Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 01, 2017 | Aug. 09, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | ChromaDex Corp. | |
Entity Central Index Key | 1,386,570 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 1, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 46,093,894 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jul. 01, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash | $ 14,138,607 | $ 1,642,429 |
Trade receivables, net of allowances of $736,000 and $1,081,000, respectively | 4,579,253 | 5,852,030 |
Inventories | 7,794,182 | 7,912,630 |
Prepaid expenses and other assets | 864,935 | 329,854 |
Total current assets | 27,376,977 | 15,736,943 |
Leasehold Improvements and Equipment, net | 3,372,879 | 3,111,374 |
Deposits | 402,497 | 397,207 |
Intangible assets, net | 1,767,811 | 486,226 |
Longterm investment | 0 | 20,318 |
Total assets | 32,920,164 | 19,752,068 |
Current Liabilities | ||
Accounts payable | 3,131,759 | 5,978,288 |
Accrued expenses | 2,111,205 | 2,170,172 |
Current maturities of capital lease obligations | 299,103 | 255,461 |
Customer deposits and other | 503,850 | 389,010 |
Deferred rent, current | 114,101 | 76,219 |
Due to officer | 100,000 | 0 |
Total current liabilities | 6,260,018 | 8,869,150 |
Capital lease obligations, less current maturities | 393,184 | 343,589 |
Deferred rent, less current | 547,539 | 564,971 |
Total Liabilities | 7,200,741 | 9,777,710 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Common stock, $.001 par value; authorized 150,000,000 shares; issued and outstanding July 1, 2017 45,571,891 shares and December 31, 2016 37,544,531 shares | 45,572 | 37,545 |
Additional paid-in capital | 75,590,304 | 55,160,387 |
Accumulated deficit | (49,916,453) | (45,223,574) |
Total stockholders' equity | 25,719,423 | 9,974,358 |
Total liabilities and stockholders' equity | $ 32,920,164 | $ 19,752,068 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Jul. 01, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts and returns | $ 736,000 | $ 1,081,000 |
Common Stock, Par Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 45,571,891 | 37,544,531 |
Common Stock, Shares, Outstanding | 45,571,891 | 37,544,531 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | ||
Income Statement [Abstract] | |||||
Sales, net | $ 5,306,855 | $ 8,829,579 | $ 9,755,977 | $ 16,161,524 | |
Cost of sales | 3,044,086 | 4,702,132 | 5,740,555 | 8,582,658 | |
Gross profit | 2,262,769 | 4,127,447 | 4,015,422 | 7,578,866 | |
Operating expenses: | |||||
Sales and marketing | 728,299 | 698,031 | 1,324,461 | 1,242,753 | |
Research and development | 849,962 | 751,726 | 1,514,152 | 1,215,798 | |
General and administrative | 2,657,573 | 2,306,559 | 5,040,719 | 4,295,118 | |
Other | 745,773 | 0 | 745,773 | 0 | |
Operating expenses | 4,981,607 | 3,756,316 | 8,625,105 | 6,753,669 | |
Operating income (loss) | (2,718,838) | 371,131 | (4,609,683) | 825,197 | |
Nonoperating expense: | |||||
Interest expense, net | (45,286) | (144,786) | (83,196) | (332,487) | |
Loss on debt extinguishment | 0 | (313,099) | 0 | (313,099) | |
Nonoperating expenses | (45,286) | (457,885) | (83,196) | (645,586) | |
Income (loss) before income taxes | (2,764,124) | (86,754) | (4,692,879) | 179,611 | |
Provision for income taxes | 0 | 4,087 | 0 | (6,653) | |
Net income (loss) | $ (2,764,124) | $ (82,667) | $ (4,692,879) | $ 172,958 | |
Basic earnings (loss) per common share | $ (0.07) | $ 0 | $ (0.12) | $ 0 | |
Diluted earnings (loss) per common share | (0.07) | 0 | $ (0.12) | $ 0 | |
Basic and diluted loss per common share | $ (0.07) | $ 0 | |||
Basic weighted average common shares outstanding | [1] | 42,121,150 | 36,990,032 | 40,075,920 | 36,702,037 |
Diluted weighted average common shares outstanding | 42,121,150 | 36,990,032 | 40,075,920 | 37,470,066 | |
Basic and diluted weighted average common shares outstanding | 42,121,150 | 36,990,032 | |||
[1] | Includes approximately 0.5 million weighted average nonvested shares of restricted stock for the three and six month periods ending July 1, 2017, respectively, and approximately 0.4 million weighted average nonvested shares of restricted stock for the three and six month periods ending July 2, 2016, respectively. These shares are participating securities that feature voting and dividend rights. |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (USD $) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2016 | 37,544,531 | |||
Beginning Balance, Amount at Dec. 31, 2016 | $ 37,545 | $ 55,160,387 | $ (45,223,574) | $ 9,974,358 |
Issuance of common stock associated with the acquisition of Healthspan Research LLC, Shares | 367,648 | |||
Issuance of common stock associated with the acquisition of Healthspan Research LLC, Amount | $ 367 | 999,635 | 1,000,002 | |
Exercise of stock options, Shares | 3,202 | |||
Exercise of stock options, Amount | $ 3 | 6,620 | 6,623 | |
Vested restricted stock, Shares | 2,667 | |||
Vested restricted stock, Amount | $ 3 | (3) | 0 | |
Share-based compensation | 319,830 | 319,830 | ||
Net loss | (1,928,755) | (1,928,755) | ||
Ending Balance, Shares at Apr. 01, 2017 | 37,918,048 | |||
Ending Balance, Amount at Apr. 01, 2017 | $ 37,918 | 56,486,469 | (47,152,329) | 9,372,058 |
Beginning Balance, Shares at Dec. 31, 2016 | 37,544,531 | |||
Beginning Balance, Amount at Dec. 31, 2016 | $ 37,545 | 55,160,387 | (45,223,574) | $ 9,974,358 |
Exercise of stock options, Shares | (3,202) | |||
Net loss | $ (4,692,879) | |||
Ending Balance, Shares at Jul. 01, 2017 | 45,571,891 | |||
Ending Balance, Amount at Jul. 01, 2017 | $ 45,572 | 75,590,304 | (49,916,453) | 25,719,423 |
Beginning Balance, Shares at Apr. 01, 2017 | 37,918,048 | |||
Beginning Balance, Amount at Apr. 01, 2017 | $ 37,918 | 56,486,469 | (47,152,329) | 9,372,058 |
Issuance of common stock, net of offering costs of $1,184,000, Shares | 7,649,968 | |||
Issuance of common stock, net of offering costs of $1,184,000, Amount | $ 7,650 | 18,698,634 | 18,706,284 | |
Exercise of stock options, Shares | 1,875 | |||
Exercise of stock options, Amount | $ 2 | 5,342 | 5,344 | |
Vested restricted stock, Shares | 2,000 | |||
Vested restricted stock, Amount | $ 2 | (2) | 0 | |
Share-based compensation | 399,861 | 399,861 | ||
Net loss | (2,764,124) | (2,764,124) | ||
Ending Balance, Shares at Jul. 01, 2017 | 45,571,891 | |||
Ending Balance, Amount at Jul. 01, 2017 | $ 45,572 | $ 75,590,304 | $ (49,916,453) | $ 25,719,423 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Equity (USD $) (Parenthetical) | 3 Months Ended |
Jul. 01, 2017USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Offering costs | $ 1,184,000 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jul. 01, 2017 | Jul. 02, 2016 | |
