ChromaDex
Annual Report 2014

Plain-text annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended January 3, 2015[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.Commission file number 000-53290 CHROMADEX CORPORATION(Exact name of Registrant as specified in its Charter) Delaware26-2940963 (State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.) 10005 Muirlands Blvd. Suite G, Irvine, California 92618 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (949) 419-0288Securities registered pursuant to Section 12(b) of the Act:Title of each className of Each Exchange on Which RegisteredN/A N/A Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par valueIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X ]Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes [X] No [ ]Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required tosubmit and post such files). Yes [X] No [ ]Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the bestof registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form10-K. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “accelerated filer,” “large accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated Filer [X] Non-accelerated filer [ ] Smaller Reporting Company [ ](Do not check if smaller reportingcompany) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]As of June 28, 2014, the aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $83,626,518.Number of shares of common stock of the registrant outstanding as of March 18, 2015: 107,287,058DOCUMENTS INCORPORATED BY REFERENCE None. Table of Contents TABLE OF CONTENTS Item PART I Cautionary Notice Regarding Forward-Looking Statements 11. Business 11A. Risk Factors 142. Properties 283. Legal Proceedings 284. Mine Safety Disclosures 28 PART II 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 296. Selected Financial Data 307. Management's Discussion and Analysis of Financial Condition and Results of Operations 307A Quantitative and Qualitative Disclosures About Market Risk 378. Financial Statements and Supplementary Data 389. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 699A Controls and Procedures 699B. Other Information 72 PART III 10. Directors, Executive Officers and Corporate Governance 7311. Executive Compensation 8012. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 9013. Certain Relationships and Related Transactions, and Director Independence 9214. Principal Accounting Fees and Services 93 PART IV 15. Exhibits, Financial Statement Schedules 95 Signatures 96 -i-Table of Contents PART I CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K (the “Form 10-K”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933,as amended, and Section 21E of the Securities Exchange Act of 1934 and are made pursuant to the safe harbor provisions of the Private Securities LitigationReform Act of 1995. Forward-looking statements reflect the current view about future events. When used in this Form 10-K the words “anticipate,” “believe,”“estimate,” “expect,” “future,” “intend,” “plan” or the negative of these terms and similar expressions as they relate to us or our management identify forwardlooking statements. Such statements, include, but are not limited to, statements contained in this Form 10-K relating to our business, business strategy,products and services we may offer in the future, sales and marketing strategy and capital outlook. Forward-looking statements are based on our currentexpectations and assumptions regarding our business, the economy and other future conditions. Because forward looking statements relate to the future, theyare subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from thosecontemplated by the forward-looking statements. They are neither statement of historical fact nor guarantees of assurance of future performance. We cautionyou therefore against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those inthe forward looking statements include, but are not limited to, a decline in general economic conditions nationally and internationally; decreased demand forour products and services; market acceptance of our products; the ability to protect our intellectual property rights; impact of any litigation or infringementactions brought against us; competition from other providers and products; risks in product development; inability to raise capital to fund continuingoperations; changes in government regulation; the ability to complete customer transactions and capital raising transactions, and other factors (including therisks 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 anybusinesses 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. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannotguarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the UnitedStates, we undertake no obligation to and do not intend to update any of the forward-looking statements to conform these statements to actual results. Item 1. Business Company Overview The business of ChromaDex Corporation is conducted by our principal subsidiaries, ChromaDex, Inc., 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”) is a natural products company that discovers, acquires, develops and commercializes proprietary-based ingredient technologies throughits business model that utilizes its wholly owned synergistic business units, including ingredient technologies, natural product fine chemicals (known as“phytochemicals”), chemistry and analytical testing services, and product regulatory and safety consulting. The Company provides science-based solutionsto the nutritional supplement, food and beverage, animal health, cosmetic and pharmaceutical industries. The ChromaDex ingredient technologies unitincludes products backed with scientific research and intellectual property. Its ingredient portfolio includes pTeroPure® pterostilbene; ProC3G®, a naturalblack rice containing cyanidin-3-glucoside; PURENERGY®, a caffeine-pTeroPure co-crystal; and NIAGEN®, its recently launched branded nicotinamideriboside, a next-generation B vitamin. -1-Table of Contents Through Chromadex Analytics, we perform chemistry-based analytical services located at our laboratory in Boulder, Colorado, setting the standard insupport of quality control or quality assurance activities within the dietary supplement industry. Through Spherix, we provide scientific and regulatoryconsulting to the clients in the food, supplement and pharmaceutical industries to manage potential health and regulatory risks. For the fiscal years endedJanuary 3, 2015 and December 28, 2013, our revenues were approximately $15,313,000 and $10,161,000, respectively. We are a leading provider of research and quality-control products and services to the natural products industry. Customers worldwide in the dietarysupplement, food and 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 finished products. Customers also use our analytical chemistry services to support theirquality assurance activities, primarily to ensure the identity, potency and safety of their consumer products. We have conducted this core business since1999. We believe there is a growing need at both the manufacturing and government regulatory levels for reference standards, analytical methods and other qualityassurance methods to ensure that products that contain plants, plant extracts and naturally occurring compounds distributed to consumers are safe. We furtherbelieve that this need is driven by the perception at the consumer level regarding a lack of adequate quality controls related to certain functional food ordietary supplement based products, as well as increased effort on the part of the Food and Drug Administration (“FDA”) to assure Good ManufacturingPractices (“GMP”). Our core standards and contract service businesses provide us with the opportunity to become aware of the results from research and screening activitiesperformed on thousands of potential natural product candidates through our relationships with various universities and research institutions. By selecting themost promising ingredients leveraged from this market-based screening model, which is grounded by primary research performed through leadinguniversities and institutions, followed by selective investments in further research and development, new natural products-related intellectual property can beidentified and brought to various markets with a much lower investment cost and an increased chance of success. The first of these proprietary compounds,pterostilbene, is marketed and sold under our brand name, pTeroPure®. Pterostilbene is a polyphenol and a powerful antioxidant that shows promise in arange of health related issues. We have in-licensed patents and patents pending related to the use of pterostilbene for a number of these benefits, and havefiled additional patents related to supplementary benefits, such as a patent jointly filed with University of California at Irvine related to its effects on non-melanoma skin cancer. We have successfully conducted a clinical trial, together with the University of Mississippi, related to its blood pressure loweringeffects and expect to conduct additional clinical trials on this compound and anticipate entering the dietary supplement and, if clinical results are favorable,the pharmaceutical market. We believe that we have opportunities in the skin care market and will continue to investigate developing these opportunitiesinternally or through third party partners. Another one of our proprietary compounds is nicotinamide riboside (“NR”), for which our brand name is NIAGEN®. NR is found naturally in trace amountsin milk and other foods and is the “no-flush” version of the B vitamin known as niacin. The potential beneficial effects of NR in humans include increasedanti-aging properties, fatty acid oxidation, mitochondrial activity, resistance to negative consequences of high-fat diets, protection against oxidative stress,prevention of peripheral neuropathy and blocking muscle degeneration. Published research has shown that NR is a potent precursor to NAD+ in themitochondria of animals. NAD+ is an important cellular co-factor for improvement of mitochondrial performance and energy metabolism. The Company hasbuilt a significant patent portfolio pertaining to NR by separately acquiring patent rights from Cornell University, Dartmouth College and WashingtonUniversity. We have successfully completed the first human clinical trial using NR and the results demonstrated that a single dose of NR resulted instatistically significant increases in the co-enzyme nicotinamide adenine dinucleotide (NAD+) in health human volunteers. In addition, NR was also foundto be safe as no adverse events were observed throughout the clinical trial. We are currently analyzing the molecular data obtained from the clinical trialrelating to NAD+ metabolome. We anticipate conducting additional clinical trials on NR and other compounds in our pipeline to provide differentiation aswe market these ingredients and support various health-related claims or obtain additional regulatory clearances. -2-Table of ContentsThrough Spherix, we provide our clients in the food, supplement and pharmaceutical industries with effective scientific solutions to manage their potentialhealth and regulatory risks. Our science-based solutions are for both new and existing products that may be subject to product liability and/or exposed tochanging scientific standards or public perceptions; literature evaluations; and design and assessment of pre-clinical and clinical safety testing. Wespecialize in regulatory submissions for food and dietary supplement ingredients. For our clients involved in drug development within the pharmaceuticalindustry, we provide similar services as well as risk-based strategies, including intellectual property data and compliance gap identification, due diligenceassessments and investigational new drug writing. Spherix has complemented and expanded our leadership in reference standards and business services byproviding a more comprehensive suite of science-based and regulatory services. Through Spherix, we have more efficiently advanced products in the dietarysupplement, food and beverage, animal health, cosmetic and pharmaceutical markets. Company Background ChromaDex, Inc. was originally formed as a California corporation on February 19, 2000. On April 23, 2003, ChromaDex Inc. acquired the research anddevelopment group of a competing natural product company called Napro Biotherapeutics located in Boulder, Colorado. The assets acquired in thistransaction were placed in a newly-formed, wholly-owned subsidiary of ChromaDex named Chromadex Analytics, Inc., a Nevada corporation. On December3, 2012, ChromaDex Inc. acquired a scientific and regulatory consulting company called Spherix Consulting Inc. located in the greater Washington D.C. areaand Spherix Consulting Inc. became a wholly-owned subsidiary of ChromaDex, Inc. In 2011, the Company launched its BluScience retail consumer linebased on its proprietary ingredients. However, on March 28, 2013, the Company entered into an asset purchase and sale agreement with NeutriSciInternational Inc. (“NeutriSci”) and consummated the sale of BluScience consumer product line to NeutriSci. Our Strategy Our business strategy is to identify, acquire, reduce-to-practice, and commercialize innovative new natural products and technologies, with an initial industryfocus on the dietary supplement, nutraceutical, food and beverage, functional food, animal health, pharmaceutical and skin care markets. We plan to utilizeour experienced management team to commercialize these natural product technologies by advancing them through any required regulatory approvalprocesses, selectively conducting clinical trials, arranging for reliable and cost-effective manufacturing, and ultimately either directly selling the products orlicensing the intellectual property to third parties. We plan to conduct clinical trials to (a) reinforce the health benefits that may be associated with ouringredients in support of sales made into the dietary supplement and food, cosmetics and beverage markets, (b) potentially improve the quality or specificityof FDA approved claim we can make with respect to these health benefits, and (c) potentially lead us toward pharmaceutical applications for our ingredients. •Commercialization of intellectual property: We believe that many of our products currently in development have the potential to spin offtechnologies that may themselves be independently capable of commercialization and becoming significant new revenue sources. Webelieve that new intellectual property can also be developed from our expansion into new markets. •Expansion and growth of the core business: We intend to continue to expand our phytochemical standards offerings, which is the core ofour business. Currently, we have approximately 5,000 defined standards. We expect to add about 500 new standards each year for theforeseeable future. •Expansion into new markets: We are developing business in new domestic and international markets. These markets include both thedomestic and international botanical drug market and the market for novel therapeutic botanicals from Asia, South America and Africa. Wehave also added what we believe to be new and innovative product offerings, including the screening of compound libraries and theoffering of value-added raw materials. •Expansion through acquisitions: We are a leader in the phytochemical standards market. We believe other smaller competitors are havingdifficulty expanding their revenue base and are prime candidates for acquisition by us. We believe that a long-term roll-up strategy couldeventually lead to ChromaDex positioning itself as a provider of choice for phytochemical standards and libraries. -3-Table of Contents Overview of our Products and Services We are headquartered in Irvine, California, and our analytical and research laboratory facility, Chromadex Analytics, is located in Boulder, Colorado.Chromadex Analytics operates a facility with 13,000 square feet of laboratory and office space. While we perform many of the contract services and researchfor our clients, Chromadex Analytics manufactures certain phytochemical reference standards, provides research and development, all analytical services andlaboratory support for ChromaDex. Since 2003, we have invested in excess of $3.0 million in laboratory equipment, and we currently have personnelpossessing over 200 years of combined pharmaceutical and natural products chemistry experience. In December 2012, we acquired Spherix, located in the greater Washington D.C. area. Spherix provides its clients in the food, supplement andpharmaceutical industries with effective solutions to manage potential health and regulatory risks. Current products and services provided are: •Ingredient technologies. We offer bulk raw materials for inclusion in dietary supplements, food, beverage and cosmetic products. This is anarea where we are increasing our focus, as we believe we can secure and defend our market positions through patents and long-termmanufacturing agreements with our customers and vendors. •Supply of reference standards, materials & kits. Through our catalog, we supply a wide range of products necessary to conduct qualitycontrol of raw materials and consumer products. Reference standards and materials and the kits created from them are used for research andquality control in the dietary supplements, cosmetics, food and beverages, and pharmaceutical industries. •Supply of fine chemicals and phytochemicals. As demand for new natural products and phytochemicals increases, we can scale up andsupply our core products in the gram to kilogram scale for companies that require these products for research and new product development. •Contract services. ChromaDex, through Chromadex Analytics, provides a wide range of contract services ranging from routine contractanalysis for the production of dietary supplements, cosmetics, foods and other natural products to elaborate contract research for clients inthese industries. •Consulting services. We provide a comprehensive range of consulting services in the areas of regulatory support, new ingredient or productdevelopment, risk management and litigation support. Through Spherix, we provide and offer product regulatory approval and scientificadvisory services. •Process development. Developing cost effective and efficient processes for manufacturing natural products can be very difficult and timeconsuming. We can assist customers in creating processes for cost-effective manufacturing of natural products, using “green chemistry.” Products and services in development: •Nicotinamide riboside. We are working to develop and conduct additional clinical trials to reinforce the health benefits associated withnicotinamide riboside. Nicotinamide riboside, a recently discovered vitamin found naturally in milk, is a more potent version of the morecommonly known niacin (vitamin B3). Nicotinamide riboside has shown promise for improving cardiovascular health, glucose levels andcognitive function and has demonstrated evidence of anti-aging effects. •Pterostilbene and caffeine co-crystal. We are working to develop and conduct additional clinical trials to reinforce the benefits of the co-crystal ingredient comprised of caffeine and pterostilbene. The first human study of this ingredient demonstrated that it delivers 30 percentmore caffeine, stays in the blood stream longer, and is absorbed more slowly than ordinary caffeine. With this ingredient, formulators ofenergy products may have the ability to reduce the total amount of caffeine in their products by as much as 50% without sacrificingconsumers’ expectations from such products. -4-Table of Contents •Anthocyanin. We are working to establish cost-effective methodologies for the efficient production of anthocyanins from geneticallyengineered 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, makingthem attractive candidates in the pharmaceutical, dietary supplement and food colorants industries. •Phytochemical libraries. We intend to continue investing in the development of natural product based libraries by continuing to createthese 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 ofbotanical reference materials. •Databases for cross-referencing phytochemicals. We are working on building a database for cross referencing phytochemicals against anextensive list of plants, including links to references to ethnopharmacological, ethnobotanical, and biological activity, as well as clinicalevidence. •Intellectual property. We plan to utilize our expertise in natural products to license and develop new intellectual property that can belicensed to clients in our target industries. Sales and Marketing Strategy Our sales platform for the ingredients, core reference standards and analytical service business is based on a direct, inside technical sales model. We hiretechnical sales staff with appropriate scientific background in chemistry, biology, biochemistry or other related scientific fields. Our sales staff currentlyoperates out of our Irvine, California office and performs sales duties by using combinations of telemarketing, e-mail, tradeshows and customer visits. It alsohas customer service responsibilities. We plan to add outside field sales representatives in the future as needed. All sales staff is compensated based on auniform basic pay model based on salary and performance-based bonus.Spherix, operating out of Rockville, Maryland, generates scientific and regulatory consulting revenue from an existing well-established list of Fortune 1000customers and referrals. Our sales staff for the ingredients, reference standards and analytical service business in Irvine, California will also generate leads forSpherix. USA and Canada: For our ingredients, core reference standards and analytical service business, we employ the use of a direct mail marketing strategy (catalogs, brochures andflyers) in combination with a range of the following marketing activities to promote and sell our products and services: •Tradeshows and conferences •Monthly newsletters (via e-mail) •Internet •Website •Advertising in trade publications •Press releases We intend to continue to use a direct marketing approach to promote our products and services to all markets that we target for direct sales. -5-Table of Contents International: For our core reference standards business, we use international distributors to market and sell to several foreign countries or markets. The use of distributors insome international markets has proven to be more effective than direct sales. Currently, we have exclusive distribution agreements in place with thefollowing distributors for the following countries or regions: •Europe (LGC Limited) •South America (JMC, Inc.) •Korea (Dongmyung Scientific Co.) •India (LGC Promochem India Pvt. Ltd.) We also use non-exclusive distributors for each of the following countries or groups of countries: •Japan •Australia and New Zealand •China •Indonesia, Malaysia, Singapore and Thailand •Mexico We may decide in the future to make non-exclusive distributors who show significant productivity in their designated market exclusive distributors in suchmarkets. Business MarketAccording to the Natural Marketing Institute, the Dietary Supplement, Functional Food and Beverage, and Natural Personal Care markets represent more than$250 billion in annual worldwide sales. The quality control and assurance of some of the products in these markets are, as previously noted, largely “underregulated.” This scenario leads to the establishment of the basis of one of our business strategies: concentration on the overall content of products, as well asactive/marker components, uniformity of production, and toxicology of products in these markets in ways similar to analysis by other companies focused inthe pharmaceutical industry. There is an increasing demand for new products, ingredients and ideas for natural products. The pressure for new, innovativeproducts, which are “natural” or “green” based, cuts across all markets including food, beverage, cosmetic and pharmaceutical. While we believe that doctors and patients have become more receptive to the use of botanical and herbal-based and natural and dietary ingredients toprevent or treat illness and improve quality of life, the medical establishment has conditioned its acceptance on significantly improved demonstration ofefficacy, safety and quality control comparable to that imposed on pharmaceuticals. Nevertheless, little is currently known about the constituents, activecompounds and safety of many botanical and herbal natural ingredients and few qualified chemists and technology based companies exist to supply theinformation and products necessary to meet this burgeoning market need. Natural products are complex mixtures of many compounds, with significantvariability arising from growing and extraction conditions. The following developments are some that highlight the need for standards control and qualityassurance: •The FDA published its draft guidance for GMPs for dietary supplements on March 13, 2003. The final rule from this guidance was madeeffective in June 2007, and full compliance was required by June 2010; and -6-Table of Contents •Regulatory agencies around the world have started to review the need for the regulation of herbal and natural supplements and areconsidering regulations that will include testing for the presence of toxic or adulterating compounds, drug/compound interactions andevidence that the products are biologically active for their intended use. Business Model We have taken advantage of both supply chain needs and regulatory requirements such as the GMPs for dietary supplements to build our core standards andanalytical services businesses. We believe that we create value throughout the supply chain of the pharmaceutical, dietary supplements, functional foodsand personal care markets. We do this by: •Combining the analytical methodology and characterization of materials with the technical support for the sale of reference materials byour clients; •Helping companies to comply with 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, through Spherix, we provide product regulatory approval and scientific advisory services to our clients in the food, supplement andpharmaceutical industries with effective solutions to manage potential health and regulatory risks. Our science-based solutions are for both new and existingproducts that may be subject to product liability and/or exposed to changing scientific standards or public perceptions; literature evaluations; and designand assessment of pre-clinical and clinical safety testing. We specialize in regulatory submissions for food and dietary supplement ingredients. For ourclients involved in drug development within the pharmaceutical industry, we provide similar services as well as risk-based strategies, including intellectualproperty data and compliance gap identification, due diligence assessments and investigational new drug writing. By providing a more comprehensive suiteof science-based and regulatory services, we will be able to more efficiently advance products in the dietary supplement, food and beverage, animal health,cosmetic and pharmaceutical markets. We will continue to expand this aspect of our business and, more importantly, capitalize on additional opportunities in product development andcommercialization of various kinds of intellectual property that we have largely discovered and acquired through the sales process associated with our corestandards and contract service businesses. Our core standards and contract service businesses provide us with the opportunity to become aware of the results from research and screening activitiesperformed on thousands of potential natural product candidates through our relationships with various universities and research institutions. By selecting themost promising ingredients leveraged from this market-based screening model, which is grounded by primary research performed through leadinguniversities and institutions, followed by selective investments in further research and development, new natural products-related intellectual property can beidentified and brought to various markets with a much lower investment cost and an increased chance of success. The first of these proprietary compounds,pterostilbene, is marketed and sold under our brand name, pTeroPure®. Pterostilbene is a polyphenol and a powerful antioxidant that shows promise in arange of health related issues. We have in-licensed patents and patents pending related to the use of pterostilbene for a number of these benefits, and havefiled additional patents related to supplementary benefits, such as a patent jointly filed with University of California at Irvine related to its effects on non-melanoma skin cancer. We have successfully conducted a clinical trial, together with the University of Mississippi, related to its blood pressure loweringeffects and expect to conduct additional clinical trials on this compound and anticipate entering the dietary supplement, and, if clinical results are favorable,possibly the pharmaceutical market. We believe that we have