SECURITIES AND EXCHANGE COMMISSION December 29, 2012 (State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.) Title of each class Name of Each Exchange on Which Registered [X ] [X] [ ] [ ] [ X] $37,933,178. 28, 2013 : 96,507,883 1. 1A. 2. 3. 4. 5. 6. 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 8. 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 9A 9B. 10. 11. 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 13. Certain Relationships and Related Transactions, and Director Independence 14. 15. 16. have conducted this core business since 1999. Food and Drug Administration (“FDA”) to assure Good Manufacturing Practices (“GMP”). pharmaceutical markets. On December 3, 2012, ChromaDex Inc. acquired a scientific and regulatory consulting company called Spherix Consulting Inc. located in the greater Washington D.C. area and Spherix Consulting Inc. became a wholly-owned subsidiary of ChromaDex, Inc. Expansion into new markets: We are developing business in new domestic and international markets. These markets include both the domestic and international botanical drug market and the market for novel therapeutic botanicals from Asia, South America and Africa. We have also added what we believe to be new and innovative product offerings, including the screening of compound libraries and the offering of Since 2003, we have invested in excess of $2 million in laboratory equipment, and we currently have personnel possessing over 150 years of combined pharmaceutical and natural products chemistry experience. Contract services. ChromaDex, through Chromadex Analytics, provides 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. ● performance-based bonus. Currently, we have exclusive distribution agreements in place with the following distributors for the following countries or regions: distributors in such markets. 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, Compounds for altering food intake in humans Co-owned by Avoca, Inc. and ChromaDex 7,338,791 Production of Flavanoids by Recombinant Microorganisms Licensed from The Research Foundation of State University of New York debt financings or collaborative agreements or from other sources. We have we may not be able to obtain all. In the event that we are unable to obtain additional financing, we may be unable to profitable. commercially successful products for a number of reasons, including but not limited to: stockholders. Contents overall business operation. common stock price appreciates. SEC. Fiscal Year Ending January 1, 2011 Fiscal Year Ending January 2, 2010 Quarter Ended High $ Low $ Quarter Ended High $ Low $ January 1, 2011 October 2, 2010 July 3, 2010 April 3, 2010 quotation was $0.68. Prior to the merger, Cody Resources Inc. was quoted on the NeutriSci. December 31, 2011. Sales Cost of sales Gross profit Operating expenses-Sales and marketing -General and administrative Nonoperating expenses -Interest expense -Interest income Net loss plans. a write-off of initial lots of BluScience inventory that did not meet required internal quality control specifications. activities net loss. activities activities private placement. Policy generated from our BluScience consumer product operation. As of BluScience consumer product line. Payable services. 2012. Assets costs pronouncements 29, 2013 Assets Current Assets Cash Trade receivables, less allowance for doubtful accounts 2010 $18,000; 2009 $16,000 Inventories Prepaid expenses and other assets Total current assets Leasehold Improvements and Equipment, net Deposits and Other Noncurrent Assets Deposits Intangible assets, less accumulated amortization 2010 $990,420; 2009 $916,785 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable Accrued expenses Current maturities of capital lease obligations Customer deposits and other Deferred rent, current Due to officers Total current liabilities Capital lease obligations, less current maturities Deferred rent, less current Stockholders’ Equity Common stock, $.001 par value; authorized 150,000,000 shares; issued and outstanding 2010 60,875,325 and 2009 28,838,216 shares Additional paid-in capital Accumulated deficit Sales Cost of sales Gross profit Operating expenses: Sales and marketing General and administrative Operating loss Nonoperating (income) expenses: Interest expense Interest income Net loss Basic and Diluted loss per common share Basic and Diluted average common shares outstanding Balance, January 3, 2009 Share-based compensation Net loss Balance, January 2, 2010 Issuance of common stock, net of offering costs of $188,372 Exercise of warrants Share-based compensation Net loss Balance, January 1, 2011 Cash Flows from Operating Activities Net loss Adjustments to reconcile net loss to net cash (used in) operating activities: Depreciation Amortization of intangibles Share-based compensation expense Loss (gain) from disposal of equipment Changes in operating assets and liabilities: Trade receivables Inventories Prepaid expenses and other assets Accounts payable Accrued expenses Due to officers Customer deposits and other Deferred rent Net cash (used in) operating activities Cash Flows From Investing Activities Purchases of leasehold improvements and equipment Purchase of intangible assets Other Net cash (used in) investing activities Cash Flows From Financing Activities Proceeds from issuance of common stock Proceeds from exercise of warrants Principal payments on capital leases Net cash provided by (used in) financing activities Net increase (decrease) in cash Cash: Beginning Ending Supplemental Disclosures of Cash Flow Information Cash payments for interest Supplemental Schedule of Noncash Invensting Activity Capital lease obligation incurred for the use of equipment Nature of business: ChromaDex Corporation and its wholly owned subsidiaries, ChromaDex, Inc., Chromadex Analytics, Inc. and Basic average common shares outstanding Warrants and options in the money and restricted stock, net Weighted average common shares outstanding assuming dilution Amortized intangible assets: License agreements was recognized as an impairment charge in general and administrative expenses in the statements of operations for the year ended December 31, 2011. Years ending December: 2011 2012 2013 2014 2015 Thereafter Laboratory equipment Leasehold improvements Computer equipment Furniture and fixtures Office equipment Construction in progress Less accumulated depreciation Year ending December: 2011 2012 2013 2014 2015 Total minimum lease payments Less amount representing interest Present value of net minimum lease payments Less current portion Long-term obligations under capital leases Salaries and vacation Professional services Other Income tax expense (benefit) at statutory rate (Increase) decrease resulting from: State income taxes, net of federal tax effect Nondeductible expenses Change in effective tax rate Change in valuation allowance Other Deferred tax assets: Net operating loss carryforward Inventory reserve Allowance for doubtful accounts Accrued expenses Intangibles Deferred rent Less valuation allowance Deferred tax liabilities: Property and equipment Prepaid expenses December 31, 2011: Compensation Committee, subject to approval by the Board of Directors. Volatility Expected dividends Expected term Risk-free rate December 31, 2011. a service period. Outstanding at January 2, 2010 Options Granted Options Exercised Options Forfeited Outstanding at January 1, 2011 Exercisable at January 1, 2011 December 29, 2012. The weighted average fair value of options granted during the years ended December 29, 2012, and December 31, 2011 was $0.27, and $0.53 respectively. The aggregate intrinsic value for options exercised during the years ended December 29, 2012, and December 31, 2011 was $765 and $52,228 respectively. Outstanding at January 2, 2010 Options Granted Options Exercised Options Forfeited Outstanding at January 1, 2011 Exercisable at January 1, 2011 conditions. The fair Expected Term Expected Volatility Expected Dividends Risk Free Rate of Return Unvested shares at January 2, 2010 Granted Vested Forfeited Unvested shares at January 1, 2011 Expected to Vest as of January 1, 2011 ended December 29, 2012, as the vesting conditions established by the Company, including continuous employment through November 15, 2013, were not met. The reversed expense amount the Company had recognized through December 31, 2011 was $476,411. award. On February 21, 2012, the Company awarded 75,000 shares of common stock to Debra Heim, our former Chief Operating Officer, pursuant to an employment agreement with Ms. Heim. The fair value of these awarded shares was estimated at the date of award using the Company’s stock price. Since these shares are immediately vested, the award is deemed to be fully earned upon issuance and the full fair value of $60,000 was expensed on the date of award. On June 6, 2012, the Company awarded 500,000 shares of common stock to each of Michael Brauser and Barry Honig, who are Co-Chairmen of the Board of Directors. The fair value of these awarded shares was estimated at the date of award using the Company’s stock price. Since these shares are immediately vested, the awards are deemed to be fully earned upon issuance and the full fair value of $690,000, or $345,000 each was expensed on the date of award. Outstanding at January 2, 2010 Options Granted Options Exercised Options Forfeited Outstanding at January 1, 2011 Exercisable at January 1, 2011 December 29, 2012. December 29, 2012. Warrants granted in connection with: 2008 Private Placement Equity Offering 2010 Private Placement Equity Offering Fiscal years ending: 2011 2012 2013 2014 2015 Thereafter as follows: The financial statements have been presented as if the Company is a going concern. December 29, 2012. 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: Officers of the Securities Exchange Act of 1934 past ten years, none of our officers, directors, promoters or control persons have been involved in any legal proceedings as described in Item 401(f) of Regulation S-K. ● Nominating and Corporate Governance Committee Name Frank L. Jaksch Jr. William F. Spengler Thomas C. Varvaro On Jr. Contents December 29, 2012. Name Stephen Block(2) Michael H. Brauser(3) Reid Dabney(4) Hugh Dunkerley(5) Mark S. Germain(6) Glenn L. Halpryn(7) Frank L. Jaksch Jr.(8) Kevin M. Jaksch(9) Thomas C. Varvaro(10) December 29, 2012. Name Frank L. Jaksch Jr. William F. Spengler Thomas C. Varvaro Name William F. Spengler Name of Beneficial Owner (1) Dr. Phillip Frost (3) Michael H. Brauser (4) Black Sheep, FLP (5) Barry Honig (6) John Liviakis Alan S. Honig (7) Directors Stephen Block (8) Reid Dabney (9) Hugh Dunkerley (10) Mark S. Germain (11) Glenn L. Halpryn (12) Frank L. Jaksch Jr. (13) Named Executive officers Frank L. Jaksch Jr., Chief Executive Officer Thomas C. Varvaro, Chief Financial Officer (14) William Spengler (15) All directors and executive officers as a group (6 Directors plus President and Chief Financial Officer)(16) A B C Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total Description Audit Fees (1) Audit-Related Fees (2) Tax Fees (3) All Other Fees Signature Title Date /s/ FRANK L. JAKSCH JR. (Principal Executive Officer) /s/ THOMAS C. VARVARO Chief Financial Officer and Secretary Exhibit No. Descriptionx [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. January 1, 2011¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.Delaware 26-2940963 10005 Muirlands Blvd. Suite G, Irvine, California 92618 (Address of Principal Executive Offices) (Zip Code) 10005 Muirlands Blvd. Suite G, Irvine, California 92618(Address of Principal Executive Offices) (Zip Code)Registrant’s N/A N/A ¨[ ] No x¨[ ] No xx[X] No ¨¨[X] No ¨[ ]registrant’sregistrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨Large accelerated filer¨Accelerated Filer¨Non-accelerated filer¨ (Do not check if smaller reporting company)Smaller Reporting Companyx¨[ ] No xJuly 2, 2010,June 30, 2012, the aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $62,287,115.14, 2011: 64,118,755Item PART I 3 12 24 24 24 PART II 25 26 27 32 50 50 50 PART III 51 54 62 64 65 PART IV 65 66 Item Page PART I Cautionary Notice Regarding Forward-Looking Statements 1. Business 1 1A. Risk Factors 11 2. Properties 23 3. Legal Proceedings 24 4. Mine Safety Disclosures 24 PART II 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25 6. Selected Financial Data 26 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 26 7A. Quantitative and Qualitative Disclosures About Market Risk 33 8. Financial Statements and Supplementary Data 33 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 34 9A. Controls and Procedures 34 9B. Other Information 35 PART III 10. Directors, Executive Officers and Corporate Governance 36 11. Executive Compensation 43 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 56 13. Certain Relationships and Related Transactions, and Director Independence 58 14. Principal Accounting Fees and Services 59 PART IV 15. Exhibits, Financial Statement Schedules 60 Signatures 61 internationally,internationally; decreased demand for our products and services; market acceptance of our products; the ability to protect our intellectual property rights; impact of any litigation or infringement actions brought against us; competition from other providers and products; risks in product development; inability to raise capital to fund continuing operations; changes in government regulation,regulation; the ability to complete customer transactions and capital raising transactions, and other factors (including the risks contained in Item 1A of this Form 10-K under the heading “Risk Factors”) relating to our industry, our operations and results of operations and any businesses that may be acquired by us. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.Item 1.Business and, Chromadex Analytics, Inc. and Spherix Consulting, Inc. ("Spherix"). ChromaDex Corporation and its subsidiaries (collectively referred to herein as “ChromaDex” or the “Company” or, in the first person as “we” “us” and “our”) supplies phytochemical reference standards, which are small quantities of plant-based compounds typically used to research an array of potential attributes, and reference materials, related contract services, technical consulting and products forproprietary ingredients. We perform chemistry-based analytical services at our laboratory in Boulder, Colorado, typically in support of quality control or quality assurance activities within the dietary supplement nutraceutical,industry. We recently acquired Spherix Consulting, Inc., which provides scientific and regulatory consulting to the clients in the food, supplement and beverage, functional food, pharmaceutical industries to manage potential health and cosmetic markets.regulatory risks. In 2011, we launched the BluScience retail dietary supplement products containing one of the proprietary ingredients, pTeropure, which we also sell as an ingredient for incorporation into the products of other companies. However, on March 28, 2013, we entered into an asset purchase and sale agreement with NeutriSci International Inc. (“NeutriSci”) and consummated the sale of BluScience consumer product line to NeutriSci. For the calendarfiscal years ended January 1,December 29, 2012 and December 31, 2011, our revenues were $11,610,494 and January 2, 2010, ChromaDex had revenues$8,112,610, respectively.leaderleading provider of research and quality-control products and services to the natural products industry. Customers worldwide in supplying phytochemical standards, referencethe dietary supplement, food & beverage, cosmetic and pharmaceutical industries use our products, which are small quantities of highly-characterized, research-grade, plant-based materials, to ensure the quality of their raw materials and libraries.finished products. Customers also use our analytical chemistry services to support their quality assurance activities, primarily to ensure the identity, potency and safety of their consumer products. We believe these phytochemicals are the current standard for the quality control of natural products such as dietary supplements, cosmetics, food and beverages, and pharmaceuticals. In addition, we believe these standards are essential elements for future product development in all the above areas. rapidly growing need at both the manufacturing and government regulatory levels for reference standards, analytical methods and other quality assurance methods to ensure that products that contain plants, plant extracts and naturally occurring compounds distributed to consumers are safe. We further believe that this need is driven by increased awarenessthe perception at the consumer level of thea lack of adequate quality controls as related to certain functional food nutraceutical or dietary supplement based products. ChromaDex has taken advantage of bothproducts, as well as increased effort on the supply chain needs and regulatory requirements to build its core standards business. We believe we are now in a position to significantly expand our current business and capitalize on additional opportunities in product development, contract research and commercializationpart of the intellectual property that we have acquired from the development of our standards.screenbecome aware of the results from research and screening activities performed on thousands of potential natural product candidates. By usingselecting the market information gatheredmost promising ingredients from this market-based screening model, which is grounded in primary research performed by the Company’s business model,leading universities and institutions, followed by an investmentselective investments in further research and development, new natural products-related intellectual property can be identified and brought to the marketvarious markets with a much lower investment cost and an increased chance of successsuccess. The first of these proprietary compounds, pTeroPure, is our brand name for the compound, pterostilbene. Pterostilbene is a polyphenol and a powerful antioxidant that shows promise in a range of health related issues. We have in-licensed patents pending related to the use of pterostilbene for a number of these benefits, and have filed additional patents related to additional 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. We expect to conduct additional clinical trials on this compound and we anticipate entering the dietary supplement, animal health and, if clinical results are favorable, the pharmaceutical market. We believe that we have opportunities in the marketplace.Company BackgroundOn May 21, 2008, Cody Resources,skin care market and we will continue to investigate developing these opportunities internally or through third party partners. We anticipate conducting additional clinical trials on other compounds in our pipeline to provide differentiation as we market these ingredients and support various health-related claims or obtain additional regulatory clearances.a Nevada corporation, we now provide 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 Cody, entered into an Agreement and Plan of Merger, or Merger Agreement, by and among Cody, CDI Acquisition, Inc., a California corporation and wholly-owned subsidiary of Cody, or Acquisition Sub, and ChromaDex, Inc., or the Merger. Subsequent to the signing of the Merger Agreement, Cody merged with and into a Delaware corporation for the sole purpose of changing the domicile of Cody to the State of Delaware. Subsequent to the signing of the Merger Agreement, andexposed to changing its domicile, Cody amended its articlesscientific standards or public perceptions; literature evaluations; and design and assessment of incorporationpre-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. We believe that the addition of Spherix will complement and expand our leadership in reference standards and services business. By providing a more comprehensive suite of science-based and regulatory services, we will be able to change its name to “ChromaDex Corporation.”Pursuant tomore efficiently advance products in the terms of the Merger Agreement,dietary supplement, food and upon satisfaction of specified conditions, including approval by ChromaDex, Inc. stockholders on June 18, 2008, Acquisition Sub merged withbeverage, animal health, cosmetic and into ChromaDex, Inc. and ChromaDex, Inc., as the surviving corporation, became a wholly-owned subsidiary of Cody.Cody was incorporated on July 19, 2006 under the laws of the State of Nevada. At the time of the Merger, Cody had been an inactive shell corporation and Cody’s actions as a going concern prior to the Merger are immaterial to the business of ChromaDex. made up of experienced chemists located in Boulder, Colorado. The assets acquired in this transaction were placed in a newly-formed, wholly-owned subsidiary of ChromaDex named ChromaDexChromadex Analytics, Inc., a Nevada corporation.“green chemistry” (environmentally safe) technologies, with an initial industry focus on the dietary supplement, cosmetic, andnutraceutical, food and beverage, markets, as well as on novel pharmaceuticals.functional food, animal health, pharmaceutical and skin care markets. We plan to utilize our experienced management team to commercialize these natural product technologies by advancing them through the properany required regulatory approval processes, selectively conducting clinical trials, arranging for reliable and cost-effective manufacturing, and ultimately either directly selling the products or licensing the product linesintellectual property to others.third parties. We plan to conduct clinical trials to (a) reinforce the health benefits that may be associated with our ingredients in support of sales made into the dietary supplement and food and beverage markets, (b) potentially improve the quality or specificity of FDA approved claim we can make with respect to these health benefits, and (c) potentially lead us toward pharmaceutical applications for our ingredients.● •current ChromaDexof our products currently in development products have the potential to spin off unique technologies that may themselves be independently capable of commercialization and becoming significant new revenue sources. We believe that new intellectual property can also be developed from our expansion into new markets.● •3,500approximately 4,500 defined standards. We expect to add 500 to 1,000 new standards each year for the foreseeable future.● •Expansion of manufacturing capacity: We plan to expand our manufacturing facilities to satisfy our growing need for customer clinical studies, new product development and early-stage manufacturing.•unique, value-added raw materials.● •our productscertain phytochemical reference standards, provides research and providesdevelopment, all analytical services and laboratory division support for ChromaDex. •●Novel Dietary Supplementsupplement and Foodfood ingredients. We offer novel bulk raw materials for inclusion in dietary supplements, food, beverage and cosmetic products. This is an area where the Company iswe are increasing itsour focus, as we believe we can secure and defend our market positions through patents and long-term manufacturing agreements with our customers and vendors, as evidenced by the launch of the pTeroPure pterostilbene product in 2010.vendors. •●pharmaceuticalspharmaceutical industries. •●whothat require these products for research and new product development. •●Bioluminex™.Bioluminex™ is a bio-analytical method that identifies the presence of toxic or harmful compounds in water, dietary ingredients, food products and food ingredients. We developed this method pursuant to a worldwide, exclusive license agreement with Bayer Ag. We intend to explore sublicensing and developing additional applications for the method before conducting a formal market launch for Bioluminex™ within the next two years.• •● •●cost efficientcost-effective manufacturing of natural products, using “green chemistry”.chemistry.” •●Process scale manufacturing. We intend to invest in a pilot plant facility that has the capability of manufacturing at a process scale for products that have gone to market.Anthocyanin•Phytochemical 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.•Plant extracts libraries. We intend to continue our efforts to create an extensive library of plant extracts using our already extensive list of botanical reference materials.•Databases for cross-referencing phytochemicals. We are working on building a database for cross referencing phytochemicals against an extensive list of plants, including links to references to ethnopharmacological, enthnobotanical, and biological activity, as well as clinical evidence.•Anthocyanin. We are working to establish cost-effective methodologies for the efficient production of anthocyanins from genetically engineered bacteria. Anthocyanins are secondary plant metabolites that are mainly responsible for the colors in plant tissues, primarily reds, purples and blues. They are non-toxic and have been observed to possess antioxidant, anticancer and anti-inflammatory activities, making them attractive candidates in the pharmaceutical, dietary supplement and food colorants industries. •●SimmondsinNicotinamide riboside. We believe that our intellectual propertyare working to establish cost-effective methodologies for jojoba extract (simmondsin) for weight lossthe efficient production of nicotinamide riboside. Nicotinamide riboside, a recently discovered vitamin found naturally in milk, is a potential sourcemore potent version of future revenue from licensing agreementsthe more commonly known niacin (vitamin B3). Nicotinamide riboside has shown promise for improving cardiovascular health, glucose levels and royalty payments.cognitive function and has demonstrated evidence of anti-aging effects. •● ● ● ● and “green chemistry” to license and develop new intellectual property that can be licensed to clients in our target industries.In 2004, we started receiving our first royalty payments for licensed intellectual property for the naturally-derived compound Sclareolide. Sclareolide, as developed by us, is a novel diterpene isolated from Salvia sclarea (commonly known as clary sage), and was created through a partnership with Avoca, Inc.modelplatform for productsthe chemical and servicesanalytical service business is based on direct, inside technical sales.sales model. We hire technical sales staff with appropriate scientific background in chemistry, biology, biochemistry or other related scientific fields. Our sales staff currently operates fromout of our headquarters in Irvine, California office and performs sales duties by using combinations of telemarketing, e-mail, tradeshows and e-mail. Sales staff are required to perform both sales andcustomer visits. It also has customer service responsibilities. We plan to add outside field sales representatives in the future as needed. All sales staff are compensated based on a uniform basic pay model based on salary and commission.Wean aggressive,a direct mail marketing strategy (catalogs, brochures and flyers) in combination with a range of the following marketing activities to promote and sell our products and services:Tradeshows and conferencesMonthly news letters (via e-mail)● Tradeshows and conferences InternetWebsite● Monthly newsletters (via e-mail) Advertising in trade publicationsPress releases● Internet ● Website ● Advertising in trade publications ● Press releases an aggressive,a direct marketing approach to promote our products and services to all markets that we target for direct sales.International:We alsoFor our core reference standards business, 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.Europe (LGC Standards)South America (JMC)● Europe (LGC Limited) Korea (Dong Myung Scientific)India (LGC Promochem India Pvt. Ltd.)