Cash Flows From Operating Activities | ||
Net income (loss) | $ (4,692,879) | $ 172,958 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation of leasehold improvements and equipment | 264,235 | 159,370 |
Amortization of intangibles | 89,803 | 38,415 |
Share-based compensation expense | 719,691 | 657,637 |
Allowance for doubtful trade receivables | (344,055) | 29,649 |
Loss from disposal of equipment | 1,452 | 0 |
Non-cash loss on debt extinguishment | 0 | 32,007 |
Non-cash financing costs | 56,587 | 94,080 |
Changes in operating assets and liabilities: | ||
Trade receivables | 1,628,288 | (4,372,837) |
Inventories | 179,362 | 3,628,678 |
Prepaid expenses and other assets | (554,679) | (266,831) |
Accounts payable | (2,950,302) | (3,892,582) |
Accrued expenses | (62,174) | 634,562 |
Customer deposits and other | 114,840 | (9,150) |
Deferred rent | 20,451 | 106,657 |
Due to officer | (32,500) | 0 |
Net cash used in operating activities | (5,561,880) | (2,987,387) |
Cash Flows From Investing Activities | ||
Purchases of leasehold improvements and equipment | (295,078) | (231,201) |
Purchases of intangible assets | (183,958) | (195,000) |
Net cash used in investing activities | (479,036) | (426,201) |
Cash Flows From Financing Activities | ||
Proceeds from issuance of common stock, net of issuance costs | 18,706,284 | 5,720,000 |
Proceeds from exercise of stock options | 11,966 | 622,384 |
Payment of debt issuance cost | (42,279) | 0 |
Principal payments on loan payable | 0 | (5,000,000) |
Principal payments on capital leases | (138,877) | (108,249) |
Net cash provided by financing activities | 18,537,094 | 1,234,135 |
Net increase (decrease) in cash | 12,496,178 | (2,179,453) |
Cash Beginning of Period | 1,642,429 | 5,549,672 |
Cash Ending of Period | 14,138,607 | 3,370,219 |
Supplemental Disclosures of Cash Flow Information | ||
Cash payments for interest | 26,611 | 239,839 |
Supplemental Schedule of Noncash Investing Activity | ||
Noncash consideration transferred for the acquisition of Healthspan Research LLC | 1,187,430 | 0 |
Capital lease obligation incurred for purchases of equipment | 232,114 | 0 |
Inventory supplied to Healthspan Research, LLC for equity interest, at cost | 0 | 20,318 |
Retirement of fully depreciated equipment - cost | 55,947 | 28,083 |
Retirement of fully depreciated equipment - accumulated depreciation | $ (55,947) | $ (28,083) |
Interim Financial Statements
Interim Financial Statements | 6 Months Ended |
Jul. 01, 2017 | |
Interim Financial Statements | |
Interim Financial Statements | The accompanying financial statements of ChromaDex Corporation and its wholly owned subsidiaries, ChromaDex, Inc., Healthspan Research, LLC, ChromaDex Analytics, Inc. and ChromaPharma, Inc. (collectively referred to herein as “ChromaDex” or the “Company” or, in the first person as “we”, “us” and “our”) include all adjustments, consisting of normal recurring adjustments and accruals, that, in the opinion of the management of the Company, are necessary for a fair presentation of the Company’s financial position as of July 1, 2017 and results of operations and cash flows for the three and six months ended July 1, 2017 and July 2, 2016. These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2016 appearing in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “Commission”) on March 16, 2017. Operating results for the six months ended July 1, 2017 are not necessarily indicative of the results to be achieved for the full year ending on December 30, 2017. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. The balance sheet at December 31, 2016 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. |
Nature of Business and Liquidit
Nature of Business and Liquidity | 6 Months Ended |
Jul. 01, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Liquidity | Nature of business Liquidity On April 26, 2017, the Company entered into a Securities Purchase Agreement with certain purchasers named therein, pursuant to which the Company agreed to sell and issue up to $25.0 million of its Common Stock in three tranches. The first and second tranche closed on April 27, 2017 and May 24, 2017, respectively and the Company received $3.5 million and $16.4 million, respectively. The third tranche is expected to close following a related stockholder approval at the Company's special meeting on August 10, 2017. While we anticipate that our current cash, cash equivalents, cash to be generated from operations and the funds from the financing transaction described above will be sufficient to meet our projected operating plans through at least August 11, 2018, we may require additional funds, either through additional equity or debt financings or collaborative agreements or from other sources. We have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all. If adequate financing is not available, the Company will further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations. The inability to raise additional financing may have a material adverse effect on the future performance of the Company. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jul. 01, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Basis of presentation Adopted Accounting Pronouncements Fiscal 2017 Note 5. Acquisition and Related Party Transaction In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting to simplify the accounting for stock compensation. It focuses on income tax accounting, award classification, estimating forfeitures, and cash flow presentation. The Company adopted the amendments in this ASU effective as of January 1, 2017. The adoption of ASU 2016-09 did not have a material effect on our consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330) - Simplifying the Measurement of Inventory, which requires that inventories, other than those accounted for under Last-In-First-Out, will be reported at the lower of cost or net realizable value. Net realizable value is the estimated selling price less costs of completion, disposal and transportation. The Company adopted the amendments in this ASU effective as of January 1, 2017. The adoption of ASU 2015-11 did not have a material effect on our consolidated financial statements. Recent accounting standards |
Earnings Per Share Applicable t
Earnings Per Share Applicable to Common Stockholders | 6 Months Ended |
Jul. 01, 2017 | |
Loss Per Share Applicable To Common Stockholders | |
