,000 | 1,371,013 |
Liabilities held for sale | $ 0 | 184,766 |
Prepaid expenses | ||
Current assets held for sale | 18,315 | |
Leasehold Improvements and Equipment, net | ||
Noncurrent assets held for sale | 1,333,203 | |
Deposits | ||
Noncurrent assets held for sale | 19,675 | |
Deferred rent | ||
Liabilities held for sale | $ 184,766 |
Discontinued Operations (Deta36
Discontinued Operations (Details 3) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Oct. 01, 2016 | |
Discontinued Operations Details 3 | ||
Depreciation | $ 169,250 | $ 192,381 |
Purchase of leasehold improvements and equipment | 111,232 | 250,420 |
Retirement of fully depreciated equipment - cost | 55,947 | 13,330 |
Retirement of fully depreciated equipment - accumulated depreciation | $ (55,947) | $ (13,330) |
Trade Receivables Allowances (D
Trade Receivables Allowances (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Trade receivables allowances | $ 533,000 | $ 1,081,000 |
Customer C | ||
Trade receivables allowances | 500,000 | 800,000 |
Customer E | ||
Trade receivables allowances | 0 | 198,000 |
Other Allowances | ||
Trade receivables allowances | $ 333,000 | $ 83,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Inventories | ||
Bulk ingredients | $ 4,830,000 | $ 7,044,000 |
Reference standards | 1,067,000 | 1,033,000 |
Dietary Supplement - finished bottles | 9,000 | 0 |
Dietary supplement - work-in-process | 875,000 | 0 |
Inventory-gross | 6,781,000 | 8,077,000 |
Less valuation allowance | (166,000) | (164,000) |
Inventory-net | $ 6,615,245 | $ 7,912,630 |
Employee Share-Based Compensa39
Employee Share-Based Compensation (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Service Period Based Stock Options | |
Outstanding at Beginning of Period | shares | 4,281,151 |
Options Granted | shares | 773,334 |
Options Exercised | shares | (114,813) |
Options Expired | shares | (3,334) |
Options Forfeited | shares | (41,358) |
Outstanding at End of Period | shares | 4,894,980 |
Exercisable at End of Period | shares | 3,496,750 |
Weighted Average Exercise Price | |
Outstanding at Beginning of Period | $ 3.52 |
Options Granted | 2.93 |
Options Exercised | 3.40 |
Options Expired | 4.50 |
Options Forfeited | 3.54 |
Outstanding at End of Period | 3.43 |
Exercisable at End of Period | $ 3.45 |
Weighted Average Remaining Contractual Term | |
Outstanding at Beginning of Period | 6 years 4 months 10 days |
Options Granted | 10 years |
Outstanding at End of Period | 6 years 2 months 8 days |
Exercisable at End of Period | 5 years 22 days |
Weighted Average Fair Value | |
Weighted Average Fair Value Option Granted | $ 1.88 |
Aggregate Intrinsic Value | |
Exercised | $ | $ 104,000 |
Outstanding at End of Period | $ | 4,786,803 |
Exercisable at End of Period | $ | $ 3,433,000 |
Employee Share-Based Compensa40
Employee Share-Based Compensation (Details 1) | 9 Months Ended |
Sep. 30, 2017 | |
Employee Share-based Compensation Details 1 | |
Expected term | 5 years 9 months 18 days |
Expected volatility | 73.00% |
Expected dividends | 0.00% |
Risk-free rate | 2.11% |
Employee Share-Based Compensa41
Employee Share-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Oct. 01, 2016 | Sep. 30, 2017 | Oct. 01, 2016 | |
Employee Share-based Compensation Details Narrative | ||||
Closing stock price | $ 4.30 | $ 4.30 | ||
Unrecognized compensation expense | $ 2,700,000 | $ 2,700,000 | ||
Cost is expected to be recognized over a weighted average period | 2 years 3 months 18 days | |||
Recognized compensation expense | $ 400,000 | $ 300,000 | $ 1,100,000 | $ 900,000 |
Stock Issuance (Details Narrati
Stock Issuance (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |
Nov. 08, 2017 | Sep. 30, 2017 | Apr. 26, 2017 | |
Shares issued under financing transaction | 9,600,000 | ||
Proceeds received under financing transaction | $ 23,700,000 | ||
Purchase price per share | $ 2.60 | ||
Private Placement Committment [Member] | |||
Shares issued under financing transaction | 5,600,000 | ||
Proceeds received under financing transaction | $ 23,000,000 | ||
Purchase price per share | $ 4.10 |
Business Segments (Details)
Business Segments (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Oct. 01, 2016 | Sep. 30, 2017 | Oct. 01, 2016 | Dec. 31, 2016 | |