opportunities in the skin care market and will continue to investigate developing theseopportunities internally or through third party partners. -7-Table of Contents Another one of our proprietary compounds is nicotinamide riboside (“NR”), for which our brand name for this compound is NIAGEN®. NR is foundnaturally in trace amounts in milk and other foods and is a “no-flush” version of the B vitamin known as niacin. The potential beneficial effects of NR inhumans include increased anti-aging properties, fatty acid oxidation, mitochondrial activity, resistance to negative consequences of high-fat diets, protectionagainst oxidative stress, prevention of peripheral neuropathy and blocking muscle degeneration. Published research has shown that NR is a potent precursorto NAD+ in the mitochondria of animals. NAD+ is an important cellular co-factor for improvement of mitochondrial performance and energymetabolism. The Company has built a significant patent portfolio pertaining to NR by separately acquiring patent rights from Cornell University, DartmouthCollege and Washington University. We have successfully completed the first human clinical trial using NR and the results demonstrated that a single doseof NR resulted in statistically significant increases in the co-enzyme nicotinamide adenine dinucleotide (NAD+) in healthy human volunteers. In addition,NR was also found to be safe as no adverse events were observed throughout the clinical trial. We are currently analyzing the molecular data obtained fromthe clinical trial relating to NAD+ metabolome. We anticipate conducting additional clinical trials on NR and other compounds in our pipeline to providedifferentiation as we market these ingredients and support various health-related claims or obtain additional regulatory clearances. We continue to identify and in-license novel, proprietary compounds with significant potential health benefits. Among these next generation compounds arepterostilbene and caffeine co-crystal, which allows formulators of energy products to reduce the amount of caffeine in their products, and anthocyanins,which are compounds responsible for the dark pigment found in certain berries and flowers. Like pTeroPure® and NIAGEN®, these compounds also havepotential in multiple markets. Government Regulation Some of our operations are subject to regulation by various United States federal agencies and similar state and international agencies, including the FDA,the Federal Trade Commission (“FTC”), the Department of Commerce, the Department of Transportation, the Department of Agriculture and other state andinternational agencies. These regulators govern a wide variety of production activities, from design and development to labeling, manufacturing, handling,selling and distributing of products. From time to time, federal, state and international legislation is enacted that may have the effect of materially increasingthe cost of doing business or limiting or expanding our permissible activities. We cannot predict whether or when potential legislation or regulations will beenacted, and, if enacted, the effect of such legislation, regulation, implementation, or any implemented regulations or supervisory policies would have on ourfinancial condition or results of operations. In addition, the outcome of any litigation, investigations or enforcement actions initiated by state or federalauthorities could result in changes to our operations being necessary and in increased compliance costs. FDA Regulation Dietary supplements are subject to FDA regulations. For example, the FDA’s final rule on GMPs for dietary supplements published in June 2007 requirescompanies to evaluate products for identity, strength, purity and composition. These regulations in some cases, particularly for new ingredients, require anotification that must be submitted to the FDA along with evidence of safety. In addition, depending on the type of product, whether a dietary supplement,cosmetic, food, or pharmaceutical, the FDA, under the Food, Drug and Cosmetic Act, or FDCA, can regulate: •product testing; •product labeling; •product manufacturing and storage; •pre-market clearance or approval; •advertising and promotion; and •product sales and distribution. -8-Table of Contents The FDCA has been amended several times with respect to dietary supplements, most notably by the Dietary Supplement Health and Education Act of 1994,known as “DSHEA.” DSHEA 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, orNDI, 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” withoutbeing “chemically altered.” An NDI notification must provide the FDA with evidence of a “history of use or other evidence of safety” establishing that theuse 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 initialmarketing 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 theFDA’s refusal to accept such evidence could prevent the marketing of such dietary ingredients. The FDA is in the process of developing guidance for theindustry that will aim to clarify the FDA’s interpretation of the NDI notification requirements, and this guidance may raise new and significant regulatorybarriers for NDIs. In order for any new ingredient developed by us to be used in conventional food or beverage products in the United States, the product would either have tobe approved by the FDA as a food additive pursuant to a food additive petition, or FAP, or be generally recognized as safe, or GRAS. The FDA does not haveto approve a company’s determination that an ingredient is GRAS. However, a company can notify the FDA of its determination. There can be no assurancethat the FDA will approve any FAP for any ingredient that we may want to commercialize, or agree with our determination that an ingredient is GRAS, eitherof which could prevent the marketing of such ingredient. Advertising Regulation In addition to FDA regulations, the FTC regulates the advertising of dietary supplements, foods, cosmetics, and over-the-counter, or OTC, drugs. In recentyears, the FTC has instituted numerous enforcement actions against dietary supplement companies for failure to adequately substantiate claims made inadvertising or for the use of false or misleading advertising claims. These enforcement actions have often resulted in consent decrees and the payment of civilpenalties, restitution, or both, by the companies involved. We may be subject to regulation under various state and local laws that include provisionsgoverning, among other things, the formulation, manufacturing, packaging, labeling, advertising and distribution of dietary supplements, foods, cosmeticsand OTC drugs.In addition, The National Advertising Division of the Council of Better Business Bureaus (the “NAD”) reviews national advertising for truthfulness andaccuracy. The NAD uses a form of alternative dispute resolution, working closely with in-house counsel, marketing executives, research and developmentdepartments and outside consultants to decide whether claims have been substantiated. International Our international sales of dietary ingredients are subject to foreign government regulations, which vary substantially from country to country. The timerequired to obtain approval by a foreign country may be longer or shorter than that required for FDA approval, and the requirements may differ. In addition,the export by us of certain of our products that have not yet been cleared or approved for domestic distribution may be subject to FDA export restrictions. Wemay be unable to obtain on a timely basis, if at all, any foreign government or United States export approvals necessary for the marketing of our productsabroad. Regulation in Europe is exercised primarily through the European Union, which regulates the combined market of each of its member states. Other countries,such as Switzerland, have voluntarily adopted laws and regulations that mirror those of the European Union with respect to dietary ingredients. -9-Table of Contents Competitive Business Conditions For reference standards and analytical testing services, we face competition within the standardization and quality testing niche of the natural productsmarket, though we know of no other companies that offer both reference standards and testing to their customers. Below is a current list of certaincompetitors. These competitors have already developed reference standards or contract services or are currently taking steps to develop botanical standards orcontract services. Of the competitors listed, some currently sell fine chemicals, which, by default, are sometimes used as reference standards, and others areclosely aligned with our market niche so as to reduce any barriers to entry if these companies wish to compete. Some of these competitors currently offersimilar services and have the scale and resources to compete with us for larger customer accounts. Because some of our competitors are larger in total size andcapitalization, they likely have greater access to capital markets, and are in a better position than we are to compete nationally and internationally. Reference Standards and Analytical Testing Services Competitors •Sigma-Aldrich (SIAL) (USA) •Phytolab (Germany) •US Pharmacopoeia (USA) •Extrasynthese (France) •Covance (CVD) (USA) •Eurofins (ERF) (France) •Silliker Canada Co. (Canada) For technical and regulatory consulting services provided by Spherix, there are numerous competitors, including some that are much larger companies withmore resources. The success in winning and retaining clients is heavily dependent on the efforts and reputation of our consultants. We believe the barriers toentry in particular areas of our consulting expertise are low. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, Including Duration We currently protect our intellectual property through patents, trademarks, designs and copyrights on our products and services. We currently have existingpatents for products such as pterostilbene methods of use for lowering cholesterol, nicotinamide riboside methods, and anthocyanin production that requireadditional capital for product development, commercialization and marketing. One of our business strategies is to use the intellectual property harnessed in the supply of reference materials to the industry as the basis for providing newand alternative mass marketable products to our customers. Our strategy is to develop these products on our own as well as to license our intellectual propertyto companies who will commercialize it. We anticipate that the net result will be a long term flow of intellectual property milestone and royalty payments forus. -10-Table of Contents The following table sets forth our existing patents and those to which we have licensed rights: Patent NumberTitleFiling DateIssued DateExpiresLicensor6,852,342Compounds for altering food intake in humans3/26/20022/8/20052/12/2022Co-owned by Avoca, Inc.and ChromaDex7,205,284Potent immunostimulants from microalgae7/10/20014/17/20073/9/2022Licensed from University ofMississippi7,338,791Production of Flavanoids by RecombinantMicroorganisms7/11/20053/4/20087/11/2025Licensed from TheResearch Foundation ofState University of NewYork7,776,326Methods and compositions for treatingneuropathies6/3/20058/17/20106/3/2025Licensed from WashingtonUniversity7,807,422Production of Flavanoids by RecombinantMicroorganisms3/3/200810/5/20103/3/2028Licensed from TheResearch Foundation ofState University of NewYork7,846,452Potent immunostimulatory extracts frommicroalgae7/28/200510/7/20107/28/2025Licensed from University ofMississippi8,106,184Nicotinyl Riboside Compositions and Methods ofUse11/17/20061/31/201211/17/2026Licensed from CornellUniversity8,114,626Yeast strain and method for using the same toproduce Nicotinamide Riboside3/26/20092/14/20123/26/2029Licensed from DartmouthCollege8,133,917Pterostilbene as an agonist for the peroxisomeproliferator-activated receptor alpha isoform10/25/20103/13/201210/25/2030Licensed from theUniversity of Mississippiand U.S. Department ofAgriculture8,197,807Nicotinamide Riboside Kinase compositions andMethods for using the same11/20/20076/12/201211/20/2027Licensed from DartmouthCollege -11-Table of Contents8,227,510Combine use of pterostilbene and quercetin forthe production of cancer treatment medicaments7/19/20057/24/20127/19/2025Licensed from GreenMolecular S.L.8,252,845Pterostilbene as an agonist for the peroxisomeproliferator-activated receptor alpha isoform2/1/20128/28/20122/1/2032Licensed from theUniversity of Mississippiand U.S. Department ofAgriculture8,318,807Pterostilbene Caffeine Co-Crystal Forms7/30/201011/27/20127/30/2030Licensed from Laurus LabsPrivate Limited8,383,086Nicotinamide Riboside Kinase compositions andMethods for using the same4/12/20122/26/20134/12/2032Licensed from DartmouthCollege8,524,782Key intermediate for the preparation of Stilbenes,solid forms of Pterostilbene, and methods formaking the same6/1/20099/3/20136/1/2029Licensed from Laurus LabsPrivate Limited8,809,400Method to Ameliorate Oxidative Stress andImprove Working Memory Via PterostilbeneAdministration6/10/20088/19/20146/10/2028Licensed from theUniversity of Mississippiand U.S. Department ofAgriculture8,841,350Method for treating non-melanoma skin cancer byinducing UDP-Glucuronosyltransferase activityusing pterostilbene5/8/20129/22/20145/8/2032Co-owned by ChromaDexand University of California Manufacturing For reference standards, Chromadex Analytics operates laboratory operations and a manufacturing facility. We currently maintain our own manufacturingequipment and have the ability to manufacture certain products in limited quantities, ranging from milligrams to kilograms. We intend to contract for themanufacturing of products that we develop and enter into strategic relationships or license agreements for sales and marketing of products that we developwhen the quantities we require exceed our capacity at our Boulder, Colorado facility. We intend to work with manufacturing companies that can meet the standards imposed by the FDA, the International Organization for Standardization, or“ISO,” and the quality standards that we will require for our own internal policies and procedures. We expect to monitor and manage supplier performancethrough 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. -12-Table of ContentsFollowing the receipt of products or product components from third-party manufacturers, we currently inspect products, as needed. We expect to reserve theright to inspect and ensure conformance of each product and product component to our specifications. We will also consider manufacturing certain productsor product components internally, if our capacity permits, when demand or quality requirements make it appropriate to do so. Sources and Availability of Raw Materials and the Names of Principal Suppliers We believe that we have identified reliable sources and suppliers of chemicals, phytochemicals, ingredients and reference materials that will provide productsin compliance with our guidelines. Research and Development We have successfully conducted a clinical trial, together with the University of Mississippi, on our proprietary compound pterostilbene for its blood pressurelowering effects. We expect to conduct additional clinical trials on this compound and we anticipate entering the dietary supplement and, if clinical resultsare favorable, possibly the pharmaceutical markets as well. We also have completed a study on our proprietary compound pterostilbene with caffeine co-crystal. The first human study of this ingredient demonstrated that it delivers 30 percent more caffeine, stays in the blood stream longer, and is absorbed moreslowly than ordinary caffeine. We also have completed the first human clinical trial on our proprietary compound nicotinamide riboside (“NR”) and the results demonstrated that a singledose of NR resulted in statistically significant increases in the co-enzyme nicotinamide adenine dinucleotide (NAD+) in healthy human volunteers. Inaddition, NR was also found to be safe as no adverse events were observed. We are currently analyzing the molecular data obtained from the clinical trialrelating to NAD+ metabolome, which is an important cellular co-factor for improvement of mitochondrial performance and energy metabolism. Weanticipate conducting additional clinical trials on NR and other compounds in our pipeline to provide differentiation as we market these ingredients andsupport various health-related claims or obtain additional regulatory clearances. In addition, we are focused on developing products and services within our core standards and service offerings. Our own laboratory group has extensiveexperience in developing products related to our field of interest and works closely with our sales and marketing group to design products and services thatare intended to increase revenue. To support development, we also have a number of contracts with outside labs that aid us in our research and developmentprocess.Research and development costs for the fiscal years ended January 3, 2015 and December 28, 2013 were approximately $514,000 and $134,000,respectively. Environmental Compliance We will incur significant expense in complying with GMPs and safe handling and disposal of materials used in our research and manufacturing activities. Wedo not anticipate incurring additional material expense in order to comply with Federal, state and local environmental laws and regulations. FacilitiesFor information on our facilities, see “Properties” in Item 2 of this Form 10-K. EmployeesAs of January 3, 2015, ChromaDex (including Chromadex Analytics and Spherix Consulting, Inc.) had 74 employees, 67 of whom were full-time and 7 ofwhom were part-time. We consider our relationships with our employees to be satisfactory. None of our employees is covered by a collective bargainingagreement. -13-Table of ContentsItem 1A. Risk FactorsInvesting in our common stock involves a high degree of risk. Current investors and potential investors should consider carefully the risks and uncertaintiesdescribed below together with all other information contained in this Form 10-K before making investment decisions with respect to our common stock. Ifany of the following risks actually occurs, our business, financial condition, results of operations and our future growth prospects would be materially andadversely affected. Under these circumstances, the trading price and value of our common stock could decline, resulting in a loss of all or part of yourinvestment. The risks and uncertainties described in this Form 10-K are not the only ones facing our Company. Additional risks and uncertainties of whichwe are not presently aware, or that we currently consider immaterial, may also affect our business operations. Risks Related to our Company and our BusinessOur cash flows and capital resources may be insufficient to make required payments on our indebtedness and future indebtedness.On September 29, 2014, we entered into a loan and security agreement (the “Loan Agreement”) with Hercules Technology II, L.P., as lender (“Lender”) andHercules Technology Growth Capital, Inc., as agent. Lender will provide us with access to a term loan of up to $5 million. The first $2.5 million of the termloan was funded at closing, and is repayable in installments over 30 months, following an initial interest-only period of twelve months after closing. Theremaining $2.5 million of the term loan can be drawn down at our option at any time but no later than July 31, 2015. The term loan bears interest at the rateper year equal to the greater of either (i) 9.35% plus the prime rate as reported in The Wall Street Journal minus 3.25%, or (ii) 9.35%. For further details on theLoan Agreement, please refer to Note 8. Loan Payable appearing on Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K.As of January 3, 2015 and March 12, 2015, we had $2.5 million of indebtedness under the Loan Agreement. Such indebtedness could have importantconsequences to you. For example, it could: •make it difficult for us to satisfy our other debt obligations; •make us more vulnerable to general adverse economic and industry conditions; •limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other general corporate requirements; •expose us to interest rate fluctuations because the interest rate on the debt under the Loan Agreement is variable; •require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow foroperations and other purposes; •limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and •place us at a competitive disadvantage compared to competitors that may have proportionately less debt and greater financial resources. In addition, our ability to make scheduled payments or refinance our obligations depends on our successful financial and operating performance, cash flowsand capital resources, which in turn depend upon prevailing economic conditions and certain financial, business and other factors, many of which are beyondour control. These factors include, among others: •economic and demand factors affecting our industry; •pricing pressures; -14-Table of Contents •increased operating costs; •competitive conditions; and •other operating difficulties. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sellmaterial assets or operations, obtain additional capital or restructure our debt. In the event that we are required to dispose of material assets or operations tomeet our debt service and other obligations, the value realized on such assets or operations will depend on market conditions and the availability of buyers.Accordingly, any such sale may not, among other things, be for a sufficient dollar amount. Our obligations pursuant to the Loan Agreement are secured by asecurity interest in all of our assets, exclusive of intellectual property. The foregoing encumbrances may limit our ability to dispose of material assets oroperations. We also may not be able to restructure our indebtedness on favorable economic terms, if at all. We may incur additional indebtedness in the future, including pursuant to the Loan Agreement. Our incurrence of additional indebtedness would intensifythe risks described above. The Loan Agreement contains various covenants limiting the discretion of our management in operating our business. The Loan Agreement contains, subject to certain carve-outs, various restrictive covenants that limit our management's discretion in operating our business. Inparticular, these instruments limit our ability to, among other things: •incur additional debt; •grant liens on assets; •make investments, including capital expenditures; •sell or acquire assets outside the ordinary course of business; and •make fundamental business changes. If we fail to comply with the restrictions in the Loan Agreement, a default may allow the creditors under the relevant instruments to accelerate the related debtand to exercise their remedies under these agreements, which will typically include the right to declare the principal amount of that debt, together withaccrued and unpaid interest and other related amounts, immediately due and payable, to exercise any remedies the creditors may have to foreclose on assetsthat are subject to liens securing that debt and to terminate any commitments they had made to supply further funds. The Loan Agreement governing ourindebtedness also contains various covenants that may limit our ability to pay dividends. We have a history of operating losses and we may need 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 $5,388,000for the year ended January 3, 2015 and a net loss of approximately $4,420,000 for the year ended December 28, 2013. As of January 3, 2015, our accumulateddeficit was approximately $39,524,000. We have not achieved profitability on an annual basis. We may not be able to reach a level of revenue to achieveprofitability. If our revenues grow slower than anticipated, or if operating expenses exceed expectations, then we may not be able to achieve profitability inthe near future or at all, which may depress our stock price. While we anticipate that our current cash, cash equivalents and cash generated from operations and $2.5 million we can additionally draw down at our optionpursuant to the Loan Agreement will be sufficient to meet our projected operating plans through at least March 20, 2016, 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 additionalfinancing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all. In the event that we are unable to obtainadditional financing, we may be unable to implement our business plan. Even with such financing, we have a history of operating losses and there can be noassurance that we will ever become profitable. -15-Table of Contents Our short-term capital needs are uncertain and we may need to raise additional funds. Based on current market conditions, such funds may not beavailable on acceptable terms or at all. We anticipate that our current cash and cash equivalents and cash generated from operations and $2.5 million we can additionally draw down at our optionpursuant to the Loan Agreement will be sufficient to implement our operating plan through at least March 20, 2016. Our capital requirements will depend onmany factors, including: • the revenues generated by sales of our products; • the costs associated with expanding our sales and marketing efforts, including efforts to hire independent agents and sales representatives andobtain required regulatory approvals and clearances; • the expenses we incur in developing and commercializing our products, including the cost of obtaining and maintaining regulatory approvals;and • unanticipated general and administrative expenses. As a result of these factors, we may seek to raise additional capital prior to March 20, 2016 both to meet our projected operating plans after March 20, 2016and to fund our longer term strategic objectives. Additional capital may come from public and private equity or debt offerings, borrowings under lines ofcredit 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 raisingthese additional funds. Furthermore, if we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution and thenew equity or debt securities we issue may have rights, preferences and privileges senior to those of our existing stockholders. In addition, if we raiseadditional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to our products orproprietary 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 developor enhance our products, obtain the required regulatory clearances or approvals, execute our business plan, take advantage of future opportunities, or respondto competitive pressures or unanticipated customer requirements. Any of these events could adversely affect our ability to achieve our development andcommercialization goals, which could have a material and adverse effect on our business, results of operations and financial condition.Decline in the state of the global economy and financial market conditions could adversely affect our ability to conduct business and our results ofoperations.Global economic and financial market conditions, including disruptions in the credit markets and the impact of the global economic deterioration maymaterially impact our customers and other parties with whom we do business. These conditions could negatively affect our future sales of our ingredient lineas many consumers consider the purchase of nutritional products discretionary. Decline in general economic and financial market conditions couldmaterially adversely affect our financial condition and results of operations. Specifically, the impact of these volatile and negative conditions may includedecreased demand for our products and services, a decrease in our ability to accurately forecast future product trends and demand, and a negative impact onour ability to timely collect receivables from our customers. The foregoing economic conditions may lead to increased levels of bankruptcies, restructuringsand liquidations for our customers, scaling back of research and development expenditures, delays in planned projects and shifts in business strategies formany of our customers. Such events could, in turn, adversely affect our business through loss of sales. -16-Table of ContentsNo Assurance of Successful Expansion of Operations.Our significant increase in the scope and the scale of our product launch, including the hiring of additional personnel, has resulted in significantly higheroperating expenses. As a result, we anticipate that our operating expenses will continue to increase. Expansion of our operations may also cause a significantdemand on our management, finances and other resources. Our ability to manage the anticipated future growth, should it occur, will depend upon asignificant expansion of our accounting and other internal management systems and the implementation and subsequent improvement of a variety ofsystems, procedures and controls. There can be no assurance that significant problems in these areas will not occur. Any failure to expand these areas andimplement and improve such systems, procedures and controls in an efficient manner at a pace consistent with our business could have a material adverseeffect on our business, financial condition and results