Earnings Per Share Applicable to Common Stockholders | The following table sets forth the computations of earnings per share amounts applicable to common stockholders for the three and six months ended July 1, 2017 and July 2, 2016: Three Months Ended Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Net income (loss) $ (2,764,124 ) $ (82,667 ) $ (4,692,879 ) $ 172,958 Basic weighted average common shares outstanding (1): 42,121,150 36,990,032 40,075,920 36,702,037 Basic earnings (loss) per common share $ (0.07 ) $ (0.00 ) $ (0.12 ) $ 0.00 Dilutive effect of stock options, net - - - 726,879 Dilutive effect of warrants, net - - - 41,750 Diluted weighted average common shares outstanding : 42,121,150 36,990,032 40,075,920 37,470,666 Diluted earnings (loss) per common share $ (0.07 ) $ (0.00 ) $ (0.12 ) $ 0.00 Potentially dilutive securities, total (2): Stock options 5,965,172 5,126,943 5,965,172 4,400,064 Warrants 470,444 487,111 470,444 445,361 (1) Includes approximately 0.5 million weighted average nonvested shares of restricted stock for each of the three and six month periods ending July 1, 2017, respectively, and approximately 0.4 million weighted average nonvested shares of restricted stock for the three and six month periods ending July 2, 2016, respectively. These shares are participating securities that feature voting and dividend rights. (2) Excluded from the computation of diluted earnings (loss) per share as their impact is antidilutive. |
Asset Acquisition and Related P
Asset Acquisition and Related Party Transaction | 6 Months Ended |
Jul. 01, 2017 | |
Related Party Transactions [Abstract] | |
Asset Acquisition and Related Party Transaction | On March 12, 2017, the Company acquired all of the outstanding equity interests of Healthspan from Robert Fried, Jeffrey Allen and Dr. Charles Brenner (the "Sellers"). Robert Fried is a member of the Board of Directors ("Board") of the Company, a position he has held since July 2015. Upon the closing of, and as consideration for, the acquisition, the Company issued an aggregate of 367,648 shares of the Company’s common stock to the Sellers. The fair value of these shares was approximately $1.0 million based on the closing price of $2.72 per share on March 12, 2017. Also on March 12, 2017, the Company appointed Robert Fried as President and Chief Strategy Officer, effective immediately. Mr. Fried continues to serve as a member of the Board, but resigned as a member of the Nominating and Corporate Governance Committee of the Board. Healthspan was formed in August 2015 to offer and sell finished bottle products that contain NIAGEN® directly to consumers through internet-based selling platforms. NIAGEN® is the leading ingredient the Company currently sells. Prior to the acquisition, the Company has supplied certain amount of NIAGEN® to Healthspan as a raw material inventory in exchange for a 4% equity interest in Healthspan. An additional 5% equity interest was received for granting certain exclusive rights to resell NIAGEN®. The Company acquired the consumer product business model that Healthspan has established. Included in the business model acquired is the know-how marketing to date, and the designs and procedures needed to operate a consumer product business. This transaction was accounted for as an acquisition of assets. An intangible asset of approximately $1.35 million was recorded as a result of this acquisition, which is the difference of consideration transferred and the net amount of assets acquired and liabilities assumed. (A) Consideration transferred (B) Net amount of assets and liabilities Fair value Assets acquired Fair value Common Stock $ 1,000,000 Cash and cash equivalents $19,000 Transaction costs 178,000 Trade receivables 11,000 Previously held equity interest 20,000 Inventory 61,000 $ 1,198,000 Liabilities assumed Due to officer (132,000) Accounts payable (74,000) Credit card payable (30,000) Other accrued expenses (3,000) Consumer product business model, intangible asset (A) -(B) $ 1,346,000 Net assets $ (148,000) The acquired intangible asset is considered to have a useful life of 10 years as we believe the economic benefits from the acquisition will last at least 10 years. The expense is amortized using the straight-line method over the useful life and the Company recognized an amortization expense of approximately $41,000 for the six months ended July 1, 2017. In cancellation of a loan owed by Healthspan to Mr. Fried prior to the acquisition, the Company repaid $32,500 to Mr. Fried on March 13, 2017 and will also repay $100,000 on March 12, 2018. No interest is to be paid for the outstanding $100,000 due to Mr. Fried. |
Trade Receivables Allowances
Trade Receivables Allowances | 6 Months Ended |
Jul. 01, 2017 | |
Trade Receivables Allowances | |
Trade Receivables Allowances | The allowance amounts for the periods ended July 1, 2017 and December 31, 2016 are as follows: July 1, 2017 December 31, 2016 Allowances related to Customer C $ 500,000 $ 800,000 Customer E 184,000 198,000 Other allowances 52,000 83,000 $ 736,000 $ 1,081,000 |
Inventories
Inventories | 6 Months Ended |
Jul. 01, 2017 | |
Inventories Abstract | |
Inventories | The amounts of major classes of inventory as of July 1, 2017 and December 31, 2016 are as follows: July 1, 2017 December 31, 2016 Bulk ingredients $ 6,833,000 $ 7,044,000 Reference standards 1,052,000 1,033,000 Dietary supplement - finished bottles 23,000 - Dietary supplement - work-in-process 48,000 - 7,956,000 8,077,000 Less valuation allowance (162,000 ) (164,000 ) $ 7,794,000 $ 7,913,000 |
Employee Share-Based Compensati
Employee Share-Based Compensation | 6 Months Ended |
Jul. 01, 2017 | |
Share-based Compensation | |
Employee Share-Based Compensation | Stock Option Plans On June 20, 2017, the stockholders of the Company approved the ChromaDex Corporation 2017 Equity Incentive Plan (the "2017 Plan"). The 2017 Plan is intended to be the successor to the ChromaDex Corporation Second Amended and Restated 2007 Equity Incentive Plan (the "2007 Plan"). Under the 2017 Plan, the Company is authorized to issue stock options that total no more than the sum of (i) 3,000,000 new shares, (ii) approximately 384,000 unallocated shares remaining available for the grant of new awards under the 2007 Plan, and (iii) any returning shares from the 2007 Plan or the 2017 Plan, such as forfeited, cancelled, or expired shares. Share-Based Compensation for Robert Fried On March 12, 2017, the Board appointed Robert Fried, as President and Chief Strategy Officer. In connection with his appointment as President and Chief Strategy Officer, the Company granted an option to purchase up to 500,000 shares of ChromaDex common stock under the 2007 Plan, subject to monthly vesting over a three-year period. The Company also granted 166,667 shares of restricted stock, subject to annual vesting over a three-year period. The fair value measured for the granted restricted stock was approximately $453,000 and the expense is amortized over the vesting period of three years. Service Period Based Stock Options The