● South America (JMC, Inc.) ● Korea (Dong Myung Scientific Co.) ● India (LGC Promochem India Pvt. Ltd.) groupgroups of countries:JapanAustralia and New Zealand● Japan ChinaIndonesia, Malaysia, Singapore and Thailand● Australia and New Zealand MexicoNon-exclusive● China ● Indonesia, Malaysia, Singapore and Thailand are considered for becomingin their designated market exclusive distributors.onin 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.The United States Food● ● 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. Drug Administration, or FDA published its draft guidance for Good Manufacturing Practices (“GMPs”)regulatory requirements such as the GMPs for dietary supplements on March 13, 2003. The final rule from this guidance was made effective in June 2007,to build our core standards and full compliance was required by June 2010The FDA published draft guidance for the approval of “Botanical Drugs” in June 2005;According to the Washington Post, the FDA and the Federal Trade Commission (“FTC”) have recently fined six mass marketers of weight loss supplements a total of $30 million, because the companies could not adequately substantiate their respective weight loss claims; andRegulatory agencies around the world have started to review the need for the regulation of herbal and natural supplements and are considering regulationsanalytical services businesses. We believe 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.Business ModelOur business model is built around supplying reference standards products and services to our primary markets. This provides capital and brand positioning to allow us access to markets in a ‘trusted advisor’ capacity, through which we can develop botanical solutions with increased value to meet client needs.We create value throughout the supply chain of the pharmaceutical, dietary supplements, functional foods and personal care markets. We do this by:combining● Combining the analytical methodology and characterization of materials with the technical support for the sale of reference materials by our clients; ● Helping companies to comply with new government regulations; and ● Providing value-added solutions to every layer of the supply chain in order to increase the overall quality of products being produced. In addition, the recent acquisition of Spherix has enabled us to be a premier provider of product regulatory approval and scientific advisory services. We can now provide 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. technical supportopportunity to become aware of the results from research and screening activities performed on thousands of potential natural product candidates. By selecting the most promising ingredients from this market-based screening model, which is grounded in primary research performed by leading universities and institutions, followed by selective investments in further research and development, new natural products-related intellectual property can be identified and brought to various markets with a much lower investment cost and an increased chance of success. The first of these proprietary compounds, pTeroPure, is our brand name for the salecompound, pterostilbene. Pterostilbene is a polyphenol and a powerful antioxidant that shows promise in a range of reference materials byhealth related issues. We have in-licensed patents pending related to the use of pterostilbene for a number of these benefits, and have filed additional patents related to additional 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. We expect to conduct additional clinical trials on this compound and we anticipate entering the dietary supplement, animal health and, if clinical results are favorable, possibly the pharmaceutical markets with it. We believe that we have opportunities in the skin care market and we will continue to investigate developing these opportunities internally or through third party partners. We anticipate conducting additional clinical trials on other compounds in our clients;helping companiespipeline to complyprovide differentiation as we market these ingredients and support various health-related claims or obtain additional regulatory clearances.new government regulations;significant potential health benefits. Among these next generation compounds are anthocyanins, which are compounds responsible for the dark pigment found in certain berries andproviding value-added solutions flowers, and nicotinamide riboside, a compound similar to every layer of the supply chainB-vitamin, niacin. Like pTeroPure®, these compounds also have potential in order to increase the overall quality of products being produced.We intend to use the market information gathered through our core products and services business to create and license intellectual property.FTC, United StatesFederal Trade Commission (“FTC”), the Department of Commerce, the United States Department of Transportation, the United States Department of Agriculture and other comparable 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 whichthat 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 suchinvestigationinvestigations or enforcement actionactions initiated by state or federal authorities could result in changes to our operations being necessary and in increased compliance costs.Our primary products and services not directly subject to regulation by the FDA. However, companies can use our products and services, such as our phytochemical standards, reference materials and libraries, to help themselves comply with FDA regulatory requirements.regulations. For example, the FDA’s final rule on GMPs for dietary supplements published in June 2007 outlines a timeline of one to three years for companies to become fully compliant, depending on the size of the company. GMPs, in part, requirerequires companies to evaluate products for identity, strength, purity and composition. We provide tools necessaryThese regulations in some cases, particular for dietary supplement companiesnew ingredients, require a notification that must be submitted to complythe FDA along with these GMPs. We also offer an extensive rangeevidence of contract services and consulting to assist companies with their compliance needs.Our strategy to commercialize innovative, new, natural products may be subject to extensive FDA regulation. Dependingsafety. 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, can regulate: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 (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.We expect to bear the costs associated with NDI notifications, FAPs, and GRAS filings with the FDA, but we plan, depending on the product, to license certain technologies to partner companies who have an interest in the product market segment prior to such filings being necessary.forthe combined market of each of its countries.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.Weuswe are to compete nationally and internationally.Sigma-Aldrich(SIAL)Pharmacopoeia(USP)Pharmacopoeia (USA)Covance(CVD)Eurofins(ERF)For technical and regulatory consulting services provided by Spherix, 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. BioluminexTM,pterostilbene methods of use for lowering cholesterol, anythocyandian production, nicotinyl riboside methods of use and Jojoba extract (simmondsin) that require additional capital for product development, commercialization and marketing.TheWe anticipate that the net result will netbe a long term flow of intellectual property milestone and royalty payments for us.the Companythen we and Avoca jointly filed a patent to protect the intellectual property created by this joint venture.Patent Number Title Filing Date Issued Date Expires Licensor 6,852,342 Filing DateIssued DateExpiresLicensorUS 6,238,928Analytical process for testing mixtures for toxic constituents09/02/199305/21/200105/25/2018Licensed from Bayer Aktiengesell-schaft6,673,563Luminous bacteria and methods for the isolation, identification and quantification of toxicants9/18/20011/6/200401/09/2021Licensed from L & J Becvar, LP (1)6,340,572Kit for the isolation, identification and quantification of toxicants9/3/19991/22/200201/26/2019Licensed from L & J Becvar, LP (1)6,017,722Luminous bacteria and methods for the isolation, identification and quantification of toxicants4/4/19911/25/200001/28/2017Licensed from L & J Becvar, LP (1)6,852,3423/26/2002 2/8/2005 02/2/12/2022 7/11/2005 3/4/2008 7/11/2025 Manufacturing(1)8,106,184ImprovementsNicotinyl 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 information or discoveries covered by these patents are licensedproduce Nicotinamide Riboside3/26/2009 2/14/2012 3/26/2029 Licensed from Dartmouth College 8,133,917 Pterostilbene as an agonist for the Board of Regents ofperoxisome proliferator-activated receptor alpha isoform10/25/2010 3/13/2012 10/25/2030 Licensed from the University of Texas System untilMississippi and U.S. Department of Agriculture8,197,807 Nicotinamide Riboside Kinase compositions and Methods for using the full end of the term for which patent rights expire subject to the terms of the Patent Licensesame11/20/2007 6/12/2012 11/20/2027 Licensed from Dartmouth College ourcertain products in limited quantities, ranging from milligrams to kilograms. 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 at our Boulder, Colorado facility.ISO,“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.contemplate inspecting, packaging and labelinginspect products, as needed, at our Irvine, California facility.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.Thethe Names of Principal SuppliersOur researchdevelopment effortswe anticipate entering the dietary supplement, animal health and, if clinical results are currentlyfavorable, possibly the pharmaceutical markets as well. We anticipate conducting additional clinical trials on other compounds in our pipeline to provide differentiation as we market these ingredients and support various health-related claims or obtain additional regulatory clearances.productstandards and service offerings. Our own laboratory group has extensive experience in developing products related to our field of interest and works closely with our sales and marketing group to design products and services that are intended to increase revenue. To support development, we also have a number of contracts with outside labs that aid us in our research and development process.January 1, 2011,December 29, 2012, ChromaDex (including Chromadex Analytics)Analytics and Spherix Consulting, Inc.) had 6073 employees, 5064 of whom were full-time and 109 of whom were part-time. We consider our relationships with our employees to be satisfactory. None of our employees areis covered by a collective bargaining agreement.Item 1A.Risk Factorsoccur,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.Our Business and IndustryFurther deterioration in the state of the global economy and financial market conditions could adversely affect our ability to conduct businessCompany and our resultsBusinessoperations.Global economicoperating losses and financial market conditions, including severe disruptions in the credit marketswe may need additional financing to meet our future long term capital requirements.the continuing impact of the recent global economic recessionmay continue to materially impact our customersincur operating and other parties with whom we do business. Continued or further deterioration in general economic and financial market conditions could materially adversely affect our financial condition and resultsnet losses for the foreseeable future. We incurred a net loss of operations. Specifically,approximately $11,662,000 for the impact of these volatile and negative conditions may include decreased demand for our products and services, decreased ability to accurately forecast future product trends and demandyear ended December 29, 2012 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 throughnet loss of sales.Our operating results may fluctuate significantly as a resultapproximately $7,895,000 for the year ended December 31, 2011. As of a variety of factors, many of which are outside ofDecember 29, 2012, our control.We are subject to the following factors, among others, that may negatively affect our operating results:the announcement or introduction of new products by our competitors;our ability to upgrade and develop our systems and infrastructure to accommodate growth;our ability to attract and retain key personnel in a timely and cost effective manner;technical difficulties;the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure;regulation by federal, state or local governments; andgeneral 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 forecast accurately.accumulated deficit was approximately $29,717,000. We have based our current and future expense levels largelynot achieved profitability 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, wean annual basis. 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 possibly profits. Failure to anticipate and respond to price competition may also impact sales and profits.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, distribution, 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 rapidly to introduce new products. In certain instances, competitors with greater financial resources also may be able to enterreach a marketlevel of revenue to achieve profitability. If our revenues grow slower than anticipated, or if operating expenses exceed expectations, then we may not be able to achieve profitability in direct competition with us, offering attractive marketing toolsthe near future or at all, which may depress our stock price.encouragebe received from the sale of products that compete withthe BluScience consumer product line subsequent to the year ended December 29, 2012 will be sufficient to meet our productsprojected operating plans through December, 2013, we may require additional funds, either through additional equity or present cost features which consumers may find attractive.We may never develop any additional products to commercialize.invested a substantial amount of our timeno commitments to obtain such additional financing, 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 it can provide us with any revenue. Despite our efforts, these products may not become commercially successful products for a number of reasons, including:regulatory approvals for our products, or the approved indication may be narrower than we seek;our products may not proveany such additional financing on terms favorable to be safe and effective in clinical trials;we may experience delays in our development program;any products that are approved may not be accepted in the marketplace;we may not have adequate financial or other resources to complete the development or to commence the commercialization of our products and will not have adequate financial or other resources to achieve significant commercialization of our products;we may not be able to manufacture any of our products in commercial quantitiesus, or at an acceptable cost;rapid technological change may make our products obsolete;effectively protectimplement our intellectual property rights orbusiness plan. Even with such financing, we may become subject tohave a claim that our activities have infringed the intellectual property rightshistory of others;operating losses andwe 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 wewill be successful in finding partners or be able to continue to incorporate new developments in technology, to improve existing products and services, or to develop successful new products and services, nor can we be certain that newly-developed products and services will perform satisfactorily or be widely accepted in the marketplace or that the costs involved in these efforts will not be substantial.We depend on key personnel, the loss of any of which could negatively affect our business.We depend greatly on Frank L. Jaksch, Jr., William F. Spengler and Thomas C. Varvaro, who are our Chief Executive Officer, President and Chief Financial Officer, respectively. We also depend greatly on other key employees, including key scientific personnel. In general, only highly qualified and trained scientists have the necessary skills to develop and market our products and provide our services. In addition, some of our manufacturing, quality control, safety and compliance, information technology, sales and e-commerce related positions are highly technical as well. Also, 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 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.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.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 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 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.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. 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.We mayever 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 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.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, we could be prohibited from 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. 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 may not be successful and our business would be harmed if the patents were infringed 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. Without access to these technologies or suitable design-around or alternative technology options, our ability to conduct our business could be impaired significantly.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 dietary supplement, nutraceutical, food and beverage, functional food, analytical laboratories, pharmaceutical and cosmetic 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 anyparty’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 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.believeanticipate that our current cash and cash equivalents and the cash payments received and to be received from the sale of BluScience consumer product line subsequent to the year ended December 29, 2012 will be sufficient to implement our operating plan through December, 2011.2013. Our capital requirements will depend on many factors, including:the end of December, 20112013 both to meet our projected operating plans after December, 20112013 and to fund our longer term strategic objectives. Additional capital may come from public and private stockequity 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.WeFurther deterioration in the state of the global economy and financial market conditions could adversely affect our ability to conduct business and our results of operations.historymaterial adverse effect on our business, financial condition and results of operating lossesoperations. There can be no assurance that our attempts to expand our marketing, sales, manufacturing and wecustomer support efforts will needbe successful or will result in additional financing to meet our future long term capital requirements.We have a history of losses and may continue to incur operating and net losses for the foreseeable future. We incurred a net loss of approximately $2,052,000 for the twelve-month period ended January 1, 2011 and a net loss of approximately $908,000 for the twelve-month period ended January 2, 2010. As of January 1, 2011, our accumulated deficit was $10.2 million. We have not achieved profitability on an annual basis. We may not be able to reach a level of revenue to achieve profitability. If our revenues grow slower than anticipated,sales or if operating expenses exceed expectations, then we may not be able to achieve profitability in any future period. As a result of the near future or at all, which may depressexpansion of our stock price.We believe that our current cash, cash equivalents, cash generated from operations and the capital raised pursuantanticipated increase in our operating expenses, as well as the difficulty in forecasting revenue levels, we expect to continue to experience significant fluctuations in its results of operations.May 2010 private placement (the “2010 Private Placement”)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.sufficientfavorable to meetthe 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 projected operating plans through December, 2011. products and consequently on our business, results of operations, financial condition and cash flows.however, require additional funds, either through additional equityincur material product liability claims, which could increase our costs and adversely affect our reputation, revenues and operating income.debt financingsnatural 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, some of 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 collaborative agreements or frominadequate warnings concerning possible side effects and interactions with other sources to engagesubstances. A product liability claim against us could result in researchincreased costs and development activitiescould adversely affect our reputation with respect to our potential new product candidates and to establish the personnel necessary to successfully implementcustomers, which, in turn, could have a materially adverse effect on our business, strategy. results of operations, financial condition and cash flows.no commitmentsa 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 obtain suchall 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 financing,expenses and experience shipment delays due to preventative measures adopted by the Indian and U.S. governments, our suppliers and our company.anyinsurance coverage in the future.additional financingas 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 terms favorable to us,terms, or at all.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.eventnecessary 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 are unablecompete. Our success will depend, in part, upon our ability to obtainattract and retain additional financing, we may be unable to implement our business plan. Even with such financing, we have a history of operating losses and thereskilled personnel, which will require substantial additional funds. There can be no assurance that we will everbe 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.profitable.time consuming,time-consuming, and could delay or limit the success of any product launch. We may not be able to develop this capacity on a timely basis or at all. Qualified direct sales personnel with experience in the phytochemical industry are in high demand, and there iscan 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. We haveThere can be no assurance that we will be able to enter into contracts with representatives on terms acceptable to us. Furthermore, there iscan be no assurance that we will be able to build an alternate distribution framework should we attempt to do so.havehas 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 agencies,departments, such as Homeland Security or defense,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.isare subject to the commercial success of our customers’ products, which may vary for reasons outside our control.We face the riskTable of product liability claims or recalls and may not be able to obtain or maintain adequate product liability insurance.ContentsOur business exposes us to the risk of product liability claims that are inherent in the testing, manufacturing and marketing of phytochemical products. We may be subject to such claims if our products cause, or appear to have caused, an injury. Defending a lawsuit, regardless of merit, could be costly, divert management attention and result in adverse publicity, which could result in the withdrawal of, or reduced acceptance of, our product in the market.Our product liability insurance is subject to deductibles and coverage limitations and we may not be able to maintain this insurance. If we are unable to maintain product liability insurance at an acceptable cost or on acceptable terms with adequate coverage or otherwise protect ourselves against potential product liability claims, we could be exposed to significant liabilities, which may harm our business and our financial condition. A product liability claim or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could result in significant costs and significant harm to our business, financial condition and results of operations.willmay need to increase the size of our organization, and we may be unable to manage rapid growth effectively.Futurecouldof similar or complementary businesses. No assurance can be unsuccessful,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 could strainexpenses, 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 existing humanmanagement's time and capital resources.We planattention, 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 dilution to acquire other entities in the futureshareholders 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 theseprivate 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 material to our business, plans and projections. We may be unable to consummate these acquisitions on favorable termsfunded with cash, debt or at all. Even if we consummate oneequity, which could have the effect of diluting or moreotherwise adversely affecting the holdings or the rights of these acquisitions, we may not successfully integrate large numbers of new employees, technology and businesses, and such efforts could put a strain on our existing human and capital resources.We heavily rely on third party air cargo carriers and other package delivery services, and a significant disruption in these services or significant increases in prices may disrupt our ability to ship products or import materials, increase our costs and lower our profitability and harm our reputation.business.United States Department of Commerce, the United States Food and Drug Administration, or FDA, the United StatesFTC, the Department of Transportation and the United States Department of Agriculture and other comparable state and international agencies.