of operations. There can be no assurance that our attempts to expand our marketing, sales,manufacturing and customer support efforts will be successful or will result in additional sales or profitability in any future period. As a result of theexpansion of our operations and the anticipated increase in our operating expenses, as well as the difficulty in forecasting revenue levels, we expect tocontinue to experience significant fluctuations in its results of operations.The success of our ingredient business is linked to the size and growth rate of the vitamin, mineral and dietary supplement market and an adverse changein the size or growth rate of that market could have a material adverse effect on us.An adverse change in size or growth rate of the vitamin, mineral and dietary supplement market could have a material adverse effect on our business.Underlying market conditions are subject to change based on economic conditions, consumer preferences and other factors that are beyond our control,including media attention and scientific research, which may be positive or negative.Unfavorable publicity or consumer perception of our products and any similar products distributed by other companies could have a material adverseeffect on our business.We believe the nutritional supplement market is highly dependent upon consumer perception regarding the safety, efficacy and quality of nutritionalsupplements generally, as well as of products distributed specifically by us. Consumer perception of our products can be significantly influenced byscientific research or findings, regulatory investigations, litigation, national media attention and other publicity regarding the consumption of nutritionalsupplements. We cannot assure you that future scientific research, findings, regulatory proceedings, litigation, media attention or other favorable researchfindings or publicity will be favorable to the nutritional supplement market or any particular product, or consistent with earlier publicity. Future researchreports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, such earlierresearch reports, findings or publicity could have a material adverse effect on the demand for our products and consequently on our business, results ofoperations, financial condition and cash flows.Our dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention orother publicity, whether or not accurate or with merit, could have a material adverse effect on the demand for our products, the availability and pricing of ouringredients, and our business, results of operations, financial condition and cash flows. Further, adverse public reports or other media attention regarding thesafety, efficacy and quality of nutritional supplements in general, or our products specifically, or associating the consumption of nutritional supplementswith illness, could have such a material adverse effect. Any such adverse public reports or other media attention could arise even if the adverse effectsassociated with such products resulted from consumers’ failure to consume such products appropriately or as directed and the content of such public reportsand other media attention may be beyond our control. -17-Table of ContentsWe may incur material product liability claims, which could increase our costs and adversely affect our reputation, revenues and operating income.As an ingredient supplier, marketer and manufacturer of products designed for human and animal consumption, we are subject to product liability claims ifthe use of our products is alleged to have resulted in injury. Our products consist of vitamins, minerals, herbs and other ingredients that are classified as foods,dietary supplements, or natural health products, and, in most cases, are not necessarily subject to pre-market regulatory approval in the United States. Some ofour products contain innovative ingredients that do not have long histories of human consumption. Previously unknown adverse reactions resulting fromhuman consumption of these ingredients could occur. In addition, some of the products we sell are produced by third-party manufacturers. As a marketer ofproducts manufactured by third parties, we also may be liable for various product liability claims for products we do not manufacture. We may, in the future,be subject to various product liability claims, including, among others, that our products include inadequate instructions for use or inadequate warningsconcerning possible side effects and interactions with other substances. A product liability claim against us could result in increased costs and couldadversely affect our reputation with our customers, which, in turn, could have a materially adverse effect on our business, results of operations, financialcondition and cash flows.We acquire a significant amount of key ingredients for our products from foreign suppliers, and may be negatively affected by the risks associated withinternational trade and importation issues.We acquire a significant amount of key ingredients for a number of our products from suppliers outside of the United States, particularly India andChina. Accordingly, the acquisition of these ingredients is subject to the risks generally associated with importing raw materials, including, among otherfactors, delays in shipments, changes in economic and political conditions, quality assurance, nonconformity to specifications or laws and regulations, tariffs,trade disputes and foreign currency fluctuations. While we have a supplier certification program and audit and inspect our suppliers’ facilities as necessaryboth in the United States and internationally, we cannot assure you that raw materials received from suppliers outside of the United States will conform to allspecifications, laws and regulations. There have in the past been quality and safety issues in our industry with certain items imported from overseas. We mayincur additional expenses and experience shipment delays due to preventative measures adopted by the Indian and U.S. governments, our suppliers and ourcompany.The insurance industry has become more selective in offering some types of coverage and we may not be able to obtain insurance coverage in the future.The insurance industry has become more selective in offering some types of insurance, such as product liability, product recall, property and directors’ andofficers’ liability insurance. Our current insurance program is consistent with both our past level of coverage and our risk management policies. However, wecannot assure you that we will be able to obtain comparable insurance coverage on favorable terms, or at all, in the future. Certain of our customers as well asprospective customers require that we maintain minimum levels of coverage for our products. Lack of coverage or coverage below these minimum requiredlevels could cause these customers to materially change business terms or to cease doing business with us entirely.We depend on key personnel, the loss of any of which could negatively affect our business. We depend greatly on Frank L. Jaksch Jr., Thomas C. Varvaro and Troy A. Rhonemus who are our Chief Executive Officer, Chief Financial Officer and ChiefOperating Officer, respectively. We also depend greatly on other key employees, including key scientific and marketing personnel. In general, only highlyqualified and trained scientists have the necessary skills to develop our products and provide our services. Only marketing personnel with specific experienceand 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 ourcompetitors, customers, marketing partners and other companies throughout the industries in which we compete. Our success will depend, in part, upon ourability to attract and retain additional skilled personnel, which will require substantial additional funds. There can be no assurance that we will be able tofind and attract additional qualified employees or retain any such personnel. Our inability to hire qualified personnel, the loss of services of our keypersonnel, 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 ourbusiness. -18-Table of ContentsOur operating results may fluctuate significantly as a result of a variety of factors, many of which are outside of our control. We are subject to the following factors, among others, that may negatively affect our operating results: • 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; and • general economic conditions as well as economic conditions specific to the healthcare industry. As a result of our limited operating history and the nature of the markets in which we compete, it is extremely difficult for us to make accurate forecasts. Wehave based our current and future expense levels largely on our investment plans and estimates of future events although certain of our expense levels are, toa large extent, fixed. Assuming our products reach the market, we may be unable to adjust spending in a timely manner to compensate for any unexpectedrevenue shortfall. Accordingly, any significant shortfall in revenues relative to our planned expenditures would have an immediate adverse effect on ourbusiness, results of operations and financial condition. Further, as a strategic response to changes in the competitive environment, we may from time to timemake certain pricing, service or marketing decisions that could have a material and adverse effect on our business, results of operations and financialcondition. 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 andmarketing resources and experience in research and development. Competitors could develop new technologies that compete with our products and servicesor even render our products obsolete. If a competitor develops superior technology or cost-effective alternatives to our products and services, our businesscould 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 havecompeted 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 salesrevenues and increase losses. Failure to anticipate and respond to price competition may also impact sales and aggravate losses. We believe that customers in our markets display a significant amount of loyalty to their supplier of a particular product. To the extent we are not the first todevelop, offer and/or supply new products, customers may buy from our competitors or make materials themselves, causing our competitive position to suffer. Many of our competitors are larger and have greater financial and other resources than we do. Our products compete and will compete with other similar products produced by our competitors. These competitive products could be marketed by well-established, successful companies that possess greater financial, marketing, distributional, personnel and other resources than we possess. Using theseresources, these companies can implement extensive advertising and promotional campaigns, both generally and in response to specific marketing efforts bycompetitors, and enter into new markets more rapidly to introduce new products. In certain instances, competitors with greater financial resources also may beable to enter a market in direct competition with us, offering attractive marketing tools to encourage the sale of products that compete with our products orpresent cost features that consumers may find attractive. -19-Table of Contents We may never develop any additional products to commercialize. We have invested a substantial amount of our time and resources in developing various new products. Commercialization of these products will requireadditional development, clinical evaluation, regulatory approval, significant marketing efforts and substantial additional investment before they can provideus with any revenue. Despite our efforts, these products may not become commercially successful products for a number of reasons, including but not limitedto: • we may not be able to obtain regulatory approvals for our products, or the approved indication may be narrower than we seek; • our products may not prove to be safe and effective in clinical trials; • we may experience delays in our development program; • any products that are approved may not be accepted in the marketplace; • we may not have adequate financial or other resources to complete the development or to commence the commercialization of our products orwill not have adequate financial or other resources to achieve significant commercialization of our products; • we may not be able to manufacture any of our products in commercial quantities or at an acceptable cost; • rapid technological change may make our products obsolete; • we may be unable to effectively protect our intellectual property rights or we may become subject to claims that our activities have infringedthe intellectual property rights of others; and • we may be unable to obtain or defend patent rights for our products. We may not be able to partner with others for technological capabilities and new products and services. Our ability to remain competitive may depend, in part, on our ability to continue to seek partners that can offer technological improvements and improveexisting products and services that are offered to our customers. We are committed to attempting to keep pace with technological change, to stay abreast oftechnology changes and to look for partners that will develop new products and services for our customer base. We cannot assure prospective investors thatwe will be successful in finding partners or be able to continue to incorporate new developments in technology, to improve existing products and services, orto develop successful new products and services, nor can we be certain that newly-developed products and services will perform satisfactorily or be widelyaccepted in the marketplace or that the costs involved in these efforts will not be substantial. If we fail to maintain adequate quality standards for our products and services, our business may be adverselyaffected and our reputation harmed. Dietary supplement, nutraceutical, food and beverage, functional food, analytical laboratories, pharmaceutical and cosmetic customers are often subject torigorous quality standards to obtain and maintain regulatory approval of their products and the manufacturing processes that generate them. A failure tomaintain, or, in some instances, upgrade our quality standards to meet our customers’ needs, could cause damage to our reputation and potentially substantialsales losses. -20-Table of Contents Our ability to protect our intellectual property and proprietary technology through patents and other means is uncertain and may be inadequate, whichwould 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, aswell as a combination of copyright, trade secret and trademark laws and nondisclosure, confidentiality and other contractual restrictions to protect ourproprietary technology, including our licensed technology. However, these legal means afford only limited protection and may not adequately protect ourrights or permit us to gain or keep any competitive advantage. For example, our pending United States and foreign patent applications may not issue aspatents in a form that will be advantageous to us or may issue and be subsequently successfully challenged by others and invalidated. In addition, ourpending patent applications include claims to material aspects of our products and procedures that are not currently protected by issued patents. Both thepatent application process and the process of managing patent disputes can be time-consuming and expensive. Competitors may be able to design around ourpatents or develop products which provide outcomes which are comparable or even superior to ours. Steps that we have taken to protect our intellectualproperty and proprietary technology, including entering into confidentiality agreements and intellectual property assignment agreements with some of ourofficers, employees, consultants and advisors, may not provide us with meaningful protection for our trade secrets or other proprietary information in theevent of unauthorized use or disclosure or other breaches of the agreements. Furthermore, the laws of foreign countries may not protect our intellectualproperty 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 beexpensive and time consuming and could divert our management’s attention. We may not have sufficient resources to enforce our intellectual property rightsor to defend our patents rights against a challenge. The failure to obtain patents and/or protect our intellectual property rights could have a material andadverse 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, orwhether 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 otherintellectual property rights are invalidated, rejected or found unenforceable, that could reduce or eliminate any competitive advantage we might otherwisehave had. We may become subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us fromdeveloping our products, require us to obtain licenses from third parties or to develop non-infringing alternatives and subject us to substantial monetarydamages. Third parties could, in the future, assert infringement or misappropriation claims against us with respect to products we develop. Whether a product infringesa patent or misappropriates other intellectual property involves complex legal and factual issues, the determination of which is often uncertain. Therefore, wecannot be certain that we have not infringed the intellectual property rights of others. Our potential competitors may assert that some aspect of our productinfringes their patents. Because patent applications may take years to issue, there also may be applications now pending of which we are unaware that maylater result in issued patents upon which our products could infringe. There also may be existing patents or pending patent applications of which we areunaware upon which our products may inadvertently infringe. -21-Table of Contents Any infringement or misappropriation claim could cause us to incur significant costs, place significant strain on our financial resources, divert management’sattention 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 infringethem, 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 patentor 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 ourproducts to avoid infringement. A court could also order us to pay compensatory damages for such infringement, plus prejudgment interest and could, inaddition, treble the compensatory damages and award attorney fees. These damages could be substantial and could harm our reputation, business, financialcondition 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 bythe 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. Withoutthese technologies, our product may notbe successful and our business would be harmed if the patents wereinfringed on or misappropriated without action by such third parties. We have obtained licenses from third parties for patents and patent application rights related to the products we are developing, allowing us to useintellectual property rights owned by or licensed to these third parties. We do not control the maintenance, prosecution, enforcement or strategy for many ofthese 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 impairedsignificantly. We may be subject to damages resulting from claims that we, our employees, or our independent contractors have wrongfully used or disclosed allegedtrade secrets of others. Some of our employees were previously employed at other dietary supplement, nutraceutical, food and beverage, functional food, analytical laboratories,pharmaceutical and cosmetic companies. We may also hire additional employees who are currently employed at other such companies, including ourcompetitors. Additionally, consultants or other independent agents with which we may contract may be or have been in a contractual arrangement with oneor more of our competitors. We may be subject to claims that these employees or independent contractors have used or disclosed such other party’s tradesecrets or other proprietary information. Litigation may be necessary to defend against these claims. Even if we are successful in defending against theseclaims, litigation could result in substantial costs and be a distraction to our management. If we fail to defend such claims, in addition to paying monetarydamages, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability tomarket existing or new products, which could severely harm our business. Litigation may harm our business. Substantial, complex or extended litigation could cause us to incur significant costs and distract our management. For example, lawsuits by employees,stockholders, collaborators, distributors, customers, competitors or others could be very costly and substantially disrupt our business. Disputes from time totime with such companies, organizations or individuals are not uncommon, and we cannot assure you that we will always be able to resolve such disputes oron terms favorable to us. Unexpected results could cause us to have financial exposure in these matters in excess of recorded reserves and insurance coverage,requiring us to provide additional reserves to address these liabilities, therefore impacting profits. -22-Table of Contents If we are unable to establish or maintain sales, marketing and distribution capabilities or enter into and maintain arrangements with third parties to sell,market and distribute our products, our business may be harmed. To achieve commercial success for our products, we must sell rights to our product lines and/or technologies at favorable prices, develop a sales andmarketing force, or enter into arrangements with others to market and sell our products. In addition to being expensive, developing and maintaining such asales force is 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 atall. Qualified direct sales personnel with experience in the phytochemical industry are in high demand, and there can be no assurance that we will be able tohire or retain an effective direct sales team. Similarly, qualified independent sales representatives both within and outside the United States are in highdemand, and we may not be able to build an effective network for the distribution of our product through such representatives. There can be no assurance thatwe will be able to enter into contracts with representatives on terms acceptable to us. Furthermore, there can be no assurance that we will be able to build analternate distribution framework should we attempt to do so. We may also need to contract with third parties in order to market our products. To the extent that we enter into arrangements with third parties to performmarketing and distribution services, our product revenue could be lower and our costs higher than if we directly marketed our products. Furthermore, to theextent that we enter into co-promotion or other marketing and sales arrangements with other companies, any revenue received will depend on the skills andefforts of others, and we do not know whether these efforts will be successful. If we are unable to establish and maintain adequate sales, marketing anddistribution capabilities, independently or with others, we will not be able to generate product revenue, and may not become profitable. Our sales and results of operations depend on our customers’ research and development efforts and their ability to obtain funding for these efforts. Our customers include researchers at pharmaceutical and biotechnology companies, chemical and related companies, academic institutions, governmentlaboratories and private foundations. Fluctuations in the research and development budgets of these researchers and their organizations could have asignificant effect on the demand for our products. Our customers determine their research and development budgets based on several factors, including theneed to develop new products, the availability of governmental and other funding, competition and the general availability of resources. As we continue toexpand our international operations, we expect research and development spending levels in markets outside of the United States will become increasinglyimportant to us. Research and development budgets fluctuate due to changes in available resources, spending priorities, general economic conditions, institutional andgovernmental budgetary limitations and mergers of pharmaceutical and biotechnology companies. Our business could be seriously harmed by anysignificant decrease in life science and high technology research and development expenditures by our customers. In particular, a small portion of our saleshas been to researchers whose funding is dependent on grants from government agencies such as the United States National Institute of Health, the NationalScience Foundation, the National Cancer Institute and similar agencies or organizations. Government funding of research and development is subject to thepolitical process, which is often unpredictable. Other departments, such as Homeland Security or Defense, or general efforts to reduce the United Statesfederal budget deficit could be viewed by the government as a higher priority. Any shift away from funding of life science and high technology research anddevelopment or delays surrounding the approval of governmental budget proposals may cause our customers to delay or forego purchases of our productsand services, which could seriously damage our business. Some of our customers receive funds from approved grants at a particular time of year, many times set by government budget cycles. In the past, such grantshave been frozen for extended periods or have otherwise become unavailable to various institutions without advance notice. The timing of the receipt ofgrant funds may affect the timing of purchase decisions by our customers and, as a result, cause fluctuations in our sales and operating results. -23-Table of Contents Demand for our products and services are subject to the commercial success of our customers’ products, which may vary for reasons outside our control. Even if we are successful in securing utilization of our products in a customer’s manufacturing process, sales of many of our products and services remaindependent on the timing and volume of the customer’s production, over which we have no control. The demand for our products depends on regulatoryapprovals and frequently depends on the commercial success of the customer’s supported product. Regulatory processes are complex, lengthy, expensive,and can often take years to complete. We may bear financial risk if we under-price our contracts or overrun cost estimates. In cases where our contracts are structured as fixed price or fee-for-service with a cap, we bear the financial risk if we initially under-price our contracts orotherwise overrun our cost estimates. Such under-pricing or significant cost overruns could have a material adverse effect on our business, results ofoperations, financial condition and cash flows. We rely on single or a limited number of third-party suppliers for the raw materials required for the production of our products. Our dependence on a limited number of third-party suppliers or on a single supplier, and the challenges we may face in obtaining adequate supplies of rawmaterials, involve several risks, including limited control over pricing, availability, quality and delivery schedules. We cannot be certain that our currentsuppliers will continue to provide us with the quantities of these raw materials that we require or satisfy our anticipated specifications and qualityrequirements. Any supply interruption in limited or sole sourced raw materials could materially harm our ability to manufacture our products until a newsource of supply, if any, could be identified and qualified. Although we believe there are other suppliers of these raw materials, we may be unable to find asufficient alternative supply channel in a reasonable time or on commercially reasonable terms. Any performance failure on the part of our suppliers coulddelay the development and commercialization of our products, or interrupt production of then existing products that are already marketed, which would havea material adverse effect on our business. We may need to increase the size of our organization, and we may be unable to manage rapid growth effectively. Our failure to manage growth effectively could have a material and adverse effect on our business, results of operations and financial condition. Weanticipate that a period of significant expansion will be required to address possible acquisitions of business, products, or rights, and potential internalgrowth to handle licensing and research activities. This expansion will place a significant strain on management, operational and financial resources. Tomanage the expected growth of our operations and personnel, we must both improve our existing operational and financial systems, procedures and controlsand implement new systems, procedures and controls. We must also expand our finance, administrative, and operations staff. Our current personnel, systems,procedures and controls may not adequately support future operations. Management may be unable to hire, train, retain, motivate and manage necessarypersonnel