following table summarizes activity of service period based stock options granted to employees at July 1, 2017 and changes during the six months then ended: Weighted Average Remaining Aggregate Number of Exercise Contractual Fair Intrinsic Shares Price Term Value Value Outstanding at December 31, 2016 4,281,151 $ 3.52 6.36 Options Granted 693,334 2.89 10.00 $ 1.85 Options Exercised (3,202 ) 2.07 $ 3,000 Options Forfeited (33,419 ) 3.53 Outstanding at July 1, 2017 4,937,864 $ 3.43 6.40 $ 3,072,000 Exercisable at July 1, 2017 3,348,382 $ 3.43 5.09 $ 2,246,000 The aggregate intrinsic values in the table above are based on the Company’s stock price of $3.82, which is the closing price of the Company’s stock on the last day of business for the period ended July 1, 2017. The fair value of the Company’s stock options was estimated at the date of grant using the Black-Scholes option pricing model. The table below outlines the weighted average assumptions for options granted to employees during the six months ended July 1, 2017. Six Months Ended July 1, 2017 Expected term 5.8 years Expected volatility 73 % Expected dividends 0.00 % Risk-free rate 2.13 % As of July 1, Employee Share-Based Compensation The Company recognized compensation expense of approximately $371,000 and $677,000 in general and administrative expenses in the statement of operations for the three and six months ended July 1, 2017, respectively, and approximately $314,000 and $621,000 for the three and six months ended July 2, 2016, respectively. |
Stock Issuance
Stock Issuance | 6 Months Ended |
Jul. 01, 2017 | |
Stock Issuance | |
Stock Issuance | On April 26, 2017, the Company entered into a Securities Purchase Agreement (the "SPA") with certain purchasers named therein, pursuant to which the Company agreed to sell and issue up to $25.0 million of its common stock at a purchase price of $2.60 per share in three tranches of approximately $3.5 million, $16.4 million and $5.1 million, respectively. The first two tranches closed during the three months ended July 1, 2017, whereby approximately 7.6 million shares were issued for proceeds of $19.9 million. The third tranche is expected to close following a related stockholder approval at the Company's special meeting on August 10, 2017. |
Business Segments
Business Segments | 6 Months Ended |
Jul. 01, 2017 | |
Business Segments | |
Business Segments | Since the year ended December 31, 2016, the Company has made operational changes to merge its scientific and regulatory consulting segment into core standards and contract services segment. Additionally, the consumer product operations recently acquired in connection with the Healthspan acquisition are categorized as a part of the ingredients segment. As a result, the Company has the following two reportable segments: ● Ingredients segment develops and commercializes proprietary-based ingredient technologies and supplies these ingredients to consumers in finished products or as raw materials to the manufacturers of consumer products in various industries including the nutritional supplement, food and beverage and animal health industries. ● Core standards and contract services segment includes (i) supply of phytochemical reference standards, (ii) analytical and chemistry based services and (iii) scientific and regulatory consulting. The “Corporate and other” classification includes corporate items not allocated by the Company to each reportable segment. Further, there are no intersegment sales that require elimination. The Company evaluates performance and allocates resources based on reviewing gross margin by reportable segment. Three months ended Core Standards and July 1, 2017 Ingredients Contract Services Corporate segment segment and other Total Net sales $ 3,004,656 $ 2,302,199 $ - $ 5,306,855 Cost of sales 1,356,845 1,687,241 - 3,044,086 Gross profit 1,647,811 614,958 - 2,262,769 Operating expenses: Sales and marketing 453,668 274,631 - 728,299 Research and development 849,962 - - 849,962 General and administrative - - 2,657,573 2,657,573 Other 745,773 - - 745,773 Operating expenses 2,049,403 274,631 2,657,573 4,981,607 Operating income (loss) $ (401,592 ) $ 340,327 $ (2,657,573 ) $ (2,718,838 ) Three months ended Core Standards and July 2, 2016 Ingredients Contract Services Corporate segment segment and other Total Net sales $ 6,241,749 $ 2,587,830 $ - $ 8,829,579 Cost of sales 3,034,389 1,667,743 - 4,702,132 Gross profit 3,207,360 920,087 - 4,127,447 Operating expenses: Sales and marketing 399,700 298,331 - 698,031 Research and development 736,726 15,000 - 751,726 General and administrative - - 2,306,559 2,306,559 Operating expenses 1,136,426 313,331 2,306,559 3,756,316 Operating income (loss) $ 2,070,934 $ 606,756 $ (2,306,559 ) $ 371,131 Six months ended Core Standards and July 1, 2017 Ingredients Contract Services Corporate segment segment and other Total Net sales $ 5,089,059 $ 4,666,918 $ - $ 9,755,977 Cost of sales 2,271,612 3,468,943 - 5,740,555 Gross profit 2,817,447 1,197,975 - 4,015,422 Operating expenses: Sales and marketing 759,013 565,448 - 1,324,461 Research and development 1,514,152 - - 1,514,152 General and administrative - - 5,040,719 5,040,719 Other 745,773 - - 745,773 Operating expenses 3,018,938 565,448 5,040,719 8,625,105 Operating income (loss) $ (201,491 ) $ 632,527 $ (5,040,719 ) $ (4,609,683 ) Six months ended Core Standards and July 2, 2016 Ingredients Contract Services Corporate segment segment and other Total Net sales $ 10,842,375 $ 5,319,149 $ - $ 16,161,524 Cost of sales 5,133,551 3,449,107 - 8,582,658 Gross profit 5,708,824 1,870,042 - 7,578,866 Operating expenses: Sales and marketing 731,443 511,310 - 1,242,753 Research and development 1,200,798 15,000 - 1,215,798 General and administrative - - 4,295,118 4,295,118 Operating expenses 1,932,241 526,310 4,295,118 6,753,669 Operating income (loss) $ 3,776,583 $ 1,343,732 $ (4,295,118 ) $ 825,197 Core Standards and At July 1, 2017 Ingredients Contract Services Corporate segment segment and other Total Total assets $ 13,413,963 $ 3,982,296 $ 15,523,905 $ 32,920,164 Core Standards and At December 31, 2016 Ingredients Contract Services Corporate segment segment and other Total Total assets $ 13,257,289 $ 3,918,440 $ 2,576,339 $ 19,752,068 Disclosure of major customers Major customers who accounted for more than 10% of the Company’s total sales were as follows: Three months ended Six months ended Major Customers July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Customer C (Ingredients segment) * 34.5 % * 31.3 % Customer F (Ingredients and Core segment) 11.9 % * * * * Represents less than 10%. Major customers who accounted for more than 10% of the Company’s total trade receivables were as follows: Percentage of the Company's Total Trade Receivables Major Customers At July 1, 2017 At December 31, 2016 Customer C (Ingredients segment) 48.8 % 45.8 % Customer D (Ingredients and Core segment) * 10.2 % * Represents less than 10%. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 01, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Legal proceedings On December 29, 2016, ChromaDex, Inc. filed a complaint (the “Complaint”) in the United States District Court for the Central District of California, naming Elysium Health, Inc. as defendant. Among other allegations, ChromaDex, Inc. alleges in the Complaint that (i) Elysium breached the Supply Agreement, dated June 26, 2014, by and between ChromaDex, Inc. and Elysium Health, LLC (“Elysium”) (the “pTeroPure® Supply Agreement”), by failing to make payments to ChromaDex, Inc. for purchases of pTeroPure® pursuant to the pTeroPure® Supply Agreement, (ii) Elysium breached the Supply Agreement, dated February 3, 2014, by and between ChromaDex, Inc. and Elysium, as amended (the “NIAGEN® Supply Agreement”), by failing to make payments to ChromaDex, Inc. for purchases of NIAGEN® pursuant to the NIAGEN® Supply Agreement, (iii) Elysium breached the Trademark License and Royalty Agreement, dated February 3, 2014, by and between ChromaDex, Inc. and Elysium (the “License Agreement”), by failing to make payments to ChromaDex, Inc. for royalties due pursuant to the License Agreement and (iv) certain officers of Elysium made false promises and representations to induce ChromaDex, Inc. into providing large supplies of pTeroPure® and NIAGEN® to Elysium pursuant to the pTeroPure® Supply Agreement and NIAGEN® Supply Agreement. ChromaDex, Inc. is seeking punitive damages, money damages and interest. On January 25, 2017, Elysium filed an answer and counterclaims (the “Counterclaim”) in response to the Complaint. Among other allegations, Elysium alleges in the Counterclaim that (i) ChromaDex, Inc. breached the NIAGEN® Supply Agreement by not issuing certain refunds or credits to Elysium and for violating certain confidential information provisions, (ii) ChromaDex, Inc. breached the implied covenant of good faith and fair dealing pursuant to the NIAGEN® Supply Agreement, (iii) ChromaDex, Inc. breached certain confidential provisions of the pTeroPure® Supply Agreement, (iv) ChromaDex, Inc. fraudulently induced Elysium into entering into the License Agreement (the “Fraud Claim”), (v) ChromaDex, Inc.’s conduct constitutes misuse of its patent rights (the “Patent Claim”) and (vi) ChromaDex, Inc. has engaged in unlawful or unfair competition under California state law (the “Unfair Competition Claim”). Elysium is seeking damages for ChromaDex, Inc.’s alleged breaches of the NIAGEN® Supply Agreement and pTeroPure® Supply Agreement, and compensatory damages, punitive damages and/or rescission of the License Agreement and restitution of any royalty payments conveyed by Elysium pursuant to the License Agreement. On February 15, 2017, ChromaDex, Inc. filed an amended complaint. In the amended complaint, ChromaDex, Inc. re-alleges the claims in the Complaint, and also alleges that Elysium willfully and maliciously misappropriated ChromaDex, Inc.’s trade secrets. On February 15, 2017, ChromaDex, Inc. also filed a motion to dismiss the Fraud Claim, the Patent Claim and the Unfair Competition Claim. On March 1, 2017, Elysium filed a motion to dismiss ChromaDex, Inc.'s fraud and trade secret misappropriation causes of action. On March 6, 2017, Elysium filed a first amended counterclaim. On March 20, 2017, ChromaDex, Inc. moved to dismiss Elysium's amended fraud, patent misuse and the Unfair Competition Claim. On May 10, 2017, the court ruled on the motions to dismiss, denying ChromaDex, Inc.’s motion as to Elysium’s fraud and patent misuse claims and granting ChromaDex, Inc.’s motion with prejudice as to Elysium’s Unfair Competition Claim. With respect to Elysium’s motion, the court granted the motion with prejudice as to ChromaDex, Inc.’s fraud claim and granted with leave to amend the motion as to ChromaDex, Inc.’s trade secret misappropriation claims. On May 24, 2017, ChromaDex, Inc. answered the first amended counterclaim and asserted several affirmative defenses. Also on May 24, 2017, ChromaDex, Inc. filed a second amended complaint, amending the trade secret misappropriation claims and addressing Elysium’s patent misuse counterclaim. On June 7, 2017, ChromaDex, Inc. filed a third amended complaint dismissing the trade secret misappropriation claims and asserting two breach of contract claims for Elysium’s failure to pay for the product delivered. On June 16, 2017, Elysium answered the third amended complaint. On July 17, 2017, Elysium filed petitions with the U.S. Patent and Trademark Office for inter partes review of U.S. Patent No. 8,197,807 and 8,383,086, patents to which ChromaDex, Inc. is the exclusive licensee. As of July 1, 2017, ChromaDex, Inc. did not accrue a potential loss for the Counterclaim because ChromaDex, Inc. believes that the allegations are without merit and thus it is not probable that a liability had been incurred, and the amount of loss cannot be reasonably estimated. From time to time we are involved in legal proceedings arising in the ordinary course of our business. We believe that there is no other litigation pending that is likely to have, individually or in the aggregate, a material adverse effect on our financial condition or results of operations. Lease Subsequent to the period ended July 1, 2017, the Company entered into a lease for an office space located in Los Angeles, California through September 2021. Pursuant to the lease, the Company will make monthly lease payments ranging from approximately $11,000 to $21,000, as the payments escalate during the term of the lease. Employment agreement with Robert Fried On March 12, 2017, the Company entered into an Employment Agreement (the "Fried Agreement") with Robert Fried. Mr. Fried is entitled to receive certain severance payments per the terms of the Fried Agreement. The key terms of the Fried Agreement, including the severance terms are as follows: Mr. Fried is entitled to: (i) an annual base salary of $300,000; (ii) an annual cash bonus equal to (a) 1% of net direct-to-consumer sales of products with nicotinamide riboside as a lead ingredient by the Company plus (b) 2% of direct to consumer net sales of products with nicotinamide riboside as a lead ingredient for the portion of such sales that exceeded prior year sales plus (c) 1% of the gross profit derived from nicotinamide riboside ingredient sales to dietary supplement producers; (iii) an option to purchase up to 500,000 shares of Common Stock under the 2007 plan, subject to monthly vesting