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 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.states,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.Good Manufacturing Practices, or 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.Common StockSince our common stock is only minimally publicly traded, and will likely remain so for some time, the price may be subject to wide fluctuations.During the period June 20, 2008 to January 1, 2011, there was a minimal public market for our common stock. Equity Securitiesis likely tomay be highly volatile and subject to wide fluctuations in response to the following factors, which are generally beyond our control. These factors may include:adversely affected by several factors.the ability to develop and obtain regulatory approvals for andproducts on a timely basis;volume, price and timing of orders for products, if we are able to sell them;the introduction of new products or product enhancements by competitors;disputes or other developments with respect to intellectual property rights;products liability claims or other litigation;quarterly variations in our results of operations and those of competitors;sales of large blocks of our common stock could fluctuate significantly in response to various factors and events, including, sales by its executive officersbut not limited to:• our ability to integrate operations, technology, products and services; • our ability to execute our business plan; • operating results 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; • loss of any strategic relationship; • industry developments, including, without limitation, changes in healthcare policies or practices; • economic and other external factors; • period-to-period fluctuations in our financial results; and • whether an active trading market in our common stock develops and is maintained. directors;changes in governmental regulations or in the status of regulatory approvals, clearances or applications;changes in the availability of third party reimbursement in the United States or other countries;changes in earnings estimates or recommendations by securities analysts; andgeneral market conditions and other factors, including factorsvolume fluctuations that are unrelated to our operating performance or the operating performance of competitors.We cannot predictparticular companies. These market fluctuations may also materially and adversely affect the extent to which an active public market for its common stock will develop or be sustained at any time in the future. If we are unable to develop or sustain a market forprice of our common stock, investors may be unable to sell the common stock they own, and may lose the entire valuestock.itsour shares more difficult to sell.SECSEC’s rules regarding penny stocks may have the effect of reducing trading activity in our shares, making it more difficult for investors to sell.sell them. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:Securities analystselect notbe thinly traded, so you may be unable to report onsell at or near ask prices or at all.may issue negative reportsbe sustained. Our common stock is currently traded on the OTC Markets where they have historically been thinly traded, if at all, meaning that adversely affect the stock price.At this time, no securities analysts provide research coveragenumber of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small or non-existent.securities analysts may not elect not to provide such coverageothers in the future. Itinvestment community who generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we have become more seasoned and viable. As a consequence, there may remain difficult forbe periods of several days, weeks or months when trading activity in our company, with its small market capitalization,shares is minimal or non-existent, as compared to attract independent financial analystsa seasoned issuer which has a large and steady volume of trading activity that will cover our common stock. If securities analysts do not cover our common stock, the lack of research coverage may adversely affect the stock’s actual and potential marketgenerally support continuous sales without an adverse effect on share price. TheWe cannot assure you that a broader or more active public trading market for our common stock maywill develop or be affected in part bysustained, or that current trading levels will be sustained or not diminish.researchSarbanes-Oxley Act of 2002 our business could be harmed and reports that industry or financial analysts publish about our business. If one or more analysts elect to cover our company and then downgrade the stock, the stock price would likely decline rapidly. If one or more of these analysts cease coverage of our company, we could lose visibility in the market, which, in turn, could cause our stock price could decline.decline. This could have a negative effect onSection 404 of the market priceSarbanes-Oxley Act of 2002 require an annual assessment of our common stock.We do not intendinternal control over financial reporting. Accordingly, we are subject to pay cash dividends.the rules requiring an annual assessment of our internal controls. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. If we cannot assess our internal control over financial reporting as effective, investor confidence and share value may be negatively impacted.never declared ornot paid cash dividends on its capital stock. We currentlyin the past and do not expect to use available funds and any future earnings in the development, operation and expansion of our business and we do not anticipate paying anypay cash dividends in the foreseeable future. In addition,Any return on investment may be limited to the terms of any future debt or credit facility we may obtain may preclude us from paying any dividends. As a result, capital appreciation, if any,value of our common stock.be an investor’s only sourcedepend on our earnings, financial condition and other business and economic factors affecting us at such time as the board of potential gain fromdirectors may consider relevant. If we do not pay dividends, our common stock formay be less valuable because a return on your investment will only occur if the foreseeable future.The 2010 Private Placement involved the issuance of a substantial number of shares of our common stock and warrants to purchase common stock. The existing stockholders’ ownership interest in us has been reduced, and if the outstanding warrants to exercise common stock that we are exercised in accordance with their terms, our existing stockholders’ ownership interest in us will be reduced even further. As a result of the sale of such a large number of shares of our common stock and securities convertible into common stock, the market price of our common stock could decline.Ifmarketsmarket in general, and the stocks of early stage companies in particular, have experienced extreme price and volume fluctuations. These fluctuations have often been unrelated or disproportionate to the operating performance of the companies involved. If these fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. If the market price or volume of our shares suffers extreme fluctuations, then we may become involved in this type of litigation, which would be expensive and divert management’s attention and resources from managing theour business.SEC or the stock market upon which our stock is traded.January 1, 2011,December 29, 2012, we had outstanding warrants for an aggregate of 22,293,33710,056,914 shares of common stock at a weighted average exercise price of $0.43$0.72 per share and options exercisable for an aggregate of 15,023,43113,445,692 shares of common stock at a weighted average exercise price of $1.51$1.10 per share. The holders may sell these shares in the public markets from time to time, without limitations on the timing, amount or method of sale. As and when our stock price rises, if at all, more outstanding warrants and options will be in-the-money and the holders may exercise their warrants and options and sell a large number of shares. This could cause the market price of our common stock to decline.Item 2.PropertiesJanuary 1, 2011, ChromaDex leasesDecember 29, 2012, we lease approximately 13,000 square feet of office space in Irvine, California with three years remainingthe lease expiring on the leaseDecember 31, 2013 and approximately 13,000 square feet of space for laboratory manufacturing in Boulder, Colorado with sixfour years remaining on the lease. The CompanyWe also leasesrent an apartment with approximately 1,1001,000 square feet in Irvine,Foothill Ranch, California, and an apartment with less than 1,100 square feet in Longmont, Colorado. Subsequent to the year ended December 29, 2012, we began renting approximately 2,500 square feet of office space in Bethesda, Maryland. We do not own any real estate. For the year ended January 1, 2011,December 29, 2012, our total annual rental expense (excluding operating charges and real property taxes) was approximately $467,500$512,000.Item 3.Legal ProceedingsItem 4.[Reserved]Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesChromaDex common stock is currentlyBulletin Board (“OTCBB”Markets Group, Inc. (f/k/a Pinksheets) (the “OTCQB”) under the symbol “CDXC.OB”, which is sponsored by the National Association of Securities Dealers (“NASD”). The OTCBB“CDXC.” OTCQB is a network of securitysecurities dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current “bids” and “asks”, as well as volume information.pricesquotations for ChromaDex common stock for each of the periods indicated as reported by the OTCBB.OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. $1.66 $1.13 January 2, 2010 $0.48 $0.21 $1.67 $1.11 October 3, 2009 $0.45 $0.10 $2.07 $0.18 July 4, 2009 $0.35 $0.11 $0.66 $0.35 April 4, 2009 $0.55 $0.10 Fiscal Year Ending December 29, 2012 Quarter Ended High Low December 29, 2012 $ 0.88 $ 0.54 September 29, 2012 $ 1.17 $ 0.56 June 30, 2012 $ 0.71 $ 0.44 March 31, 2012 $ 1.08 $ 0.55 Fiscal Year Ending December 31, 2011 Quarter Ended High Low December 31, 2011 $ 1.05 $ 0.52 October 1, 2011 $ 1.77 $ 0.82 July 2, 2011 $ 1.72 $ 1.20 April 2, 2011 $ 1.99 $ 1.32 10, 2011,22, 2013, the high and lowclosing bid prices were $1.65 and $1.55, respectively.OTCBBOTC Bulletin Board under the symbol “CDYE.OB.” or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.February 16, 2011,March 20, 2013, we had 567approximately 86 registered holders of record of ChromaDexour common stock.Item 6.Selected Financial DataItem 7.Management’s Discussion and Analysis of Financial Condition and Results of Operationsproducts forproprietary ingredients. We perform chemistry-based analytical services at our laboratory in Boulder, Colorado, typically in support of quality control or quality assurance activities within the dietary supplement nutraceutical,industry. We recently acquired Spherix, which provides scientific and regulatory consulting to the clients in the food, supplement and beverage, functional food, pharmaceutical industries to manage potential health and cosmetic markets. Our business strategy isregulatory risks. In 2011, we launched BluScience retail consumer line based on our proprietary ingredients, however, on March 28, 2013, we entered into an asset purchase and sale agreement with NeutriSci International Inc. and consummated the sale of BluScience consumer product line to identify, acquire, reduce-to-practice, and commercialize innovative new natural products and “green chemistry” (environmentally safe) technologies, with an initial industry focus on the dietary supplement, cosmetic, food and beverage markets, as well as novel pharmaceuticals. We plan to utilize our experienced management team to commercialize these natural product technologies by advancing them through the proper regulatory approval processes, arranging for reliable and cost-effective manufacturing, and ultimately either selling or licensing the product lines and intellectual property to others.We believeand cash generated from operations and the capital raised pursuantcash payments received and to be received from the sale of BluScience consumer product line subsequent to the Subscription Agreement entered into by the Company on April 22, 2010,year ended December 29, 2012 (see Liquidity and Capital Resources below in Item 7 of this Annual Report on this Form 10-K) will be sufficient to meet our projected operating plans through December, 2011.2013. We may, however, seek additional capital prior to the end of December, 20112013 both to meet our projected operating plans after December, 2011 and2013 and/or to fund our longer term strategic objectives. To the extent we are unable to raise additional cash or generate sufficient net income prior to December, 2011 to meet our projected operating plans, we will revise our projected operating plans accordingly. andand/or private stock or debt offerings, borrowings under lines of credit or other sources. These additional funds may not be available on favorable terms, or at all. 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 to grant licenses on terms that are not favorable to us. If we cannot raise funds on acceptable terms, we may not be able to develop or enhance our products, obtain the required regulatory clearances or approvals, achieve long term strategic objectives, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements. Any of these events could adversely affect our ability to achieve our development and commercialization goals, which could have a material and adverse effect on our business, results of operations and financial condition. If we are unable to establish small to medium scale production capabilities through our own plant or though collaboration we may be unable to fulfill our customer’scustomers’ requirements. This may cause a loss of future revenue streams as well as require us to look for third party vendors to provide these services. These vendors may not be available, or charge fees that prevent us from pricing competitively within our markets.has startedFTC and U.S. Department of Agriculture (“USDA”) regulations relating to regulate the dietary supplement market under thecomposition, labeling and advertising claims. These regulations may in some cases, particularly with respect to those applicable to new GMPs. As of June, 2010, all dietary supplement manufacturers are held accountable under these new regulations. At this time, it is unknowningredients, require a notification that must be submitted to what extent the FDA will enforcealong with evidence of safety. There are similar regulations related to food additives.regulationssale of BluScience consumer product line to NeutriSci. The total sale transaction value is estimated at approximately $6.2 million and how they will be interpreted upon enforcement. The outcomeconsists of these uncertainties may havefollowing: (a) a material adverse effect on our results of operations because$250,000 cash payment, which NeutriSci paid as a lack of enforcement ordeposit in February 2013; (b) an interpretationadditional $250,000 cash payment, which was paid at the closing of the regulationssale; (c) an additional cash payment of $500,000 due no later than 60 days after the closing of the sale; (d) $2,500,000 senior convertible secured note (convertible into 625,000 shares Series I Preferred Stock as described below) payable in quarterly installments of $416,667 beginning August 15, 2013; and (e) 669,708 shares of Series I Preferred Shares that lessensare convertible into 2,678,832 Class “A” common shares of NeutriSci, representing an aggregate of 19% of the burdenNeutriSci shares at a deemed price for each Class A common share of compliance for$1.00 per share. The transaction documents contain certain equity blockers that preclude our ownership in NeutriSci in excess of 9.99% and 19% without obtaining a waiver from NeutriSci.dietary supplement marketplace may causeterms of the Agreement, WU granted to ChromaDex a reduced demand for our productsworldwide, exclusive, sublicensable right and services.Resultslicense to use certain patent rights relating to the use of OperationsWe generatedthe vitamin known as Nicotinamide Riboside (“NR”) in a specified field of use. NR is found naturally in trace amounts in milk and other foods and is a more potent version of Niacin (vitamin B3). In consideration of the license granted, we will pay to WU earned royalties on net sales of $7,566,370all licensed products (including sales by sublicensees and affiliates), as well as a percentage of attributed income from sublicensing agreements. We are subject to minimum annual maintenance or royalty payments to WU of $25,000 during the term of the Agreement. We have agreed upon a commercialization plan to develop, commercialize and market licensed products under that Agreement and will make certain payments to WU in connection with the achievement of certain milestone events relating to product development and regulatory approvals in accordance with the terms of the Agreement.twelve month periodtwelve-month periods ended January 1,December 29, 2012 and December 31, 2011 were $11,610,494 and $5,777,865 for the twelve month period ended January 2, 2010.$8,112,610, respectively. We incurred a net loss of $2,051,676$11,662,426 for the twelve monthtwelve-month period ended January 1, 2011December 29, 2012 and a net loss of $907,568$7,894,984 for the twelve monthtwelve-month period ended January 2, 2010.December 31, 2011. This equated to a $0.04$0.13 loss per basic and diluted share for the twelve monthtwelve-month period ended January 1, 2011December 29, 2012 versus a $0.03$0.12 loss per basic and diluted share for the twelve monthtwelve-month period ended January 2, 2010.twelve months,two years, we plan to continue to increase research and development efforts for our line of proprietary ingredients, subject to available financial resources. However, we presently do not have the necessary resources (financial and otherwise) to do so. We also intend to continue to expand our service capacity through hiring and to implement accreditation and certification programs related to quality initiatives. In addition, we plan to expand our chemical library program and to either establish a GMP compliant pilot plant to support small to medium scale production of target compounds or to partnercollaborate with a company that has these capabilities. We also intend to increase our research and development effort, and related expense, focusing on our new bulk dietary supplement grade and food grade raw material line and to increase marketing and sales related expenses forThere can be no assurance, however, that we will actually implement any of these products. Twelve months ending January 1, 2011 January 2, 2010 Change $ 7,566,370 $ 5,777,865 31 % 4,621,525 3,736,435 24 % 2,944,845 2,041,430 44 % 1,085,510 829,969 31 % 3,876,488 2,104,193 84 % 36,068 17,090 111 % (1,545 ) (2,254 ) -31 % $ (2,051,676 ) $ (907,568 ) 126 % Twelve months ending December 29, 2012 December 31, 2011 Change Sales $ 11,610,494 $ 8,112,610 43 % Cost of sales 9,335,057 5,640,791 65 % Gross profit 2,275,437 2,471,819 -8 % Operating expenses-Sales and marketing 5,520,141 2,539,252 117 % 8,391,730 7,796,806 8 % Nonoperating-Interest income 3,014 1,397 116 % (29,006 ) (32,142 ) -10 % Net loss $ (11,662,426 ) $ (7,894,984 ) 48 % returnspromotions, discounts and discounts.returns.Net sales increased by 31%43% to $7,566,370$11,610,494 for the twelve monthtwelve-month period ended January 1, 2011December 29, 2012 as compared to $5,777,865$8,112,610 for the twelve monthtwelve-month period ended January 2, 2010.December 31, 2011. The core standards, contract services and ingredients segment generated net sales of $8,527,800 for the twelve-month period ended December 29, 2012. This is an increase of 6%, compared to $8,079,960 for the twelve-month period ended December 31, 2011. This increase was largely due to increased demand forsales of our existing productsproprietary ingredients and services and increased sales ofother bulk dietary supplement grade and food grade raw materials. The retail dietary supplement products segment generated net sales of $3,082,694 for the twelve-month period ended December 29, 2012. The gross sales for this segment was $6,861,035, however, sales deductions for promotions discounts and returns totaled $3,778,341. For the twelve-month period ended December 31, 2011, the retail dietary supplement products segment only had net sales of $32,650 as we had just begun generating initial sales for our BluScience product line.includesinclude raw materials, labor, overhead, and delivery costs.Cost of sales for the twelve monthtwelve-month period ended January 1, 2011December 29, 2012 was $4,621,525 versus $3,736,435$9,335,057 as compared with $5,640,791 for the twelve monthtwelve-month period ended January 2, 2010.December 31, 2011. As a percentage of net sales, this represented a 4% decrease11% increase for the twelve monthtwelve-month period ended January 1, 2011December 29, 2012 compared withto the twelve monthtwelve-month period ended January 2, 2010.December 31, 2011. The cost of sales as a percentage of net sales for the core standards contract services and ingredients segment for the twelve-month period ended December 29, 2012 was 72% compared to 67% for the twelve-month period ended December 31, 2011. This percentage decreaseincrease in cost of sales is a result of fixed labor and overhead costs that make up the majority of our expenses. These fixed expenses did notlargely due to an increase in proportion to sales as we were able to achieve growth in sales without an increase of certain labor and overhead costs. However, during thetwelve month period ended January 1, 2011, sales of high volume products, primarily consisting ofproprietary ingredients and other bulk dietary supplement grade raw materials. These proprietary ingredients and foodbulk dietary supplement grade raw materials increased. These high volume products have significantly higher raw material costs associated with them. The Company expectsthan other products. We expect to see a significantan increase in the sales of these high volume productsproprietary ingredients and bulk dietary supplement grade raw materials over the next twelve months. Increases inThe cost of sales for the retail dietary supplement products segment for the twelve-month period ended December 29, 2012 was $3,234,278 despite net sales of these types$3,082,694. This is due to gross sales of products will likely cause$6,861,035 and the Company to experience lower gross marginscost of sales as a percentage of gross sales during this timewas 47% for the twelve-month period as comparedended December 29, 2012. For the twelve-month period ended December 31, 2011, the retail dietary supplement products segment generated net sales of $32,650 while incurring a cost of $224,305, which is largely related to previous periods.ProfitGross profit (loss) is net sales less the cost of sales and is affected by a number of factors including product mix, competitive pricing and costs of products and services.services. Our gross profit increased 44%decreased 8% to $2,944,845$2,275,437 for the twelve monthtwelve-month period ended January 1, 2011December 29, 2012 from $2,041,430$2,471,819 for the twelve monthtwelve-month period ended January 2, 2010.December 31, 2011. For the core standards, contract services and ingredients segment, our gross profit decreased 9% to $2,427,021 for the twelve-month period ended December 29, 2012 from $2,663,474 for the twelve-month period ended December 31, 2011. The increase in direct costs of sales coupled with a decrease in labor and overhead costs as a percentage of net sales contributed to this increasewas the primary cause for the decrease in gross profit. The Company expects that as sales continue to grow, labor and overhead costs as a percentage of sales will continue to decrease as future growth in Net Sales will likely require lower direct labor and variable overhead costs. Raw materials costs as a percentage of sales are expected to increase as sales ofFor the high volumeretail dietary supplement gradeproducts segment, we had a gross loss of $151,584 for the twelve-month period ended December 29, 2012. This was due to the sales promotions and food grade raw materials continuesales discounts we offered in relation to grow.the launch of our BluScience products to retail distribution channels. For the twelve-month period ended December 31, 2011, the retail dietary supplement products segment had a gross loss of $191,655.Expenses-SalesExpenses - Sales and Marketingemployeesbrokers and advertising and marketing expenses.Sales and marketing expenses for the twelve monthtwelve-month period ended January 1, 2011December 29, 2012 was $1,085,510$5,520,141 as compared to $829,969$2,539,252 for the twelve monthtwelve-month period ended January 2, 2010. ThisDecember 31, 2011. For the core standards, contract services and ingredients segment, sales and marketing expenses for the twelve-month period ended December 29, 2012, increased to $2,227,934 compared to $1,748,360 for the twelve-month period ended December 31, 2011. The increase was largely due to our increased efforts of marketing efforts forand promoting public awareness of one of our new bulkproprietary ingredients, pterostilbene. For the retail dietary supplement gradeproducts segment, sales and food grade raw material line.marketing expenses for the twelve-month period ended December 29, 2012, increased to $3,292,207 as compared to $790,892 for the twelve-month period ended December 31, 2011. This increase was mainly due to our national advertising campaign through television and radio media as well as co-op advertising with retailers in support of marketing BluScience products.Expenses-GeneralExpenses - General and AdministrativeAdministrative Expensesadministrative expenses for the twelve monthtwelve-month period ended January 1, 2011, was $3,876,488December 29, 2012 increased to $8,391,730 as compared to $2,104,193$7,796,806 for the twelve monthtwelve-month period ended January 2, 2010.December 31, 2011. One of the factors that contributed to this increase was an increase in share-based compensation expenses. Our share-based compensation expense increased 513% to $1,262,071 for the twelve month period ended January 1, 2011 from $205,858 for the twelve month period ended January 2, 2010. This large increase in share-based compensation expense was largelycertain one-time severance payments made due to the stock options that were granted following consummationterminations of certain officers of the 2010 Private Placement. The Company will continueCompany. Severance expenses incurred due to incur significant share-based compensation expenses over the next three years, asterminations of certain officers for the expenses for these post-closing grants are recognized on the straight-line method over the expected vesting periods.twelve-month period ended December 29, 2012 were approximately $671,000. Another factor that contributed to thisthe increase in general and administrative expenses was the initiation ofincrease in investor relations activities. During the twelve month period ended January 1, 2011, the Company incurred expenses associated with adoption of a formal investor relations program for the purpose of increasing market and shareholder awareness and incurred one-time legal and accountingawareness. Our investor relations expenses associated with the 2010 Private Placement.Non-operating Expenses- Interest ExpenseInterest expense consists of interest on capital leases. Interest expense for the twelve monthtwelve-month period ended January 1, 2011, was $36,068December 29, 2012 were $987,399 as compared to $17,090$517,891 for the twelve monthtwelve-month period ended January 2, 2010. This increase was due to a new capital lease obligation incurred for the purchase of equipmentDecember 31, 2011. Lastly, we had additional executive management and administrative staff during the twelve month period ended January 1, 2011.first six months of 2012, to support the launch of BluScience, which led to an increase in general and administrative expenses.Non-operating Expenses-accounts.accounts. Interest income for the twelve monthtwelve-month period ended January 1, 2011,December 29, 2012, was $1,545$3,014 as compared to $2,254$1,397 for the twelve monthtwelve-month period ended January 2, 2010.December 31, 2011.twelve monthtwelve-month period ended January 1, 2011,December 29, 2012, we recorded approximately $313,777$328,099 in depreciation compared to approximately $270,672$328,632 for the twelve monthtwelve-month period ended January 2, 2010.December 31, 2011. We depreciate our assets on a straight-line basis, based on the estimated useful lives of the respective assets. We amortize intangible assets using a straight-line method over 10 years. In the twelve month period ended January 1, 