or to identify, manage and exploit existing and potential strategic relationships and market opportunities. Risks Associated with Acquisition Strategy.As part of our business strategy, we intend to consider acquisitions of similar or complementary businesses. No assurance can be given that we will besuccessful in identifying attractive acquisition candidates or completing acquisitions on favorable terms. In addition, any future acquisitions will beaccompanied by the risks commonly associated with acquisitions. These risks include potential exposure to unknown liabilities of acquired companies or toacquisition costs and expenses, the difficulty and expense of integrating the operations and personnel of the acquired companies, the potential disruption tothe business of the combined company and potential diversion of our management's time and attention, the impairment of relationships with and the possibleloss of key employees and clients as a result of the changes in management, the incurrence of amortization expenses and dilution to the shareholders of thecombined company if the acquisition is made for stock of the combined company. In addition, successful completion of an acquisition may depend onconsents from third parties, including regulatory authorities and private parties, which consents are beyond our control. There can be no assurance thatproducts, technologies or businesses of acquired companies will be effectively assimilated into the business or product offerings of the combined company orwill have a positive effect on the combined company's revenues or earnings. Further, the combined company may incur significant expense to completeacquisitions and to support the acquired products and businesses. Any such acquisitions may be funded with cash, debt or equity, which could have the effectof diluting or otherwise adversely affecting the holdings or the rights of our existing stockholders. -24-Table of ContentsIf we experience a significant disruption in our information technology systems or if we fail to implement newsystems and software successfully, ourbusiness could be adversely affected. We depend on information systems throughout our company to control our manufacturing processes, process orders, manage inventory, process and billshipments and collect cash from our customers, respond to customer inquiries, contribute to our overall internal control processes, maintain records of ourproperty, plant and equipment, and record and pay amounts due vendors and other creditors. If we were to experience a prolonged disruption in ourinformation systems that involve interactions with customers and suppliers, it could result in the loss of sales and customers and/or increased costs, whichcould adversely affect our overall business operation. Risks Related to Regulatory Approval of Our Products and Other Government Regulations We are subject to regulation by various federal, state and foreign agencies that require us to comply with a wide variety of regulations, including thoseregarding the manufacture of products, advertising and product label claims, the distribution of our products and environmental matters. Failure tocomply with these regulations could subject us to fines, penalties and additional costs. Some of our operations are subject to regulation by various United States federal agencies and similar state and international agencies, including theDepartment of Commerce, the FDA, the FTC, the Department of Transportation and the Department of Agriculture. These regulations govern a wide variety ofproduct activities, from design and development to labeling, manufacturing, handling, sales and distribution of products. If we fail to comply with any ofthese regulations, we may be subject to fines or penalties, have to recall products and/or cease their manufacture and distribution, which would increase ourcosts and reduce our sales. We are also subject to various federal, state, local and international laws and regulations that govern the handling, transportation, manufacture, use and saleof substances that are or could be classified as toxic or hazardous substances. Some risk of environmental damage is inherent in our operations and theproducts we manufacture, sell, or distribute. Any failure by us to comply with the applicable government regulations could also result in product recalls orimpositions 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 allof these regulations, we may be subject to fines or penalties, have to recall products and/or cease their manufacture and distribution, which would increaseour costs and reduce our sales. Government regulations of our customer’s business are extensive and are constantly changing. Changes in these regulations can significantly affectcustomer demand for our products and services. The process by which our customer’s industries are regulated is controlled by government agencies and depending on the market segment can be veryexpensive, time-consuming, and uncertain. Changes in regulations or the enforcement practices of current regulations could have a negative impact on ourcustomers and, in turn, our business. At this time, it is unknown how the FDA will interpret and to what extent it will enforce GMPs, regulations that willlikely affect many of our customers. These uncertainties may have a material impact on our results of operations, as lack of enforcement or an interpretationof the regulations that lessens the burden of compliance for the dietary supplement marketplace may cause a reduced demand for our products and services. Changes in government regulation or in practices relating to the pharmaceutical, dietary supplement, food and cosmetic industry could decrease the needfor the services we provide. Governmental agencies throughout the world, including the United States, strictly regulate these industries. Our business involves helping pharmaceuticaland biotechnology companies navigate the regulatory drug approval process. Changes in regulation, such as a relaxation in regulatory requirements or theintroduction of simplified drug approval procedures, or an increase in regulatory requirements that we have difficulty satisfying or that make our services lesscompetitive, could eliminate or substantially reduce the demand for our services. Also, if the government makes efforts to contain drug costs andpharmaceutical and biotechnology company profits from new drugs, our customers may spend less, or reduce their spending on research and development. Ifhealth insurers were to change their practices with respect to reimbursements for pharmaceutical products, our customers may spend less, or reduce theirspending on research and development. -25-Table of ContentsIf we should in the future become required to obtain regulatory approval to market and sell our goods we will not be able to generate any revenues untilsuch approval is received. The pharmaceutical industry is subject to stringent regulation by a wide range of authorities. While we believe that, given our present business, we are notcurrently required to obtain regulatory approval to market our goods because, among other things, we do not (i) produce or market any clinical devices orother products, or (ii) sell any medical products or services to the customer, we cannot predict whether regulatory clearance will be required in the future and,if so, whether such clearance will at such time be obtained for any products that we are developing or may attempt to develop. Should such regulatoryapproval in the future be required, our goods may be suspended or may not be able to be marketed and sold in the United States until we have completed theregulatory clearance process as and if implemented by the FDA. Satisfaction of regulatory requirements typically takes many years, is dependent upon thetype, complexity and novelty of the product or service and would require the expenditure of substantial resources.If regulatory clearance of a good that we propose to propose to market and sell is granted, this clearance may be limited to those particular states andconditions for which the good is demonstrated to be safe and effective, which would limit our ability to generate revenue. We cannot ensure that any goodthat we develop will meet all of the applicable regulatory requirements needed to receive marketing clearance. Failure to obtain regulatory approval willprevent commercialization of our goods where such clearance is necessary. There can be no assurance that we will obtain regulatory approval of ourproposed goods that may require it. Risks Related to the Securities Markets and Ownership of our Equity SecuritiesThe market price of our common stock may be volatile and adversely affected by several factors.The market price of our common stock could fluctuate significantly in response to various factors and events, including, but not limited to: •our ability to integrate operations, technology, products and services; •our ability to execute our business plan; •our operating results are below expectations; •our issuance of additional securities, including debt or equity or a combination thereof,; •announcements of technological innovations or new products by us or our competitors; •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.In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operatingperformance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. -26-Table of Contents Our common stock is and likely will remain subject to the SEC’s “penny stock” rules, which may make our shares more difficult to sell. Because the price of our common stock is currently and is likely to remain less than $5.00 per share, it is expected to be classified as a “penny stock.” TheSEC’s rules regarding penny stocks have the effect of reducing trading activity in our shares, making it more difficult for investors to sell them. Under theserules, broker-dealers who recommend such securities to persons other than institutional accredited investors must: • make a special written suitability determination for the purchaser; • receive the purchaser’s written agreement to a transaction prior to sale; • provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and whichdescribe the market for these “penny stocks” as well as a purchaser’s legal remedies; • obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has received the required risk disclosuredocument before a transaction in a “penny stock” can be completed; and • give bid and offer quotations and broker and salesperson compensation information to the customer orally or in writing before or with theconfirmation. These rules make it more difficult for broker-dealers to effectuate customer transactions and trading activity in our securities and may result in a lower tradingvolume of our common stock and lower trading prices. Our shares of common stock may be thinly traded, so you may be unable to sell at or near ask prices or at all. We cannot predict the extent to which an active public market for our common stock will develop or be sustained. Our common stock is currently traded onthe OTC Markets where they have historically been thinly traded, if at all, meaning that the number of persons interested in purchasing our common stock ator near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stockbrokers, institutional investors and others in the investment community who generate or influence sales volume, and that even if we came to the attention ofsuch 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 ourshares until such time as we have become more seasoned and viable. As a consequence, there may be periods of several days, weeks or months when tradingactivity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generallysupport continuous sales without an adverse effect on share price. We cannot assure you that a broader or more active public trading market for our commonstock will develop or be sustained, or that current trading levels will be sustained or not diminish. We have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future. Any return on investment may be limited tothe value of our common stock. We have never paid cash dividends on our capital stock and do not anticipate paying cash dividends on our capital stock in the foreseeable future. Thepayment of dividends on our capital stock will depend on our earnings, financial condition and other business and economic factors affecting us at such timeas the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment willonly occur if the common stock price appreciates. -27-Table of Contents Stockholders may experience significant dilution if future equity offerings are used to fund operations or acquire complementary businesses. If future operations or acquisitions are financed through the issuance of additional equity securities, stockholders could experience significant dilution.Securities issued in connection with future financing activities or potential acquisitions may have rights and preferences senior to the rights and preferencesof our common stock. In addition, the issuance of shares of our common stock upon the exercise of outstanding options or warrants may result in dilution toour stockholders. We may become involved in securities class action litigation that could divert management’s attention and harm our business. The stock market in general, and the stocks of early stage companies in particular, have experienced extreme price and volume fluctuations. Thesefluctuations 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 particularcompany’s securities, securities class action litigation has often been brought against that company. If the market price or volume of our shares suffersextreme fluctuations, then we may become involved in this type of litigation, which would be expensive and divert management’s attention and resourcesfrom managing our business. As a public company, we may also from time to time make forward-looking statements about future operating results and provide some financial guidance tothe public markets. The management has limited experience as a management team in a public company and as a result projections may not be made timelyor set at expected performance levels and could materially affect the price of our shares. Any failure to meet published forward-looking statements thatadversely affect the stock price could result in losses to investors, stockholder lawsuits or other litigation, sanctions or restrictions issued by the SEC. We have a significant number of outstanding options and warrants, and future sales of these shares could adversely affect the market price of our commonstock. As of January 3, 2015, we had outstanding options exercisable for an aggregate of 13,974,052 shares of common stock at a weighted average exercise price of$1.14 per share and outstanding warrants exercisable for an aggregate of 469,020 shares of common stock at a weighted average exercise price of $1.07 pershare. The holders may sell many of these shares in the public markets from time to time, without limitations on the timing, amount or method of sale. As andwhen our stock price rises, if at all, more outstanding options and warrants will be in-the-money and the holders may exercise their options and warrants andsell a large number of shares. This could cause the market price of our common stock to decline.Item 2. PropertiesAs of January 3, 2015, we lease approximately 15,000 square feet of office space in Irvine, California with 6 years remaining on the lease, approximately13,000 square feet of space for laboratory manufacturing in Boulder, Colorado with 16 months remaining on the lease, and approximately 1,700 square feetof office space in Rockville, Maryland with 16 months remaining on the lease. We also rent an apartment with approximately 1,000 square feet in FoothillRanch, California, and an apartment with less than 1,100 square feet in Longmont, Colorado. We use the apartments to accommodate our travelingemployees to each of our California and Colorado locations. We do not own any real estate. For the year ended January 3, 2015, our total annual rentalexpense was approximately $537,000. Item 3. Legal Proceedings We are not involved in any legal proceedings which management believes may have a material adverse effect on our business, financial condition,operations, cash flows, or prospects. However, the Company from time to time is involved in legal proceedings in the ordinary course of our business, whichcan include employment claims, product claims and patent infringements. We do not believe that any of these claims and proceedings against us as theyarise are likely to have, individually or in the aggregate, a material adverse effect on our financial condition or results of operations. Item 4. Mine Safety DisclosuresNot applicable. -28-Table of ContentsPART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesSince November 2014, we have been quoted on the top tier of the OTC Markets Group, Inc. (the “OTCQX”) under the symbol “CDXC.” From April 2010 toNovember 2014, we have been quoted on the middle tier of the OTC Markets Group, Inc. (the “OTCQB”) under the symbol “CDXC.” OTCQX and OTCQBare networks of securities 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. The following table sets forth the range of high and low closing bid quotations for ChromaDex common stock for each of the periods indicated as reported byOTCQX and OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actualtransactions. Fiscal Year Ending January 3, 2015 Quarter Ended High Low January 3, 2015 $1.25 $0.84 September 27, 2014 $1.46 $1.02 June 28, 2014 $1.90 $1.21 March 29, 2014 $2.08 $1.41 Fiscal Year Ending December 28, 2013 Quarter Ended High Low December 28, 2013 $1.58 $0.78 September 28, 2013 $0.95 $0.68 June 29, 2013 $0.86 $0.61 March 30, 2013 $0.80 $0.50 On March 12, 2015, the closing bid quotation was $1.26. Penny StockThe SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securitieswith a market price of less than $5.00, other than securities registered on certain national securities exchanges, provided that current price and volumeinformation with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to atransaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and levelof 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 thecustomer 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 thebid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or inthe 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 shallrequire by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock;(b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or othercomparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value ofeach penny stock held in the customer’s account. -29-Table of ContentsIn addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make aspecial written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of thereceipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitabilitystatement. These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty sellingour securities. Holders of Our Common StockAs of March 12, 2015, we had approximately 82 registered holders of record of our common stock. Dividends We have not declared or paid any cash dividends on our common stock during either of the two most recent fiscal years and have no current intention to payany cash dividends. Our ability to pay cash dividends is governed by applicable provisions of Delaware law and is subject to the discretion of our Board ofDirectors. Item 6. Selected Financial DataNot Applicable.Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsYou should read the following discussion and analysis of financial condition and results of operation, together with the financial statements and therelated notes appearing in Item 8 of this report.Overview We discover, acquire, develop and commercialize proprietary-based ingredient technologies through our business model which utilizes our wholly-ownedsynergistic business units. These units include the supply of phytochemical reference standards, which are small quantities of plant-based compoundstypically used to research an array of potential attributes, and reference materials, related contract services, and proprietary ingredients. We performchemistry-based analytical services at our laboratory in Boulder, Colorado, typically in support of quality control or quality assurance activities within thedietary supplement industry. Through our subsidiary Spherix Consulting, Inc., we also provide scientific and regulatory consulting to clients in the food,supplement and pharmaceutical industries to manage potential health and regulatory risks. The discussion and analysis of our financial condition and results of operations are based on the ChromaDex financial statements, which have been preparedin accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires making estimates and assumptionsthat affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well asthe reported revenues, if any, and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including thosedescribed in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under thecircumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent fromother sources. Actual results may differ from these estimates under different assumptions or conditions. On September 29, 2014, we entered into a loan and security agreement (the “Loan Agreement”) with Hercules Technology II, L.P., as lender (“Lender”) andHercules Technology Growth Capital, Inc., as agent. Lender will provide us with access to a term loan of up to $5 million. The first $2.5 million of the termloan was funded at closing, and is repayable in installments over 30 months, following an initial interest-only period of twelve months after closing. Theremaining $2.5 million of the term loan can be drawn down at our option at any time but no later than July 31, 2015. -30-Table of ContentsWith the term loan described above, we anticipate that our current cash and cash generated from operations will be sufficient to meet our projected operatingplans through at least March 20, 2016. We may, however, seek additional capital prior to March 20, 2016, both to meet our projected operating plans afterMarch 20, 2016 and/or to fund our longer term strategic objectives.Additional capital may come from public and/or private stock or debt offerings, borrowings under lines of credit or other sources. These additional funds maynot be available on favorable terms, or at all. Further, if we issue equity or debt securities to raise additional funds, our existing stockholders may experiencedilution and the new equity or debt securities we issue may have rights, preferences and privileges senior to those of our existing stockholders. In addition, ifwe raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to our products orproprietary 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 todevelop or enhance our products, obtain the required regulatory clearances or approvals, achieve long term strategic objectives, take advantage of futureopportunities, or respond to competitive pressures or unanticipated customer requirements. Any of these events could adversely affect our ability to achieveour 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 ourcustomers’ 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. Thesevendors may not be available, or charge fees that prevent us from pricing competitively within our markets. Some of our operations are subject to regulation by various state and federal agencies. In addition, we expect a significant increase in the regulation of ourtarget markets. Dietary supplements are subject to FDA, FTC and U.S. Department of Agriculture regulations relating to composition, labeling andadvertising claims. These regulations may in some cases, particularly with respect to those applicable to new ingredients, require a notification that must besubmitted to the FDA along with evidence of safety. There are similar regulations related to food additives.Results of Operations Our net sales for the twelve-month periods ended January 3, 2015 and December 28, 2013 were approximately $15,313,000 and $10,161,000, respectively.We incurred a net loss of approximately $5,388,000 for the twelve-month period ended January 3, 2015 and a net loss of approximately $4,420,000 for thetwelve-month period ended December 28, 2013. This equated to a $0.05 loss per basic and diluted share for the twelve-month period ended January 3, 2015versus a $0.04 loss per basic and diluted share for the twelve-month period ended December 28, 2013. Over the next two years, we plan to continue to increase research and development efforts for our line of proprietary ingredients, subject to available financialresources. Twelve months ending January 3,2015 December 28,2013 Change Sales $15,313,179 $10,160,964 51%Cost of sales 9,987,514 7,027,828 42%Gross profit 5,325,665 3,133,136 70%Operating expenses-Sales and marketing 2,136,584 2,357,605 -9% -General and administrative 8,374,601 5,117,016 64% -Loss from investment in affiliate 45,829 44,961 2%Nonoperating-Interest income 2,013 1,251 61% -Interest expenses (158,849) (34,330) 363%Net loss $(5,388,185) $(4,419,525) 22% -31-Table of Contents Net Sales Net sales consist of gross sales less discounts and returns. Net sales increased by 51% to $15,313,179 for the twelve-month period ended January 3, 2015 ascompared to $10,160,964 for the twelve-month period ended December 28, 2013. The core standards and contract services segment generated net sales of$7,487,189 for the twelve-month period ended January 3, 2015. This is an increase of 13%, compared to $6,643,832 for the twelve-month period endedDecember 28, 2013. This increase was due to increased sales of both phytochemical reference standards and contract services. The ingredients segmentgenerated net sales of $6,857,177 for the twelve-month period ended January 3, 2015. This is an increase of 182%, compared to $2,430,699 for the twelve-month period ended December 28, 2013. This increase was due to the increased sales throughout most of the ingredients we sell, “NIAGEN®” in particular,which we launched in the third quarter of 2013. The scientific and regulatory consulting segment generated net sales of $968,813 for the twelve-monthperiod ended January 3, 2015. This is a decrease of 16%, compared to $1,146,718 for the twelve-month period ended December 28, 2013. There were fewerconsulting projects completed during the twelve-month period ended January 3, 2015 than during the twelve-month period ended December 28, 2013. Cost of Sales Costs of sales include raw materials, labor, overhead, and delivery costs. Cost of sales for the twelve-month period ended January 3, 2015 was $9,987,514as compared with $7,027,828 for the twelve-month period ended December 28, 2013. As a percentage of net sales, this represented a 4% decrease for thetwelve-month period ended January 3, 2015 compared to the twelve-month period ended December 28, 2013. The cost of sales as a percentage of net salesfor the core standards and contract services segment for the twelve-month period ended January 3, 2015 was 69% compared to 74% for the twelve-monthperiod ended December 28, 2013. This percentage decrease in cost of sales is largely due to increased sales in analytical testing and contract services area,which the sales increased about 16% compared to the twelve-month period ended December 28, 2013. Fixed labor costs make up the majority of costs foranalytical testing and contract services and these fixed labor costs did not increase in proportion to sales. The cost of sales as a percentage of net sales for theingredients segment for the twelve-month period ended January 3, 2015 was 62%. This percentage was also 62% for the twelve-month period endedDecember 28, 2013. The cost of sales as a percentage of net sales for the scientific and regulatory consulting segment for the twelve-month period endedJanuary 3, 2015 was 61% compared to 55% for the twelve-month period ended December 28, 2013. The increase in cost of sales was largely due tocompleting fewer consulting projects during the twelve-month period ended January 3, 2015 than during the comparable period in 2013. Gross Profit Gross profit 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 andservices. Our gross profit increased 70% to $5,325,665 for the twelve-month period ended January 3, 2015 from $3,133,136 for the twelve-month periodended December 28, 2013. For the core standards and contract services segment, our gross profit increased 34% to $2,345,522 for the twelve-month periodended January 3, 2015 from $1,750,183 for the twelve-month period ended December 28, 2013. The increased sales of analytical testing and contractservices which resulted in a higher labor utilization rate as well as increased fixed cost coverage, was the primary reason for the increase in gross profit. Forthe ingredients segment, our gross profit increased to $2,599,830 for the twelve-month period ended January 3, 2015 from $929,512 for the twelve-monthperiod ended December 28, 2013. The increased sales throughout our ingredient portfolio, especially for our recently launched “NIAGEN®” was the mainfactor for the increase in gross profit. For the