over a three-year period; and (iv) 166,667 shares of restricted Common Stock, subject to annual vesting over a three-year period. Subject to Mr. Fried’s continuous service through such date, Mr. Fried is also eligible to receive (i) on March 12, 2018, 166,667 shares of restricted Common Stock, subject to annual vesting over a two-year period, (ii) on March 12, 2019, 166,666 shares of restricted Common Stock that vest in full on the one year anniversary of the grant date and (iii) up to 500,000 shares of fully-vested restricted Common Stock that will be granted upon the achievement of certain performance goals. Any unvested options or shares of restricted stock will vest in full upon (a) a change in control of the Company, (b) Mr. Fried’s death, (c) Mr. Fried’s disability, (d) termination by the Company of Mr. Fried’s employment without cause or (e) Mr. Fried’s resignation for good reason, subject in each case to Mr. Fried’s continuous service as an employee or consultant of the Company or any of its subsidiaries though such event. The severance terms of the Fried Agreement provide that if (i) Mr. Fried’s employment is terminated by the Company without cause, for death or disability, or Mr. Fried resigns for good reason, or (ii) (a) a change in control of the Company occurs and (b) within one month prior to the date of such change in control or twelve months after the date of such change in control R. Fried’s employment is terminated by the Company other than for cause, then, subject to executing a release, Mr. Fried will receive (w) continuation of his base salary for 12 months, (x) health care continuation coverage payments premiums for 12 months, (y) a prorated annual cash bonus earned for the fiscal year in which such termination or resignation occurs, and (z) an extended exercise period for his options |
Other Expense
Other Expense | 6 Months Ended |
Jul. 01, 2017 | |
Other Expense | |
Other Expense | Loss from an ongoing litigation, Elysium Health, Inc. During the three months ended July 1, 2017, the Company, in relation to the ongoing litigation, incurred a write-off of approximately $746,000 in gross trade receivable from Elysium Health, Inc. related to royalties. As a result of this write-off and after further analysis, the Company made an adjustment to the total allowance amount from ($800,000) to ($500,000). |
Significant Accounting Polici20
Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 01, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation |
Accounting Pronouncements and Standards | Adopted Accounting Pronouncements Fiscal 2017 Note 5. Acquisition and Related Party Transaction In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting to simplify the accounting for stock compensation. It focuses on income tax accounting, award classification, estimating forfeitures, and cash flow presentation. The Company adopted the amendments in this ASU effective as of January 1, 2017. The adoption of ASU 2016-09 did not have a material effect on our consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330) - Simplifying the Measurement of Inventory, which requires that inventories, other than those accounted for under Last-In-First-Out, will be reported at the lower of cost or net realizable value. Net realizable value is the estimated selling price less costs of completion, disposal and transportation. The Company adopted the amendments in this ASU effective as of January 1, 2017. The adoption of ASU 2015-11 did not have a material effect on our consolidated financial statements. Recent accounting standards |
Earnings Per Share Applicable21
Earnings Per Share Applicable to Common Stockholders (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Loss Per Share Applicable To Common Stockholders Tables | |
Loss per share amounts applicable to common stockholders | Three Months Ended Six Months Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Net income (loss) $ (2,764,124 ) $ (82,667 ) $ (4,692,879 ) $ 172,958 Basic weighted average common shares outstanding (1): 42,121,150 36,990,032 40,075,920 36,702,037 Basic earnings (loss) per common share $ (0.07 ) $ (0.00 ) $ (0.12 ) $ 0.00 Dilutive effect of stock options, net - - - 726,879 Dilutive effect of warrants, net - - - 41,750 Diluted weighted average common shares outstanding : 42,121,150 36,990,032 40,075,920 37,470,666 Diluted earnings (loss) per common share $ (0.07 ) $ (0.00 ) $ (0.12 ) $ 0.00 Potentially dilutive securities, total (2): Stock options 5,965,172 5,126,943 5,965,172 4,400,064 Warrants 470,444 487,111 470,444 445,361 (1) Includes approximately 0.5 million weighted average nonvested shares of restricted stock for each of the three and six month periods ending July 1, 2017, respectively, and approximately 0.4 million weighted average nonvested shares of restricted stock for the three and six month periods ending July 2, 2016, respectively. These shares are participating securities that feature voting and dividend rights. (2) Excluded from the computation of diluted earnings (loss) per share as their impact is antidilutive. |
Asset Acquisition and Related22
Asset Acquisition and Related Party Transaction (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Asset Acquisition And Related Party Transaction Tables | |
Net amount of assets and liabilities acquired | (A) Consideration transferred (B) Net amount of assets and liabilities Fair value Assets acquired Fair value Common Stock $ 1,000,000 Cash and cash equivalents $19,000 Transaction costs 178,000 Trade receivables 11,000 Previously held equity interest 20,000 Inventory 61,000 $ 1,198,000 Liabilities assumed Due to officer (132,000) Accounts payable (74,000) Credit card payable (30,000) Other accrued expenses (3,000) Consumer product business model, intangible asset (A) -(B) $ 1,346,000 Net assets $ (148,000) |
Trade Receivables Allowances (T
Trade Receivables Allowances (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Trade Receivables Allowances Tables | |
Trade Receivables Allowances | July 1, 2017 December 31, 2016 Allowances related to Customer C $ 500,000 $ 800,000 Customer E 184,000 198,000 Other allowances 52,000 83,000 $ 736,000 $ 1,081,000 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Accounting Policies [Abstract] | |
Inventories | July 1, 2017 December 31, 2016 Bulk ingredients $ 6,833,000 $ 7,044,000 Reference standards 1,052,000 1,033,000 Dietary supplement - finished bottles 23,000 - Dietary supplement - work-in-process 48,000 - 7,956,000 8,077,000 Less valuation allowance (162,000 ) (164,000 ) $ 7,794,000 $ 7,913,000 |
Employee Share-Based Compensa25
Employee Share-Based Compensation (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Share-based Compensation Tables | |