2011,December 29, 2012, we recorded amortization on intangible assets of approximately $73,635$15,934 compared to approximately $123,828$70,249 for the twelve month period ended January 2, 2010.LiquidityDecember 31, 2011.January 1, 2011,December 29, 2012, we have incurred aggregate losses of approximately $10.2$30 million. These losses are primarily due to overhead costs and general and administrative expenses associated with the development and expansion of our operations. These operations have been financed through capital contributions and the issuance of common stock.The Boardstock and warrants through private placements and through our registered direct offering.Directorsdirectors periodically reviews our capital requirements in light of our proposed business plan. Our future capital requirements will remain dependent upon a variety of factors, including cash flow from operations, the ability to increase sales, increasing our gross profits from current levels, reducing sales and administrationadministrative expenses as a percentage of net sales, continued development of customer relationships, and our ability to market our new products successfully. However, based on our results from operations, we may determine that we need additional financing to implement our business plan, and thereplan. There can be no assurance that itany such financing will be available on terms favorable to us or at all. IfWithout adequate financing is not available, we may have to further delay postpone or terminate product andor service expansion and curtail general and administrative operations in order to maintain sufficient operating capital. Theplans. Any inability to raise additional financing maywould have a material adverse effect on us. Whilebelieve thatsold 9,966,666 shares of our current levelscommon stock at a price per share of capital will be sufficient$0.75 for gross proceeds of $7,475,000, or $6,739,498 after deducting offering costs in a registered direct offering of these shares. We also sold 4,933,329 restricted shares of our common stock at a price per share of $0.75 for gross proceeds of $3,699,997, or $3,330,740 after deducting offering costs.meet our projected operating plans throughthe period ended December 2011, we may seek additional capital prior to December, 2011 both to meet our projected operating plans after December, 2011 and to fund our longer term strategic objectives. To the extent we are unable to raise additional cash or generate net income to meet our projected operating plans prior to December, 2011, we will revise our projected operating plans accordingly.On April 22, 2010,29, 2012, we entered into an asset purchase and sale agreement with NeutriSci International Inc. and consummated the sale of BluScience consumer product line to NeutriSci. The total sale transaction value is estimated at approximately $6.2 million and consists of following: (a) a Subscription Agreement with certain subscribers. We closed on$250,000 cash payment, which NeutriSci paid as a deposit in February 2013; (b) an additional $250,000 cash payment, which was paid at the transactions contemplated byclosing of the 2010 Private Placement on May 20, 2010sale; (c) an additional cash payment of $500,000 due no later than 60 days after the closing of the sale; (d) $2,500,000 senior convertible secured note (convertible into 625,000 shares Series I Preferred Stock as described below) payable in quarterly installments of $416,667 beginning August 15, 2013issued and sold to the subscribers(e) 669,708 shares of Series I Preferred Shares that are convertible into 2,678,832 Class “A” common shares of NeutriSci, representing an aggregate of 26,249,98319% of the NeutriSci shares at a deemed price for each Class A common share of common stock for an aggregate purchase price of $3,674,998 or $0.14$1.00 per share. During the twelve month period ended January 1, 2011,The transaction documents contain certain equity blockers that preclude our ownership in NeutriSci in excess of 9.99% and 19% without obtaining a waiver from NeutriSci. In addition, as of December 29, 2012, we received net capital contributions of $3,486,626 through this offering. We have also issued to each subscriber an immediately exercisable warrant to purchase our common stock equal to the number of shares of private placement stock purchased by such subscriber athad 7,803,564 warrants outstanding with an exercise price of $0.21 per share. As of January 1, 2011, 5,674,996 of the warrants have been exercised and we received additional proceeds of $1,191,749 from exercise of the warrants. Assuming the full exercise of the outstanding warrants for cash, we would receive additional proceeds of $4,320,747 for an aggregate of $8,999,122 in net proceeds from the purchase of the shares of stock issued in the private palcement and the exercise of the related warrants.$1,638,748. There iscan be no guaranteeassurance that the subscribersholders of these warrants will exercise any of the outstanding warrants for cash, and we will not receive any proceeds from any of the outstanding warrants until they are exercised for cash.activities:twelve monthstwelve-month period ended January 1, 2011December 29, 2012 was $2,662,000,approximately $10,120,000 as compared to $396,000approximately $4,099,000 for the twelve monthstwelve-month period ended January 2, 2010. TheDecember 31, 2011. Along with the net loss, an increase in netinventories and trade receivables were the largest uses of cash during the twelve-month period ended December 29, 2012. Net cash used in operating activities for the twelve-month period ended December 31, 2011 largely reflects the payment of unpaid compensation from prior years for two officers as well as an increase in trade receivablesinventories and an increase in inventory for our new line of bulk dietary supplement grade and food grade raw material duringprepaid expenses along with the past twelve months. that our operating cash flows mayto fluctuate significantly in future periods as a result of fluctuations in our operating results, shipment timetables, trade receivablesaccounts receivable collections, inventory management, and the timing of our payments, among other factors.activities:$199,000approximately $77,000 for the twelve monthstwelve-month period ended January 1, 2011,December 29, 2012, compared to $179,000approximately $177,000 for the twelve monthstwelve-month period ended January 2, 2010.December 31, 2011. The increasedecrease in cash used in investing activities mainly reflects the timing of purchases of leasehold improvements and equipment as well as purchases of intangible assets.(used in) financing activities:$4,616,000approximately $10,296,000 for the twelve monthstwelve-month period ended January 1, 2011,December 29, 2012, compared to $78,000 used in financing activitiesapproximately $2,469,000 for the twelve monthstwelve-month period ended January 2, 2010.December 31, 2011. Net cash provided by financing activities for the twelve monthstwelve-month period ended January 1,December 29, 2012 mainly consisted of proceeds from issuance of our common stock through registered direct offering and private placement. Net cash provided by financing activities for the twelve-month period ended December 31, 2011 mainly consisted of net proceeds from the exercise of warrants related to the 2010 Private Placement.policyJanuary 1, 2011,December 29, 2012, we had $1,001,563$1,940,539 in trade receivables as compared to $497,928$723,666 as of January 2, 2010.December 31, 2011. This increase iswas largely due to higherthe sales during the fourth quarter of 2010 as compared to 2009, as disclosed under “Net Sales” above.InventoriesJanuary 1,December 31, 2011, we had $1,423,035just begun generating initial sales for our BluScience product line.$922,760$2,905,600 as of January 2, 2010.December 31, 2011. This large increase iswas largely due to a higher inventory requirements during the past twelve monthsincrease in inventories for our new line of bulk dietary supplement grade and food grade raw material.payableJanuary 1, 2011,December 29, 2012, we had $514,598$3,428,233 in accounts payable as compared to $548,310$2,250,241 as of January 2, 2010.December 31, 2011. This decreaseincrease was primarily due to the timing of payments related to our purchases of bulk dietary supplement gradeinventory and food grade raw material for sale.January 1, 2011,December 29, 2012, we had $112,427$310,267 in advances from customers as compared to $126,518$199,693 as of January 2, 2010.December 31, 2011. These advances are for large scale contract services and contract research projects where the company requireswe require a deposit before beginning work. This decreaseincrease was due to reduced orders forincrease in the large scale projects during the last six months of 2010.Due to officersAs of January 1, 2011 there was no money due to officers compared to $1,178,206 as of January 2, 2010. During the year ended January 1, 2011, we paid $1,178,206 to two officers relating to unpaid compensation from prior years. The amounts owed to officers were non-interest bearing.Fiscal Yearsfiscal years ended January 1,December 29, 2012 and December 31, 2011, and January 2, 2010, the Companywe had no off-balance sheet arrangements other than ordinary operating leases as disclosed in the accompanying financial statements.recognition:The Company recognizesrecognitionAssets:costs:the Company’sour technologies. These costs are expensed as incurred.pronouncements:January 1,December 29, 2012 and December 31, 2011, and January 2, 2010, and the related consolidated statements of operations, stockholders’stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.auditaudits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.January 1,December 29, 2012 and December 31, 2011, and January 2, 2010 and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.& Pullen, LLP16, 2011January 1, 2011December 29, 2012 and January 2, 2010December 31, 2011 2010 2009 $ 2,226,459 $ 471,378 1,001,563 497,928 1,423,035 922,760 243,967 115,794 4,895,024 2,007,860 1,303,108 1,203,431 31,415 32,227 277,855 321,490 309,270 353,717 $ 6,507,402 $ 3,565,008 $ 514,598 $ 548,310 371,020 270,250 78,577 28,430 112,427 126,518 62,664 35,617 — 1,178,206 1,139,286 2,187,331 198,071 45,868 233,822 284,356 60,875 28,838 15,034,550 9,126,141 (10,159,202 ) (8,107,526 ) 4,936,223 1,047,453 $ 6,507,402 $ 3,565,008 See Notes to Consolidated Financial Statements. 2012 2011 Assets Current Assets Cash $ 520,000 $ 420,152 1,940,539 723,666 Inventories 5,205,304 2,905,600 Prepaid expenses and other assets 261,297 903,934 Total current assets 7,927,140 4,953,352 Leasehold Improvements and Equipment, net 936,426 1,172,288 Deposits and Other Noncurrent Assets Deposits 34,773 44,159 136,182 100,106 Total deposits and other noncurrent assets 170,955 144,265 Total assets $ 9,034,521 $ 6,269,905 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 3,428,233 $ 2,250,241 Accrued expenses 876,158 755,967 Current maturities of capital lease obligations 77,259 77,356 Customer deposits and other 310,267 199,693 Deferred rent, current 71,042 59,743 Total current liabilities 4,762,959 3,343,000 Capital lease obligations, less current maturities 148,374 164,729 Deferred rent, less current 129,859 200,890 Commitments and contingencies Stockholders' Equity 92,140 72,940 Additional paid-in capital 33,617,801 20,542,532 Accumulated deficit (29,716,612 ) (18,054,186 ) Total stockholders' equity 3,993,329 2,561,286 Total liabilities and stockholders' equity $ 9,034,521 $ 6,269,905 January 1,December 29, 2012 and December 31, 2011 and January 2, 2010 2012 2011 Sales $ 11,610,494 $ 8,112,610 Cost of sales 9,335,057 5,640,791 Gross profit 2,275,437 2,471,819 Operating expenses: Sales and marketing 5,520,141 2,539,252 General and administrative 8,391,730 7,796,806 Operating expenses 13,911,871 10,336,058 Operating loss (11,636,434 ) (7,864,239 ) Nonoperating income (expense): Interest income 3,014 1,397 Interest expense (29,006 ) (32,142 ) Nonoperating expenses (25,992 ) (30,745 ) Net loss $ (11,662,426 ) $ (7,894,984 ) Basic and Diluted loss per common share $ (0.13 ) $ (0.12 ) Basic and Diluted weighted average common shares outstanding 90,268,802 68,306,812 2010 2009 $ 7,566,370 $ 5,777,865 4,621,525 3,736,435 2,944,845 2,041,430 1,085,510 829,969 3,876,488 2,104,193 4,961,998 2,934,162 (2,017,153 ) (892,732 ) 36,068 17,090 (1,545 ) (2,254 ) 34,523 14,836 $ (2,051,676 ) $ (907,568 ) $ (0.04 ) $ (0.03 ) 48,251,930 28,838,216 See Notes to Consolidated Financial Statements. Stockholders’Stockholders' EquityJanuary 1,December 29, 2012 and December 31, 2011 and January 2, 2010 Common Stock Additional
Paid-in Capital Accumulated
Deficit Total
Stockholders’
Equity Shares Amount 28,838,216 28,838 8,920,283 (7,199,958 ) 1,749,163 — — 205,858 — 205,858 — — — (907,568 ) (907,568 ) 28,838,216 28,838 9,126,141 (8,107,526 ) 1,047,453 26,249,983 26,250 3,460,376 — 3,486,626 5,787,126 5,787 1,185,962 — 1,191,749 — — 1,262,071 — 1,262,071 — — — (2,051,676 ) (2,051,676 ) 60,875,325 60,875 15,034,550 (10,159,202 ) 4,936,223 See Notes to Consolidated Financial Statements. Total Common Stock Additional Accumulated Stockholders' Shares Amount Paid-in Capital Deficit Equity Balance, January 1, 2011 60,875,325 $ 60,875 $ 15,034,550 $ (10,159,202 ) $ 4,936,223 Exercise of stock options 43,248 43 26,355 - 26,398 Exercise of warrants 12,021,423 12,022 2,512,477 - 2,524,499 Share-based compensation - - 2,969,150 - 2,969,150 Net loss - - - (7,894,984 ) (7,894,984 ) Balance, December 31, 2011 72,939,996 72,940 20,542,532 (18,054,186 ) 2,561,286 Issuance of common stock, net of offering costs of $1,104,759 14,899,995 14,900 10,055,338 - 10,070,238 Issuance of common stock for vested restricted stock 1,140,000 1,140 158,460 - 159,600 Repurchase and cancellation of common stock (10,000 ) (10 ) (8,190 ) - (8,200 ) Exercise of stock options 6,117 6 3,053 - 3,059 Exercise of warrants 754,103 754 156,746 - 157,500 Share-based compensation 2,409,851 2,410 2,709,862 - 2,712,272 Net loss - - - (11,662,426 ) (11,662,426 ) Balance, December 29, 2012 92,140,062 $ 92,140 $ 33,617,801 $ (29,716,612 ) $ 3,993,329 January 1,December 29, 2012 and December 31, 2011 and January 2, 2010 2010 2009 $ (2,051,676 ) $ (907,568 ) 313,777 270,672 73,635 123,828 1,262,071 205,858 20,640 (554 ) (503,635 ) (148,876 ) (500,275 ) (211,176 ) (127,361 ) 9,569 (33,712 ) 103,973 100,770 (67,806 ) (1,178,206 ) — (14,091 ) 92,258 (23,487 ) 133,650 (2,661,550 ) (396,172 ) (169,136 ) (184,487 ) (30,000 ) — — 5,000 (199,136 ) (179,487 ) 3,486,626 — 1,191,749 — (62,608 ) (78,467 ) 4,615,767 (78,467 ) 1,755,081 (654,126 ) 471,378 1,125,504 $ 2,226,459 $ 471,378 $ 36,068 $ 17,090 $ 264,958 $ — See Notes to Consolidated Financial Statements. 2012 2011 Cash Flows From Operating Activities Net loss $ (11,662,426 ) $ (7,894,984 ) Adjustments to reconcile net loss to net cash (used in) operating activities: Depreciation of leasehold improvements and equipment 328,099 328,632 Amortization of intangibles 15,934 70,249 Share-based compensation expense 2,703,253 2,969,150 Loss from impairment of intangibles - 133,500 Loss from disposal of equipment 1,937 - Changes in operating assets and liabilities: Trade receivables (1,216,873 ) 277,897 Inventories (2,299,704 ) (1,482,565 ) Prepaid expenses and other assets 675,602 (672,711 ) Accounts payable 1,177,992 1,735,643 Accrued expenses 105,631 384,947 Customer deposits and other 110,574 87,266 Deferred rent (59,732 ) (35,853 ) Net cash (used in) operating activities (10,119,713 ) (4,098,829 ) Cash Flows From Investing Activities Purchases of leasehold improvements and equipment (24,555 ) (150,663 ) Purchase of intangible assets (52,010 ) (26,000 ) Net cash (used in) investing activities (76,565 ) (176,663 ) Cash Flows From Financing Activities Proceeds from issuance of common stock, net of issuance costs 10,229,838 - Proceeds from exercise of stock options 3,059 26,398 Proceeds from exercise of warrants 157,500 2,524,499 Repurchase of common stock (8,200 ) - Principal payments on capital leases (86,071 ) (81,712 ) Net cash provided by financing activities 10,296,126 2,469,185 Net increase (decrease) in cash 99,848 (1,806,307 ) Cash Beginning of Year 420,152 2,226,459 Cash Ending of Year $ 520,000 $ 420,152 Supplemental Disclosures of Cash Flow Information Cash payments for interest $ 29,006 $ 32,142 Supplemental Schedule of Noncash Investing Activity Capital lease obligation incurred for the purchase of equipment $ 69,619 $ 47,149 Supplemental Schedule of Noncash Share-based Compensation Stock awards earned but not issued $ 14,560 $ - Stock and warrant awards issued for future services $ 23,579 $ - Warrants issued, net of offering costs $ 44,610 $ - Note 1.Nature of Business and Significant Accounting PoliciesChromaDex Analytics,Spherix Consulting, Inc. (collectively, the Company) create“Company”) are an innovative natural products company that provides proprietary, science-based solutions and supply botanicalingredients to the dietary supplement, food and beverage, animal health, cosmetic and pharmaceutical industries. The Company supplies ingredients, phytochemical reference standards, along withand related phytochemical products and services. The Company’s main priority isCompany recently acquired Spherix Consulting, Inc., which provides scientific and regulatory consulting to create industry-accepted information,the clients in the food, supplement and pharmaceutical industries to provide productsmanage potential health and services to every layerregulatory risks. The amount of the functional food, pharmaceutical, personal carepurchase price of Spherix was insignificant. In 2011, the Company launched its BluScience retail consumer line based on its proprietary ingredients. However, on March 28, 2013, the Company entered into an asset purchase and dietary supplement markets. The Company provides these services at various termssale agreement with termsNeutriSci International Inc. and consummated the sale of net 30 days being the most common.BluScience consumer product line to NeutriSci.January 1,December 29, 2012 (referred to as 2012), and December 31, 2011 (referred to as 2010), and January 2, 2010 (referred to as 2009)2011), each consisted of 52 weeks. Every fifth or sixth fiscal year, the inclusion of an extra week occurs due to the Company’s floating year-end date. The fiscal year 2014 will include 53 weeks instead of the normal 52 weeks.twoone bank accounts.account.periodicperiod review of all outstanding amounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. The allowances for doubtful accounts for the periods ended December 29, 2012 and December 31, 2011 were $450,000 and $9,000, respectively. Of the allowance amount of $450,000 for the period ended December 29, 2012, $433,000 represents a hold on the receivables placed by a retailer that carries our BluScience retail consumer line. The hold is placed by the retailer as an offset in the event of future returns of our products and the hold was treated as a reduction of revenue. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received.goods andgoods. They are stated at the lower of cost, determined by the first-in, first-out method (FIFO) method, or market. The inventory on the balance sheet is recorded net of valuation allowances of $167,000$366,000 and $172,000$227,000 for the periods ended January 1,December 29, 2012 and December 31, 2011 and January 2, 2010 respectively. Labor and overhead has been added to inventory that was manufactured or characterized by the Company. The amounts of major classes of inventory for the periods ended December 29, 2012 and December 31, 2011 are as follows: 2012 2011 Reference standards $ 1,614,755 $ 1,459,330 Bulk ingredients 432,230 174,847 Dietary supplements – raw materials 401,809 709,476 Dietary supplements – work in process 465,253 38,293 Dietary supplements – finished goods 2,657,257 750,654 5,571,304 3,132,600 Less valuation allowance 366,000 227,000 $ 5,205,304 $ 2,905,600 Useful lives range from 3 to 10 years. Depreciation on equipment under capital lease is included with depreciation on owned assets. Useful lives of leasehold improvements and equipment for each of the category are as follows:Note 1.NatureUseful LifeLeasehold improvements Until the end of Businessthe lease termComputer equipment 3 to 5 years Furniture and Significant Accounting Policies (continued)fixtures7 years Laboratory equipment 10 years Californiaand various state tax return, Colorado state tax return, and Arizona state tax return.returns. Open tax years for these jurisdictions are 20072009 to 2009,2012, which statutes expire in 20112013 to 2013,2015, respectively. When and if applicable, potential interest and penalty costs are accrued as incurred, with expenses recognized in general and administrative expenses in the statements of operations. As of January 1, 2011,December 29, 2012, the Company has no liability for unrecognized tax benefits.consultants. Sharenon-employees. For employees, share based compensation cost is recorded for all option grants and awards of non-vested stock based on the grant date fair value of the award, and is recognized over the period the employee or consultantis required to provide services for the award. For non-employees, share based compensation cost is recorded for all option grants and awards of non-vested stock and is remeasured over the vesting term as earned. The expense is recognized over the period the non-employee is required to provide services for the award. and capital leases approximate their fair values.New accounting pronouncements: In January 2010, the FASB issued additional disclosure requirements for fair value measurements. According to the guidance, the fair value hierarchy disclosures should be disaggregated by class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. In addition, significant transfers between Levels 1 and 2 of the fair value hierarchy are required to be disclosed. These additional requirements became effective January 1, 2010 for quarterly and annual reporting. These amendments did not have an impact in the Company’s financial position, results of operations or cash flows. The guidance also requires more detailed disclosures of the changes in Level 3 instruments. These changes became effective January 1, 2011 and are not expected to have an impact in the Company’s financial position, results of operations or cash flows as they relate only to additional disclosures.Note 2.Earnings Per Sharewarrants and the issuance of restricted shareswarrants for all periods. For all periods ended January 1, 2011 and January 2, 2010,presented, the basic and diluted shares reported are equal because the common shareshares equivalents are anti-dilutive due to the Company’s net losses.anti-dilutive. Below is a tabulation of the potentially dilutive securities that were “in the money” for the periods ended January 1,December 29, 2012 and December 31, 2011. Years Ended 2012 2011 Basic weighted average common shares outstanding 90,268,802 68,306,812 Warrants and options in the money, net 5,720,320 7,677,914 Weighted average common shares outstanding assuming dilution 95,989,122 75,984,726 January 2, 2010. Years Ended 2010 2009 48,251,930 28,838,216 18,536,086 — 66,788,016 28,838,216 2010 2009 Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization $ 1,268,275 $ 990,420 $ 1,238,275 $ 916,785 2012 2011 Gross Carrying Accumulated Gross Carrying Accumulated Amount Amortization Amount Amortization Amortized intangible assets: License agreements and other $ 986,285 $ 850,103 $ 934,275 $ 834,169 January 1,December 29, 2012 and December 31, 2011 was $15,934 and January 2, 2010$70,249, respectively.$73,635$133,500 and $123,828, respectively. 68,858 46,828 46,828 46,828 36,328 32,185 $ 277,855 Years ending December: 2013 $ 18,628 2014 18,628 2015 18,628 2016 18,628 2017 18,628 Thereafter 43,042 $ 136,182 Note 4.Leasehold Improvements and Equipment 2010 2009 $ 2,336,954 $ 2,063,860 372,943 332,702 248,374 208,499 18,313 15,308 3,445 3,445 86,294 86,031 3,066,323 2,709,845 1,763,215 1,506,414 $ 1,303,108 $ 1,203,431 2012 2011 Laboratory equipment $ 2,439,688 $ 2,378,122 Leasehold improvements 403,971 403,971 Computer equipment 363,739 302,518 Furniture and fixtures 18,313 18,313 Office equipment 7,877 7,877 Construction in progress 106,080 149,086 3,339,668 3,259,887 Less accumulated depreciation 2,403,242 2,087,599 $ 936,426 $ 1,172,288 Note 5.Capitalized Lease Obligations$392,878$381,888 and $127,920$372,027 and accumulated amortization of $71,421$90,960 and $34,866$77,883 as of January 1,December 29, 2012 and December 31, 2011, and January 2, 2010, respectively.January 2, 2010,December 29, 2012, are as follows: $ 109,990 84,762 71,471 71,471 11,319 349,013 72,365 276,648 78,577 $ 198,071 Year ending December: 2013 $ 97,951 2014 97,951 2015 37,797 2016 24,905 2017 4,056 Total minimum lease payments 262,660 Less amount representing interest 37,027 Present value of net minimum lease payments 225,633 Less current portion 77,259 Long-term obligations under capital leases $ 148,374 $36,068$29,006 and $17,090$32,142 for the years ended January 1,December 29, 2012 and December 31, 2011, and January 2, 2010, respectively.Note 6.Accrued Expenses 2010 2009 $ 172,340 $ 128,156 83,927 77,155 113,753 64,939 $ 370,020 $ 270,250 Note 7.Income Taxes 2012 2011 Salaries and vacation $ 388,100 $ 361,269 Professional services 141,895 120,797 Other 346,163 273,901 $ 876,158 $ 755,967 20102012 and 20092011 compared to the Company’s income tax expense for the years ended January 1,December 29, 2012 and December 31, 2011 and January 2, 2010 is as follows: 2010 2009 $ (698,000 ) $ (308,000 ) (93,000 ) (49,000 ) 74,000 24,000 67,000 — 642,000 369,000 8,000 (36,000 ) $ — $ — 2012 2011 Income tax expense (benefit) at statutory rate $ (3,965,000 ) $ (2,684,000 ) (Increase) decrease resulting from: State income taxes, net of federal tax effect (428,000 ) (382,000 ) Nondeductible expenses 134,000 135,000 Change in effective tax rate 194,000 (26,000 ) Change in valuation allowance 4,136,000 2,953,000 Other (71,000 ) 4,000 $ - $ - January 1, 2011December 29, 2012 and January 2, 2010: 2010 2009 $ 3,509,000 $ 2,413,000 64,000 68,000 7,000 6,000 36,000 490,000 66,000 71,000 43,000 38,000 3,725,000 3,086,000 3,540,000 2,970,000 185,000 116,000 (148,000 ) (100,000 ) (37,000 ) (16,000 ) (185,000 ) (116,000 ) $ — $ — 2012 2011 Deferred tax assets: Net operating loss carryforward $ 8,512,000 $ 4,757,000 Stock options and restricted stock 1,679,000 1,620,000 Inventory reserve 138,000 88,000 Allowance for doubtful accounts 169,000 4,000 Accrued expenses 134,000 86,000 Intangibles 48,000 63,000 Deferred rent 76,000 42,000 10,756,000 6,660,000 Less valuation allowance 10,629,000 6,493,000 127,000 167,000 Deferred tax liabilities: Leasehold improvements and equipment (101,000 ) (129,000 ) Prepaid expenses (26,000 ) (38,000 ) (127,000 ) (167,000 ) $ - $ - $7,512,000$22,530,000 and $6,383,000,$18,625,000, respectively which begin to expire throughin the year ending December 31, 20252023 and 2026,2013, respectively. Under the Internal Revenue Code, certain ownership changes may subject the Company to annual limitations on the utilization of its net operating loss carryforward. The Company has determined that the stock issuance discussedissued in Note 10the year 2010 created a change in control under the Internal Revenue Code Section 382. This limitation is not expected to be significant.Note 8.Employee Equity Incentive Planmanagementthe Company’s compensation committee (the “Compensation Committee”), and with the approval of the BoardCompany’s board of Directors,directors (the “Board of Directors”), the Company may grant options to purchase the Company’s common stock to certain individuals from time to time. Management and the Board of DirectorsCompensation Committee determine the terms of awards which include the exercise price, vesting conditions and expiration dates at the time of grant. Expiration dates for stock options are not to exceed 10 years.years from their date of issuance. The Company, under its Second Amended and Restated 2007 Equity Incentive Plan, is authorized to issue stock options that total no more than 20% of the shares of common stock issued and outstanding, as determined on a fully diluted basis. Beginning in 2007, stock options were no longer issuable under the Company’s 2000 Non-Qualified Incentive Stock Plan. The remaining amount available for issuance under the Second Amended and Restated 2007 Equity Incentive Plan totaled 1,737,8806,569,688 at January 1, 2011.December 29, 2012. The stock option awards generally vest ratably over a four-year period following grant date after a passage of time. However, some stock option awards are performance based and vest based on the achievement of certain criteria established by the Company.January 1, 2011December 29, 2012 and January 2, 2010.Year Ended December 2010 2009 32.05 % 29.97 % 0.00 % 0.00 % 5.1 years 6.0 years 1.92 % 2.28 % Year Ended December 2012 2011 Volatility 33.22 % 31.56 % Expected dividends 0.00 % 0.00 % Expected term 5.8 years 5.8 years Risk-free rate 0.96 % 2.20 % onof future dividend payouts on the common stock. The risk-free interest rate is based on the implied yield available on U.S. treasury zero-coupon issues with an equivalent remaining term. The Company used the simplified method for estimating the expected term of the options. The expected term of the options represents the estimated period of time until exercise and is based on historical experience of awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. The estimation process for the fair value of performance based stock options was the same as for non-performanceservice period based options.Non-performanceService Period Based Stock Optionsnon-performanceservice based options granted to employees. These options vest ratably over a defined period following grant date after a passage of time and do not have performance vesting requirements.Note 8.Employee Equity Incentive Plan (continued)non-performanceservice period based stock options activity at January 1, 2011December 29, 2012 and changes during the year then ended: Weighted Average Number of