scientific and regulatory consulting segment, our gross profit decreased 26% to $380,313 for the twelve-monthperiod ended January 3, 2015 from $514,681 for the twelve-month period ended December 28, 2013. The decrease in sales which resulted in a lower laborutilization rate was the reason for the decrease in gross profit. -32-Table of ContentsOperating Expenses - Sales and Marketing Sales and Marketing Expenses consist of salaries, advertising and marketing expenses. Sales and marketing expenses for the twelve-month period endedJanuary 3, 2015 were $2,136,584 as compared to $2,357,605 for the twelve-month period ended December 28, 2013. For the core standards and contractservices segment, sales and marketing expenses for the twelve-month period ended January 3, 2015, decreased to $975,800 as compared to $1,459,620 for thetwelve-month period ended December 28, 2013. This decrease was largely due to operational changes in sales and marketing staff and a decrease inmarketing and advertising spend. For the ingredients segment, sales and marketing expenses for the twelve-month period ended January 3, 2015 increased to$1,081,209 as compared to $752,121 for the twelve-month period ended December 28, 2013. The increase was largely due to increased marketing efforts forour line of proprietary ingredients. For the scientific and regulatory consulting segment, sales and marketing expenses for the twelve-month period endedJanuary 3, 2015 were $79,575 as compared to $14,705 for the twelve-month period ended December 28, 2013. This increase was largely due to our increasedmarketing efforts to raise the awareness of our consulting services within the industry. Lastly, we incurred $131,159 in sales and marketing expenses for ourBluScience product line during the twelve-month period ended December 28, 2013. We did not have such expenses for the comparable period in 2014 as wesold the BluScience product line on March 28, 2013. Operating Expenses - General and Administrative General and Administrative Expenses consist of research and development, general company administration, IT, accounting and executivemanagement. General and administrative expenses for the twelve-month period ended January 3, 2015 increased to $8,374,601 as compared to $5,117,016for the twelve-month period ended December 28, 2013. One of the factors that contributed to this increase was an increase in share-based compensationexpense. Our share-based compensation expense for the twelve-month period ended January 3, 2015 was $2,916,924 as compared to $1,287,917 for thetwelve-month period ended December 28, 2013. During the twelve-month period ended January 3, 2015, the Company recognized expenses for the1,090,000 shares of restricted stock granted to the Company’s officers and members of the board of directors, which resulted in the increase in share-basedcompensation expenses. Another factor that contributed to the increase in general and administrative expenses was an increase in expenses related to thepatents we license, including maintenance, consulting, filing and related royalty expenses. Our patent related expenses increased to $815,195 as comparedto $293,643 for the twelve-month period ended December 28, 2013. Another factor that contributed to the increase in general and administrative expenseswas an increase in research and development expenses for our line of proprietary ingredients. Our research and development expenses increased to $513,671as compared to $134,040 for the twelve-month period ended December 28, 2013. In addition, during the twelve-month period ended January 3, 2015, therewas an increase of approximately $176,000 in wages and related expenses as a result of hiring additional personnel to support our operations, including anin-house legal counsel. Lastly, there was one-time expense for $125,000 during the twelve-month period ended January 3, 2015, which we have paid as asettlement fee to a certain claimant. Nonoperating - Interest Income Interest income consists of interest earned on money market accounts. Interest income for the twelve-month period ended January 3, 2015, was $2,013 ascompared to $1,251 for the twelve-month period ended December 28, 2013. Nonoperating - Interest Expense Interest expense consists of interest on loan payable and capital leases. Interest expense for the twelve-month period ended January 3, 2015, was $158,849as compared to $34,330 for the twelve-month period ended December 28, 2013. This increase was largely related to the Loan Agreement the Companyentered into with Hercules Technology II, L.P., which the Company has drawn down $2.5 million on September 29, 2014. -33-Table of ContentsDepreciation and Amortization For the twelve-month period ended January 3, 2015, we recorded approximately $222,721 in depreciation compared to approximately $246,175 for thetwelve-month period ended December 28, 2013. 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 3, 2015, we recorded amortization onintangible assets of approximately $35,589 compared to approximately $23,532 for the twelve-month period ended December 28, 2013. Income Taxes At January 3, 2015 and December 28, 2013, the Company maintained a full valuation allowance against the entire deferred income tax balance whichresulted in an effective tax rate of zero for 2014 and 2013. Liquidity and Capital Resources For the twelve-month periods ended January 3, 2015 and December 28, 2013, the Company has incurred operating losses of approximately $5,231,000 and$4,386,000, respectively. Net cash used in operating activities for the twelve-month periods ended January 3, 2015 and December 28, 2013 wereapproximately $2,580,000 and $3,906,000, respectively. The losses and the uses of cash are primarily due to expenses associated with the development andexpansion of our operations. These operations have been financed through capital contributions, the issuance of common stock and warrants through privateplacements, and the issuance of debt. Our Board of Directors periodically reviews our capital requirements in light of our proposed business plan. Our future capital requirements will remaindependent upon a variety of factors, including cash flow from operations, the ability to increase sales, increasing our gross profits from current levels,reducing sales and administrative expenses as a percentage of net sales, continued development of customer relationships, and our ability to market our newproducts successfully. However, based on our results from operations, we may determine that we need additional financing to implement our businessplan. There can be no assurance that any such financing will be available on terms favorable to us or at all. Without adequate financing we may have tofurther delay or terminate product or service expansion plans. Any inability to raise additional financing would have a material adverse effect on us.On September 29, 2014, we entered into a loan and security agreement (the “Loan Agreement”) with Hercules Technology II, L.P., as lender (“Lender”) andHercules Technology Growth Capital, Inc., as agent. Lender will provide us with access to a term loan of up to $5 million. The first $2.5 million of the termloan was funded at closing, and is repayable in installments over 30 months, following an initial interest-only period of twelve months after closing. Theremaining $2.5 million of the term loan can be drawn down at our option at any time but no later than July 31, 2015.While we anticipate that our current cash, cash equivalents and cash generated from operations and $2.5 million we can additionally draw down at our optionpursuant to the Loan Agreement will be sufficient to meet our projected operating plans through at least March 20, 2016, we may seek additional capitalprior to March 20, 2016, both to meet our projected operating plans through and after March 20, 2016 and to fund our longer term strategic objectives. To theextent we are unable to raise additional cash or generate sufficient revenue to meet our projected operating plans prior to March 20, 2016, we will revise ourprojected operating plans accordingly.Net cash used in operating activitiesNet cash used in operating activities for the twelve-month period ended January 3, 2015 was approximately $2,580,000 as compared to approximately$3,906,000 for the twelve-month period ended December 28, 2013. Along with the net loss, an increase in inventories and trade receivables were the largestuses of cash during the twelve-month period ended January 3, 2015. Net cash used in operating activities for the twelve-month period ended December 28,2013 largely reflects decrease in accounts payable and increase in inventories, along with the net loss.We expect our operating cash flows to fluctuate significantly in future periods as a result of fluctuations in our operating results, shipment timetables,accounts receivable collections, inventory management, and the timing of our payments, among other factors. -34-Table of ContentsNet cash provided by investing activitiesNet cash provided by investing activities was approximately $1,590,000 for the twelve-month period ended January 3, 2015, compared to approximately$999,000 for the twelve-month period ended December 28, 2013. Net cash provided by investing activities for the twelve-month period ended January 3,2015 principally consisted of proceeds received from unrelated third parties from the assignment of the Senior Note and the sale of the PreferredShares. NeutriSci originally issued the Senior Note and the Preferred Shares to the Company as a part of the consideration for the purchase of BluScienceproduct line. Net cash provided investing activities for the twelve-month period ended December 28, 2013 mainly consisted of cash consideration receivedfrom NeutriSci from the sale of BluScience product line as well as a repayment received from the Senior Note issued by NeutriSci.Net cash provided by financing activitiesNet cash provided by financing activities was approximately $2,694,000 for the twelve-month period ended January 3, 2015, compared to approximately$4,649,000 for the twelve-month period ended December 28, 2013. Net cash provided by financing activities for the twelve-month period ended January 3,2015 mainly consisted of proceeds from the loan we entered into with Hercules Technology II, L.P. Net cash provided by financing activities for the twelve-month period ended December 28, 2013 mainly consisted of proceeds from issuance of our common stock through a private offering as well as from theexercise of warrants.Dividend Policy We have not declared or paid any cash dividends on our common stock. We presently intend to retain earnings for use in our operations and to finance ourbusiness. Any change in our dividend policy is within the discretion of our board of directors and will depend, among other things, on our earnings, debtservice and capital requirements, restrictions in financing agreements, if any, business conditions, legal restrictions and other factors that our board ofdirectors deems relevant. Trade Receivables As of January 3, 2015, we had $1,906,709 in trade receivables as compared to $838,793 as of December 28, 2013. This increase was largely due to theincrease in our sales from the ingredients segment. Other Receivable As of January 3, 2015, the Company did not have any other receivable, however, as of December 28, 2013, we had $215,000 in other receivable. Thisamount was from a legal settlement agreement related to a lawsuit over the violation of the Company’s trademarks. The counterparty had already remittedthe payment to a third party escrow agent prior to December 28, 2013 and this payment was deposited by the Company on January 14, 2014. Inventories As of January 3, 2015, we had $3,734,341 in inventory, compared to $2,204,125 as of December 28, 2013. This increase was mainly due to increase ininventory for the ingredients business segment. As of January 3, 2015, our inventory consisted of approximately $2,276,000 of bulk ingredients andapproximately $1,458,000 of phytochemical reference standards. Bulk ingredients are proprietary compounds sold to customers in larger quantities,typically in kilograms. These ingredients are used by our customers in the dietary supplement, food and beverage, animal health, cosmetic andpharmaceutical industries to manufacture their final products. Phytochemical reference standards are small quantities of plan-based compounds typicallyused to research an array of potential attributes or for quality control purposes. The Company has approximately 5,000 defined standards and holds a lot ofthese standards as inventory in small quantities, mostly in grams and milligrams. -35-Table of ContentsOur normal operating cycle for reference standards is currently longer than one year. Due to the large number of different items we carry, certain groups ofthese reference standards have sales frequency that is slower than others and varies greatly year to year. In addition, for certain reference standards, the costsaving is advantageous when purchased in larger quantities and we have taken advantage of such opportunities when available. Such factors have resulted inan operating cycle to be more than one year on average. The Company gains competitive advantage through the broad offering of reference standards and itis critical for the Company to continue to expand its library of reference standards it offers for the growth of business. Nevertheless, the Company hasrecently made changes in its reference standards inventory purchasing practice, which the management believes will result in an improved turnover rate andshorter operating cycle without impacting our competitive advantage. The Company regularly reviews inventories on hand and records a provision for slow-moving and obsolete inventory, inventory not meeting qualitystandards and inventory subject to expiration. The provision for slow-moving and obsolete inventory is based on current estimates of future product demand,market conditions and related management judgment. Any significant unanticipated changes in future product demand or market conditions that vary fromcurrent expectations could have an impact on the value of inventories. We strive to optimize our supply chain as we constantly search for better and more reliable sources and suppliers of bulk ingredients and phytochemicalreference standards. By doing so, we believe we can lower the costs of our inventory, which we can then pass along the savings to our customers. In addition,we are working with our suppliers and partners to develop more efficient manufacturing methods of the raw materials, in an effort to lower the costs of ourinventory. Accounts Payable As of January 3, 2015, we had $3,451,608 in accounts payable compared to $1,440,910 as of December 28, 2013. This increase was primarily due the growthin our ingredients business segment and reflects the timing of payments related to our purchases of inventory. Advances from Customers As of January 3, 2015, we had $243,435 in advances from customers compared to $546,044 as of December 28, 2013. These advances are for large-scaleconsulting projects, contract services and contract research projects where we require a deposit before beginning work. This decrease was due to completionof certain large-scale research projects during the twelve-month period ended January 3, 2015 which the advances were outstanding as of December 28, 2013. Off-Balance Sheet Arrangements During the fiscal years ended January 3, 2015 and December 28, 2013, we had no off-balance sheet arrangements other than ordinary operating leases asdisclosed in the accompanying financial statements. Critical Accounting Policies The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared inaccordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgmentsthat affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, we evaluate these estimates,including those related to the valuation of share-based payments. We base our estimates on historical experience and on various other assumptions that arebelieved to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilitiesthat are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.We believe that of our significant accounting policies, which are described in Note 2 of the Financial Statements, set forth in Item 8, the followingaccounting policies involve the greatest degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid infully understanding and evaluating our consolidated financial condition and results of operations. -36-Table of ContentsRevenue recognition: The Company recognizes sales and the related cost of sales at the time the merchandise is shipped to customers or service is performed,when each of the following conditions have been met: an arrangement exists, delivery has occurred, there is a fixed price, and collectability is reasonablyassured. Discounts, returns and allowances related to sales, including an estimated reserve for returns and allowances, are recorded as reduction of revenue.Shipping and handling fees billed to customers and the cost of shipping and handling fees billed to customers are included in Net sales. Shipping andhandling fees not billed to customers are recognized as cost of sales.Taxes collected from customers and remitted to governmental authorities are excluded from revenue, which is presented on a net basis in the statement ofoperations.Inventories: Inventories are comprised of raw materials, work-in-process and finished goods. 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. Labor and overhead has been addedto inventory that was manufactured or characterized by the Company.The Company regularly reviews inventories on hand and records a provision for slow-moving and obsolete inventory, inventory not meeting qualitystandards and inventory subject to expiration. The provision for slow-moving and obsolete inventory is based on current estimates of future product demand,market conditions and related management judgment. Any significant unanticipated changes in future product demand or market conditions that vary fromcurrent expectations could have an impact on the value of inventories. Share-based compensation: The Company has an Equity Incentive Plan under which the Board of Directors may grant restricted stock or stock options toemployees and non-employees. For employees, share-based compensation cost is recorded for all option grants and awards of non-vested stock based on thegrant date fair value of the award, and is recognized over the period the employee is 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 isrecognized over the period the non-employee is required to provide services for the award.The Company recognizes compensation expense over the requisite service period using the straight-line method for option grants without performanceconditions. For stock options that have both service and performance conditions, the Company recognizes compensation expense using the gradedattribution method. Compensation expense for stock options with performance conditions is recognized only for those awards expected to vest.From time to time, the Company awards shares of its common stock to non-employees for services provided or to be provided. The fair value of the awardsare measured either based on the fair market value of stock at the date of grant or the value of the services provided, based on which is more reliablymeasurable. Since these stock awards are fully vested and non-forfeitable, upon issuance the measurement date for the award is usually reached on the date ofthe award. Item 7A. Quantitative and Qualitative Disclosures About Market RiskNot Applicable. -37-Table of ContentsItem 8. Financial Statements and Supplementary DataThe financial statements are set forth in the pages listed below. PageReport of Independent Registered Public Accounting Firm39Consolidated Balance Sheets at January 3, 2015 and December 28, 201340Consolidated Statements of Operations for the Years Ended January 3, 2015 and December 28, 201341Consolidated Statements of Stockholders’ Equity for the Years Ended January 3, 2015 and December 28, 201342Consolidated Statements of Cash Flows for the Years Ended January 3, 2015 and December 28, 201343Notes to Consolidated Financial Statements44 -38-Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Audit Committee of the Board of Directors and Shareholders ofChromaDex Corporation We have audited the accompanying consolidated balance sheets of ChromaDex Corporation and Subsidiaries (the “Company”) as of January 3, 2015 andDecember 28, 2013, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. Theseconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An auditalso includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ChromaDex Corporation andSubsidiaries, as of January 3, 2015 and December 28, 2013, and the results of its operations and its cash flows for the years ended January 3, 2015 andDecember 28, 2013 in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ChromaDex Corporation andSubsidiaries’ internal control over financial reporting as of January 3, 2015, based on criteria established in Internal Control - Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission in 2013 and our report dated March 19, 2015 expressed an unqualified opinion onthe effectiveness of the Company’s internal control over financial reporting. /s/ Marcum llpMarcum LLPNew York, NYMarch 19, 2015 -39-Table of Contents ChromaDex Corporation and SubsidiariesConsolidated Balance SheetsJanuary 3, 2015 and December 28, 2013 2014 2013 Assets Current Assets Cash $3,964,750 $2,261,336 Trade receivables, less allowance for doubtful accounts and returns2014 $38,000; 2013 $9,000 1,906,709 838,793 Other receivable - 215,000 Inventories 3,734,341 2,204,125 Prepaid expenses and other assets 292,891 271,445 Total current assets 9,898,691 5,790,699 Leasehold Improvements and Equipment, net 1,264,660 1,063,239 Other Noncurrent Assets Deposits and other 148,796 43,460 Long-term investment in affiliate - 1,887,844 Intangible assets, net 296,061 201,650 Total other noncurrent assets 444,857 2,132,954 Total assets $11,608,208 $8,986,892 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $3,451,608 $1,440,910 Accrued expenses 853,685 656,707 Current maturities of loan payable 223,358 - Current maturities of capital lease obligations 148,278 138,887 Customer deposits and other 234,435 546,044 Deferred rent, current 69,456 55,586 Total current liabilities 4,980,820 2,838,134 Loan payable, less current maturities, net 2,068,474 - Capital lease obligations, less current maturities 423,015 280,342 Deferred rent, less current 137,508 202,965 Total liabilities 7,609,817 3,321,441 Commitments and contingencies Stockholders' Equity Common stock, $.001 par value; authorized 150,000,000 shares; issued and outstanding 2014 105,271,058 and 2013 104,524,738 shares 105,271 104,525 Additional paid-in capital 43,417,442 39,697,063 Accumulated deficit (39,524,322) (34,136,137)Total stockholders' equity 3,998,391 5,665,451 Total liabilities and stockholders' equity $11,608,208 $8,986,892 See Notes to Consolidated Financial Statements. -40-Table of ContentsChromaDex Corporation and Subsidiaries Consolidated Statements of Operations Years Ended January 3, 2015 and December 28, 2013 2014 2013 Sales, net $15,313,179 $10,160,964 Cost of sales 9,987,514 7,027,828 Gross profit 5,325,665 3,133,136 Operating expenses: Sales and marketing 2,136,584 2,357,605 General and administrative 8,374,601 5,117,016 Loss from investment in affiliate 45,829 44,961 Operating expenses 10,557,014 7,519,582 Operating loss (5,231,349) (4,386,446) Nonoperating income (expense): Interest income 2,013 1,251 Interest expense (158,849) (34,330)Nonoperating expenses (156,836) (33,079) Net loss $(5,388,185) $(4,419,525) Basic and Diluted loss per common share $(0.05) $(0.04) Basic and Diluted weighted average common shares outstanding 106,459,379 99,987,443 See Notes to Consolidated Financial Statements. -41-Table of ContentsChromaDex Corporation and Subsidiaries Consolidated Statement of Stockholders' Equity Years Ended January 3, 2015 and December 28, 2013 Total Common Stock Additional Accumulated Stockholders' Shares Amount Paid-in Capital Deficit Equity Balance, December 29, 2012 92,140,062 $92,140 $33,617,801 $(29,716,612) $3,993,329 Issuance of common stock, net of offering costs of $20,000 3,529,411 3,529 2,976,471 - 2,980,000 Exercise of stock options 276,038 276 138,093 - 138,369 Exercise of warrants 7,979,227 7,979 1,630,769 - 1,638,748 Share-based compensation 600,000 600 1,333,930 - 1,334,530 Net loss - - - (4,419,525) (4,419,525) Balance, December 28, 2013 104,524,738 104,525 39,697,063 (34,136,137) 5,665,451 Issuance of warrant - - 246,189 - 246,189 Exercise of stock options 534,715 535 466,614 - 467,149 Issuance of unvested restricted stock 1,186,000 1,186 - - 1,186 Unvested restricted stock (1,186,000) (1,186) - - (1,186) Share-based compensation 85,000 85 2,861,208 - 2,861,293 Stock issued to settle outstanding payable balance 126,605 126 146,368 - 146,494 Net loss - - - (5,388,185) (5,388,185) Balance, January 3, 2015 105,271,058 $105,271 $43,417,442 $(39,524,322) $3,998,391 See Notes to Consolidated Financial Statements. -42-Table of Contents ChromaDex Corporation and Subsidiaries Consolidated Statements of Cash Flows Years Ended January 3, 2015 and December 28, 2013 2014 2013 Cash Flows From Operating Activities Net loss $(5,388,185) $(4,419,525) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation of leasehold improvements and equipment 222,721 246,175 Amortization of intangibles 35,589 23,532 Share-based compensation expense 2,916,924 1,287,917 Loss from disposal of equipment 20,400 66,378 Loss from investment in affiliate 45,829 44,961 Non-cash financing costs 49,527 - Changes in operating assets and liabilities: Trade receivables (1,067,916) 1,118,730 Other receivable 215,000 (215,000) Inventories (1,530,216) (466,352) Prepaid expenses and other assets (91,053) (62,913) Accounts payable 2,157,192 (1,618,450) Accrued expenses 196,978 (204,891) Customer deposits and other (311,609) 235,777 Deferred rent (51,587) 57,650 Net cash used in operating activities (2,580,406) (3,906,011) Cash Flows From Investing Activities Purchases of leasehold improvements and equipment (123,096) (137,349) Purchase of intangible assets (130,000) (89,000) Proceeds from sales of assets - 1,000,000 Proceeds from sales of equipment 1,356 - Proceeds from investment in affiliate 1,842,015 225,000 Net cash provided by investing activities 1,590,275 998,651 Cash Flows From Financing Activities Proceeds from issuance of common stock, net of issuance costs - 2,980,000 Proceeds from exercise of stock options 467,149 138,369 Proceeds from exercise of warrants - 1,638,748 Proceeds from loan payable 2,500,000 - Payment of debt issuance costs (102,866) - Principal payments on capital leases (170,738) (108,421)Net cash provided by financing activities 2,693,545 4,648,696 Net increase in cash 1,703,414 1,741,336 Cash Beginning of Year 2,261,336 520,000 Cash Ending of Year $3,964,750 $2,261,336 Supplemental Disclosures of Cash Flow Information Cash payments for interest $74,996 $34,330 Supplemental Schedule of Noncash Investing Activity Capital lease obligation incurred for the purchase of equipment $322,802 $302,017 Retirement of fully depreciated equipment - cost $56,110 $- Retirement of fully depreciated equipment - accumulated depreciation $(56,110) $- Supplemental Schedule of Noncash Operating Activity Stock issued to settle outstanding payable balance $146,494 $- Supplemental Schedule of Noncash Share-based Compensation Stock awards issued for services rendered in prior period $- $14,560 Changes in prepaid expenses associated with share-based compensation $55,631 $32,053 Warrant issued, net of offering costs $246,189 $- Supplemental Schedule of Noncash Activities Related to Sale of BluScience Consumer Product Line Assets transferred $- $3,526,677 Liabilities transferred $- $368,873 Carrying value of long-term investment in affiliate, net of $1,000,000 cash proceeds $- $2,157,804 See Notes to Consolidated Financial Statements. -43-Table of Contents Note 1. Nature of Business and LiquidityNature of business: ChromaDex Corporation and its wholly owned subsidiaries, ChromaDex, Inc., Chromadex Analytics, Inc. and Spherix Consulting, Inc.