Service Period Based Stock Options | Weighted Average Remaining Aggregate Number of Exercise Contractual Fair Intrinsic Shares Price Term Value Value Outstanding at December 31, 2016 4,281,151 $ 3.52 6.36 Options Granted 693,334 2.89 10.00 $ 1.85 Options Exercised (3,202 ) 2.07 $ 3,000 Options Forfeited (33,419 ) 3.53 Outstanding at July 1, 2017 4,937,864 $ 3.43 6.40 $ 3,072,000 Exercisable at July 1, 2017 3,348,382 $ 3.43 5.09 $ 2,246,000 |
Weighted average assumptions of stock options granted | Six Months Ended July 1, 2017 Expected term 5.8 years Expected volatility 73 % Expected dividends 0.00 % Risk-free rate 2.13 % |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jul. 01, 2017 | |
Business Segmentation | Three months ended Core Standards and July 1, 2017 Ingredients Contract Services Corporate segment segment and other Total Net sales $ 3,004,656 $ 2,302,199 $ - $ 5,306,855 Cost of sales 1,356,845 1,687,241 - 3,044,086 Gross profit 1,647,811 614,958 - 2,262,769 Operating expenses: Sales and marketing 453,668 274,631 - 728,299 Research and development 849,962 - - 849,962 General and administrative - - 2,657,573 2,657,573 Other 745,773 - - 745,773 Operating expenses 2,049,403 274,631 2,657,573 4,981,607 Operating income (loss) $ (401,592 ) $ 340,327 $ (2,657,573 ) $ (2,718,838 ) Three months ended Core Standards and July 2, 2016 Ingredients Contract Services Corporate segment segment and other Total Net sales $ 6,241,749 $ 2,587,830 $ - $ 8,829,579 Cost of sales 3,034,389 1,667,743 - 4,702,132 Gross profit 3,207,360 920,087 - 4,127,447 Operating expenses: Sales and marketing 399,700 298,331 - 698,031 Research and development 736,726 15,000 - 751,726 General and administrative - - 2,306,559 2,306,559 Operating expenses 1,136,426 313,331 2,306,559 3,756,316 Operating income (loss) $ 2,070,934 $ 606,756 $ (2,306,559 ) $ 371,131 Six months ended Core Standards and July 1, 2017 Ingredients Contract Services Corporate segment segment and other Total Net sales $ 5,089,059 $ 4,666,918 $ - $ 9,755,977 Cost of sales 2,271,612 3,468,943 - 5,740,555 Gross profit 2,817,447 1,197,975 - 4,015,422 Operating expenses: Sales and marketing 759,013 565,448 - 1,324,461 Research and development 1,514,152 - - 1,514,152 General and administrative - - 5,040,719 5,040,719 Other 745,773 - - 745,773 Operating expenses 3,018,938 565,448 5,040,719 8,625,105 Operating income (loss) $ (201,491 ) $ 632,527 $ (5,040,719 ) $ (4,609,683 ) Six months ended Core Standards and July 2, 2016 Ingredients Contract Services Corporate segment segment and other Total Net sales $ 10,842,375 $ 5,319,149 $ - $ 16,161,524 Cost of sales 5,133,551 3,449,107 - 8,582,658 Gross profit 5,708,824 1,870,042 - 7,578,866 Operating expenses: Sales and marketing 731,443 511,310 - 1,242,753 Research and development 1,200,798 15,000 - 1,215,798 General and administrative - - 4,295,118 4,295,118 Operating expenses 1,932,241 526,310 4,295,118 6,753,669 Operating income (loss) $ 3,776,583 $ 1,343,732 $ (4,295,118 ) $ 825,197 Core Standards and At July 1, 2017 Ingredients Contract Services Corporate segment segment and other Total Total assets $ 13,413,963 $ 3,982,296 $ 15,523,905 $ 32,920,164 Core Standards and At December 31, 2016 Ingredients Contract Services Corporate segment segment and other Total Total assets $ 13,257,289 $ 3,918,440 $ 2,576,339 $ 19,752,068 |
Sales Revenue, Net [Member] | |
Percentage of Sales Table | Three months ended Six months ended Major Customers July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016 Customer C (Ingredients segment) * 34.5 % * 31.3 % Customer F (Ingredients and Core segment) 11.9 % * * * * Represents less than 10%. |
Accounts Receivable [Member] | |
Percentage of Sales Table | Percentage of the Company's Total Trade Receivables Major Customers At July 1, 2017 At December 31, 2016 Customer C (Ingredients segment) 48.8 % 45.8 % Customer D (Ingredients and Core segment) * 10.2 % * Represents less than 10%. |
Nature of Business and Liquid27
Nature of Business and Liquidity (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jul. 01, 2017 | Apr. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Operating income (loss) | $ (2,718,838) | $ 371,131 | $ (4,609,683) | $ 825,197 | ||
Net (loss) | (2,764,124) | $ (1,928,755) | (82,667) | (4,692,879) | 172,958 | |
Cash and cash equivalents | $ 14,138,607 | $ 3,370,219 | $ 14,138,607 | $ 3,370,219 | $ 1,642,429 |
Earnings Per Share Applicable28
Earnings Per Share Applicable to Common Stockholders (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jul. 01, 2017 | Apr. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | ||
Net income (loss) | $ (2,764,124) | $ (1,928,755) | $ (82,667) | $ (4,692,879) | $ 172,958 | |
Basic weighted average common shares outstanding | [1] | 42,121,150 | 36,990,032 | 40,075,920 | 36,702,037 | |
Basic earnings (loss) per common share | $ (0.07) | $ 0 | $ (0.12) | $ 0 | ||
Dilutive effect of stock options, net | 0 | 0 | 0 | 726,879 | ||
Dilutive effect of warrants, net | 0 | 0 | 0 | 41,750 | ||
Diluted weighted average common shares outstanding : | 42,121,150 | 36,990,032 | 40,075,920 | 37,470,066 | ||
Diluted earnings (loss) per common share | $ (0.07) | $ 0 | $ (0.12) | $ 0 | ||
Stock Option [Member] | ||||||
Potentially dilutive securities | [2] | 5,965,172 | 5,126,943 | 5,965,172 | 4,400,064 | |
Warrant [Member] | ||||||
Potentially dilutive securities | [2] | 470,444 | 487,111 | 470,444 | 445,361 | |
[1] | Includes approximately 0.5 million weighted average nonvested shares of restricted stock for the three and six month periods ending July 1, 2017, respectively, and approximately 0.4 million weighted average nonvested shares of restricted stock for the three and six month periods ending July 2, 2016, respectively. These shares are participating securities that feature voting and dividend rights. | |||||
[2] | Excluded from the computation of diluted earnings (loss) per share as their impact is antidilutive. |
Asset Acquisition and Related29
Asset Acquisition and Related Party Transaction (Details) | 6 Months Ended |
Jul. 01, 2017USD ($) | |
Asset Acquisition And Related Party Transaction Tables | |
Common Stock | $ 1,000,000 |
Transaction costs | 178,000 |
Previously held equity interest | 20,000 |
Consideration transferred (A) | 1,198,000 |
Assets acquired | |
Cash and cash equivalents | 19,000 |
Trade receivables | 11,000 |
Inventory | 61,000 |
Liabilities assumed | |
Due to officer | (132,000) |
Accounts payable | (74,000) |
Credit card payable | (30,000) |
Other accrued expenses | (3,000) |
Net assets (B) | (148,000) |
Consumer product business model, intangible asset (A) -(B) | $ 1,346,000 |
Trade Receivables Allowances (D