Shares Exercise
Price Remaining
Contractual
Term Aggregate
Intrinsic
Value 3,585,426 $ 1.29 9,536,246 1.61 — — (195,541 ) 1.37 12,926,131 $ 1.52 7.52 $ 592,733 2,590,405 $ 1.34 6.67 $ 346,001 Weighted Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value Outstanding at December 31, 2011 13,895,872 $ 1.53 Options Granted 10,905,375 0.87 Options Exercised (6,117 ) 0.50 Options Cancelled (7,765,512 ) 1.60 Options Forfeited (4,827,060 ) 1.05 Outstanding at December 29, 2012 12,202,558 $ 1.08 8.25 $ 27,991 Exercisable at December 29, 2012 4,638,114 $ 1.30 6.19 $ 25,546 $1.36$0.56 on the last day of business for the year ended January 1, 2011.Company.Compensation Committee. If these performance criteria are not met, the compensation expenses are not recognized and the expenses that have been recognized will be reversed.January 1, 2011December 29, 2012 and changes during the year then ended: Weighted Average �� Number of
Shares Exercise
Price Remaining
Contractual
Term Aggregate
Intrinsic
Value — $ — 1,000,000 1.65 — — — — 1,000,000 $ 1.65 9.88 $ — — $ — — $ — Note 8.Employee Equity Incentive Plan (continued) Weighted Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value Outstanding at December 31, 2011 1,200,000 $ 1.64 Options Granted - - Options Exercised - - Options Cancelled - - Options Forfeited (1,054,166 ) 1.65 Outstanding at December 29, 2012 145,834 $ 1.59 8.27 $ - Exercisable at December 29, 2012 85,417 $ 1.59 8.21 $ - January 1, 2011,December 29, 2012, there was $3,869,743$2,410,677 of total unrecognized compensation expense related to nonvested share basednon-vested share-based compensation arrangements granted under the plans.plans for employee stock options. That cost is expected to be recognized over a weighted average period of 2.192.42 years as of January 1, 2011. The weighted average fair value of options granted during the years ended January 1, 2011, and January 2, 2010 was $.45, and $.12 respectively.December 29, 2012. The realized tax benefit from stock options for the years ended January 1,December 29, 2012, and December 31, 2011 and January 2, 2010 was $0, based on the Company’s election of the “with and without” approach. The fair value of the options that vested during the years ended January 1, 2011 and January 2, 2010 was $301,078 and $288,464, respectively.generallyto employees have two vesting conditions a service condition for continuous employment and a stock market condition tiedthat are unique to the Company’s stock price. On November 15, 2010, the Company awarded 1,000,000 shareseach award.our new President, William F. Spengler. Theseemployees at December 29, 2012 and changes during the twelve months then ended: Weighted Average Award-Date Shares Fair Value Unvested shares at December 31, 2011 1,000,000 $ 1.27 Granted 2,250,000 0.75 Vested - - Forfeited (2,750,000 ) 0.95 Unvested shares at December 29, 2012 500,000 $ 0.69 Expected to Vest as of December 29, 2012 500,000 $ 0.69 shares will fully vest in three years, provided that Mr. Spengler is continuously employed by the Company through the vesting date and that a certain stock awards had market condition is met.valuevalues of the Company’sthese restricted stock award wasawards were estimated at the datedates of award using the Hull-White based binomial valuation model. The table below outlines the weighted average assumptions of these market conditioned restricted stock awarded on November 15, 2010.Summary of Significant Assumptions November 15, 20102012 3.00 70.7669.98% 0.00 % 0.810.39% the Company’s common stock does not cover the period equal to the expected life of the restricted stock.covers only about four and a half years in a thinly traded market. The dividend yield assumption is based on the Company’s history and expectation on future dividend payouts on the common stock. The risk-free interest rate is based on the implied yield available on U.S. treasury zero-coupon issues with an equivalent remaining term. The companyCompany used the expected vesting period of the restricted stock for estimating the expected term of the restricted stock.The following table summarizesactivityawards had both market and service conditions and the awards become vested on the satisfaction of either condition. The fair values of these restricted stock awards were estimated at January 1, 2011 and changesthe date of award using the Company’s stock price as the service condition prevailed over the market condition.then ended: Shares Weighted Average
Award-Date
Fair Value — $ — 1,000,000 1.27 — — — — 1,000,000 $ 1.27 1,000,000 $ 1.27 January 1, 2011, there was $1,208,826December 29, 2012, these shares have not been vested.totalDecember 29, 2012, the Company did not have any unrecognized compensation expense related to restricted stock granted underawards to employees.plans. That costCompany awards shares of its common stock to executives and members of the Board of Directors as part of its overall compensation program. On February 7, 2012, the Company awarded 100,000 shares of common stock to Jeffrey Himmel, our former Chief Executive Officer and President, pursuant to an employment agreement with Mr. Himmel. The fair value of these awarded shares was estimated at the date of award using the Company’s stock price. Since these shares are immediately vested, the award is expecteddeemed to be recognized over a periodfully earned upon issuance and the full fair value of 2.88 years as$94,000 was expensed on the date of January 1, 2011.equity incentive plan,share-based compensation, the Company recognized share-based compensation expense of $1,194,275 and $197,403$1,497,509 in general and administrative expenses in the statement of operations for the yearsyear ended January 1, 2011 and January 2, 2010.December 29, 2012. The Company recognized $2,677,891 in share-based compensation expense for the year ended December 31, 2011.Note 9.Non-Employee Share-Based Compensationremeasuredre-measured over the vesting term asuntil earned. The estimated fair value is expensed over the applicable service period.January 1, 2011December 29, 2012 and changes during the year then ended: Weighted Average Number of
Shares Exercise
Price Remaining
Contractual
Term Aggregate
Intrinsic
Value 555,000 $ 0.94 542,300 1.53 — — — — 1,097,300 $ 1.23 7.26 $ 267,200 456,542 $ 0.86 4.64 $ 251,613 Weighted Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value Outstanding at December 31, 2011 1,097,300 $ 1.23 Options Granted - - Options Exercised - - Options Forfeited - - Outstanding at December 29, 2012 1,097,300 $ 1.23 5.26 $ 15,540 Exercisable at December 29, 2012 1,094,800 $ 1.23 5.26 $ 15,401 $1.36$0.56 on the last day of business for the year ended January 1, 2011.January 1, 2011,December 29, 2012, there was $199,736$580 of total unrecognized compensation expense related to nonvested share basedunvested share-based compensation arrangements granted to non-employees. That cost is expected to be recognized over a weighted average period of 1.44 years4.4 months as of January 1, 2011. December 29, 2012.weighted averagerestricted stock awards to non-employees are accounted for using the fair value of options granted during the years ended January 1, 2011, and January 2, 2010 was $.40, and $.15 respectively. The realized tax benefit from stock options for the years ended January 1, 2011, and January 2, 2010 was $0, based on the Company’s election of the “with and without” approach. The fair value of the options that vested non-employee restricted stock awards during the yearsyear ended January 1, 2011 and January 2, 2010December 29, 2012 was $34,356 and $40,538, respectively.For$568,400, which represents the market value of the Company’s common stock options grantedon the vesting date less the purchase price. There were no unvested non-employee restricted stock awards at December 29, 2012. Shares Unvested shares at December 31, 2011 1,170,000 $ 0.41 Granted - - Vested (1,140,000 ) 0.50 Forfeited (30,000 ) 0.74 Unvested shares at December 29, 2012 - $ - Year Ended December 29, 2012 2012 Volatility 28.2 % Expected dividends 0.00 % Expected term 2.0 years Risk-free rate 0.27 % $67,796 and $8,455$1,205,744 in general and administrative expenses in the statement of operations for the yearsyear ended December 29, 2012. The Company recognized $291,259 in share-based compensation expense for the year ended December 31, 2011.1, 2011 and January 2, 2010.Note 10.Stock IssuanceOn April 22, 2010,31, 2012, the Company entered into a subscriptiondefinitive agreement (the “Subscription Agreement”) with certain investors (the “Subscribers”). Thein a registered direct offering of common stock at a price per share of $0.75. On February 9, 2012, the registered direct offering was consummated and the Company sold 9,966,666 shares of common stock at a price per share of $0.75 for gross proceeds of $7,475,000, or net proceeds of $6,739,498 after deducting offering costs. As a part of the offering commission to its placement agent, the Company issued and soldwarrants to the Subscribers, in a private placement transaction (the “Private Placement”), an aggregate of 26,249,983 newly issuedpurchase 300,000 shares (the “Private Placement Shares”) of the Company’s common stock forto the placement agent, Aegis Capital Corp. and its designees. These warrants have an aggregate purchaseexercise price of $3,674,998$0.85 per share, a term of 2.5 years and a cashless exercise feature. The aggregate estimated fair value of these warrants was $44,610 and these warrants were determined to be equity awards. The fair value was estimated at the date of issuance using the Black-Scholes based valuation model. The table below outlines the assumptions for the warrants issued to Aegis Capital Corp. and its designees.Year Ended December 29, 2012 2012 Volatility 29.7 % Expected dividends 0.00 % Expected term 2.5 years Risk-free rate 0.28 % $0.14 per share. net proceeds of $3,330,740 after deducting offering costs.January 1, 2011, the Company received net capital contributions of $3,486,626 through this offering. The Company also issued to each Subscriber an immediately exercisable warrant (collectively, the “Warrants”) to purchase the Company’s common stock in an amount equal to the number of Private Placement Shares purchased by such Subscriber atDecember 29, 2012, 750,000 warrants with an exercise price of $0.21 per share. As of January 1, 2011, 5,674,996 of the Warrants have been exercised and the Company received additional proceeds of $1,191,749 from the exercise of the Warrants.Note 11.WarrantsOn May 20, 2010, the Company issued immediately exercisable Warrants to certain investors pursuant to the Subscription Agreement entered into by the Company on April 22, 2010. The Company issued an aggregate of 26,249,983 Warrants to investors to purchase the Company common stock at $0.21 per share. The fair value of these Warrants was estimated, at the date of grant, using the Black-Scholes based option valuation model. The Warrantsshare were valued at $31,282,105. Since these warrants are classified as equity, the Company recorded these warrants along with the stock issuance discussed in Note 9 at the amount of net proceeds received by the Company. As of January 1, 2011, 5,674,996 of the Warrants have been exercised and the Company received proceeds of $1,191,749$157,500 from exercise of these warrants. These warrants were issued during the Warrants.The table below outlinesyear ended January 1, 2011 pursuant to a subscription agreement entered into by the assumptions for Warrants granted on May 20, 2010.Summary of Significant AssumptionsMay 20, 2010Expected Term1.50Expected Volatility35.45% Expected Dividends0.00% Risk Free Rate of Return0.55% On May 10, 2010, Brookville Capital Partners, formerly known as New Castle Financial Services, exercised outstandingholders of such warrants and the Company on April 22, 2010.112,130to Aegis Capital Corp. and its designees, warrants with an exercise price of $0.85 per share were exercised and the Company issued 4,103 shares of common stock. Brookville Capital PartnersThe warrant holder elected a cashless exercise pursuant to the provisions of the warrants and received 112,1304,103 shares of common stock in lieu of 336,39015,000 shares forand a cash payment of $1.36$0.85 per share. These warrants were issued during the year ended January 3, 2009December 29, 2012 as part of New Castle’sAegis Capital Corp.’s services as a placement agent in conjunction with the private placementregistered direct offering concluded during the year ended January 3, 2009.January 1, 2011,December 29, 2012, the following warrants were outstanding and exercisable: Weighted
Average
Exercise
Prices Number
Outstanding
And Exercisable
At January 1, 2011 Weighted
Average
Remaining
Contractual Life $ 3.00 1,718,350 2.30 $ 0.21 20,574,987 2.39 $ 0.43 22,293,337 2.38 Note 12.CommitmentsWarrants granted in connection with : 2008 Private placement equity offering $ 3.00 1,718,350 3.6 months 2010 Private placement equity offering $ 0.21 7,803,564 4.7 months 2012 Placement agent commission $ 0.85 285,000 19.1 months 2012 Non-employee award $ 0.75 250,000 19.3 months $ 0.72 10,056,914 5.3 months May 2011August 2013 through April 2016. Monthly lease payments range from $1,029$1,114 per month to $20,247$21,480 per month, and minimum lease payments escalate during the terms of the leases. Generally accepted accounting principles require total minimum lease payments to be recognized as rent expense on a straight-line basis over the term of the lease. The excess of such expense over amounts required to be paid under the lease agreement is carried as a noncurrent liability on the Company’s consolidated balance sheet. $ 462,749 459,638 474,908 270,800 278,925 93,886 $ 2,040,906 Fiscal years ending: 2013 $ 500,469 2014 270,800 2015 278,925 2016 93,886 $ 1,144,080 $467,468,$512,110, and $509,725$467,675 for the years ended January 1,December 29, 2012 and December 31, 2011, and January 2, 2010, respectively.threesix royalty agreements related to certain products the Company offers to its customers. These agreements expire at various dates from December 31, 2019 through June 10, 2028.May 11, 2031. Yearly minimum royalty payments including license maintenance fees range from $5,000$1,000 per year to $15,000$35,000 per year. Theseyear, however these minimum royalty payments escalate each year with a maximum of $40,000$75,000 per year. In addition, the Company is required to pay a range of 2% to 5% of sales related to the licensed products under these agreements. Total royalty expense including license maintenance fees from continuing operations for the year ended January 1,December 29, 2012 and December 31, 2011 was $74,804 and January 2, 2010 was $63,263 and $2,649,$37,049, respectively under these agreements. Minimum royalties including license maintenance fees for the next five years are $29,488, $31,125, $32,431, $33,803 and $35,243 for fiscal years 2011, 2012, 2013, 2014 and 2015, respectively.Note 13.Related Party TransactionsDuring the year ended January 1, 2011, the Company paid $1,178,206 to two officers relating to unpaid compensation from prior years. The amounts owed to officers were non-interest bearing.Note 14.LitigationFrom time to time, the Company has and expects to have claims and pending legal proceedings that generally involve product liability, professional service and employment issues. These proceedings are, in the opinion of management, ordinary and routine matters incidental to the normal business conducted by the Company. In the opinion of management, such proceedings are substantially covered by insurance and/or are without merit, and the ultimate disposition of such proceedings is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.Fiscal years ending: 2013 $ 83,306 2014 100,315 2015 102,031 2016 116,333 2017 130,572 $ 532,557 Note 15.· Business SegmentationCore standards, contract services and Geographical Distributioningredients segment includes supply of phytochemical reference standards, which are small quantities of plant-based compounds typically used to research an array of potential attributes, and reference materials, related contract services, technical consulting and proprietary ingredients.· Retail dietary supplement products segment which consist of the supply of the BluScience line of dietary supplement products containing our proprietary ingredients to various retail distribution channels. Core Standards, Contract Services and Year ended December 29, 2012 Ingredients segment Other Total Gross Sales $ 8,661,638 $ 6,861,035 $ - $ 15,522,673 Promotions, discounts and returns (133,838 ) (3,778,341 ) - (3,912,179 ) Net sales 8,527,800 3,082,694 - 11,610,494 Cost of sales 6,100,779 3,234,278 - 9,335,057 Gross profit (loss) 2,427,021 (151,584 ) - 2,275,437 Operating expenses: Sales and marketing 2,227,934 3,292,207 - 5,520,141 General and administrative - - 8,391,730 8,391,730 Operating expenses 2,227,934 3,292,207 8,391,730 13,911,871 Operating income (loss) $ 199,087 $ (3,443,791 ) $ (8,391,730 ) $ (11,636,434 ) Core Standards, Contract Services and Year ended December 31, 2011 Ingredients segment Other Total Gross Sales $ 8,107,231 $ 40,056 $ - $ 8,147,287 Promotions, discounts and returns (27,271 ) (7,406 ) - (34,677 ) Net sales 8,079,960 32,650 - 8,112,610 Cost of sales 5,416,486 224,305 - 5,640,791 Gross profit (loss) 2,663,474 (191,655 ) - 2,471,819 Operating expenses: Sales and marketing 1,748,360 790,892 - 2,539,252 General and administrative - - 7,796,806 7,796,806 Operating expenses 1,748,360 790,892 7,796,806 10,336,058 Operating income (loss) $ 915,114 $ (982,547 ) $ (7,796,806 ) $ (7,864,239 ) Core Standards, Contract Services and At December 29, 2012 Ingredients segment Other Total Total assets $ 3,604,573 $ 4,331,866 $ 1,098,082 $ 9,034,521 Core Standards, Contract Services and At December 31, 2011 Ingredients segment Supplement Products segment Other Total Total assets $ 3,167,191 $ 1,915,817 $ 1,186,897 $ 6,269,905 $1,990,000$1,690,000 and $1,477,000$1,900,000 for the years ended January 1,December 29, 2012 and December 31, 2011, and January 2, 2010, respectively. International sources which the Company generates revenue include Europe, North America, South America, Asia, and Oceania.The Company’s operations comprise a single business We did not have any revenue from international sources for the retail dietary supplement products segment for the years ended December 29, 2012 and all of theDecember 31, 2011.Note 16.Management’s Plans for Operations$2,017,153$11,636,434 and a net loss of $2,051,676$11,662,426 for the year ended January 1, 2011,December 29, 2012, and a net loss of $907,568$7,894,984 for the year ended January 2, 2010. December 31, 2011.January 1, 2011December 29, 2012 is largely reflectsdue to sales and marketing expenses as well as sales promotions and sales discounts related to BluScience retail dietary supplement product line. For the year ended December 29, 2012, sales and marketing expenses for BluScience retail dietary supplement products segment totaled $3,292,207 and sales promotions, sales discounts and returns for BluScience retail dietary supplement products segment totaled $3,778,341. On March 28, 2013, the Company entered into an asset purchase and sale agreement with NeutriSci International Inc. and consummated the sale of BluScience consumer product line to NeutriSci. As a result, the Company will no longer incur such sales and marketing costs related to BluScience consumer product line.expenses. The company’sexpense. Our share-based compensation expense increased 513%totaled to $1,262,071$2,703,253 for the year ended January 1, 2011 from $205,858December 29, 2012. In addition to the stock option grants, the Company has awarded shares of its common stock to both employees and non-employees as compensation for the services provided. Another factor that contributed to the net loss is the increase in investor relations expense for the purpose of increasing market and shareholder awareness. Our investor relations expense increased to $987,399 for the year ended January 2, 2010. This large increase in share-based compensation expense was largely due to stock options that were granted following consummation of the transactions contemplated by the Subscription Agreement discussed in Note 9. The Company will continue to incur significant share-based compensation expenses over the next three years. The lossDecember 29, 2012 from $517,891 for the year ended January 2, 2010 reflects costs related to increased service capacity as well as related to reporting, legal, accounting and compliance associated with being a public reporting entity. The Company expects to incur significant future costs associated with being a public reporting entity. In addition, management has invested heavily in additional personnel and selling expenses over the past two years to implement its business plan. This has resulted in higher direct labor, indirect overhead, selling, and advertising expenses versus prior years.Management has also implemented additional strategic operational structure changes, which it believes will allow the Company to achieve profitability with future growth without incurring significant additional overhead costs. Management’s anticipation of future growth is largely relatedDecember 31, 2011. Lastly, there were certain one-time severance payments due to the Food and Drug Administration’s (FDA’s) guideline releases intermination of certain officers of the dietary supplement industry and the market’s trend towards green chemistry in the food and cosmetic sector. The Company has implemented a comprehensive marketing plan targeted on leveraging its capabilities concurrent with the FDA’s releases. The Company has also expanded its marketing plan to target the pharmaceutical and cosmetic sectors to support the reference standards, analytical services and discovery libraries product lines. In addition, the Company’s new line of bulk dietary supplement grade and food grade raw material is expected to contribute to the Net Sales growth, but at a lower gross margin.DuringCompany. Such severance payments totaled approximately $671,000 for the year ended January 1, 2011,December 29, 2012.received net capital contributionsentered into an asset purchase and sale agreement with NeutriSci International Inc. and consummated the sale of $4,678,375BluScience consumer product line to NeutriSci. The total sale transaction value is estimated at approximately $6.2 million and consists of following: (a) a $250,000 cash payment, which NeutriSci paid as a deposit in February 2013; (b) an additional $250,000 cash payment, which was paid at the closing of the sale; (c) an additional cash payment of $500,000 due no later than 60 days after the closing of the sale; (d) $2,500,000 senior convertible secured note (convertible into 625,000 shares Series I Preferred Stock as described below) payable in quarterly installments of $416,667 beginning August 15, 2013; and (e) 669,708 shares of Series I Preferred Shares that are convertible into 2,678,832 Class “A” common shares of NeutriSci, representing an aggregate of 19% of the NeutriSci shares at a deemed price for each Class A common share of $1.00 per share. The transaction documents contain certain equity blockers that preclude our ownership in NeutriSci in excess of 9.99% and 19% without obtaining a waiver from NeutriSci.offering discussed in Note 10.Company has 7,803,564 warrants outstanding with an exercise price of $0.21 per share. Assuming the full exercise of the outstanding Warrantswarrants for cash, the Company would receive additional proceeds of $4,320,747 for an aggregate of $8,999,122 in net proceeds from the purchase of the Private Placement Shares and the exercise of the Warrants.$1,638,748. There is no guarantee that the Subscribersholders of these warrants will exercise any of the outstanding Warrantswarrants for cash, and that the Company will not receive any proceeds from any of the outstanding Warrantswarrants until they are exercised for cash. The Company believes that this capital raise will be sufficient to implement its current business plan through December, 2011. However, ifexercised. If the Company determines that it needsshall require additional financing to further enable it to achieve its long-term strategic objectives, there can be no assurance that itsuch financing will be available on terms favorable to it or at all. If adequate financing is not available, the Company may have towill further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations in order to maintain sufficient operating capital after December, 2011.operations. The inability to raise additional financing may have a material adverse effect on the future performance of the Company.Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure and registered public accounting firm on accounting and financial disclosure.Item 9A.Controls and ProceduresThe Company’s Chief Executive OfficerChief Financial Officerprincipal financial officer carried out an evaluation of the effectiveness of the Company’sour disclosure controls and procedures as of January 1, 2011.December 29, 2012. Pursuant to Rule13a–Rule13a−15(e) promulgated by the Securities and Exchange 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 the Companyus in the reports that it fileswe file with the Securities and Exchange 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 the Company isthat we are required to disclose in the reports it fileswe file with the Commission is accumulated and communicated to the Chief Executive Officerour principal executive officer and Chief Financial Officerprincipal financial officer as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation, of the Company, its Chief Executive Officerour principal executive officer and Chief Financial Officerprincipal financial officer concluded that the Company’sour disclosure controls and procedures were effective as of January 1, 2011.13a–13a−15(f) promulgated under the Securities Exchange Act of 1934)Act) that occurred during the Company’sour fourth fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’sour internal control over financial reporting.The of ChromaDex is responsible for establishing and maintaining adequate internal control over financial reporting as defined in RulesRule 13a-15(f) and 15d-15(f)15d-(f) under the Securities Exchange ActAct. Our internal control over financial reporting are designed to provide reasonable assurance regarding the reliability of 1934.Management,(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;Chief Executive Officerprincipal executive officer and Chief Financial Officer,principal financial officer, assessed the effectiveness of the Company’sour internal control over financial reporting presented in conformity with accounting principles generally accepted in the United States of America as of January 1, 2011.December 29, 2012. In conducting its assessment, our management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission inInternal Control—Integrated Framework. Based on this assessment, our management concluded that, as of January 1, 2011, the Company’sDecember 29, 2012, our internal control over financial reporting was effective based on those criteria.Item 9B.Other InformationItem 10.Name Age Position Frank Jaksch, Jr. 44 Chief Executive Officer and Director Thomas Varvaro 43 Chief Financial Officer Michael Brauser 57 Co-Chairman of the Board Barry Honig 41 Co-Chairman of the Board 68 Director 61 Director 39 Director 62 Director 52 Director 52 Director (1) Member of our Audit Committee. (2) Member of our Compensation Committee. (3) Member of our Nominating and Corporate Governance Committee. DirectorsOur boarddirectorsDirectorssixnine members, fiveeight of whom are independent within the independence requirementsmeaning of Marketplace Rule 5605(a)(2) of the NASDAQ Stock Market, Inc. EachOn February 7, 2012, the Board appointed Jeffrey Himmel, our then Chief Executive Officer, as a director. Immediately prior to the appointment of our directors will serve untilMr. Himmel the 2011 annual meetingBoard adopted a resolution increasing the size of the stockholders or until a successor is duly electedBoard from ten directors to eleven directors. On February 13, 2012, William Spengler ceased serving in all positions held with the Company and qualified. Michael H. Brauseron February 17, 2012, Mr. Spengler resigned from his position as a director on March 2, 2011 for personal reasons. Glen L. Halprynof the Company. On June 11, 2012, Mr. Himmel voluntarily resigned from all the positions he held with the Company, including as a member of our Board. On June 11, 2012, Mr. Jaksch was appointed as a director on May 20, 2010 in connection with the 2010 Private Placement. our Chief Executive Officer and President.1, 201121, 2013 of individuals serving as directors as well as information about each individual’s qualification and experience that contributes to the overall needs of the board of directorsBoard as determined by the Nominating and Corporate Governance Committee: 42, 44, is a co-founder of the Company and has served as Chairmana member of the board of directorsBoard since 2010 and Chief Executive Officer sinceFebruary 2000. From 2000-2010, Mr. Jaksch served as Co-ChairmanChairman of the board of directors.Board from May 2010 to October 2011 and was its Co-Chairman from February 2000 to May 2010. Mr. Jaksch currently serves as our Chief Executive Officer. Mr. Jaksch oversees research, strategy operations and marketingoperations for the Company with a focus on scientific and novel products andfor pharmaceutical and nutraceutical markets. From 1993 to 1999, Mr. Jaksch served as International Subsidiaries Manager of Phenomenex, a life science supply company where he managed the international subsidiary and international business development divisions. Mr. Jaksch earned a B.S. in Chemistry and Biology from Valparaiso University. Frank L. Jaksch Jr. is the brother of Kevin Jaksch, who served on our board of directors until his resignation as a director in May 2010. The Nominating and Corporate Governance Committee believes that Mr. Jaksch’s years of experience working in chemistry-related industries, his extensive sales and marketing background, and his knowledge of international business allow him to bring an understanding of the industries in which the Company operates as well as scientific expertise to the Company and the board of directors.Board.66,, 68, has been a director of ChromaDexthe Company since October 2007 and Chair of the Compensation Committee, a member of the Audit Committee and a member of the Nominating and Corporate Governance Committee since 2007. Since May 2010, Mr. Block has served as Lead Independent Director to the board of directors. Mr. Block is also a director and Chair of the Nominating and Corporate Governance Committee and a member of the Audit Committee since October 2007. From May 2010 to October 2011, Mr. Block served as Lead Independent Director to the Board. Mr. Block is also a director and chair of the nominating and corporate governance committee and a member of the audit committee of Senomyx, Inc., a public biotech company. (NASDAQ:SNMX). He has served on the board of directors of Senomyx, Inc. since 2005. HeUntil December 2011, he also servesserved as the Chairmanchairman of the board of directors of Blue Pacific Flavors and Fragrances, Inc., and, until March 2012, as a director of Allylix, Inc., and Masher Media, Inc. of which he was also a co-founder. He has served on the boardboards of directors of these privately held companies since 2007, 2008 and 2009,2007, respectively. Mr. Block retired as Senior Vice President, General Counselsenior vice president, general counsel and Secretarysecretary of International Flavors and Fragrances Inc., a leading creator, manufacturer and seller of flavors and fragrances (IFF) in December 2003, having been IFF’s Chief Legal Officerchief legal officer since 1993. During his eleven years at IFF he also led the company’s Regulatory Affairs Department. Prior to 1993, Mr. Block served as Senior Vice President, General Counsel, Secretarysenior vice president, general counsel, secretary and Directordirector of GAF Corporation, a company specializing in specialty chemicals and building materials, and its publicly traded subsidiary International Specialty Products Inc., held various management positions with Celanese Corporation, a company specializing in synthetic fibers, chemicals and plastics, and practiced law with the New York firm of Stroock & Stroock & Lavan. Mr. Block currently serves as an industry consultant and as a member of the Executive Committeeexecutive committee of Westlake/Santa Barbarathe Orange County network of Tech Coast Angels, a leading angel investing group, and as a managing director of Venture Farm LLC, an early stage venture capital firm.firm, and as a Venture Partner of K5 Launch, an Orange County accelerator. Mr. Block received his B.A.cum laude in Russian Studies from Yale University and his law degree from Harvard Law School. The Nominating and Corporate Governance Committee believes that Mr. Block’s experience as the Chief Legal Officerchief legal officer of one of the world’s leading flavor and fragrance companies contributes to the board of directors’Board’s understanding of the flavor industry, including the board of directors’Board’s perspective on the strategic interests of potential collaborators, the regulation of the industry, and the viability of various commercial strategies. In addition, Mr. Block’s experience in the area of corporate governance and public company financial reporting is especially valuable to the board of directorsBoard in his capacity as a member of both the Audit Committee and the Compensation Committee.59,, 61, has served as a director of ChromaDexthe Company and has chaired the Audit Committee since October 2007. Mr. Dabney is the Company’s audit committee financial expert. Since November 2008,September 2012, he has also served as a Managing Directormanaging director of Merriman Capital, Inc. From November 2008 to September 2012, he has also served as a managing director of Monarch Bay Associates, LLC. From March 2005 to November 2008, Mr. Dabney served as Cecors, Inc.’s (CEOS.OB)'s (OTC Markets: CEOS) (a Software As A Service (SaaS) technology provider’s) Senior Vice Presidentprovider's) senior vice president and Chief Financial Officer.chief financial officer. From July 2003 to November 2005, Mr. Dabney was engaged by CFO911 as a business and financial consultant. From January 2003 to August 2004, Mr. Dabney served as Vice Presidentvice president of National Securities, a broker-dealer firm specializing in raising equity for private operating businesses that have agreed to become public companies through reverse merger transactions with publicly traded shell companies. From June 2002 to January 2003, Mr. Dabney was the Chief Financial Officerchief financial officer of House Ear Institute in Los Angeles, California. Mr. Dabney received a B.A. from Claremont McKenna College and an M.B.A. in Finance from the University of Pennsylvania’sPennsylvania's Wharton School. Mr. Dabney also holds Series 7, 24 and 63 licenses from the Financial Industry Regulatory Authority (FINRA). The Nominating and Corporate Governance Committee believes that Mr. Dabney’sDabney's experience as CFOchief financial officer of a public company and his extensive experience dealing with financial markets qualify him to chair the Audit Committee and that Mr. Dabney brings financial, merger and acquisition experience, and a background working with public marketplaces to the board of directors.Board.37,39, has served as a director of ChromaDexthe Company since December 2005 and has served on the Compensation Committee since May 2010 and on the Nominating and Governance Committee since 2007.October 2007 and on the Compensation Committee since May 2010. From October 2002 to December 2005, Mr. Dunkerley served as Director of Corporate Development at ChromaDex. Since April 2011, Mr. Dunkerley has been an executive vice president, Capital Markets of COR Capital LLC, an investment fund based in Santa Monica, CA. He is a director, secretary and sits on the compensation committee for COR Securities Holdings, Inc., the parent company of Legent Clearing LLC, a national clearing and settlements firm. Mr. Dunkerley was a Manager of Capital Markets for the FDIC, Division of Resolutions and Receiverships, sincefrom February 2009.2009 to March 2011 where he was active in implementing the Dodd-Frank Wall Street Reform Act, along with the oversight of securities and derivatives portfolios for large money center banks. He was Presidentpresident and Chief Executive Officerchief executive officer of Cecors, Inc. (OTCBB:CEOS.OB)(OTC Markets: CEOS), a Software As A Service (SaaS) technology provider, from October, 31, 2007 to February, 17, 2009. He had served as Cecor’s Chief Operating OfficerCecor's chief operating officer from June 2007 to October, 31, 2007 and as Vice Presidentvice president of Corporate Financecorporate finance from June 2006 to June 2007. From January 2006 to July 2006, Mr. Dunkerley served as Vice Presidentvice president of Small-Mid Cap Equities at Hunter Wise Financial Group, LLC, specializing in investment banking advisory services to US and EU companies. Mr. Dunkerley received his undergraduate degree from the University of Westminster, London and earned a MBA from South Bank University, London. Mr. Dunkerley also holds Series 7, 24, 66 and 6679 licenses from FINRA. The Nominating and Corporate Governance Committee believe that Mr. Dunkerley’sDunkerley's experience as CEOthe chief executive officer of a public company and his extensive financial market experience qualify him to sit on the Nominating and Corporate Governance Committee and the Compensation Committee and that Mr. Dunkerley brings financial and mergers and acquisitions experience, and experience with public marketplaces and regulatory oversight to the board of directors.Board. His previous experience as an employee of the Company also allows him to provide a unique perspective of and extensive knowledge on the industries in which the Company operates.60,62, is a co-founder of the Company and has served on the Nominating and Corporate Governance since May 2010. He served on the Audit Committee from October 2007 to May 2010, and as Co-Chairman of the board of directorsBoard from February 2000 to May 2010. Mr. Germain has extensive experience as a merchant banker in the biotech and life sciences industries. He has been involved as a founder, director, Chairmanchairman of the board of directors of, and/or investor in over twenty companies in the biotech field, and assisted many of them in arranging corporate partnerships, acquiring technology, entering into mergers and acquisitions, and executing financings and going public transactions. He graduated from New York University School of Law, Order of the Coif, in 1975 and was a partner in a New York law firm practicing corporate and securities law before entering the private sector inuntil 1986. Between 1986 and 1991, he served businesses in senior executive capacities, including as president of a public company sold in 1991. Mr. Germain is currently a director of the following publicly traded companies: Omnimmune Holdings, Inc. (OTCBB: OMMHE.OB)(OTC Markets: OMMH), a biotechnology company, Stem Cell Innovations, Inc. (OTC:SCLL.PK)(OTC Markets: SCLL), a cell biology company, Collexis Holdings, Inc. (OTC:CLXS.PK)(OTC Markets: CLXS), a developer of semantic search and knowledge discovery software, and Pluristem Therapeutics, Inc. (NASDAQ:PSTI), a bio-therapeutics company. During the past five years, Mr. Germain also served as a board member of two publicly traded companies, Reis, Inc. (NASDAQ: REIS), a commercial real estate market information provider, and Intellect Neurosciences, Inc. (OTCBB: ILNS.OB)(OTC Markets: ILNS), a biopharmaceutical company. He is also a co-founder and director of a number of private companies in the biotechnology field. He graduated from New York University School of Law, Order of the Coif, in 1975. The Nominating and Corporate Governance Committee believes that Mr. Germain’s past experience as the president of a public company and as the board member of other public companies bring financial expertise, industry knowledge, and merger and acquisition experience to the boardBoard.50,52, has served as ChairChairman of the Nominating and Corporate Governance Committee and has served on the Audit Committee since May 2010. Mr. Halpryn has been the Chief Executive Officerchief executive officer and a director of Transworld Investment Corporation, a private investment company, since June 2001. Mr. Halpryn currently serves as a director of Sorrento Therapeutics (OTCBB:SRNE.OB), a biopharmaceutical company, Castle Brands Inc. (AMEX:ROX), a developer and international marketer of premium branded spirits and served as a director of Sorrento Therapeutics (OTC Markets:SRNE), a biopharmaceutical company until September 2012. Mr. Halpryn served as a director of Tiger Media Inc. f/k/a SearchMedia Holdings Limited (AMEX:(NYSE:IDI), a China-based billboard and in-elevator advertising company.company until June 2011. From April 2010 until October 2011, Mr. Halpryn served as a director of CDSI Holdings, Inc., a public shell company seeking new business opportunities. From September 2008 until May 2010, Mr. Halpryn also served as a director of Winston Pharmaceuticals, Inc. (OTCBB:WPHM.OB)(OTC Markets: WPHM), a pharmaceutical company specializing in skin creams and pain medications. From October 2002 to September 2008, Mr. Halpryn served as a director of Ivax Diagnostics, Inc. (AMEX:IVD). From June 1987 until April 2012, Mr. Halpryn served as Chairmanthe president of and a beneficial owner of United Security Corporation, a broker-dealer registered with FINRA. The Nominating and Corporate Governance Committee believes that Mr. Halpryn’s past experience as the board member of other public companies bring financial expertise and industry knowledge to the Board.boardCompensation Committee since March 2011. From October, 2011 to February 2013, Dr. Lockshin served as Vice President, Corporate R&D Initiatives of directorswith OPKO Health, Inc. (NYSE: OPK) Dr. Lockshin is an independent consultant who assists companies leveraging technological assets in the healthcare, biotechnology and Chief Executive Officersecurity sectors. From August 2002 to March 2003, Dr. Lockshin was Director of Discovery Biology at Beyond Genomics, Inc., a biopharmaceutical company focusing on drug discovery using biological approaches. Dr. Lockshin also served in various positions including Director of Discovery Biology & Informatics, Associate Director and Scientist at Sepracor, Inc. (now Sunovion Pharmaceuticals Inc.), a research-based pharmaceutical company that develops therapeutic products for the central nervous system and respiratory disorders, from June 1998 to July 2002. From October 2009 to September 2012, Dr. Lockshin served as a director of Sorrento Therapeutics, Inc. (OTC Markets: SRNE), a biopharmaceutical company. From September 2008 to May 2010, Dr. Lockshin was a director of Winston Pharmaceuticals, Inc. (OTC Markets: WPHM), a pharmaceutical company specializing in skin creams and paid medications. From July 2006 to December 2006, Dr. Lockshin served as a director of Orthodontix, Inc. (now Protalix Bio Therapeutics, Inc.) (AMEX:PLX) from April 2001 to December 2006. From April 1988 to June 1998, Mr. Halpryn was Vice Chairman of Central Bank,, a Florida state-chartered bank. Since June 1987, Mr. Halpryn has beenbiopharmaceutical company. The Nominating and Corporate Governance Committee believes that Dr. Lockshin’s past experience as the President of and a beneficial holder of stock of United Security Corporation, a broker-dealer registered with FINRA.Executive OfficersWilliam F. Spengler, 56, has served as President of the Company since November 15, 2010. Prior to joining the Company, he served as Executive Vice President, Chief Financial Officer and Treasurer at Smith & Wesson Holding Corp. since July 2008. Mr. Spengler currently serves as aboard member of other public companies bring business and management expertise and industry knowledge to the board of directors of Endo Corporation, a specialty pharmaceutical company. Prior to Smith & Wesson, Mr. Spengler served in various capacities at MGI Pharma, Inc., a specialty pharmaceutical company, including as Board.Vice President and Chief Financial Officer from August 2006 to January, 2008, Senior Vice President and Chief Financial Officer from April 2006 to August 2006, and as Senior Vice President, International & Corporate Development from October 2005 to April 2006. From July 2004 to October 2005, Mr. Spengler served as Executive Vice President and Chief Financial Officer of Guilford Pharmaceuticals Inc., a biotechnology company, prior to its acquisition by MGI Pharma in October 2005. Mr. Spengler received a Bachelors Degree in Economics from Yale University in 1977 and a Masters of Business Administration from New York University in 1980.41,43, has served as the Company’s Chief Financial Officer since January 2004 and Secretary since March 2006. He also served as a director from March 2006 until May 2010. Mr. Varvaro overseesis responsible for overseeing all of Company’s operations including all aspects of accounting, information technology, inventory, distribution, and human resources management for the Company.management. Mr. Varvaro has developed skills inextensive process mapping and business process improvement skills, along with a solid information technology background that includes management and implementation experiences ranging from custom application design to enterprise risk systems deployment,wide system deployment. Mr. Varvaro also has hands-on experience in integrating acquisitions and in new facility startups. In working with manufacturing organizations Mr. Varvaro has overseen plant automation, and reporting and bar code tracking implementation from his prior business experiences.implementations. Mr. Varvaro also has broad legal experience in intellectual property (IP), contract and employment law. From 1998 to 2004, Mr. Varvaro was employed by Fast Heat Inc., a Chicago, Illinois based globalGlobal supplier to the plastics, HVAC, packaging, and food processing industries, where he began as Controllercontroller and was promoted to Chief Information Officerchief information officer and then Chief Financial Officerchief financial officer during his tenure. During his time there Mr. Varvaro was responsible for all financial matters including accounting, risk management and human resources. From 1993 to 1998, Mr. Varvaro was employed by Maple Leaf Bakery, USA, aInc., Chicago, Illinois, based company, during its rise to becoming a national leader in specialty products. During his tenure Mr. Varvaro served in information technology and accounting roles, helping to shepherd the company from a single facility to national leader in specialty food products. Mr. Varvaro served as Staff Accountant and was promoted to Assistant Controller during his tenure. He earnedhas a B.S. in Accounting from University of Illinois, Urbana,Urbana-Champaign and ishas been certified as a Certified Public Accountant.Beneficial Ownership Reporting Compliancefrom theseby our officers and directors regarding their compliance with applicable reporting requirements under Section 16(a) of the Exchange Act, we believe that all Section 16(a) filing requirements for our executive officers, directors and 10% stockholders were met during the year ended January 1, 2011December 29, 2012 except as follows: Michael H. Brauser was late in filing one report for one transaction; Barry Honig was late in filing one report for one transaction; Frank L. Jaksch Jr. was late in filing one report for one transaction; Stephen A. Block was late in filing one report for one transaction; Reid Dabney was late in filing one report for one transaction; Hugh Dunkerley was late in filing one report for one transaction; Mark S. Germain was late in filing one report for one transaction; Glenn L. Halpryn was late in filing one report for one transaction; Curtis A. Lockshin was late in filing one report for one transaction and Steve Block amendedThomas C. Varvaro was late in filing one report to reflect 5,000 additional stock options that were not reported onfor one transaction.original report.board of directorsBoard has established a corporate Code of Conduct which qualifies as a “code of ethics” as defined by Item 406 of Regulation S-K of the Exchange Act. Among other matters, the Code of Conduct is designed to deter wrongdoing and to promote:honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;● honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; compliance with applicable governmental laws, rules and regulations;prompt internal reporting of violations of the Code of Conduct to appropriate persons identified in the code; and● full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications; accountability for adherence to the Code of Conduct.● compliance with applicable governmental laws, rules and regulations; ● prompt internal reporting of violations of the Code of Conduct to appropriate persons identified in the code; and ● accountability for adherence to the Code of Conduct. board of directors.Board. In the event that the board of directorsBoard grants any waivers of the elements listed above to any of our officers, we expect to announce the waiver within fivefour business days on a Current Report on Form 8-K.ourthe Company’s employees, including our principal executive officer, the principal financial and accounting officer, and all employees who perform these functions. A full text of our Code of Conduct is published on our website at www.chromadex.com under the tab “Investor Relations-Corporate Governance.Governance-Highlights.” If we amend our Code of Conduct as it applies to the principal executive officer, principal financial officer, principal accounting officer or controller (or persons performing similar functions) or grant a waiver from any provision of the code of conduct to any such person, we shall disclose such amendment or waiver on our website at www.chromadex.com under the tab “Investor Relations-Corporate Governance.Governance-Highlights.”● ● available in print to any stockholder who requests them from our corporate secretary. board of directorsBoard has determined that:Mr. Dabney qualifies as an “audit committee financial expert,” as defined by the SEC in Item 407(d)(5) of Regulation S-K; and •●Mr. Dabney qualifies as an “audit committee financial expert,” as defined by the SEC in Item 407(d)(5) of Regulation S-K; and all members of the Audit Committee (i) are “independent” under the independence requirements of Marketplace Rule 5605(a)(2) of the NASDAQ Stock Market, Inc., (ii) meet the criteria for independence as set forth in the Exchange Act, (iii) have not participated in the preparation of our financial statements at any time during the past three years and (iv) are financially literate and have accounting and finance experience. members. Currently,directors: Messrs. Stephen Block (chairman), and Hugh Dunkerley serve on the Compensation Committee and there is one vacancy due to Mr. Michael Brauser’s resignation on March 2, 2011.Curtis Lockshin. The Board has determined that:● all members of the Compensation Committee qualify as “independent” under the independence requirements of Marketplace Rule 5605(a)(2) of the NASDAQ Stock Market, Inc.; ● all members of the Compensation Committee qualify as “non-employee directors” under Exchange Act Rule 16b-3; and ● all members of the Compensation Committee qualify as “outside directors” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). all members of the Compensation Committee qualify as “non-employee directors” under Exchange Act Rule 16b-3; andall members of the Compensation Committee qualify as “outside directors” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).members:directors: Glenn L. Halpryn (chairman), Hugh Dunkerley and Mark Germain. The Board has determined that all members of the Nominating and Corporate Governance Committee qualify as “independent” under the independence requirements of Marketplace Rule 5605(a)(2) of the NASDAQ Stock Market, Inc.Item 11.Executive CompensationThis section10-K explains our compensation for the persons who served as our Chief Executive Officer, President and Chief Financial Officer during our fiscal year ended January 1, 2011. We have elected to use the Smaller Reporting Company rules issued10-K.SEC regarding the disclosureCompensation Committeeexecutive compensation. Under these rules, we provide executive compensation disclosure forarrangements of our named executive officers for two years under2012 should be read together with the Summarycompensation tables and related disclosures set forth below.Outstandingbonuses and equity incentive awards. Both the Compensation Committee and the Board have approved these agreements.Year End predetermined meetings of the Board. On limited occasions, grants may occur upon unanimous written consent of the Board, which occurs primarily for the purpose of approving a compensation package for a newly hired or promoted executive under an employment agreement with the executive. The exercise price of a newly granted option is the average price of our common stock on the date of grant. and, our Chief Financial Officer (the principal financial officer) and our Chief Operating Officer (a named executive officer), each of whom served during the year ended January 1, 2011December 29, 2012 as our executive officers. The compensation indicated below was paid by ChromaDex. Year Salary Bonus Stock