(collectively, the “Company”) are a natural products company that discovers, acquires, develops and commercializes proprietary-based ingredienttechnologies through its business model that utilizes its wholly owned business units, including ingredient technologies, catalog of natural product finechemicals, chemistry and analytical testing services, and product regulatory and safety consulting services. The Company provides science-based solutionsto the nutritional supplement, food and beverage, animal health, cosmetic and pharmaceutical industries. The Company acquired Spherix Consulting, Inc.on December 3, 2012, which provides scientific and regulatory consulting to the clients in the food, supplement and pharmaceutical industries to managepotential health and regulatory risks. In 2011, the Company launched its BluScience retail consumer line based on its proprietary ingredients. However, onMarch 28, 2013, the Company entered into an asset purchase and sale agreement with NeutriSci International Inc. and consummated the sale of BluScienceconsumer product line to NeutriSci.Liquidity: The Company has incurred a loss from operations of approximately $5.2 million and a net loss of approximately $5.4 million for the year endedJanuary 3, 2015, and a net loss of approximately $4.4 million for the year ended December 28, 2013. As of January 3, 2015, the cash and cash equivalentstotaled approximately $3,965,000.On September 29, 2014, we entered into a loan and security agreement (the “Loan Agreement”) with Hercules Technology II, L.P., as lender (“Lender”) andHercules Technology Growth Capital, Inc., as agent. Lender will provide us with access to a term loan of up to $5 million. The first $2.5 million of the termloan was funded at closing, and is repayable in installments over 30 months, following an initial interest-only period of twelve months after closing. Theremaining $2.5 million of the term loan can be drawn down at our option at any time but no later than July 31, 2015. The term loan bears interest at the rateper year equal to the greater of either (i) 9.35% plus the prime rate as reported in The Wall Street Journal minus 3.25%, or (ii) 9.35%. For further details on theLoan Agreement, please refer to Note 8. Loan Payable.While we anticipate that our current cash, cash equivalents and cash generated from operations and $2.5 million we can additionally draw down at our optionpursuant to the Loan Agreement will be sufficient to meet our projected operating plans through at least March 20, 2016, 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 additionalfinancing, 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, theCompany will further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations. Theinability to raise additional financing may have a material adverse effect on the future performance of the Company.Note 2. Significant Accounting Policies Significant accounting policies are as follows:Basis of presentation: The financial statements and accompanying notes have been prepared on a consolidated basis and reflect the consolidated financialposition of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated from thesefinancial statements. The Company’s fiscal year ends on the Saturday closest to December 31. The fiscal year ended January 3, 2015 (referred to as 2014)consisted of 53 weeks and the fiscal year ended December 28, 2013 (referred to as 2013) consisted of 52 weeks. Every fifth or sixth fiscal year, the inclusionof an extra week occurs due to the Company’s floating year-end date. The fiscal year 2015 will include 52 weeks. -44-Table of ContentsUse of accounting estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the amountsreported in the financial statements and accompanying notes. Actual results could differ from those estimates.Changes in accounting estimates: During the year ended January 3, 2015, the Company evaluated assumptions for estimating the fair value of theCompany’s stock options. The Company uses the Black-Scholes based option valuation model, which requires assumptions on (i) volatility, (ii) expecteddividends, (iii) expected term and (iv) risk-free rate. While evaluating the assumptions on volatility, the Company determined that the historical volatilitythe Company’s common stock needs to be considered when estimating the expected volatility. Previously, the Company calculated expected volatilitybased principally on the volatility rates of similarly situated publicly held companies, as the historical measurement period that was available to compute thevolatility rate of the Company’s common stock was shorter than the expected life of the options. For stock options granted during the year ended January 3, 2015, the Company calculated expected volatility rate based on the combined volatility ofpublicly held companies in similar industries and volatility of the Company’s common stock. Based on the expected term of stock options, a 20~75%weight was assigned to the volatility of the Company’s common stock as the historical volatility of the Company’s common stock from June 2008 throughApril 2010 was exceptionally high due to a thinly traded market. Below table illustrates the Company’s historical volatility and the average daily tradingvolume of the Company’s common stock from June 2008 through April 2010 and from April 2010 through December 2014.Period Volatility Average DailyTradingVolume 6/20/2008 ~ 4/19/2010 402% 11,455 4/20/2010 ~ 1/2/2015 77% 155,111 The weighted average expected volatility for the stock options granted during the twelve-month period ended January 3, 2015 following the update to ourestimate is approximately 75%. The weighted average expected volatility would have been approximately 30%, had we computed solely based on thevolatility rates of similarly situated public companies. For the year ended December 28, 2013, the weighted average expected volatility the Company used toestimate the fair value of the Company’s stock options granted was approximately 33%.The following is a pro-forma disclosure of our historical calculation of estimated volatility over the expected term based on a grant with an expected term of6 years:Fiscal Year 2013 Fiscal Year 2013 Name Use Volatility Name Use Volatility Covance, Inc. 50% 35% ChromaDex Corp. 20% 243%Sigma-Aldrich Corp. 50% 30% Covance Inc. 40% 35% Sigma-Aldrich Corp. 40% 30%Weighted Average 33% Weighted Average 75%The change in our estimate of volatility did not result to a material additional expense to our statement of operations. Revenue recognition: The Company recognizes sales and the related cost of sales at the time the merchandise is shipped to customers or service is performed,when each of the following conditions have been met: an arrangement exists, delivery has occurred, there is a fixed price, and collectability is reasonablyassured. Discounts, returns and allowances related to sales, including an estimated reserve for the returns and allowances, are recorded as reduction ofrevenue. -45-Table of ContentsShipping and handling fees billed to customers and the cost of shipping and handling fees billed to customers are included in net sales. For the year endingin January 3, 2015, shipping and handling fees billed to customers were approximately $115,000 and the cost of shipping and handling fees billed tocustomers was approximately $130,000. For the year ending in December 28, 2013, shipping and handling fees billed to customers were approximately$110,000 and the cost of shipping and handling fees billed to customers was approximately $128,000. Shipping and handling fees not billed to customersare recognized as cost of sales.Taxes collected from customers and remitted to governmental authorities are excluded from revenue, which is presented on a net basis in the statement ofoperations.Cash concentration: The Company maintains substantially all of its cash in three different accounts in one bank.Trade accounts receivable: Trade accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based onmonthly and quarterly reviews of all outstanding amounts. Management determines the allowance for doubtful accounts by identifying troubled accountsand by using historical experience applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries oftrade accounts receivable previously written off are recorded when received.Other receivables: Other receivables are amounts due for payment to the Company other than the Company’s normal customer invoices for merchandiseshipped or services performed. The other receivable amount as of December 28, 2013 was from a legal settlement agreement, which the settlement wasreached at arbitration form a lawsuit for the violation of the Company’s trademarks. The counterparty had already remitted the payment to a third partyescrow agent prior to December 28, 2013. This payment was deposited by the Company on January 14, 2014. The other receivable amount was recorded as again in general and administrative expenses in the statement of operations for the period ended December 28, 2013.Inventories: Inventories are comprised of raw materials, work-in-process and finished goods. 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. Labor and overhead has been addedto inventory that was manufactured or characterized by the Company. The amounts of major classes of inventory for the periods ended January 3, 2015 andDecember 28, 2013 are as follows: 2014 2013 Reference standards $1,760,305 $1,769,160 Bulk ingredients 2,298,036 694,965 4,058,341 2,464,125 Less valuation allowance 324,000 260,000 $3,734,341 $2,204,125 Our normal operating cycle for reference standards is currently longer than one year. The Company has approximately 5,000 defined standards and holds alot of these standards as inventory in small quantities, mostly in grams and milligrams. Due to the large number of different items we carry, certain groups ofthese reference standards have sales frequency that is slower than others and varies greatly year to year. In addition, for certain reference standards, the costsaving is advantageous when purchased in larger quantities and we have taken advantage of such opportunities when available. Such factors have resulted inan operating cycle to be more than one year on average. The Company gains competitive advantage through the broad offering of reference standards and itis critical for the Company to continue to expand its library of reference standards it offers for the growth of business. Nevertheless, the Company hasrecently made changes in its reference standards inventory purchasing practice, which the management believes will result in an improved turnover rate andshorter operating cycle without impacting our competitive advantage. The Company regularly reviews inventories on hand and records a provision for slow-moving and obsolete inventory, inventory not meeting qualitystandards and inventory subject to expiration. The provision for slow-moving and obsolete inventory is based on current estimates of future product demand,market conditions and related management judgment. Any significant unanticipated changes in future product demand or market conditions that vary fromcurrent expectations could have an impact on the value of inventories. -46-Table of ContentsIntangible assets: Intangible assets include licensing rights and are accounted for based on the fair value of consideration given or the fair value of the netassets acquired, whichever is more reliable. Intangible assets with finite useful lives are amortized using the straight-line method over a period of 10 years, or,for licensed patent rights, the remaining term of the patents underlying licensing rights (considered to be the remaining useful life of the license).Leasehold improvements and equipment: Leasehold improvements and equipment are carried at cost and depreciated on the straight-line method over thelesser of the estimated useful life of each asset or lease term. Leasehold improvements and equipment are comprised of leasehold improvements, laboratoryequipment, furniture and fixtures, and computer equipment. Depreciation on equipment under capital lease is included with depreciation on ownedassets. Maintenance and repairs are charged to operating expenses as they are incurred. Improvements and betterments, which extend the lives of the assets,are capitalized. Useful lives of leasehold improvements and equipment for each of the category are as follows: Useful LifeLeasehold improvementsUntil the end of the lease termComputer equipment3 to 5 yearsFurniture and fixtures7 yearsLaboratory equipment10 years Long-lived assets are reviewed for impairment on a periodic basis and when changes in circumstances indicate the possibility that the carrying amount maynot be recoverable. Long-lived assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of otherassets. If the forecast of undiscounted future cash flows is less than the carrying amount of the assets, an impairment charge would be recognized to reducethe carrying value of the assets to fair value. If a possible impairment is identified, the asset group’s fair value is measured relying primarily on a discountedcash flow methodology.Long-term investment in affiliate: The Company accounts for its investment in affiliate under the equity method. The Company records equity methodadjustments in gains (losses) on equity method investments, net, and may do so with up to a three-month lag, pending on the timely availability of financialinformation of the investee. Equity method adjustments include: our proportionate share of investee income or loss, gains or losses resulting from investeecapital transactions, and other adjustments required by the equity method. The long-term investment in affiliate is subject to a periodic impairment reviewand is considered to be impaired when a decline in carrying value is judged to be other-than-temporary. Evidence of a loss in value might include (i) absenceof an ability to recover the carrying amount of the investment or (ii) inability of the investee to sustain an earnings capacity that would justify the carryingamount of the investment.Customer deposits and other: Customer deposits and other represent either (i) cash received from customers in advance of product shipment or delivery ofservices; or (ii) cash received from government as research grants, which the Company has yet to complete the research activities.The cash received from government as research grants is recognized as a liability until the research is performed. Other than a nominal management fee,which the Company is entitled to earn when the research is performed, the research activities related to the grants are excluded from revenue and arepresented on a net basis in the statement of operations. Income taxes: Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences andoperating loss and tax credit carryforwards and deferred liabilities are recognized for taxable temporary differences. Temporary differences are the differencesbetween the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion ofmanagement, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted forthe effects of changes in tax laws and rates on the date of enactment. -47-Table of ContentsThe Company has not recorded a reserve for any tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty aboutthe timing of such deductibility. The Company files tax returns in all appropriate jurisdictions, which include a federal tax return and various state taxreturns. Open tax years for these jurisdictions are 2011 to 2014, which statutes expire in 2015 to 2018, respectively. When and if applicable, potential interestand penalty costs are accrued as incurred, with expenses recognized in general and administrative expenses in the statements of operations. As of January 3,2015, the Company has no liability for unrecognized tax benefits.Research and development costs: Research and development costs consist of direct and indirect costs associated with the development of the Company’stechnologies. These costs are expensed as incurred. Research and development costs for the periods ended January 3, 2015 and December 28, 2013 wereapproximately $514,000 and $134,000, respectively.Advertising: The Company expenses the production costs of advertising the first time the advertising takes place. Advertising expense for the periods endedJanuary 3, 2015 and December 28, 2013 were approximately $171,000 and $355,000, respectively.Share-based compensation: The Company has an Equity Incentive Plan under which the Board of Directors may grant restricted stock or stock options toemployees and non-employees. For employees, share-based compensation cost is recorded for all option grants and awards of non-vested stock based on thegrant date fair value of the award, and is recognized over the period the employee is 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 isrecognized over the period the non-employee is required to provide services for the award.The Company recognizes compensation expense over the requisite service period using the straight-line method for option grants without performanceconditions. For stock options that have both service and performance conditions, the Company recognizes compensation expense using the gradedattribution method. Compensation expense for stock options with performance conditions is recognized only for those awards expected to vest.From time to time, the Company awards shares of its common stock to non-employees for services provided or to be provided. The fair value of the awardsare measured either based on the fair market value of stock at the date of grant or the value of the services provided, based on which is more reliablymeasureable. Since these stock awards are fully vested and non-forfeitable, upon issuance the measurement date for the award is usually reached on the dateof the award. Fair Value Measurement: The Company follows the provisions of the accounting standard which defines fair value, establishes a framework for measuringfair value and enhances fair value measurement disclosure. Under these provisions, fair value is defined as the price that would be received to sell an asset orpaid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use onunobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use inpricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflectthe Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best informationavailable in the circumstances. The hierarchy is described below:Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchygives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. -48-Table of Contents Financial instruments: The estimated fair value of financial instruments has been determined based on the Company’s assessment of available marketinformation and appropriate valuation methodologies. The Company’s financial instruments that are included in current assets and current liabilities arerecorded at cost in the consolidated balance sheets. The estimated fair value of these financial instruments approximates their carrying value due to theirshort-term nature. The carrying amounts reported in the balance sheet for capital lease obligations are present values of the obligations, excluding the interest portion. Capitallease obligations with maturities less than one year are classified as current liabilities. The carrying amounts reported in the balance sheet for loan payable are present values net of discount, excluding the interest portion. The carrying value oflong-term portion of the loan payable approximates fair value because the Company’s interest rate yield based on the credit rating of the Company isbelieved to be near current market rates. The long-term portion of the Company’s loan payable is considered a Level 3 liability within the fair valuehierarchy. Loan payable with maturities less than one year are classified as current liabilities. Recent accounting standards: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognizerevenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for thosegoods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may berequired within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract,estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performanceobligation. ASU 2014-09 is effective for us in our first quarter of fiscal 2018 using either of two methods: (i) retrospective to each prior reporting periodpresented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initiallyapplying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. We arecurrently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements.In August 2014, the FASB issued ASU 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) - Disclosure of Uncertaintiesabout an Entity’s Ability to Continue as a Going Concern.” Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluatewhether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in thisASU provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. Theamendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that arecurrently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation everyreporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosureswhen substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures whensubstantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available tobe issued). The amendments in this ASU are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption ispermitted. On September 27, 2014, the Company early adopted ASU 2014-15. The adoption of ASU 2014-15 had no impacts on the Company’sconsolidated financial statements. -49-Table of Contents Note 3. Loss Per Share Applicable to Common Stockholders The following table sets forth the computations of loss per share amounts applicable to common stockholders for the year ended January 3, 2015 andDecember 28, 2013. Years Ended 2014 2013 Net loss $(5,388,185) $(4,419,525) Basic and diluted loss per common share $(0.05) $(0.04) Weighted average common shares outstanding (1): 106,459,379 99,987,443 Potentially dilutive securities (2): Stock options 13,974,052 13,160,955 Warrants 469,020 - Convertible Debt 773,395 - (1) Includes 1,623,186 and 500,000 weighted average nonvested shares of restricted stock for the year 2014 and 2013, respectively, which are participatingsecurities that feature voting and dividend rights. (2) Excluded from the computation of loss per share as their impact is antidilutive. Note 4. Investment in AffiliateDuring the year ended December 28, 2013, the Company entered into an asset purchase and sale agreement with NeutriSci International Inc. (“NeutriSci”)and consummated the sale of BluScience consumer product line to NeutriSci. The Company used the cost recovery method to account the sale transaction,which was estimated at approximately $3,157,804. The consideration received consisted of following: (a) a $1,000,000 cash payment; (b) a $2,500,000senior convertible secured note (convertible into 625,000 shares Series I Preferred Stock); and (c) 669,708 shares of Series I Preferred Shares that areconvertible into 2,678,832 Class “A” common shares of NeutriSci, representing an aggregate of 19% of the NeutriSci shares at the date of the transaction.The Company had previously applied the equity method of accounting due to a significant influence that it had obtained from the financial instrumentsnoted above, and the carrying value, which includes the Senior Note, was reflected as long-term investment in affiliate in the Company’s consolidatedbalance sheet at the date of transaction. The initial carrying value of this investment recognized at the date of transaction was $2,157,804, which is theCompany’s unrecovered cost or the difference between the net assets transferred to NeutriSci and the initial monetary consideration received. The 669,708shares of Series I Preferred Shares and the senior convertible secured note were accounted for as one long-term investment in NeutriSci. Under the costrecovery method, no gain on the sale is recognized until the Company’s cost basis in the net assets transferred has been recovered.During the year ended December 28, 2013, the Company received a partial payment of $225,000 for the first installment repayment that was due under theSenior Note. -50-Table of ContentsSale of Senior Secured Convertible NoteOn December 30, 2013, the Company assigned the Senior Note to an unrelated third party for $1,250,000. $2,275,000 remained outstanding on the SeniorNote at the date of the assignment. The Company also paid legal fees of $7,500 out of the proceeds of the purchase price. The Company also agreed totransfer to the third party a number of shares of preferred stock of NeutriSci having a value of $500,000 upon the consummation by NeutriSci of any actionresulting in the shares of its common stock being listed on an exchange. There was no recourse provision to the Company associated with the assignment ofthe note. In connection with the assignment of the note, the Company paid Palladium Capital Advisors, LLC (“Palladium”), a placement agent, a cash fee of$150,000 and agreed to transfer to Palladium a number of shares of preferred stock of NeutriSci having a value of $50,000 upon the consummation byNeutriSci of any action resulting in the shares of its common stock being listed on an exchange. The net proceeds received from the assignment of the SeniorNote have been charged against the carrying value of the long-term investment in affiliate.Sale and Transfer of Preferred SharesOn December 1, 2014, NeutriSci consummated its reverse merger with Disani Capital Corporation and became listed on Toronto Stock Exchange, TSXVenture Exchange. Immediately prior to NeutriSci’s listing, the Company transferred 108,676 and 10,868 Series I Preferred Shares of NeutriSci to theunrelated third party and Palladium, respectively, pursuant to the terms of the assignment of the Senior Note. In addition, the Company sold the remaining551,114 Series I Preferred Shares to another unrelated third party for $749,515. The Company recorded a loss of $24,286 as the carrying value prior to thesetransactions was $773,801. As of January 3, 2015, the Company does not have any investments in NeutriSci.Loss of Significant InfluenceAs a result of the assignment of the Senior Note described above, the Company no longer had a significant influence on NeutriSci as of December 30,2013. As a result, the Company discontinued applying equity method of accounting and applied cost method of accounting from December 30, 2013. Theadjusted carrying amount as of December 30, 2013 became the new cost figure for the investment and no retrospective adjustments to the financial statementshave been made. The Company had elected to record equity method adjustments in losses on the investment in NeutriSci, with a three-month lag, as thefinancial information of NeutriSci was not available in a timely manner. The equity method adjustment for the previously unaccounted NeutriSci’soperations from October 1, 2013 to December 31, 2013 was recorded during the year ended January 3, 2015, and was incorporated into the adjusted carryingamount of the investment.Sales, gross profit, net loss of NeutriSci for the six months ended September 30, 2013 and the three months ended December 31, 2013 are as follows: Six MonthsEnded Three MonthsEnded September 30,2013 December 31,2013 Sales $36,451 $60,575 Gross profit 13,310 33,619 Net loss $(813,212) $(435,208) -51-Table of ContentsChanges in carrying value and the Company ownership percentage since the inception are summarized as follows: CarryingValue OwnershipPercentage At March 28, 2013 $2,157,804 5.7% Company's share of NeutriSci's loss through September 30, 2013 (44,961) Proceeds from investment in affiliate (225,000) At December 28, 2013 1,887,844 4.9% Company's share of NeutriSci's loss for the three-month period ended December 31, 2013; previously not recognized due to a three-month lag (21,543) Proceeds from assignment of the Senior Note (1,092,500) Proceeds from sale and transfer of the Preferred Shares (749,515) Loss from investment in affiliate (24,286) At January 3, 2015 $- 0.0%Note 5. Intangible Assets Intangible assets consisted of the following: 2014 2013 Gross Carrying Accumulated Gross Carrying Accumulated Amount Amortization Amount Amortization Amortized intangible assets: License agreements and other $1,205,275 $909,224 $1,075,285 $873,635 Amortization expense on amortizable intangible assets included in the consolidated statement of operations for the year ended January 3, 2015 andDecember 28, 2013 was approximately $36,000 and $24,000, respectively. The unamortized expense is expected to be recognized over a weighted averageperiod of 7.3 years as of January 3, 2015. Estimated aggregate amortization expense for each of the next five years is as follows: Years ending December: 2015 $40,000 2016 40,000 2017 40,000 2018 36,000 2019 33,000 Thereafter 107,000 $296,000 -52-Table of Contents Note 6. Leasehold Improvements and Equipment Leasehold improvements and equipment consisted of the following: 2014 2013 Laboratory equipment $3,151,748 $2,782,364 Leasehold improvements 495,240 491,125 Computer equipment 329,737 372,851 Furniture and fixtures 13,039 18,313 Office equipment 7,877 7,877 Construction in progress 68,141 40,126 4,065,782 3,712,656 Less accumulated depreciation 2,801,122 2,649,417 $1,264,660 $1,063,239 Depreciation expense on leasehold improvements and equipment included in the consolidated statement of operations for the year ended January 3, 2015and December 28, 2013 was approximately $223,000 and $246,000, respectively. The Company leases equipment under capitalized lease obligations with a total cost of $1,073,601 and $695,461 and accumulated amortization of $242,887and $136,358 as of January 3, 2015 and December 28, 2013, respectively.During the year ended January 3, 2015, the Company disposed of approximately $56,000 of fully depreciated equipment. Note 7. Capitalized Lease Obligations Minimum future lease payments under capital leases as of January 3, 2015, are as follows: Year ending December: 2015 $191,454 2016 178,563 2017 157,713 2018 108,860 