Trade Receivables Allowances (Details) - USD ($) | Jul. 01, 2017 | Dec. 31, 2016 |
Trade receivables allowances | $ 736,000 | $ 1,081,000 |
Customer C | ||
Trade receivables allowances | 500,000 | 800,000 |
Customer E | ||
Trade receivables allowances | 184,000 | 198,000 |
Other Allowances | ||
Trade receivables allowances | $ 52,000 | $ 83,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Jul. 01, 2017 | Dec. 31, 2016 |
Inventories | ||
Bulk ingredients | $ 6,833,000 | $ 7,044,000 |
Reference standards | 1,052,000 | 1,033,000 |
Dietary Supplement - finished bottles | 23,000 | 0 |
Dietary supplement - work-in-process | 48,000 | 0 |
Inventory-gross | 7,956,000 | 8,077,000 |
Less valuation allowance | (162,000) | (164,000) |
Inventory-net | $ 7,794,182 | $ 7,912,630 |
Employee Share-Based Compensa32
Employee Share-Based Compensation (Details) | 6 Months Ended |
Jul. 01, 2017USD ($)$ / sharesshares | |
Service Period Based Stock Options | |
Outstanding at Beginning of Period | shares | 4,281,151 |
Options Granted | shares | 693,334 |
Options Exercised | shares | (3,202) |
Options Forfeited | shares | (33,419) |
Outstanding at End of Period | shares | 4,937,864 |
Exercisable at End of Period | shares | 3,348,382 |
Weighted Average Exercise Price | |
Outstanding at Beginning of Period | $ 3.52 |
Options Granted | 2.89 |
Options Exercised | 2.07 |
Options Forfeited | 3.53 |
Outstanding at End of Period | 3.43 |
Exercisable at End of Period | $ 3.43 |
Weighted Average Remaining Contractual Term | |
Outstanding at Beginning of Period | 6 years 4 months 10 days |
Options Granted | 10 years |
Outstanding at End of Period | 6 years 4 months 24 days |
Exercisable at End of Period | 5 years 1 month 2 days |
Weighted Average Fair Value | |
Weighted Average Fair Value Option Granted | $ 1.85 |
Aggregate Intrinsic Value | |
Exercised | $ | $ 3,000 |
Outstanding at End of Period | $ | 3,072,000 |
Exercisable at End of Period | $ | $ 2,246,000 |
Employee Share-Based Compensa33
Employee Share-Based Compensation (Details 1) | 6 Months Ended |
Jul. 01, 2017 | |
Employee Share-based Compensation Details 1 | |
Expected term | 5 years 9 months 18 days |
Expected volatility | 73.00% |
Expected dividends | 0.00% |
Risk-free rate | 2.13% |
Employee Share-Based Compensa34
Employee Share-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | |
Closing stock price | $ 3.82 | $ 3.82 | ||
Unrecognized compensation expense | $ 3,081,000 | $ 3,081,000 | ||
Cost is expected to be recognized over a weighted average period | 2 years 4 months 24 days | |||
Recognized compensation expense | $ 371,000 | $ 314,000 | $ 677,000 | $ 621,000 |
President [Member] | ||||
Option grant | 500,000 | |||
Restricted stock award | 166,667 | |||
Fair value of restricted stock award | $ 453,000 |
Stock Issuance (Details Narrati
Stock Issuance (Details Narrative) - USD ($) | 6 Months Ended | |
Jul. 01, 2017 | Apr. 26, 2017 | |
Stock Issuance | ||
Shares issued under SPA | 7,600,000 | |
Proceeds received under SPA | $ 19,900,000 | |
Purchase price per share | $ 2.60 |
Business Segments (Details)
Business Segments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | Dec. 31, 2016 | |
Net sales | $ 5,306,855 | $ 8,829,579 | $ 9,755,977 | $ 16,161,524 | |
Cost of sales | 3,044,086 | 4,702,132 | 5,740,555 | 8,582,658 | |
Gross profit | 2,262,769 | 4,127,447 | 4,015,422 | 7,578,866 | |
Operating expenses: | |||||
Sales and marketing | 728,299 | 698,031 | 1,324,461 | 1,242,753 | |
Research and development | 849,962 | 751,726 | 1,514,152 | 1,215,798 | |
General and administrative | 2,657,573 | 2,306,559 | 5,040,719 | 4,295,118 | |
Other | 745,773 | 0 | 745,773 | 0 | |
Operating expenses | 4,981,607 | 3,756,316 | 8,625,105 | 6,753,669 | |
Operating income (loss) | (2,718,838) | 371,131 | (4,609,683) | 825,197 | |
Total assets | 32,920,164 | 32,920,164 | $ 19,752,068 | ||
Ingredients Segment [Member] | |||||
Net sales | 3,004,656 | 6,241,749 | 5,089,059 | 10,842,375 | |
Cost of sales | 1,356,845 | 3,034,389 | 2,271,612 | 5,133,551 | |
Gross profit | 1,647,811 | 3,207,360 | 2,817,447 | 5,708,824 | |
Operating expenses: | |||||
Sales and marketing | 453,668 | 399,700 | 759,013 | 731,443 | |
Research and development | 849,962 | 736,726 | 1,514,152 | 1,200,798 | |
General and administrative | 0 | 0 | 0 | 0 | |
Other | 745,773 | 745,773 | |||
Operating expenses | 2,049,403 | 1,136,426 | 3,018,938 | 1,932,241 | |
Operating income (loss) | (401,592) | 2,070,934 | (201,491) | 3,776,583 | |
Total assets | 13,413,963 | 13,413,963 | 13,257,289 | ||
Core Standards and Contract Services Segment [Member] | |||||
Net sales | 2,302,199 | 2,587,830 | 4,666,918 | 5,319,149 | |
Cost of sales | 1,687,241 | 1,667,743 | 3,468,943 | 3,449,107 | |
Gross profit | 614,958 | 920,087 | 1,197,975 | 1,870,042 | |
Operating expenses: | |||||
Sales and marketing | 274,631 | 298,331 | 565,448 | 511,310 | |
Research and development | 0 | 15,000 | 0 | 15,000 | |
General and administrative | 0 | 0 | 0 | 0 | |
Other | 0 | 0 | |||
Operating expenses | 274,631 | 313,331 | 565,448 | 526,310 | |
Operating income (loss) | 340,327 | 606,756 | 632,527 | 1,343,732 | |
Total assets | 3,982,296 | 3,982,296 | 3,918,440 | ||
Corporate and Other Segment [Member] | |||||
Net sales | 0 | 0 | 0 | 0 | |
Cost of sales | 0 | 0 | 0 | 0 | |
Gross profit | 0 | 0 | 0 | 0 | |
Operating expenses: | |||||
Sales and marketing | 0 | 0 | 0 | 0 | |
Research and development | 0 | 0 | 0 | 0 | |
General and administrative | 2,657,573 | 2,306,559 | 5,040,719 | 4,295,118 | |
Other | 0 | 0 | |||
Operating expenses | 2,657,573 | 2,306,559 | 5,040,719 | 4,295,118 | |
Operating income (loss) | (2,657,573) | $ (2,306,559) | (5,040,719) | $ (4,295,118) | |
Total assets | $ 15,523,905 | $ 15,523,905 | $ 2,576,339 |
Business Segments (Details 1)
Business Segments (Details 1) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jul. 01, 2017 | Jul. 02, 2016 | Jul. 01, 2017 | Jul. 02, 2016 | Dec. 31, 2016 | |||||
Customer C [Member] | Ingredients Segment [Member] | |||||||||
Customer concentration risk | [1] | 34.50% | [1] | 31.30% | |||||
Customer F [Member] | Ingredients and Core Segment [Member] | |||||||||
Customer concentration risk | 11.90% | [1] | [1] | [1] | |||||
Customer C Receivables [Member] | Ingredients Segment [Member] | |||||||||
Customer concentration risk | 48.80% | 45.80% | |||||||
Customer D Receivables [Member] | Ingredients and Core Segment [Member] | |||||||||
Customer concentration risk | [1] | 10.20% | |||||||
[1] | Represents less than 10%. |
Other Expense (Details Narrativ
Other Expense (Details Narrative) | 3 Months Ended |
Jul. 01, 2017USD ($) | |
Other Expense | |
Loss from ongoing litigation | $ 746,000 |
Allowance amount, beginning | (800,000) |
Allowance amount, ending | $ (500,000) |