Awards
(1) Option
Awards(2) All Other
Compensation Total 2010 $ 211,635 (3) — — $ 1,064,968 (4) $ 1,788 $ 1,278,391 2009 $ 183,750 — — $ 7,620 (5) $ 1,788 $ 193,158 2010 $ 25,385 (6) — $ 1,270,429 (7) $ 1,086,300 (8) $ 25,000 $ 2,407,114 2009 — — — — — — 2010 $ 162,654 — — $ 817,772 (9) — $ 980,426 2009 $ 136,500 — — $ 5,715 (10) — $ 142,215 Name Year Salary Bonus All Other Compensation Frank L. Jaksch Jr. 2012 $ 225,000 - $ 172,500 (3) $ 648,048 (4) $ 149 $ 1,045,697 2011 $ 225,000 - - $ 67,225 (5) $ 1,788 $ 294,013 Thomas C. Varvaro 2012 $ 175,000 - $ 172,500 (6) $ 125,702 (7) - $ 473,202 2011 $ 175,000 - - $ 53,780 (8) - $ 228,780 William F. Spengler 2012 $ 250,309 (9) - - - $ 250,309 2011 $ 220,000 $ 87,500 (10) - $ 32,231 (11) - $ 339,731 Jeffrey Himmel 2012 $ 409,888 (12) - $ 937,847 (13) $ 660,600 (14) - $ 2,008,335 2011 - - - - - - Debra Heim 2012 $ 153,814 (15) - $ 562,733 (16) $ 408,450 (17) - $ 1,124,997 2011 - - - - - - (1) The amounts in the column titled “Stock Awards” above reflect the aggregate award date fair value of stock awards and restricted stock awards for the fiscal year ended January 1, 2011.awards. See Note 8 of the ChromaDex Corporation Consolidated Financial Report included in this Form 10-K for the year ended January 1, 2011December 29, 2012 for a description of certain assumptions in the calculation of the fair value of the Company’s restricted stock.(2) January 1, 2011December 29, 2012 and the fiscal year ended January 2, 2010,December 31, 2011, respectively. See Note 8 of the ChromaDex Corporation Consolidated Financial Report included in this Form 10-K for the year ended January 1, 2011December 29, 2012 for a description of certain assumptions in the calculation of the fair value of the Company’s stock options.(3) On June 6, 2012, Frank L. Jaksch Jr. was paid $1,048,555 in cash in 2010, which included unpaid compensationawarded 250,000 shares of $836,920 from years priorrestricted stock. These shares shall vest upon the earlier to 2009. This unpaid compensation was non-interest bearing.occur of the following: (i) the market price of the Company’s stock exceeds a certain price, or (ii) one of other certain triggering events, including the termination of Mr. Jaksch for any reason. As of December 29, 2012, these shares have not vested.(4) On May 20, 2010,August 28, 2012, Frank L. Jaksch Jr. was granted options to purchase a total of 3,175,000250,000 shares of ChromaDex common stock at an exercise price of $1.70. The$0.64. These options for the first 1,537,500 shares expire on May 20, 2015,August 28, 2022 and 25% of the options vest on August 28, 2013 and the remaining 75% vest 2.083% monthly thereafter. In addition, on September 15, 2012, Frank L. Jaksch Jr. was granted option awards to purchase certain number of shares of ChromaDex common stock at an exercise price of $0.945, on the condition that Mr. Jaksch terminates certain option awards with exercise prices of $1.50 or higher, which the Company had previously granted. Mr. Jaksch agreed to terminate previously granted options to purchase 3,075,000 shares of ChromaDex common stock at exercise prices of $1.50 or higher and was newly awarded with options to purchase 1,901,418 shares of ChromaDex common stock at an exercise price of $0.945. These options expire on September 15, 2022, and 33% of the options vest on May 20, 2011September 15, 2013 and the remaining 67% vest 2.778% monthly thereafter. The(5) On May 10, 2011, Frank L. Jaksch Jr. was granted options for the second 1,537,500to purchase 125,000 shares of ChromaDex common stock at an exercise price of $1.54. These options expire on May 20, 2015, and 33% of the shares vest on May 20, 2011 and the remaining 67% vest 2.778% monthly thereafter. However, in addition, the exercisability of the second 1,537,500 shares is subject to the following restrictions related to the exercises of “Warrant Shares” issued in connection with the 2010 Private Placement : at any time that: (i) less than 25.0% of the Warrant Shares have been exercised, no options may be exercised; (ii) at least 25.0% but less than 49.9% of the Warrant Shares have been exercised, up to 25.0% of the options may be exercised, in aggregate; (iii) at least 50.0% but less than 74.9% of the Warrant Shares have been exercised, up to 50.0% of the options may be exercised, in aggregate; and (iv) at least 75.0% of the Warrant Shares have been exercised, 100.0% of the options may be exercised. The options for the last 100,000 shares expire on May 20, 2020,10, 2021, and 25% of the sharesoptions vest on May 20, 201110, 2012 and the remaining 75% vest 2.083% monthly thereafter.(5)(6)On June 6, 2012, Thomas C. Varvaro was awarded 250,000 shares of restricted stock. These shares shall vest upon the earlier to occur of the following: (i) the market price of the Company’s stock exceeds a certain price, or (ii) one of other certain triggering events, including the termination of Mr. Varvaro for any reason. As of December 29, 2012, these shares have not vested. (7) On August 28, 2012, Thomas C. Varvaro was granted options to purchase 250,000 shares of ChromaDex common stock at an exercise price of $0.64. These options expire on August 28, 2022 and 25% of the options vest on August 28, 2013 and the remaining 75% vest 2.083% monthly thereafter. In addition, on September 15, 2012, Thomas C. Varvaro was granted option awards to purchase certain number of shares of ChromaDex common stock at an exercise price of $0.945, on the condition that Mr. Varvaro terminates certain option awards with exercise prices of $1.50 or higher, which the Company had previously granted. Mr. Varvaro agreed to terminate previously granted options to purchase 1,387,512 shares of ChromaDex common stock at exercise prices of $1.50 or higher and was newly awarded with options to purchase 863,511 shares of ChromaDex common stock at an exercise price of $0.945. These options expire on September 15, 2022, and 33% of the options vest on September 15, 2013 and the remaining 67% vest 2.778% monthly thereafter. (8) On May 13, 2009, Frank L. Jaksch Jr.10, 2011, Thomas C. Varvaro was granted options to purchase 100,000 shares of ChromaDex common stock at an exercise price of $0.50.$1.54. These options expire on May 13, 2019,10, 2021, and 25% of the sharesoptions vest on May 13, 201010, 2012 and the remaining 75% vest 2.083% monthly thereafter.(6)(9)Includes severance compensation. William F. Spengler ceased serving in all positions held with the Company on February 13, 2012. (10) William F. Spengler joinedreceived a bonus in the amount of $87,500 for achieving certain personal performance goals as set forth in 2011 Bonus Plan which has been approved by the Board.(11) On May 10, 2011, William F. Spengler was granted options to purchase 59,932 shares of ChromaDex common stock at an exercise price of $1.54. These options expire on May 10, 2021, and 25% of the options vest on May 10, 2012 and the remaining 75% vest 2.083% monthly thereafter. On February 13, 2012, William Spengler ceased serving in all positions held with the Company; as a result, these options have been forfeited. (12) Includes severance compensation. Jeffrey Himmel, who served as Chief Executive Officer of the Company since February 7, 2012, voluntarily resigned from all the positions he held with the Company on November 15, 2010.June 11, 2012.(7)(13)On November 17, 2010, William F. SpenglerFebruary 7, 2012, Jeffrey Himmel was awarded 100,000 shares of common stock. These shares were immediately vested and the award was fully earned. In addition, on February 7, 2012, Jeffrey Himmel purchased 1,000,000 restricted shares of ChromaDex common stock at thea price of theequal to their par value, which is $0.001 per share. TheThese restricted shares will fully vest in full on November 15, 2013,February 1, 2015, provided that Mr. Spengler is continuously employed and that the fair market value of the Company’s common stock at any time prior to November 15, 2013 has increased byFebruary 1, 2015 is at least three timesequal to $1.296. On June 11, 2012, Jeffrey Himmel voluntarily resigned from all the fair market value.positions he held with the Company; as a result, these restricted shares have been forfeited.(8)(14)On November 15, 2010, William F. SpenglerFebruary 7, 2012, Jeffrey Himmel was granted options to purchase a total of 2,000,000 shares of ChromaDex common stock at an exercise price of $1.65. The$0.89. These options for the first 1,000,000 shares expire on November 15, 2020,February 7, 2022, and 25%33% of the sharesoptions vest on November 15, 2011February 7, 2013 and the remaining 75%67% vest 2.083%2.778% monthly thereafter. TheOn June 11, 2012, Jeffrey Himmel voluntarily resigned from all the positions he held with the Company; as a result, these options forhave been forfeited. (15) Includes severance compensation. Debra Heim, who served as Chief Operating Officer of the second 1,000,000Company since February 23, 2012, voluntarily resigned from all the positions she held with the Company on June 11, 2012.(16) On February 23, 2012, Debra Heim was awarded 75,000 shares expireof common stock. These shares were immediately vested and the award was fully earned. In addition, on November 15, 2020,February 23, 2012, Debra Heim purchased 750,000 restricted shares of ChromaDex common stock at a price equal to their par value, which is $0.001 per share. These restricted shares will fully vest basedon February 1, 2015, provided that the achievementfair market value of certain milestones established by the Company’s Compensation Committee.common stock prior to February 1, 2015 is at least equal to $1.296. On June 11, 2012, Debra Heim voluntarily resigned from all the positions she held with the Company; as a result, these restricted shares have been forfeited.(9) (17)May 20, 2010, Thomas C. VarvaroFebruary 23, 2012, Debra Heim was granted options to purchase a total of 1,703,5001,500,000 shares of ChromaDex common stock at an exercise price of $1.545. The$0.785. These options for the first 814,250 shares expire on May 20, 2020,February 23, 2022, and 33% of the sharesoptions vest on May 20, 2011February 23, 2013 and the remaining 67% vest 2.778% monthly thereafter. The options forOn June 11, 2012, Debra Heim voluntarily resigned from all the second 814,250 shares expire on May 20, 2020, and 33% of the options vest on May 20, 2011 and the remaining 67% vest 2.778% monthly thereafter. However, in addition, the exercisability of the second 814,250 shares is subject to the following restrictions related to the exercises of “Warrant Shares” issued in connectionpositions she held with the 2010 PrivatePlacement: at any time that: (i) less than 25.0% of the Warrant SharesCompany; as a result, these options have been exercised, no options may be exercised; (ii) at least 25.0% but less than 49.9% of the Warrant Shares have been exercised, up to 25.0% of the options may be exercised, in aggregate; (iii) at least 50.0% but less than 74.9% of the Warrant Shares have been exercised, up to 50.0% of the options may be exercised, in aggregate; and (iv) at least 75.0% of the Warrant Shares have been exercised, 100.0% of the options may be exercised. The options for the last 75,000 shares expire on May 20, 2020, and 25% of the shares vest on May 20, 2011 and the remaining 75% vest 2.083% monthly thereafter.(10)On May 13, 2009, Thomas C. Varvaro was granted options to purchase 75,000 shares of ChromaDex common stock at an exercise price of $0.50. These options expire on May 13, 2019, and 25% of the shares vest on May 13, 2010 and the remaining 75% vest 2.083% monthly thereafter.Named Executivesnamed executive officers previously entered into by ChromaDexthe Company are described below.Jr.pro ratedpro-rated portion of 40% of his salary (40% of his salary being the “Maximum Annual Bonus”) for the year of termination. In addition, if Mr. Jaksch leaves the Company for “Good Reason” he will also be entitled to severance equal to the Maximum Annual Bonus, and he will be deemed to have been employed for the entirety of such year. “Good Reason” means any of the following: (A) the assignment of duties materially inconsistent with those of other employees in similar employment positions, and Mr. Jaksch provides written notice to the Company within 60 days of such assignment that such duties are materially inconsistent with those duties of such similarly-situated employees and the Company fails to release Mr. Jaksch from his obligation to perform such inconsistent duties and to re-assign Mr. Jaksch to his customary duties within 20 business days after the Company’s receipt of such notice; or (B) if, without the consent of Mr. Jaksch, Mr. Jaksch’s normal place of work is or becomes situated more than 50 linear miles from Mr. Jaksch’s personal residence as of the effective date of the Amended Jaksch Agreement, or (C) a failure by the Company to comply with any other material provision of the Amended Jaksch Agreement which has not been cured within 60 days after notice of such noncompliance has been given by Mr. Jaksch to the Company, or if such failure is not capable of being cured in such time, a cure shall not have been diligently pursued by the Company within such 60 day period. Severance will then consist of 16 weeks of paid salary, unless Mr. Jaksch signs a release, in which case he will receive compensation equal to the lesser of the remainder of the term of the agreement, or up to 12 months paid salary., (as defined in the Amended Jaksch Agreement), he will only be entitled to his accrued but unpaid base salary, and any stock vested through the date of his termination., (as defined in the Amended Jaksch Agreement), Mr. Jaksch will be entitled to a lump sum payment of base salary and an amount equal to the Maximum Annual Bonus, and continuation of health benefits until the earlier of the last to occur of the term or renewal term of the agreement or 12 months from the date of termination.Employment Agreement with William F. SpenglerOn October 27, 2010, the Company entered into an Employment Agreement, which was amended on March 14, 2011, (the “Spengler Agreement”) with Mr. Spengler. The Spengler Agreement has a one-year term commencing on November 15, 2010, subject to one-year renewal terms. The Spengler Agreement provides that Mr. Spengler will receive a base salaryTable of $220,000 and will be eligible for certain annual cash bonuses of up to 100% of his base salary (in aggregate) based upon the achievement of Company-wide and individual performance targets established by the Compensation Committee of the Company’s Board of Directors.Mr. Spengler was also granted options to purchase a total of 2,000,000 shares of the Company’s common stock, with half of such shares to vest over a four-year vesting period and half to vest conditioned upon the achievement of performance targets established by the Compensation Committee of the Company’s Board of Directors. The Spengler Agreement also provided for the issuance of 1,000,000 shares of restricted Company common stock to be issued to Mr. Spengler at a purchase price of $0.001 per share, the stock’s par value. These restricted shares are subject to repurchase by the Company and will vest in full on November 15, 2013, subject to Mr. Spengler being continuously employed by the Company through such date and the fair market value of the Company’s common stock at any time prior to November 15, 2013 having increased by at least three times. The vesting of the stock options and restricted shares are subject to acceleration in the event of a change of control resulting in the termination of Mr. Spengler’s employment. In addition, the Spengler Employment Agreement provides for adjustments to the target price and vesting of the restricted shares, under certain circumstances, in the event of termination without “Cause” (as defined in the Spengler Agreement).The severance terms of the Spengler Agreement provide that if Mr. Spengler is terminated by the Company for “Cause” or leaves without “Good Reason” (as defined in the Spengler Agreement), he will only be entitled to his accrued and unpaid base salary. If Mr. Spengler is terminated by the Company without “Cause” or terminates for “Good Reason” (as defined in the Spengler Agreement), Mr. Spengler is entitled to severance in the form of the continuation of his base salary for a period of two weeks for each completed year of service, or, if Mr. Spengler enters into a standard separation agreement, Mr. Spengler will receive continuation of his base salary and health benefits, together with applicable fringe benefits as provided to other executive employees, for 12 months from the date of termination.In the event Mr. Spengler is terminated as a result of his death or disability, he will be entitled to his accrued and unpaid base salary and, notwithstanding any policy of the Company to the contrary, the prorated amount of any annual bonus that would be due to him for the fiscal year in which termination pursuant to death or disability took place. If Mr. Spengler is terminated due to a “Cessation of Business” (as defined in the Spengler Agreement), Mr. Spengler will be entitled to a lump-sum payment equal to 12 months of base salary.pro ratedpro-rated portion of 30% of his salary (30% of this salary being the “Maximum Annual Bonus”) for the year of termination. In addition, if Mr. Varvaro leaves the Company for Good Reason he will also be entitled to severance equal to the Maximum Annual Bonus, and he shall be deemed to have been employed for the entirety of such year. “Good Reason” means any of the following: (A) the assignment of duties materially inconsistent with those of other employees in similar employment positions, and Mr. Varvaro provides written notice to the Company within 60 days of such assignment that such duties are materially inconsistent with those duties of such similarly-situated employees and the Company fails to release Mr. Varvaro from his obligation to perform such inconsistent duties and to re-assign Mr. Varvaro to his customary duties within 20 business days after the Company’s receipt of such notice; or (B) the termination of Frank Jaksch as the Company’s Chief Executive Officer either by the Company without “Cause” or by the Mr. Jaksch for “Good Reason,” and Mr. Varvaro provides written notice within 60 days of such termination, or (C) a failure by the Company to comply with any other material provision of the Amended Varvaro Agreement which has not been cured within 60 days after notice of such noncompliance has been given by Mr. Varvaro to the Company, or if such failure is not capable of being cured in such time, a cure will not have been diligently pursued by the Company within such 60 day period. Severance will then consist of 16 weeks of paid salary, unless Mr. Varvaro signs a release, in which case he will receive compensation equal to the lesser of the remainder of his agreement or 12 months paid salary.DIRECTOR COMPENSATIONthe Company entered into an Employment Agreement, which was amended on March 14, 2011, (the “Spengler Agreement”) with Mr. Spengler. The Spengler Agreement has a one-year term commencing on November 15, 2010, subject to one-year renewal terms. The Spengler Agreement provides that Mr. Spengler will receive a base salary of $220,000 and will be eligible for certain annual cash bonuses of up to 100% of his base salary (in aggregate) based upon the achievement of Company-wide and individual performance targets established by the Compensation Committee of the Company’s Board of Directors.board of directors’ membersdirectors currently receive an annual grant of options to buy our common stock upon reelection by the stockholders. These options are granted under the Second Amended and Restated 2007 Equity Incentive Plan of the Company, or the 2007 Plan. The number of options granted and the vesting schedule are determined by the Compensation Committee of the Board of Directors. The vesting schedule of the options awarded for the fiscal year ended January 1, 2011December 29, 2012 is as follows: 8.333% of the options vest monthly.January 1, 2011.December 29, 2012. The compensation reported is for services as directors for the fiscal year ended January 1, 2011. Fees
Earned or
Paid in
Cash Stock
Awards Option
Awards
(1) Non-Equity
Incentive Plan
Compensation Non-Qualified
Deferred
Compensation
Earnings All Other
Compensation Total — — $ 150,898 — — — $ 150,898 — — $ 30,584 — — — $ 30,584 — — $ 130,162 — — — $ 130,162 — — $ 153,509 — — — $ 153,509 — — $ 295,250 — — — $ 295,250 — — $ 37,381 — — — $ 37,381 — — — — — — — $ 226,247 $ 226,247 — — — — — — — Name - 345,000 31,896 - - - 376,896 - 345,000 25,650 - - - 370,650 - - 67,450 - - 1,000 68,450 - - 16,416 - - - 16,416 - - 63,327 - - - 63,327 - - 108,765 - - - 108,765 - - 29,862 - - - 29,862 - - 18,193 - - - 18,193 - - - - - - - - - - - - - - - - - - - - - (1) The amounts in the column titled “Stock Awards” above reflect the aggregate grant date fair value of stock awards for the fiscal year ended December 29, 2012. See Note 8 of the ChromaDex Corporation Consolidated Financial Report included in this Form 10-K for the year ended December 29, 2012 for a description of certain assumptions in the calculation of the fair value of the Company’s stock awards. (2) The amounts in the column titled “Option Awards” above reflect the aggregate grant date fair value of stock option awards for the fiscal year ended January 1,December 31, 2011. See Note 8 of the ChromaDex Corporation Consolidated Financial Report included in this Form 10-K for the year ended December 29, 2012 for a description of certain assumptions in the calculation of the fair value of the Company’s stock options.(2)(3)On June 6, 2012, Michael H. Brauser was awarded 500,000 shares of common stock. Michael H. Brauser held an aggregate of 166,738 option awards as of December 29, 2012. (4) On June 6, 2012, Barry Honig was awarded 500,000 shares of common stock. Barry Honig held an aggregate of 125,000 option awards as of December 29, 2012. (5) Stephen Block held an aggregate of 450,000444,981 option awards as of January 1, 2011.December 29, 2012.(3)Michael H. Brauser held an aggregate of 67,500 option awards as of January 1, 2011. Mr. Brauser resigned from the Board on March 2, 2011.(4)(6)Reid Dabney held an aggregate of 390,200550,200 option awards as of January 1, 2011.December 29, 2012.(5)(7)Hugh Dunkerley held an aggregate of 544,800493,275 option awards as of January 1, 2011.December 29, 2012.(6)(8)Mark S. Germain held an aggregate of 941,700683,524 option awards as of January 1, 2011.December 29, 2012.(7)(9)Glenn L. Halpryn held an aggregate of 82,500189,309 option awards as of January 1, 2011. Glenn Halpryn was appointed to the Board on May 20, 2010 in connection with the 2010 Private Placement.December 29, 2012.(8)(10)Curtis Lockshin held an aggregate of 113,151 option awards as of December 29, 2012. (11) Frank L. Jaksch Jr. held an aggregate of 4,425,0003,626,418 option awards as of January 1, 2011.December 29, 2012.(9)(12)Kevin M. Jaksch held an aggregate of 747,300William F. Spengler resigned from the Board on February 17, 2012. As a result, all option awards as of January 1, 2011. Mr. Jaksch servedhave been forfeited.(13) Jeffrey Himmel resigned from the Board on the board until May 20, 2010, when he resigned in connection with the 2010 Private Placement. Mr. Jaksch is the brother of Frank L. Jaksch Jr.(10)Thomas C. Varvaro held an aggregate of 2,378,500June 11, 2012. As a result, all option awards as of January 1, 2011. Mr. Varvaro served on the board until May 20, 2010, when he resigned in connection with the 2010 Private Placement.have been forfeited.tables settable sets forth certain information regarding stock options and restricted stock granted to our named executive officers outstanding as of January 1, 2011.20102012 Fiscal Year-End Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) Option Exercise
Price ($) Option
Expiration Date 240,000 60,000 (1) — 1.50 12/1/2016 466,667 233,333 (2) — 1.50 4/21/2018 100,000 50,000 (3) — 1.50 4/21/2018 39,583 60,417 (4) — 0.50 5/13/2019 — 1,537,500 (5) — 1.70 5/20/2015 — 1,537,500 (6) — 1.70 5/20/2015 — 100,000 (7) — 1.70 5/20/2020 — 1,000,000 (8) — 1.65 11/15/2020 — — 1,000,000 (9) 1.65 11/15/2020 240,000 — — 1.00 1/19/2014 10,000 — — 1.00 1/19/2014 200,000 50,000 (10) — 1.50 12/1/2016 66,667 33,333 (11) — 1.50 4/21/2018 29,688 45,312 (12) — 0.50 5/13/2019 — 814,250 (13) — 1.545 5/20/2020 — 814,250 (14) — 1.545 5/20/2020 — 75,000 (15) — 1.545 5/20/2020 Frank L. Jaksch Jr. 300,000 — — 1.50 12/1/2016 700,000 — — 1.50 4/21/2018 150,000 — — 1.50 4/21/2018 89,583 10,417 (1) — 0.50 5/13/2019 64,583 35,417 (2) — 1.70 5/20/2020 49,479 75,521 (3) — 1.54 5/10/2021 — 250,000 (4) — 0.64 8/28/2022 — 1,901,418 (5) — 0.945 9/15/2022 Thomas C. Varvaro 240,000 — — 1.00 1/19/2014 10,000 — — 1.00 1/19/2014 250,000 — — 1.50 12/1/2016 100,000 — — 1.50 4/21/2018 67,188 7,812 (6) — 0.50 5/13/2019 289,936 46,764 (7) — 1.545 5/20/2020 48,438 26,562 (8) — 1.545 5/20/2020 1,697 2,591 (9) — 1.54 5/10/2021 — 200,000 (10) — 0.64 8/28/2022 — 863,511 (11) — 0.945 9/15/2022 (1) 60,000 of Mr. Jaksch’s options vest on December 1, 2011.(2)14,583 of Mr. Jaksch’s options vest on the 21st of every month through April 21, 2012.(3)3,125 of Mr. Jaksch’s options vest on the 21st of every month through April 21, 2012.(4)2,083 of Mr. Jaksch’sJaksch��s options vest on the 13th of every month through May 13, 2013.(5)(2)512,5002,083 of Mr. Jaksch’s options vest on 20th of every month through May 20, 2011, and 42,7082014.(3) the 2010thth of every month thereafter through May 20, 2013.10, 2015.(6)(4)512,50062,500 of Mr. Jaksch’s options vest on May 20, 2011,August 28, 2013 and 42,7085,208 options vest on the 2028thth of every month thereafter through May 20, 2013. However, in addition, the exercisability of these options is subject to the following restrictions related to the exercises of “Warrant Shares” issued in the 2010 Private Placement: at any time that: (i) less than 25.0% of the Warrant Shares have been exercised, no options may be exercised; (ii) at least 25.0% but less than 49.9% of the Warrant Shares have been exercised, up to 25.0% of the options may be exercised, in aggregate; (iii) at least 50.0% but less than 74.9% of the Warrant Shares have been exercised, up to 50.0% of the options may be exercised, in aggregate; and (iv) at least 75.0% of the Warrant Shares have been exercised, 100.0% of the options may be exercised..August 28, 2016.(7)(5)25,000633,803 of Mr. Jaksch’s options vest on May 20, 2011,September 15, 2013 and 2,08352,817 options vest on 2015thth of every month thereafter through May 20, 2014.September 15, 2015.(8)250,000 of Mr. Spengler’s options vest on November 15, 2011 and 20,833 options vest on the last day of every month thereafter through November 30, 2014.(9)Mr. Spengler’s options shall vest based on the achievement of certain milestones established by the Company’s Compensation Committee as provided in Mr. Spengler’s Employment Agreement. See the “Employment Agreement with William F. Spengler” above in this section of the Form 10-K.(10)50,000 of Mr. Varvaro’s options vest on December 1, 2011.(11)2,083 of Mr. Varvaro’s options vest on the 21st of every month through April 21, 2012.(12)(6)1,563 of Mr. Varvaro’s options vest on the 13th of every month through May 13, 2013. (13)(7)271,4179,353 of Mr. Varvaro’s options vest on the 20th of every month through May 20, 2011, and 22,6182013.(8) the 20th of every month through May 20, 2014.(9) 20, 2013.10, 2015.(14)(10)271,41750,000 of Mr. Varvaro’s options vest on May 20, 2011,August 28, 2013 and 22,6184,167 options vest on the 2028thth of every month thereafter through May 20, 2013. However, in addition, the exercisability of these options is subject to the following restrictions related to the exercises of “Warrant Shares” issued in the 2010 Private Placement: at any time that: (i) less than 25.0% of the Warrant Shares have been exercised, no options may be exercised; (ii) at least 25.0% but less than 49.9% of the Warrant Shares have been exercised, up to 25.0% of the options may be exercised, in aggregate; (iii) at least 50.0% but less than 74.9% of the Warrant Shares have been exercised, up to 50.0% of the options may be exercised, in aggregate; and (iv) at least 75.0% of the Warrant Shares have been exercised, 100.0% of the options may be exercised.August 28, 2016.(15)(11)18,750287,837 of Mr. Varvaro’s options vest on May 20, 2011,September 15, 2013 and 1,56323,986 options vest on 2015thth of every month thereafter through May 20, 2014.September 15, 2015.20102012 Fiscal Year-End Number of Shares or