Net sales | $ 6,084,690 | $ 3,937,286 | $ 13,670,646 | $ 17,211,865 | |
Cost of sales | 3,169,321 | 2,074,325 | 7,028,340 | 8,831,400 | |
Gross profit | 2,915,369 | 1,862,961 | 6,642,306 | 8,380,465 | |
Operating expenses: | |||||
Sales and marketing | 1,103,157 | 286,941 | 2,058,178 | 1,190,013 | |
Research and development | 1,040,561 | 772,799 | 2,554,713 | 1,988,597 | |
General and administrative | 3,948,435 | 1,727,383 | 8,882,821 | 5,935,139 | |
Other | 0 | 0 | 745,773 | 0 | |
Operating expenses | 6,092,153 | 2,787,123 | 14,241,485 | 9,113,749 | |
Operating income (loss) | (3,176,784) | (924,162) | (7,599,179) | (733,284) | |
Total assets | 41,801,512 | 41,801,512 | $ 19,752,068 | ||
Ingredients Segment [Member] | |||||
Net sales | 2,459,905 | 2,663,095 | 7,393,389 | 13,505,470 | |
Cost of sales | 1,384,221 | 1,287,421 | 3,615,097 | 6,420,972 | |
Gross profit | 1,075,684 | 1,375,674 | 3,778,292 | 7,084,498 | |
Operating expenses: | |||||
Sales and marketing | 390,568 | 199,130 | 959,761 | 930,573 | |
Research and development | 558,677 | 760,299 | 2,022,151 | 1,961,097 | |
General and administrative | 0 | 0 | 0 | 0 | |
Other | 745,773 | ||||
Operating expenses | 949,245 | 959,429 | 3,727,685 | 2,891,670 | |
Operating income (loss) | (126,439) | 416,245 | 50,607 | 4,192,828 | |
Total assets | 9,761,568 | 9,761,568 | 13,257,289 | ||
Consumer Products Segment [Member] | |||||
Net sales | 2,647,300 | 0 | 2,802,875 | 0 | |
Cost of sales | 1,095,128 | 0 | 1,135,864 | 0 | |
Gross profit | 1,552,172 | 0 | 1,667,011 | 0 | |
Operating expenses: | |||||
Sales and marketing | 548,827 | 0 | 738,647 | 0 | |
Research and development | 481,884 | 0 | 532,562 | 0 | |
General and administrative | 0 | 0 | 0 | 0 | |
Other | 0 | ||||
Operating expenses | 1,030,711 | 0 | 1,271,209 | 0 | |
Operating income (loss) | 521,461 | 0 | 395,802 | 0 | |
Total assets | 4,012,200 | 4,012,200 | 0 | ||
Core Standards and Contract Services Segment [Member] | |||||
Net sales | 977,485 | 1,274,191 | 3,474,382 | 3,706,395 | |
Cost of sales | 689,972 | 786,904 | 2,277,379 | 2,410,428 | |
Gross profit | 287,513 | 487,287 | 1,197,003 | 1,295,967 | |
Operating expenses: | |||||
Sales and marketing | 163,762 | 87,811 | 359,770 | 259,440 | |
Research and development | 0 | 12,500 | 0 | 27,500 | |
General and administrative | 0 | 0 | 0 | 0 | |
Other | 0 | ||||
Operating expenses | 163,762 | 100,311 | 359,770 | 286,940 | |
Operating income (loss) | 123,751 | 386,976 | 837,233 | 1,009,027 | |
Total assets | 2,589,857 | 2,589,857 | 2,547,427 | ||
Corporate and Other Segment [Member] | |||||
Net sales | 0 | 0 | 0 | 0 | |
Cost of sales | 0 | 0 | 0 | 0 | |
Gross profit | 0 | 0 | 0 | 0 | |
Operating expenses: | |||||
Sales and marketing | 0 | 0 | 0 | 0 | |
Research and development | 0 | 0 | 0 | 0 | |
General and administrative | 3,948,435 | 1,727,383 | 8,882,821 | 5,935,139 | |
Other | 0 | ||||
Operating expenses | 3,948,435 | 1,727,383 | 8,882,821 | 5,935,139 | |
Operating income (loss) | (3,948,435) | $ (1,727,383) | (8,882,821) | $ (5,935,139) | |
Total assets | $ 25,437,887 | $ 25,437,887 | $ 3,947,352 |
Business Segments (Details 1)
Business Segments (Details 1) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2017 | Oct. 01, 2016 | Sep. 30, 2017 | Oct. 01, 2016 | Dec. 31, 2016 | ||||||
Customer G [Member] | Sales Revenue, Net [Member] | ||||||||||
Customer concentration risk | 37.80% | [1] | 16.80% | [1] | ||||||
Customer G [Member] | Trade Receivables [Member] | ||||||||||
Customer concentration risk | 30.30% | [1] | ||||||||
Customer D [Member] | Sales Revenue, Net [Member] | ||||||||||
Customer concentration risk | 12.10% | 12.30% | [1] | [1] | ||||||
Customer D [Member] | Trade Receivables [Member] | ||||||||||
Customer concentration risk | [1] | 10.20% | ||||||||
Customer C [Member] | Sales Revenue, Net [Member] | ||||||||||
Customer concentration risk | [1] | [1] | [1] | 24.50% | ||||||
Customer C [Member] | Trade Receivables [Member] | ||||||||||
Customer concentration risk | 45.40% | 45.80% | ||||||||
[1] | Represents less than 10%. |
Other Expense (Details Narrativ
Other Expense (Details Narrative) | 3 Months Ended |
Sep. 30, 2017USD ($) | |
Other Expense | |
Loss from ongoing litigation | $ 746,000 |
Allowance amount, beginning | (800,000) |
Allowance amount, ending | $ (500,000) |