Units of Stock
That Have Not Vested (#) Market Value of Shares
of Units of Stock That
Have Not Vested ($) Equity incentive plan
awards: Number of
unearned shares, units
or other rights that
have not vested (#) Equity incentive plan
awards: Market or
payout value of
unearned shares, units
or other rights that
have not vested ($) (1) — — 1,000,000 (2) $ 1,360,000 Name Number of Shares or Market Value of Shares Equity incentive plan Equity incentive plan Frank L. Jaksch Jr. — — 250,000 (2) $ 140,000 Thomas C. Varvaro — — 250,000 (3) $ 140,000 (1) The amounts in the column titled “Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested” above reflect the aggregate market value based on the closing market price of the Company’s stock on January 1, 2011.December 29, 2012.(2) November 17, 2010, William F. Spengler purchased 1,000,000 restrictedJune 6, 2012, Frank L. Jaksch Jr. was awarded 250,000 shares of ChromaDex common stock at arestricted stock. These shares shall vest upon the earlier to occur of the following: (i) the market price of the par value,Company’s stock exceeds a certain price, or $0.001 per share. The(ii) one of other certain triggering events, including the termination of Mr. Jaksch for any reason.(3) On June 6, 2012, Thomas C. Varvaro was awarded 250,000 shares of restricted stock. These shares willshall vest in full on November 15, 2013, provided that Mr. Spengler is continuously employed byupon the Company andearlier to occur of the fairfollowing: (i) the market valueprice of the Company’s common stock atexceeds a certain price, or (ii) one of other certain triggering events, including the termination of Mr. Varvaro for any time prior to November 15, 2013 has increased by at least three times.reason.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT3, 2011,21, 2013, there were approximately 63,404,47196,222,917 shares of our common stock outstanding. In addition, at March 3, 2011, (i) there were options representing rights to purchase up to approximately 14,946,225 shares of ChromaDex common stock at a weighted average exercise price of $1.51 per share, (ii) warrants representing rights to purchase up to approximately 19,074,990 shares of ChromaDex common stock at an exercise price of $0.21 per share issued as part of the 2010 Private Placement, and (iii) warrants representing rights to purchase up to approximately 1,718,350 shares of ChromaDex common stock at a weighted average exercise price of $3.00 per share issued prior to the 2010 Private Placement. The following table sets forth certain information regarding our common stock, beneficially owned as of March 3, 2011,21, 2013, by each person known to us to beneficially own more than 5% of our common stock, each named executive officer eachand director, and all directors and executive officers as a group. We calculated beneficial ownership according to Rule 13d-3 of the Exchange Act as of that date. Shares issuable upon exercise of options or warrants that are exercisable or convertible within 60 days after March 3, 2011 and restricted stock over which the holder has voting and investment power21, 2013 are included as beneficially owned by the holder. Beneficial ownership generally includes voting and dispositive power with respect to securities. Unless otherwise indicated below, the persons and entities named in the table have sole voting and sole dispositive power with respect to all shares beneficially owned. Shares of Common
Stock Beneficially
Owned (2) Aggregate
Percentage
Ownership 14,325,004 20.42 % 7,364,727 10.97 % 6,225,155 9.82 % 6,016,526 9.49 % 4,071,714 6.21 % 3,392,854 5.35 % 170,500 * 143,208 * 236,125 * 281,750 * 1,147,053 1.79 % 8,584,572 13.34 % (See above ) 560,938 * 1,000,000 1.58 % 12,124,146 18.28 % Aggregate Percentage Ownership 15,252,937 15.85 % 6,225,155 6.47 % Directors 8,327,509 8.47 % 7,933,349 8.24 % 306,654 * 523,533 * 288,850 * 465,683 * 1,397,634 1.45 % 75,434 * 9,380,820 9.61 % Named Executive Officers Frank L. Jaksch Jr., Chief Executive Officer (See above) 1,323,594 1.36 % All directors and executive officers as a group (10 Directors plus Chief Operating Officer 30,023,060 29.26 % * Represents less than 1%. (1) Addresses for the beneficial owners listed are: Dr. Phillip Frost, 4400 Biscayne Blvd., Suite 1500, Miami, FL 33137; Michael Brauser, 595 South Federal Highway, Suite 600, Boca Raton, FL 33432;and Black Sheep, FLP and Frank Louis Jaksch Jr., 8 Garzoni Aisle, Irvine,6 Palm Hill Drive, San Juan Capistrano, CA 92606; Barry Honig, 595 South Federal Highway, Suite 600, Boca Raton, FL 33432; Margie Chassman, 445 West 23rd Street, Apt. 16E, New York, NY 10011; John Liviakis, 655 Redwood Highway, Suite 395, Mill Valley, CA 94945; and Alan S. Honig, 1501 Broadway, Apt. 1313, New York, NY 10036.92675.(2) Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or dispositive power with respect to shares beneficially owned. Unless otherwise specified, reported ownership refers to both voting and dispositive power. Shares of Common Stockcommon stock issuable upon the conversion of stock options or the exercise of warrants within the next 60 days are deemed to be converted and beneficially owned by the individual or group identified in the Aggregate Percentage Ownership column.(3) Held byDirect ownership of 15,252,937 through Frost Gamma Investments Trust, of which Dr. Phillip Frost has voting and investment power, as the trustee. Dr. Frost is a shareholderstockholder and chairman of the board of Ladenburg Thalmann Financial Services, Inc. (NYSE:LTS), parent company of Ladenburg Thalmann & Co., Triad Advisors, Inc. and Investacorp Inc., each registered broker-dealers. Includes 6,750,002 immediately exercisable warrant shares.(4) Direct ownership through (i) Michael & Betsy Brauser TBE of 1,795,714 shares of common stock and 1,785,714 immediately exercisable warrant shares; and (ii) Betsy Brauser Third Amended Trust Agreement (beneficially owned by the spouse and disclaimed by Michael Brauser) of 357,142 shares of common stock and 357,142 immediately exercisable warrant shares. Indirect ownership through (i) Grander Holdings, Inc. 401K profit Sharing Plan (of which, Michael Brauser is a trustee) of 314,285 shares of common stock and 314,285 immediately exercisable warrant shares; (ii) Brauser 2010 GRAT (of which Michael Brauser is a trustee) of 342,857 shares of common stock and 342,857 immediately exercisable warrant shares; and (iii) BMB Holdings, LLLP (of which, Michael Brauser is the Manager of its General Partner) of 846,428 shares of common stock and 846,428 immediately exercisable warrant shares. Includes 61,875 stock options exercisable within 60 days. Mr. Brauser is a former director of the Company who resigned on March 2, 2011(5)Black Sheep, FLP is a family limited partnership the co-general partners of which are Frank L. Jaksch, Jr. and Tricia Jaksch and the sole limited partners of which are Frank L. Jaksch, Jr., Tricia Jaksch and the Jaksch Family Trust. (6)(5)Includes 2,857,142Direct ownership of (i) 803,498 shares of common stock owned directly by Barry Honig and a further 3,159,384100,000 immediately exercisable warrants and (ii) through Michael & Betsy Brauser TBE, 3,571,428 shares of common stock. Indirect ownership through (i) Grander Holdings, Inc. 401K profit Sharing Plan (of which Michael Brauser is a trustee) of 314,285 shares of common stock and 314,285 immediately exercisable warrants; (ii) Brauser 2010 GRAT (of which Michael Brauser is a trustee) of 342,857 shares of common stock and 342,857 immediately exercisable warrants; and (iii) BMB Holdings, LLLP (of which Michael Brauser is the Manager of its General Partner) of 846,428 shares of common stock and 846,428 immediately exercisable warrants; and (iv) Betsy Brauser Third Amended Trust Agreement (beneficially owned by the spouse and disclaimed by Michael Brauser) of 357,142 shares of common stock and 357,142 immediately exercisable warrants. Includes 111,159 stock options exercisable within 60 days.(6) Direct ownership of 4,574,959 shares of common stock. Indirect ownership through (i) 230,000 Shares owned by GRQ Consultants, Inc. Defined Benefits Plan for which Mr. Honig is the beneficiary and holds voting and investment power; (ii) 941,486 Shares owned by GRQ Consultants, Inc. 401K of which Mr. Honig is the beneficiary and holds voting and investment power; and (iii) 2,103,571 Shares owned by GRQ Consultants Inc Roth 401K FBO Renee Honig, for which Mr. Honig’s spouse is the beneficiary and Mr. Honig holds voting and investment power.(7)power and disclaims beneficial ownership. Includes 1,071,428 shares of common stock owned by Harrison Honig UTMA for which Alan Honig acts as custodian; 1,071,428 shares of common stock owned by Jacob Honig UTMA for which Alan Honig acts as custodian; 535,714 shares of common stock owned by Cameron Honig UTMA for which Alan Honig acts as custodian; and 714,284 shares of common owned by Ryan Honig UTMA for which Alan Honig acts as custodian.(8)Includes 170,50083,333 stock options exercisable within 60 days.(9)Includes 143,208 stock options exercisable within 60 days.(10) Includes 236,125 stock options exercisable within 60 days.(11)Includes 281,750465,683 stock options exercisable within 60 days. Does not include 2,053,995 shares beneficially owned by Margery Germain, who is Mr. Germain’s wife, as Mr. Germain does not share voting or dispositive control over those shares.(12)(11)Indirect ownership through IVC Investors, LLLP (in which Glenn Halpryn has an interest) of 535,7141,271,428 shares of common stock and 535,714 immediately exercisable warrant shares.stock. Glenn Halpryn disclaims beneficial ownership of these shares except to the extent of any pecuniary interest therein. Includes 75,625126,206 stock options exercisable within 60 days.(13) Includes 1,429,000 shares owned by the JakschFMJ Family Trust,Limited Partnership, beneficially owned by Frank L Jaksch Jr. because Mr. Jaksch Jr. has shared voting power for such shares. Includes 6,225,155 shares owned by Black Sheep, FLP beneficially owned by Mr. Jaksch Jr. because he has shared voting power and shared dispositive power for such shares. Includes 925,417339,165 shares directly owned by Mr. Jaksch Jr. Includes 1,387,500 stock options exercisable within 60 days.(14)Includes 560,938 stock options exercisable within 60 days.(15)On November 17, 2010, William F. Spengler purchased 1,000,000 restricted shares of ChromaDex common stock at a price of the par value, or $0.001 per share. The restricted shares will vest in full on November 15, 2013, provided that Mr. Spengler is continuously employed by the Company and the fair market value of the Company’s common stock at any time prior to November 15, 2013 has increased by at least three times.(16)Includes 535,714 immediately exercisable warrant shares and 2,393,563 stock options exercisable within 60 days.theour equity compensation plans of ChromaDex as of January 1, 2011: 15,023,431 $1.51 1,737,880 (1) — — — 15,023,431 $1.51 1,737,880 (1) A B C Equity compensation plans approved by security holders 13,445,692 1.10 6,569,688 (1) Equity compensation plans not approved by security holders - - - Total 13,445,692 1.10 6,569,688 (1) (1) Pursuant to the Company’sour Second Amended and Restated 2007 Equity Incentive Plan, the Company iswe are authorized to issue shares under this plan that total no more than 20% of theour shares of common stock issued and outstanding, as determined on a fully diluted basis.Item 13.Certain Relationships and Related Transactions, and Director IndependenceDuring the year ended January 1, 2011,paid unpaid compensation from prior yearsand Opko Health, Inc. (“OPKO”) entered into a license, supply and distribution agreement. Pursuant to Frank L. Jaksch, Jr.this agreement, the Company has licensed to OPKO certain new product offerings and Mark Germainhealth care technologies for distribution and business development throughout Latin America. As of December 29, 2012, there were no transactions between the Company and OPKO under this agreement, but the initial products to be commercialized is our proprietary product pterostilbene. On July 10, 2012, the Company and OPKO entered into another agreement, pursuant to which OPKO was retained to serve as management consultant and advisor to the Company. That agreement expired on October 10, 2012. As a consideration for the services, the Company granted OPKO 500,000 shares of its common stock. The fair value of this stock award was $320,000 and was measured using the Company’s stock price on the date of award. The expense was amortized over the three month period which the services had been provided. Dr. Phillip Frost, who beneficially owns 15,252,937 shares of the Company’s common stock, or 16.6% of the Company’s outstanding shares as of December 29, 2012, is Chairman of the Board and Chief Executive Officer of OPKO.amountAudit Committee.board of directors,Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The board of directorsBoard has determined that each of Michael H. Brauser, Barry Honig, Stephen Block, Reid Dabney, Hugh Dunkerley, Mark S. Germain, and Glenn L. Halpryn and Curtis Lockshin has no material relationship with our Company and is independent within the independence requirements of Marketplace Rule 5605(a)(2) of the NASDAQ Stock Market, Inc. Frank L. Jaksch Jr. does not meet the aforementioned independence standards because of he is the Chief Executive Officer of our Company.Item 14.Principal Accounting Fees and ServicesJanuary 1,December 29, 2012 and December 31, 2011, and January 2, 2010, McGladrey, & PullenLLP was the Company’s independent registered public accounting firm. For each of these years, McGladrey, & Pullen, LLP and RSM McGladrey, Inc. performed the following professional services: 2010 2009 $ 123,000 $ 119,000 $ 20,000 $ — $ 14,400 $ 22,000 $ — $ — 2012 2011 $ 151,900 $ 200,000 $ 78,000 $ 23,400 $ 37,000 $ 45,200 All Other Fees $ — $ — (1) Audit fees consist of fees for the audit of the Company’s financial statements and review of financial statements included in the Company’s quarterly reports. (2) Audit-related fees include costs incurred for reviews of registration statements and consultations on various accounting matters in support of the Company’s financial statements. (3) Tax fees consist of fees for tax compliance matters. Item 15.Exhibits and Financial Statement SchedulesItem 16.Signatures16th29th day of March 2011.2013.CHROMADEX CORPORATIONBy: By: /s/ FRANK L. JAKSCH JR. Frank L. Jaksch Jr. Chief Executive Officer Chief Executive Officer and Director March 29, 2013 Frank L. Jaksch Jr. Chairman of the Board, Chief ExecutiveOfficer and Director March 16, 2011Thomas C. Varvaro March 29, 2013 Thomas C. Varvaro (Principal Financial and Accounting Officer) /s/ MICHAEL BRAUSER Co-Chairman of the Board and Director March 16, 201129, 2013Michael Brauser /s/ BARRY C. HONIG Co-Chairman of the Board and Director March 29, 2013 Barry C. Honig /s/ STEPHEN BLOCK Stephen Block Director March 16, 201129, 2013Stephen Block /s/ REID DABNEY Reid Dabney Director March 16, 201129, 2013Reid Dabney /s/ GLENN L. HALPRYN Glenn L. Halpryn Director March 16, 201129, 2013Glenn L. Halpryn /s/ HUGH DUNKERLEYHugh Dunkerley Director March 16, 201129, 2013Curtis A. Lockshin /s/ MARK GERMAINMark Germain Director March 16, 201129, 2013Hugh Dunkerley /s/ MARK S. GERMAIN Director March 29, 2013 Mark S. Germain 2.1 Agreement and Plan of Merger, dated as of May 21, 2008, among Cody, CDI Acquisition, Inc. and ChromaDex, Inc. as amended on June 10, 2008 (incorporated by reference from, and filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 3.1 Amended and Restated Certificate of Incorporation of ChromaDex Corporation, a Delaware corporation (incorporated by reference from, and filed as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed with the Commission on May 4, 2010) 3.2 Bylaws of ChromaDex Corporation, a Delaware corporation (incorporated by reference from, and filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 4.1 Form of Stock Certificate representing shares of ChromaDex Corporation Common Stock (incorporated by reference from, and filed as Exhibit 4.1 of the Company’s Annual Report on Form 10-K filed with the Commission on April 3, 2009) 4.2 Investor’s Rights Agreement, effective as of December 31, 2005, by and between The University of Mississippi Research Foundation and ChromaDex (incorporated by reference from, and filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 4.3 Tag-Along Agreement effective as of December 31, 2005, by and among the Company, Frank Louis Jaksch, Snr. & Maria Jaksch, Trustees of the Jaksch Family Trust, Margery Germain, Lauren Germain, Emily Germain, Lucie Germain, Frank Louis Jaksch, Jr., and the University of Mississippi Research Foundation (incorporated by reference from, and filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 4.4 License Agreement, effective September 15, 2005 between L&J Becvar, L.P. and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 4.5 Form of Warrant to Purchase Shares of Common Stock of ChromaDex Corporation (incorporated by reference from, and filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on July 30, 2008) 4.6 Form of Warrant under the Subscription Agreement, dated as of April 22, 2010 (incorporated by reference from, and filed as Exhibit 10.2 to the Company’sCompany's Current Report on Form 8-K filed with the Commission on April 26, 2010)4.7 Form of Registered Direct Agreement, dated as of January 31, 2012 (incorporated by reference from, and filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 1, 2012) 4.8 Form of Purchase Agreement dated as of January 31, 2012 (incorporated by reference from, and filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed with the Commission on February 1, 2012) 10.1 ChromaDex, Inc. 2000 Non-Qualified Incentive Stock Option Plan effective October 1, 2000 (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008)(1)+ 10.2 Second Amended and Restated 2007 Equity Incentive Plan effective March 13, 2007, as amended May 20, 2010 (incorporated by reference from, and filed as Appendix B to the Company’s Current Definitive Proxy Statement on Schedule 14A filed with the Commission on May 4, 2010)(1)+ 10.3 Form of Stock Option Agreement under the ChromaDex, Inc. Second Amended and Restated 2007 Equity Incentive Plan (incorporated by reference from, and filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008)(1)+ 10.4 Form of Restricted Stock Purchase Agreement under the ChromaDex, Inc. 2007 Equity Incentive Plan (incorporated by reference from, and filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008)(1)+ 10.5 Amended and Restated Employment Agreement dated April 19, 2010, by and between Frank L. Jaksch, Jr. and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 22, 2010)(1)+ 10.6 Amended and Restated Employment Agreement dated April 19, 2010, by and between Thomas C. Varvaro and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on April 22, 2010)(1)+ 10.7 Employment Agreement dated as of October 27, 2010, between ChromaDex, Inc. and William F. Spengler (incorporated by reference from, and filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on November 1, 2010)+ 10.8 Amendment to Employment Agreement, dated as of March 14, 2011, between ChromaDex, Inc. and William F. Spengler+vSpengler (incorporated by reference from, and filed as Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed with the Commission on March 16, 2011)+10.9 Separation and Release Agreement, dated as of February 13, 2012 between ChromaDex Corporation and William F. Spengler (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 17, 2012)+ 10.910.10Employment Agreement, dated as of February 7, 2012 between ChromaDex Corporation and Jeffrey Himmel (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 13, 2012)+ 10.11 Separation and Release Agreement, dated as of June 11, 2012 between ChromaDex Corporation and Jeffrey Himmel (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 12, 2012)+ 10.12 Employment Agreement, dated as of February 21, 2012 between ChromaDex Corporation and Debra Heim (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 24, 2012)+ 10.13 Separation and Release Agreement, dated as of June 11, 2012 between ChromaDex Corporation and Debra Heim (incorporated by reference from, and filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on June 12, 2012)+ 10.14 Form of Indemnification Agreement entered into between the Company and existing directors and officers on October 27, 2010 (incorporated by reference from and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 1, 2010)+ 10.1010.15 Standard Industrial/Commercial Multi-Tenant Lease – Net dated December 19, 2006, by and between ChromaDex, Inc. and SCIF Portfolio II, LLC (incorporated by reference from, and filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 10.1110.16 Lease Agreement dated October 26, 2001, by and between Railhead Partners, LLC and NaPro BioTherapeutics, Inc., as assigned to Chromadex Analytics, Inc. on April 9, 2003 and amended on September 24, 2003 (incorporated by reference from, and filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 10.1210.17 First Amendment to Standard Industrial/Commercial Multi-Tenant Lease, made as of July 18, 2008, between SCIF Portfolio II, LLC (“Lessor”) and ChromaDex, Inc. (“Lessee”) (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on July 23, 2008) 10.1310.18 Second Addendum to Lease Agreement, made as of April 27, 2009, by and between Railhead Partners, LLC and Chromadex Analytics, Inc. (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 28, 2009) 10.1410.19 Licensing Agreement Nutraceutical Standards effective as of December 31, 1999 between the University of Mississippi Research Foundation and ChromaDex (incorporated by reference from, and filed as Exhibit 10.9 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 10.1510.20 Equity Based License Agreement dated October 25, 2001, by and between the Company and Bayer Innovation Beteiligungsgesellshaft mbH, as amended as of October 30, 2003 (incorporated by reference from, and filed as Exhibit 10.10 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 10.1610.21 License Agreement, effective September 15, 2005 between L&J Becvar, L.P. and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 10.1710.22 Patent License Agreement between the Board of Regents of The University of Texas Systems and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.12 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 10.1810.23 Stock Redemption Agreement, dated June 18, 2008 between ChromaDex, Inc. and Bayer Innovation GmbH (formerly named Bayer Innovation Beteiligungsgesellschaft mbH) (incorporated by reference from, and filed as Exhibit 10.13 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 10.1910.24 Promissory Note, dated June 18, 2008 between ChromaDex, Inc. as borrower and Bayer Innovation GmbH as lender (incorporated by reference from, and filed as Exhibit 10.14 to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008) 10.2010.25 Technology License Agreement dated June 30, 2008 between The Research Foundation of the State University of New York and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 12, 2008)* 10.26 Subscription Agreement, dated November 29, 2009, between Jinke Group (Hong Kong) Ltd and ChromaDex Corporation (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 3, 2009) 10.2110.27 Subscription Agreement, dated April 22, 2010, between ChromaDex Corporation and the subscribers listed on the signature pages thereto (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 26, 2010) 10.28 Placement Agency Agreement, dated as of January 31, 2012 (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 1, 2012) 10.2210.29 License Agreement, dated March 25, 2010 between the University of Mississippi and Chromadex,ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the Commission on May 18, 2010)*10.30 First Amendment to License Agreement, made as of June 3, 2011 between the University of Mississippi and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 18, 2010)August 11, 2011)*21.110.31 Subsidiaries ofLicense Agreement, dated July 5, 2011 between ChromaDex, Inc. and Cornell University (incorporated by reference from, and filed as Exhibit 21.110.1 to the Company’s CurrentQuarterly Report on Form 8-K10-Q filed with the Commission on June 24, 2008)November 10, 2011)*10.32 Exclusive License Agreement, dated September 8, 2011 between the Regents of the University of California and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 10, 2011)* 10.33 Exclusive License Agreement, dated July 13, 2012 between Dartmouth College and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 8, 2012)* 21.1 23.1 & Pullen, LLP, Independent Registered Public Accounting Firmv31.1 31.2 32.1 v Filed herewith. (1) Plan and related Forms were assumed by ChromaDex Corporation pursuant to Agreement and Plan of Merger, dated as of May 21, 2008, among ChromaDex Corporation (formerly Cody Resources, Inc.), CDI Acquisition, Inc. and ChromaDex, Inc. +Indicates management contract or compensatory plan or arrangement.* This Exhibit has been granted confidential treatment and has been filed separately with the Commission. The confidential portions of this Exhibit have been omitted and are marked by an asterisk. 69