2019 33,884 Total minimum lease payments 670,474 Less amount representing interest at a rate of approximately 8.8% per year 99,181 Present value of net minimum lease payments 571,293 Less current portion 148,278 Long-term obligations under capital leases $423,015 Interest expense related to capital leases was approximately $47,000 and $34,000 for the years ended January 3, 2015 and December 28, 2013, respectively. -53-Table of ContentsSubsequent to January 3, 2015, the Company entered into a financing transaction to purchase laboratory equipment. Under the lease terms, the Companywill make monthly lease payments, including interest, of approximately $7,000 for 48 months, for a total payment of approximately $356,000. TheCompany will record a capital lease of approximately $304,000. The equipment will be utilized in our core standards and contract services segment. Note 8. Loan Payable On September 29, 2014, the Company entered into a loan and security agreement (the “Loan Agreement”) with Hercules Technology II, L.P., as lender(“Lender”) and Hercules Technology Growth Capital, Inc., as agent. Lender will provide us with access to a term loan of up to $5 million. The first $2.5million of the term loan was funded at closing, and is repayable in equal monthly installments of principal and interest (mortgage style) over 30 months,following an initial interest-only period of twelve months after closing. The remaining $2.5 million of the term loan can be drawn down at our option at anytime but no later than July 31, 2015. In connection with the loan, the Company paid a $50,000 facility charge to Lender and recorded as debt issuance cost. The term loan bears interest at the rate per year equal to the greater of either (i) 9.35% plus the prime rate as reported in The Wall Street Journal minus 3.25%,or (ii) 9.35%. The Company may prepay all, but no less than all, of the outstanding loan balance, subject to prepayment charges of 3% during the first twelvemonths following closing, 2% during the next twelve months and 1% thereafter. On the earliest to occur of the (a) the loan maturity date, (b) the date theCompany prepays the outstanding loan balance or (c) the date the outstanding loan balance becomes due and payable, the Company will pay Lender an endof term charge equal to 3.75% of all amounts drawn under the loan.The Loan Agreement further provides that, subject to certain conditions, any regularly scheduled installment of principal due to Lender may be paid, inwhole or in part at the option of the Company or Lender, by converting a portion of the principal of the term loan into shares of the Company’s commonstock (the “Conversion Shares”) at a conversion price of $1.293, in lieu of payment in cash. The aggregate principal amount to be paid in Conversion Sharesshall not exceed $1,000,000. Of this amount 50% shall convert at the Lender’s option and 50% shall convert at the Company’s option.Pursuant to the Loan Agreement, the Company issued Lender a warrant (the “Warrant”) to purchase 419,020 shares of our common stock at an exercise priceof $1.062 per share, subject to customary anti-dilution provisions. The Warrant is exercisable and expires five years from the date of issuance.In connection with the Loan Agreement, the Company granted first priority liens and security interest in substantially all of our assets, exclusive ofintellectual property and 35% of the capital stock of any foreign subsidiary, as collateral for the obligations under the Loan Agreement. The Loan Agreementalso contains representations and warranties by the Company and Lender, indemnification provisions in favor of Lender and customary covenants, andevents of default. Upon the occurrence of an event of default, a default interest rate of an additional 4% will be applied to the outstanding loan balances, andLender may terminate its lending commitment, declare all outstanding obligations immediately due and payable, and take such other actions as set forth inthe Loan Agreement. We are currently in compliance with all loan covenants. Debt Issuance Costs and End of Term ChargeThe Company incurred debt issuance costs of $102,866 in connection with this term loan. The debt issuance costs are being amortized as interest expenseusing the effective interest method over the term of the loan. Amortization of debt issuance costs was $11,505 for the year ended January 3, 2015 and theremaining unamortized debt issuance costs of $91,361 are included in other noncurrent assets. In addition, the Company will pay an end of term charge of$93,750, which is 3.75% of the $2.5 million drawn under the loan. The end of term charge is being accrued as additional interest expense using the effectiveinterest rate method over the term of the loan. The Company accrued $10,486 of this fee during the year ended January 3, 2015. -54-Table of ContentsWarrant Issued to LenderThe Company determined the Warrant issued to Lender to be equity classified. The Company estimated the fair value of this Warrant as of the issuance dateusing a Black-Scholes option pricing model with the following assumptions: September 29,2014 Fair value of common stock $1.08 Volatility 72.40%Expected dividends 0.00%Contractual term 5.0 years Risk-free rate 1.76% The Company utilized this fair value in its allocation of the loan proceeds between loan payable and the Warrant which was performed on a relative fair valuebasis. The fair value of the Warrant to purchase 419,020 shares of our common stock was approximately $273,081. Ultimately, the Company allocated$246,189 to the Warrant and recognized this amount in additional paid in capital. Accordingly, this amount is recognized as a debt discount and is beingamortized as interest expense using the effective interest method over the term of the loan. Amortization of this debt discount was $27,535 for the year endedJanuary 3, 2015.Loan payable as of January 3, 2015 consists of the following: Principal amount payable for following years ending December 2015 $223,358 2016 867,247 2017 1,035,995 2018 373,400 Total principal payments 2,500,000 Accrued end of term charge 10,486 Total loan payable 2,510,486 Less unamortized debt discount 218,654 Less current portion 223,358 Loan payable – long term $2,068,474 The total interest expenses related the term loan, including cash interest payments, the amortizations of debt issuance costs and debt discount, and the accrualof end of term charge were approximately $112,000 for the year ended January 3, 2015. -55-Table of Contents Note 9. Income Taxes At January 3, 2015 and December 28, 2013, the company maintained a full valuation allowance against the entire deferred income tax balance which resultedin an effective tax rate of zero for 2014 and 2013. The valuation allowance increased by $2,308,000 as of January 3, 2015. A reconciliation of income taxes computed at the statutory Federal income tax rate to income taxes as reflected in the financial statements is summarized asfollows: 2014 2013 Federal income tax expense at statutory rate (34.0)% (34.0)%State income tax, net of federal benefit (5.3)% (4.3)%Permanent differences 2.7% 2.6%Change in tax rates (6.1)% (3.7)%Change in valuation allowance 42.8% 39.2%Other (0.1)% 0.2%Effective tax rate 0.0% 0.0% The deferred income tax assets and liabilities consisted of the following components as of January 3, 2015 and December 28, 2013: 2014 2013 Deferred tax assets: Net operating loss carryforward $11,401,000 $8,953,000 Stock options and restricted stock 2,934,000 1,945,000 Investment in affiliate related to BluScience transaction - 1,187,000 Inventory reserve 226,000 100,000 Allowance for doubtful accounts 15,000 3,000 Accrued expenses 125,000 100,000 Deferred revenue 4,000 64,000 Intangibles 26,000 36,000 Deferred rent 81,000 99,000 14,812,000 12,487,000 Less valuation allowance 14,669,000 12,361,000 143,000 126,000 Deferred tax liabilities: Leasehold improvements and equipment (108,000) (100,000)Prepaid expenses (35,000) (26,000) (143,000) (126,000) $- $- The Company has tax net operating loss carryforwards and other tax attributes available to offset future federal taxable income and future state taxableincome of approximately $28,956,000 and $29,092,000, respectively which begin to expire in the year ending December 31, 2023 and 2015,respectively. The net operating loss can be carried forward up to 20 years for federal tax returns and from 5 to 20 years for various state tax returns. Under theInternal Revenue Code, certain ownership changes may subject the Company to annual limitations on the utilization of its net operating losscarryforward. The Company will continue to analyze the potential impact of any additional transactions undertaken upon the utilization of the net operatinglosses on a go forward basis. The company has not identified any uncertain tax positions requiring a reserve as of January 3, 2015 and December 28, 2013. -56-Table of Contents Note 10. Share-Based Compensation10A. Employee Share-Based Compensation Stock Option Plans At the discretion of the Company’s compensation committee (the “Compensation Committee”), and with the approval of the Company’s board of directors(the “Board of Directors”), the Company may grant options to purchase the Company’s common stock to certain individuals from time to time. Managementand the Compensation Committee determine the terms of awards which include the exercise price, vesting conditions and expiration dates at the time ofgrant. Expiration dates for stock options are not to exceed 10 years from their date of issuance. The Company, under its Second Amended and Restated 2007Equity Incentive Plan, is authorized to issue stock options that total no more than 20% of the shares of common stock issued and outstanding, as determinedon a fully diluted basis. Beginning in 2007, stock options were no longer issuable under the Company’s 2000 Non-Qualified Incentive Stock Plan. Theremaining amount available for issuance under the Second Amended and Restated 2007 Equity Incentive Plan totaled 4,738,496 at January 3, 2015. Thestock option awards generally vest ratably over a four-year period following grant date after a passage of time. However, some stock option awards areperformance based and vest based on the achievement of certain criteria established by the Compensation Committee, subject to approval by the Board ofDirectors.The fair value of the Company’s stock options was estimated at the date of grant using the Black-Scholes based option valuation model. The table belowoutlines the weighted average assumptions for options granted to employees during the years ended January 3, 2015 and December 28, 2013.Year Ended December 2014 2013 Expected Volatility 74.63% 32.75%Expected dividends 0.00% 0.00%Expected term 5.76 years 6.0 years Risk-free rate 1.86% 1.51%Prior to the year 2014, the Company calculated expected volatility from the volatility of publicly held companies in similar industries, as the historicalvolatility of the Company’s common stock did not cover the period equal to the expected life of the options. For the stock options granted during the yearended January 3, 2015, the Company calculated expected volatility rate based principally on the combined volatility of similarly situated publicly heldcompanies. Based on the expected term of stock options, a 20~75% weight was assigned to the volatility of the Company common stock as the historicalvolatility of the Company’s common stock from June 2008 through April 2010 was exceptionally high due to a thinly traded market. Below table illustratesthe Company’s historical volatility and the average daily trading volume of the Company’s common stock from June 2008 through April 2010 and fromApril 2010 through December 2014.Period Volatility Average DailyTradingVolume 6/20/2008 ~ 4/19/2010 402% 11,455 4/20/2010 ~ 1/2/2015 77% 155,111 -57-Table of ContentsThe dividend yield assumption is based on the Company’s history and expectation of future dividend payouts on the common stock. The risk-free interestrate is based on the implied yield available on U.S. treasury zero-coupon issues with an equivalent remaining term. For the expected term, the Company usedSEC Staff Accounting Bulletin No. 107 simplified method since most of the options granted were “plain vanilla” options with following characteristics: (i)the share options are granted at the market price on the grant date; (ii) exercisability is conditional on performing service through the vesting date on mostoptions; (iii) If an employee terminates service prior to vesting, the employee would forfeit the share options; (iv) if an employee terminates service aftervesting, the employee would have 30 days to exercise the share options; and (v) the share options are nontransferable and nonhedgeable.1) Service Period Based Stock Options The majority of options granted by the Company are comprised of service based options granted to employees. These options vest ratably over adefined period following grant date after a passage of a service period. The following table summarizes service period based stock options activity at January 3, 2015 and changes during the year then ended: Weighted Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value Outstanding at December 28, 2013 12,113,655 $1.06 7.43 Options Granted 2,233,987 1.39 10.00 Options Classification from Employee to Non-Employee (113,151) 0.76 Options Exercised (534,715) 0.87 Options Expired (253,900) 1.00 Options Forfeited (722,275) 1.13 Outstanding at January 3, 2015 12,723,601 $1.13 7.00 $581,050 Exercisable at January 3, 2015 9,362,374 $1.13 6.40 $455,570 The aggregate intrinsic values in the table above are based on the Company’s closing stock price of $0.90 on the last day of business for the year endedJanuary 3, 2015. The weighted average fair value of options granted during the years ended January 3, 2015, and December 28, 2013 was $0.90, and $0.29respectively. The aggregate intrinsic value for options exercised during the years ended January 3, 2015, and December 28, 2013 was approximately$156,000 and $7,000 respectively. 2) Performance Based Stock OptionsThe Company also grants stock option awards that are performance based and vest based on the achievement of certain criteria established from time to timeby the Compensation Committee. If these performance criteria are not met, the compensation expenses are not recognized and the expenses that have beenrecognized will be reversed. -58-Table of ContentsThe following table summarizes performance based stock options activity at January 3, 2015 and changes during the year then ended: Weighted Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value Outstanding at December 28, 2013 200,000 $0.63 9.08 Options Granted - - Options Exercised - - Options Expired - - Options Forfeited - - Outstanding at January 3, 2015 200,000 $0.63 8.08 $54,000 Exercisable at January 3, 2015 95,833 $0.63 8.08 $25,875 The aggregate intrinsic value in the table above are, based on the Company’s closing stock price of $0.90 on the last day of business for the period endedJanuary 3, 2015. As of January 3, 2015, there was approximately $1,768,000 of total unrecognized compensation expense related to non-vested share-based compensationarrangements granted under the plans for employee stock options. That cost is expected to be recognized over a weighted average period of 2.20 years. Therealized tax benefit from stock options for the years ended January 3, 2015, and December 28, 2013 was $0, based on the Company’s election of the “withand without” approach.Restricted Stock AwardsRestricted stock awards granted by the Company to employees have vesting conditions that are unique to each award. The following table summarizes activity of restricted stock awards granted to employees at January 3, 2015 and changes during the year then ended: WeightedAverage Award-Date Shares Fair Value Unvested shares at December 28, 2013 500,000 $0.69 Granted 1,090,000 1.41 Vested - - Forfeited - - Unvested shares at January 3, 2015 1,590,000 $1.18 Expected to Vest as of January 3, 2015 1,590,000 $1.18 -59-Table of Contents On January 2, 2014, the Company awarded an aggregate of 1,090,000 shares of restricted stock to the Company’s officers and members of the board ofdirectors. 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 ofother certain triggering events, including the termination of the officers and members of the board of directors without cause for any reason. The fair valuesof these restricted stock awards were $1,536,900 in aggregate, and they were based on the trading price of the Company’s common stock on the date ofgrant. The expense related to the restricted stock award has been amortized over the period of six months through July 1, 2014, as the Company determinedthe requisite service period to be 6 months as that is when they are eligible to vest. Employee Option and Restricted Stock Compensation The Company recognized share-based compensation expense of approximately $2,747,000 and $958,000 in general and administrative expenses in thestatement of operations for the year ended January 3, 2015 and December 28, 2013. 10B. Non-Employee Share-Based Compensation Stock Option PlanAt the discretion of management, working with the Compensation Committee, and with approval of the Board of Directors, the Company may grant optionsto purchase the Company’s common stock to certain individuals from time to time who are not employees of the Company. These options are granted underthe Second Amended and Restated 2007 Equity Incentive Plan of the Company and are granted on the same terms as those being issued to employees. Stockoptions granted to non-employees are accounted for using the fair value approach. The fair value of non-employee option grants are estimated using theBlack-Scholes option-pricing model and are re-measured over the vesting term until earned. The estimated fair value is expensed over the applicable serviceperiod.The following table summarizes activity of stock options granted to non-employees at January 3, 2015 and changes during the year then ended: Weighted Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value Outstanding at December 28, 2013 847,300 $1.44 5.74 Options Granted 90,000 1.24 10.00 Options Classification from Employe to Non-Employee 113,151 0.76 Options Exercised - - Options Forfeited - - Outstanding at January 3, 2015 1,050,451 $1.35 5.46 $37,550 Exercisable at January 3, 2015 971,701 $1.36 5.12 $37,550 The aggregate intrinsic values in the table above are, based on the Company’s closing stock price of $0.90 on the last day of business for the year endedJanuary 3, 2015. The aggregate intrinsic value for options exercised during the year ended December 28, 2013 was $35,000.As of January 3, 2015, there was approximately $44,000 of total unrecognized compensation expense related to non-vested share-based compensationarrangements granted under the plan for non-employee stock options. The unrecognized compensation expense is expected to be recognized over aweighted average period of 1.7 years. -60-Table of ContentsStock Awards On July 1, 2014, the Company awarded 65,000 shares of the Company’s common stock that were fully vested and non-forfeitable to a non-employee. Thefair value of the award, which amounted to $83,850 was based on the trading price of the Company’s stock on the date of grant. The expense related to thisstock award is being amortized over the period of approximately 7 months, as the services relating to this award are being provided over this period oftime. In addition, there were stock awards made in 2013, which the Company has recognized a portion of the expense in 2014 as the required service periodsextended into 2014. The total expense the Company recognized for stock awards to non-employees was approximately $129,000 for the twelve monthsended January 3, 2015. During the twelve months ended December 28, 2013, the Company awarded an aggregate of 600,000 shares and recognized a totalexpense of approximately $325,000.As of January 3, 2015, there was approximately $11,000 of total unrecognized compensation expense related to the stock award to a non-employee. Thatcost is expected to be recognized over a period of approximately one month.Warrant Awards On October 27, 2014, the Company awarded a warrant to purchase 50,000 shares of the Company’s common stock to a certain non-employee. The exerciseprice of the warrant was $1.10 per share and the term of the warrant was 2 years. The fair value of the warrant was estimated at the date of award using theBlack-Scholes based valuation model. The table below outlines the assumptions for the warrant granted. October 27,2014 Volatility 66.9%Expected dividends 0.00%Contractual term 2.0 years Risk-free rate 0.41%The Company calculated expected volatility from the historical volatility of Company’s common stock. The dividend yield assumption is based on theCompany’s history and expectation of future dividend payouts on the common stock. The risk-free interest rate is based on the implied yield available onU.S. treasury zero-coupon issues with an equivalent remaining term. The expected term of the warrants represents the contractual terms. For the year endedJanuary 3, 2015, the expense the Company recognized for this warrant award was approximately $6,000. As of January 3, 2015, there was approximately$10,000 of total unrecognized compensation expense related to this warrant, expected to be recognized over a period of approximately 4 months.During the year ended December 28, 2013, the Company recognized an expense of approximately $4,000 for the warrant that was previously awarded to acertain non-employee on August 7, 2012. On December 9, 2013, the warrant was exercised and the Company issued 74,186 shares of common stock. Thenon-employee who held the warrant elected a cashless exercise pursuant to the provisions of the warrant and received 74,186 shares of common stock in lieuof 250,000 shares for a cash payment of $0.75 per share. The intrinsic value of the warrant exercised was $90,507.Restricted Stock AwardRestricted stock awards granted by the Company to non-employees generally feature time vesting service conditions, specified in the respective serviceagreements. Restricted stock awards issued to non-employees are accounted for at current fair value through the vesting period. The fair value of vested non-employee restricted shares awarded during the twelve months ended January 3, 2015 was approximately $24,000, which represents the market value of theCompany’s common stock on respective vesting dates charged to expense. -61-Table of ContentsThe following table summarizes activity of restricted stock awards issued to non-employees at January 3, 2015 and changes during the year then ended: WeightedAverage Shares Fair Value Unvested shares at December 28, 2013 - $- Granted 96,000 1.30 Vested (20,000) 1.17 Forfeited - - Unvested shares expected to vest at January 3, 2015 76,000 $0.90 As of January 3, 2015, there was approximately $68,000 of total unrecognized compensation expense related to the restricted stock award to a non-employee. That cost is expected to be recognized over a period of 3.2 years as of January 3, 2015.Non-Employee Option, Stock, Warrant and Restricted Stock AwardsFor non-employee share-based compensation, the Company recognized share-based compensation expense of approximately $170,000 and $330,000 ingeneral and administrative expenses in the statement of operations for the year ended January 3, 2015 and December 28, 2013. Note 11. Stock Issuance On June 11, 2014, the Company issued 44,605 shares of common stock to a vendor to settle an outstanding payable balance of $52,188. On June 18, 2014, the Company issued 82,000 shares of common stock to a vendor to settle an outstanding payable balance of $76,306 and payment of 6months of $3,000 per month monthly retainer fees from July 2014 through December 2014. In Fiscal Year 2013, the Company sold approximately 3.5 million shares with gross proceeds of approximately $3.0 million to two strategic accreditedinvestors pursuant to a subscription agreement. A total placement agent fee of $20,000 was incurred in connection with the investments. -62-Table of Contents Note 12. WarrantsThe following table summarizes activity of warrants at January 3, 2015 and December 28, 2013 and changes during the years then ended: Weighted Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term ValueOutstanding at December 29, 2012 10,056,914 $0.72 0.44 Warrants Issued Warrants Exercised (8,338,564) 0.25 Warrants Expired (1,718,350) 3.00 Outstanding at December 28, 2013 - - Warrants Issued 469,020 1.07 4.68 Warrants Exercised - - Warrants Expired - - Outstanding and exercisable at January 3, 2015 469,020 $1.07 4.43 $- The aggregate intrinsic values in the table above are based on the Company’s closing stock price of $0.90 on the last day of business for the year endedJanuary 3, 2015. On September 29, 2014, the Company issued Hercules Technology II, L.P. a warrant to purchase 419,020 shares of the Company’s common stock at anexercise price of $1.062 per share pursuant to the Loan Agreement. This warrant has not been exercised as of January 3, 2015. On October 27, 2014, the Company awarded a certain non-employee a warrant to purchase 50,000 shares of the Company’s common stock at an exerciseprice of $1.10 per share. This warrant has not been exercised as of January 3, 2015. Note 13. Commitments and Contingencies Lease The Company leases its office and research facilities in California, Colorado and Maryland under operating lease agreements that expire at various dates fromAugust 2015 through September 2019. Monthly lease payments range from $1,320 per month to $22,788 per month, and minimum lease payments escalateduring 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 liability on theCompany’s consolidated balance sheet. Minimum future rental payments under all of the leases are as follows: Fiscal years ending: 2015 $544,000 2016 319,000 2017 225,000 2018 233,000 2019 181,000 $1,502,000 -63-Table of Contents Rent expense was approximately $537,000, and $519,000 for the years ended January 3, 2015 and December 28, 2013, respectively. RoyaltyThe Company has 10 licensing agreements with leading research universities, pursuant to which the Company acquired patents related to certain productsthe Company offers to its customers. These agreements afford for future royalty payments based on contractual minimums and expire at various dates fromDecember 31, 2019 through April 12, 2032. Yearly minimum royalty payments including license maintenance fees range from $5,000 per year to $50,000per year, however, these minimum payments escalate each year with a maximum of $150,000 per year. In addition, the Company is required to pay a range of2% to 5% of sales related to the licensed products under these agreements. Total royalty expense including license maintenance fees from continuingoperations for the year ended January 3, 2015 and December 28, 2013 was approximately $323,000 and $111,000, respectively under theseagreements. Minimum royalties including license maintenance fees for the next five years are as follows:Fiscal years ending: 2015 $272,000 2016 283,000 2017 320,000 2018 338,000 2019 339,000 $1,552,000 Legal proceedings The Company from time to time is involved in legal proceedings in the ordinary course of our business, which can include employment claims, productclaims and patent infringements. We do not believe that any of these claims and proceedings against us as they arise are likely to have, individually or in theaggregate, a material adverse effect on our financial condition or results of operations. Severance payments to executive officersAs of January 3, 2015, the Company has three executive officers, Frank Jaksch, Jr., Chief Executive Officer, Thomas Varvaro, Chief Financial Officer andTroy A. Rhonemus, Chief Executive Officer. Upon termination, Mr. Jaksch, Mr. Varvaro and Mr. Rhonemus will receive severance payments per the terms ofthe respective employment agreements entered with the Company. The key terms of the employment agreements, including the severance terms are asfollows:Employment Agreement with Frank L. Jaksch Jr.On April 19, 2010, the Company entered into an Amended and Restated Employment Agreement (the “Amended Jaksch Agreement”) with Frank L. Jaksch Jr.The Amended Jaksch Agreement has a three year term, beginning on the date of the Agreement that automatically renews unless the Amended JakschAgreement is terminated in accordance with its terms. On January 2, 2014, the Board approved the recommendations of the Company’s CompensationCommittee raising the annual base salary of Mr. Jaksch to $275,000 per year and raising the annual cash bonus target for Mr. Jaksch up to 50% of his basesalary.The severance terms of the Amended Jaksch Agreement provide that in the event Mr. Jaksch’s employment with the Company is terminated voluntarily byMr. Jaksch, he will be entitled to any accrued but unpaid base salary, any stock vested through the date of his termination and a pro-rated portion of 50% ofhis salary (50% of his salary being the “Maximum Annual Bonus”) for the year of termination. In addition, if Mr. Jaksch leaves the Company for “GoodReason”, (as defined in the Amended Jaksch Agreement), he will also be entitled to severance equal to the Maximum Annual Bonus, and he will be deemedto have been employed for the entirety of such year. Severance will then consist of 16 weeks of paid salary, unless Mr. Jaksch signs a release, in which case hewill receive compensation equal to the lesser of the remainder of the term of the agreement, or up to 12 months paid salary. -64-Table of ContentsIn the event the Company terminates Mr. Jaksch’s employment “without Cause” (as defined in the Amended Jaksch Agreement), Mr. Jaksch will be entitledto severance in the form of any stock vested through the date of his termination and continuation of his base salary for a period of eight weeks, or, if Mr.Jaksch enters into a standard separation agreement, Mr. Jaksch will receive continuation of base salary and health benefits, together with applicable fringebenefits as provided to other executive employees until the last to occur of the expiration of the term or renewal term then in effect or 24 months from thedate of termination (the “Severance Period”), and he will receive his Maximum Annual Bonus if the Severance Period is equal to 24 months or a pro rataportion thereof if less, as well as the full vesting of any otherwise unvested stock.Employment Agreement with Thomas C. VarvaroOn April 19, 2010, the Company entered into an Amended and Restated Employment Agreement (the “Amended Varvaro Agreement”) with Thomas C.Varvaro. The Amended Varvaro Agreement has a three year term beginning on the date of the agreement that automatically renews unless the AmendedVarvaro Agreement is terminated in accordance with its terms. On January 2, 2014, the Board approved the recommendations of the Company’sCompensation Committee raising the annual base salary of Mr. Varvaro to $225,000 per year and raising the annual cash bonus target for Mr. Varvaro up to40% of his base salary.The severance terms of the Amended Varvaro Agreement provide that in the event Mr. Varvaro’s employment with us is terminated voluntarily byMr. Varvaro he will be entitled to any accrued but unpaid base salary, any stock vested through the date of his termination and a pro-rated portion of 40% ofhis salary (40% of this salary being the “Maximum Annual Bonus”) for the year of termination. In addition, if Mr. Varvaro leaves the Company for “GoodReason” (as defined in the Amended Varvaro Agreement), he will also be entitled to severance equal to the Maximum Annual Bonus, and he shall be deemedto have been employed for the entirety of such year. Severance will then consist of 16 weeks of paid salary, unless Mr. Varvaro signs a release, in which casehe will receive compensation equal to the lesser of the remainder of his agreement or 12 months paid salary.In the event the Company terminates Mr. Varvaro’s employment “without Cause,” Mr. Varvaro will be entitled to severance in the form of any stock vestedthrough the date of his termination and continuation of his base salary for a period of eight weeks, or, if Mr. Varvaro enters into a standard separationagreement, Mr. Varvaro will receive continuation of base salary and health benefits, together with applicable fringe benefits as provided to other executiveemployees until the last to occur of the expiration of the term or renewal term then in effect or 24 months from the date of termination (the “SeverancePeriod”), will receive his Maximum Annual Bonus if the Severance Period is equal to 24 months or a pro rata portion thereof if less, as well as the full vestingof any otherwise unvested stock.Employment Agreement with Troy A. RhonemusOn March 6, 2014, the Company entered into an Employment Agreement (the “Rhonemus Agreement”) with Mr. Troy Rhonemus pursuant to which Mr.Rhonemus was appointed to serve as the Chief Operating Officer of the Company. The Rhonemus Agreement provides for a base salary of $180,000, andprovides for an annual cash bonus (based on performance targets) of up to 30% of his base salary (30% of this salary being the “Maximum Annual Bonus”),and provides for option grants of 250,000 shares of Common Stock. The option grants were awarded on February 21, 2014 at an exercise price of $1.75 pershare, which vest 33% one year from the date of grant with the remainder vesting in 24 equal monthly installments thereafter.Upon termination, Mr. Rhonemus will be entitled to any accrued but unpaid base salary and any accrued but unpaid welfare and retirement benefits up to thetermination date. In addition, if Mr. Rhonemus leaves the Company for “Good Reason” (as defined in the Rhonemus Agreement), he will also be entitled toseverance equal to two weeks of base salary for each full year of service to a maximum of eight weeks of the base salary.In the event the Company terminates Mr. Rhonemus’ employment “without Cause,” Mr. Rhonemus will be entitled to severance equal to two weeks of basesalary for each full year of service to a maximum of eight weeks of the base salary, or, if Mr. Rhonemus enters into a standard separation agreement, Mr.Rhonemus will receive continuation of base salary and health benefits, together with applicable fringe benefits as provided until the expiration of the term orrenewal term then in effect, however, that in the case of medical and dental insurance, until the expiration of 12 months from the date of termination. -65-Table of Contents Note 14. Business Segmentation and Geographical DistributionSince the year ended December 28, 2013, the Company has generated significant revenue from its ingredients operations and has made operational changes,including changes in the organizational structure to support the ingredients operations. As a result, on December 29, 2013, the Company began segregatingits financial results for ingredients operations, and has following three reportable segments. ·Core standards, and contract services segment includes supply of phytochemical reference standards, which are small quantities of plant-basedcompounds typically used to research an array of potential attributes, reference materials, and related contract services. ·Ingredients segment develops and commercializes proprietary-based ingredient technologies and supplies these ingredients to the manufacturers ofconsumer products in various industries including the nutritional supplement, food and beverage and animal health industries. ·Scientific and regulatory consulting segment which consist of providing scientific and regulatory consulting to the clients in the food, supplementand pharmaceutical industries to manage potential health and regulatory risks. The “Other” classification includes corporate items not allocated by the Company to each reportable segment. Further, there are no intersegment sales thatrequire elimination. The Company evaluates performance and allocates resources based on reviewing gross margin by reportable segment. Year endedJanuary 3, 2015 Core StandardsandContractServicessegment Ingredientssegment RegulatoryConsultingsegment Other Total Net sales $7,487,189 $6,857,177 $968,813 $- $15,313,179 Cost of sales 5,141,667 4,257,347 588,500 - 9,987,514 Gross profit 2,345,522 2,599,830 380,313 - 5,325,665 Operating expenses: Sales and marketing 975,800 1,081,209 79,575 - 2,136,584 General and administrative - - - 8,374,601 8,374,601 Loss from investment in affiliate - - - 45,829 45,829 Operating expenses 975,800 1,081,209 79,575 8,420,430 10,557,014 Operating income (loss) $1,369,722 $1,518,621 $300,738 $(8,420,430) $(5,231,349) -66-Table of ContentsYear endedDecember 28, 2013 Core StandardsandContractServicessegment Ingredientssegment Scientific andRegulatoryConsultingsegment Other Total Net sales $6,643,832 $2,430,699 $1,146,718 $(60,285) $10,160,964 Cost of sales 4,893,649 1,501,187 632,037 955 7,027,828 Gross profit (loss) 1,750,183 929,512 514,681 (61,240) 3,133,136 Operating expenses: Sales and marketing 1,459,620 752,121 14,705 131,159 2,357,605 General and administrative - - - 5,117,016 5,117,016 Loss from investment in affiliate - - - 44,961 44,961 Operating expenses 1,459,620 752,121 14,705 5,293,136 7,519,582 Operating income (loss) $290,563 $177,391 $499,976 $(5,354,376) $(4,386,446) At January 3, 2015 Core StandardsandContractServicessegment Ingredientssegment Scientific andRegulatoryConsultingsegment Other Total Total assets $3,220,518 $3,757,073 $105,711 $4,524,906 $11,608,208 At December 28, 2013 Core StandardsandContractServicessegment Ingredientssegment Scientific andRegulatoryConsultingsegment Other Total Total assets $2,952,270 $1,083,856 $139,765 $4,811,001 $8,986,892 -67-Table of Contents Revenue from international sources for the core standards and contract services segment approximated $1,756,000 and $1,488,000 for the years endedJanuary 3, 2015 and December 28, 2013, respectively. Revenues from international sources for the ingredients segment approximated $35,000 and $22,000for the years ended January 3, 2015 and December 28, 2013, respectively. Revenues from international sources for the scientific and regulatory consultingsegment approximated $104,000 and $450,000 for the years ended January 3, 2015 and December 28, 2013, respectively. International sources which theCompany generates revenue include Europe, North America, South America, Asia, and Oceania. The Company’s long-lived assets are located within the United States. Note 15. Subsequent EventsOn January 28, 2015, the Company awarded 350,000 shares of common stock to consultants for certain investor relations services to be provided.On February 25, 2015, the Board of Directors (the “Board”) appointed Stephen Allen, a current Board member, to serve as Chairman of the Board. Mr. Allenremained on the Board’s Compensation Committee and chairperson of the Board’s Nominating and Corporate Governance Committee.Also on February 25, 2015, Michael Brauser and Barry Honig, who were Co-Chairmen of the Board of Directors (the “Board”) of the Company, resigned fromthe Board. Mr. Brauser’s and Mr. Honig’s resignations were not a result of any disagreements with the Company’s operations, policies or practices. At thetime of resignation, Mr. Brauser and Mr. Honig held following unvested securities of the Company: ·Michael Brauser – 26,667 stock options at an exercise price of $1.25 per share; 250,000 shares of restricted stock. ·Barry Honig – 26,667 stock options at an exercise price of $1.25 per share; 250,000 shares of restricted stock.The Board made a resolution that above unvested securities are immediately vested on the date of resignation. In addition, the Board made a resolution thatall stock options held by Mr. Brauser and Mr. Honig will expire in accordance with their terms as if Mr. Brauser and Mr. Honig remained directors of theCompany. -68-Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureWe have had no disagreements with our independent registered public accounting firm on accounting and financial disclosure.Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and Procedures Our principal executive officer and principal financial officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as ofJanuary 3, 2015. Pursuant to Rule13a−15(e) promulgated by the Commission pursuant to the Securities Exchange Act of 1934, as amended (the “ExchangeAct”) “disclosure controls and procedures” means controls and other procedures that are designed to insure that information required to be disclosed by us inthe reports that we file with the Commission is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules andforms. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to insure that information that we are required todisclose in the reports we file with the Commission is accumulated and communicated to our principal executive officer and principal financial officer asappropriate to allow timely decisions regarding required disclosure. Based on their evaluation, our principal executive officer and principal financial officerconcluded that our disclosure controls and procedures were effective as of January 3, 2015. Inherent Limitations on Disclosure Controls and Procedures The effectiveness of our disclosure controls and procedures is subject to various inherent limitations, including cost limitations, judgments used in decisionmaking, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover,projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditionsand the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance thatany system of disclosure controls and procedures, no matter how well conceived, will be successful in preventing all errors or fraud or in making all materialinformation known in a timely manner to the appropriate levels of management. Changes in Internal Controls There was no change in internal controls over financial reporting (as defined in Rule 13a−15(f) promulgated under the Exchange Act) that occurred duringour fourth fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting. Management Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-(f)under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles.Our internal control over financial reporting include those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our consolidated financial statements inaccordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizationsof our management and directors; and -69-Table of Contents(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that couldhave a material effect on the consolidated financial statements. Our management, including the undersigned principal executive officer and principal financial officer, assessed the effectiveness of our internal control overfinancial reporting as of January 3, 2015. In conducting its assessment, our management used the criteria issued by the Committee of SponsoringOrganizations of the Treadway Commission in Internal Control—Integrated Framework in 2013. Based on this assessment, our management concluded that,as of January 3, 2015, our internal control over financial reporting was effective based on those criteria.Inherent Limitations on Internal Control Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations,including the possibility of human error and circumvention by collusion or overriding of control. Accordingly, even an effective internal control system maynot prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk thatthe controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures maydeteriorate. Accordingly, our internal control over financial reporting is designed to provide reasonable assurance of achieving their objectives. Attestation Report of the Registered Public Accounting Firm This annual report includes an attestation report of the Company’s registered public accounting firm regarding internal control over financialreporting. Management’s report was subject to attestation by the Company’s registered public accounting firm since the Company is presently reporting asan “accelerated filer.” -70-Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ONINTERNAL CONTROL OVER FINANCIAL REPORTING To the Audit Committee of theBoard of Directors and Shareholders ofChromaDex Corporation We have audited ChromaDex Corporation and Subsidiaries' (the “Company”) internal control over financial reporting as of January 3, 2015, based on criteriaestablished in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. TheCompany's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying “Management Annual Report on Internal Control over Financial Reporting”. Ourresponsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing therisk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our auditalso included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis forour opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliancewith the policies or procedures may deteriorate. In our opinion, ChromaDex Corporation and Subsidiaries maintained, in all material aspects, effective internal control over financial reporting as of January3, 2015, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the TreadwayCommission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsas of January 3, 2015 and December 28, 2013 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years thenended of the Company and our report dated March 19, 2015 expressed an unqualified opinion on those financial statements. /s/ Marcum LLPMarcum LLPNew York, NYMarch 19, 2015 -71-Table of ContentsItem 9B. Other InformationNone. -72-Table of ContentsPART IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe following table sets forth the names, ages, and positions of our current directors and executive officers. Our directors hold office for one-year terms untilthe following annual meeting of stockholders and until his or her successor has been elected and qualified or until the director’s earlier resignation orremoval. Officers are elected annually by the Board of Directors (the “Board”) and serve at the discretion of the Board. NameAgePositionFrank Jaksch, Jr.46Chief Executive Officer and DirectorThomas Varvaro45Chief Financial OfficerTroy Rhonemus42Chief Operating OfficerStephen Allen (2)(3)65Chairman of the BoardStephen A. Block (1)(2)70DirectorReid Dabney (1)63DirectorHugh Dunkerley (2)41DirectorMark S. Germain (3)64DirectorGlenn L. Halpryn (1)(3)54Director (1) Member of our Audit Committee. (2) Member of our Compensation Committee. (3) Member of our Nominating and Corporate Governance Committee.Board of DirectorsThe Board currently consists of seven members, six of whom are independent within the meaning of Marketplace Rule 5605(a)(2) of the NASDAQ StockMarket, Inc. On February 25, 2015, the Board appointed Stephen Allen, an existing Board member, to serve as Chairman of the Board. Mr. Allen remained onthe Board’s Compensation Committee and chairperson of the Board’s Nominating and Corporate Governance Committee. Also on February 25, 2015,Michael Brauser and Barry Honig, who were Co-Chairmen of the Board, resigned from the Board. Mr. Brauser’s and Mr. Honig’s resignations were not as aresult of any disagreements with the Company’s operations, policies or practices.Listed below are the biographical summaries and ages as of March 12, 2015 of individuals serving as directors as well as information about each individual’squalification and experience that contributes to the overall needs of the Board as determined by the Nominating and Corporate Governance Committee:Frank L. Jaksch Jr., 46, is a co-founder of the Company and has served as a member of Board since February 2000. Mr. Jaksch served as Chairman of theBoard from May 2010 to October 2011 and was its Co-Chairman from February 2000 to May 2010. Mr. Jaksch currently serves as our Chief ExecutiveOfficer. Mr. Jaksch oversees research, strategy and operations for the Company with a focus on scientific and novel products for pharmaceutical andnutraceutical markets. From 1993 to 1999, Mr. Jaksch served as International Subsidiaries Manager of Phenomenex, a life science supply company where hemanaged the international subsidiary and international business development divisions. Mr. Jaksch earned a B.S. in Chemistry and Biology from ValparaisoUniversity. The Nominating and Corporate Governance Committee believes that Mr. Jaksch’s years of experience working in chemistry-related industries, hisextensive sales and marketing background, and his knowledge of international business bring an understanding of the industries in which the Companyoperates as well as scientific expertise to the Board. -73-Table of ContentsStephen Allen, 65, has served as Chairman of the Board since February 2015, and as a director of the Board, Chair of the Nominating and CorporateGovernance Committee and member of the Compensation Committee since January 2014. Until 2009, Mr. Allen worked for Nestlé, at which point he retiredfrom a 30 year career where he served in various sales, marketing and management roles, including 7 years serving in Nestlé’s Mergers and Acquisitionsdepartment. Until 2012, Mr. Allen served on the Advisory Board of Vitamin Angels, an organization focused on eliminating childhood malnutrition inAfrica and the Middle East. Currently, Mr. Allen serves as the non-executive Vice Chairman of 6 Pacific group, a Los Angeles based boutique advisory andinvestment firm. Mr. Allen also serves as the Managing Partner of California Agricultural Orchards LLC and California Nut Orchards LLC which, along withgrowing almonds and grapes, manages the assets of high net-worth individuals. Mr. Allen also serves as the President of the Board of the North AmericanFoundation for the University of Leeds where Mr. Allen plays a key role in fundraising efforts. Mr. Allen received his B.Sc. with honors from the Universityof Leeds and his M.Sc. at the University of London, School of Hygiene & Tropical Medicine. The Nominating and Corporate Governance Committeebelieves that Mr. Allen’s past experience in the nutritional industry bring financial expertise, industry knowledge, and merger and acquisition experience tothe Board.Stephen A. Block, 70, has been a director of the Company since October 2007 and Chair of the Compensation Committee and a member of the AuditCommittee since October 2007. From May 2010 to October 2011, Mr. Block served as Lead Independent Director to the Board. Mr. Block is also a directorand chair of the nominating and corporate governance committee and a member of the audit committee of Senomyx, Inc. (NASDAQ:SNMX). He has servedon the board of directors of Senomyx, Inc. since 2005. Since September 2013, he has served as a director of GetThis, Corp., a privately held digital mediacompany bringing real-time shopping through a second screen to consumers watching television programming. Until December 2011, he also served as thechairman of the board of directors of Blue Pacific Flavors and Fragrances, Inc., and, until March 2012, as a director of Allylix, Inc. He served on the boards ofdirectors of these privately held companies since 2008, and 2007, respectively. Mr. Block retired as senior vice president, general counsel and secretary ofInternational Flavors and Fragrances Inc., a leading creator, manufacturer and seller of flavors and fragrances (IFF) in December 2003, having been IFF’s chieflegal 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 seniorvice president, general counsel, secretary and director of GAF Corporation, a company specializing in specialty chemicals and building materials, and itspublicly traded subsidiary International Specialty Products Inc., held various management positions with Celanese Corporation, a company specializing insynthetic fibers, chemicals and plastics, and practiced law with the New York firm of Stroock & Stroock & Lavan. Mr. Block currently serves as an industryconsultant and as a Managing Director of Venture Farm LLC, an early stage venture capital firm, and as a Venture Partner of K5 Venture Partners, LLC, anOrange County early stage venture firm. He is also a Managing Director of K5 Venture Partner, LLC’s affiliated accelerator K5 Launch and a member of theexecutive committee of the Orange County network of Tech Coast Angels, a leading investing group. Mr. Block received his B.A. cum laude in RussianStudies from Yale University and his law degree from Harvard Law School. The Nominating and Corporate Governance Committee believes that Mr. Block’sexperience as the chief legal officer of one of the world’s leading flavor and fragrance companies contributes to the Board’s understanding of the flavorindustry, including the Board’s perspective on the strategic interests of potential collaborators, the regulation of the industry, and the viability of variouscommercial strategies. In addition, Mr. Block’s experience in the area of corporate governance and public company financial reporting is especially valuableto the Board in his capacity as a member of both the Audit Committee and the Compensation Committee.Reid Dabney, 63, has served as a director of the Company and has chaired the Audit Committee since October 2007. Mr. Dabney is the Company’s auditcommittee financial expert. Since December 2014, he has served as a managing director and chief compliance officer of CVCapital Securities, LLC. FromOctober 2012 to November 2013, he has also served as a managing director of Merriman Capital, Inc. From May 2008 to July 2012, he has also served as amanaging director of Monarch Bay Associates, LLC. From March 2005 to November 2008, Mr. Dabney served as Cecors, Inc.'s (OTC Markets: CEOS) (aSoftware As A Service (SaaS) technology provider) senior vice president and chief financial officer. From July 2003 to the present, Mr. Dabney has beenengaged by CFO911 as a managing director and business and financial consultant. From January 2003 to August 2004, Mr. Dabney served as vice presidentof National Securities, a broker-dealer firm specializing in raising equity for private operating businesses that have agreed to become public companiesthrough reverse merger transactions with publicly traded shell companies. From June 2002 to January 2003, Mr. Dabney was the chief financial officer ofHouse 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 Universityof Pennsylvania's Wharton School. Mr. Dabney also holds Series 7, 24, 63, 79 and 99 licenses from -74-Table of Contentsthe Financial Industry Regulatory Authority (FINRA). The Nominating and Corporate Governance Committee believes that Mr. Dabney's experience as chieffinancial 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.Hugh Dunkerley, 41, has served as a director of the Company since December 2005 and has served on the Compensation Committee since May 2010 and hasserved on the Nominating and Governance Committee from October 2007 to December 2013. From October 2002 to December 2005, Mr. Dunkerley servedas Director of Corporate Development at ChromaDex. Since September 2013, Mr. Dunkerley has been a Managing Director of Burnham Securities Inc., aNew York based investment bank, and has been setting up their new operations in Irvine, CA. Prior to Burnham, Mr. Dunkerley was an EVP, Capital Marketsof COR Capital LLC, an investment fund based in Santa Monica, CA. He is a director and sits on the compensation committee for COR Securities Holdings,Inc., the parent company of COR Clearing LLC, a national clearing and settlements firm. Mr. Dunkerley is also the President and Director of WealthAssurance Holdings a Bermudian based and listed company that oversees a portfolio of insurance assets in the EU. Mr. Dunkerley was a Manager of CapitalMarkets for the FDIC, Division of Resolutions and Receiverships, from February 2009 to March 2011 where he was active in implementing the Dodd-FrankWall Street Reform Act, along with the oversight of securities and derivatives portfolios for large money center banks. He was president and chief executiveofficer of Cecors, Inc. (OTCBB:CEOS.OB), a Software As A Service (SaaS) technology provider, from October, 2007 to February, 2009. He had served asCecor's chief operating officer and as vice president of corporate finance starting in June 2006. During 2006 Mr. Dunkerley also served as VP of Small-MidCap Equities at Hunter Wise Financial Group, LLC, specializing in investment banking advisory services to US and EU companies. Mr. Dunkerley receivedhis undergraduate degree from the University of Westminster, London and earned a MBA from South Bank University, London. Mr. Dunkerley also holdsSeries 7, 24, 66 and 79 licenses from FINRA. The Nominating and Corporate Governance Committee believe that Mr. Dunkerley's experience as the chiefexecutive officer of a public company and his extensive financial market experience qualify him to sit on 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. Hisprevious experience as an employee of the Company also allows him to provide a unique perspective of and extensive knowledge on the industries in whichthe Company operates. Mark S. Germain, 64, is a co-founder of the Company and has served on the Nominating and Corporate Governance since May 2010. He served on the AuditCommittee from October 2007 to May 2010, and as Co-Chairman of the Board from February 2000 to May 2010. Mr. Germain has extensive experience as amerchant banker in the biotech and life sciences industries. He has been involved as a founder, director, chairman of the board of directors of, and/or investorin over twenty companies in the biotech field, and assisted many of them in arranging corporate partnerships, acquiring technology, entering into mergersand acquisitions, and executing financings and going public transactions. He was a partner in a New York law firm practicing corporate and securities lawuntil 1986. Between 1986 and 1991, he served businesses in senior executive capacities, including as president of a public company sold in 1991. Mr.Germain was or is a director of the following companies that are or were publicly traded: Omnimmune Holdings, Inc. (OTC Markets: OMMH), abiotechnology company, Stem Cell Innovations, Inc. (OTC Markets: SCLL), a cell biology company, Collexis Holdings, Inc. (OTC Markets: CLXS), adeveloper of semantic search and knowledge discovery software, and Pluristem Therapeutics, Inc. (NASDAQ: PSTI), a bio-therapeutics company. During thepast five years, Mr. Germain also served as a board member of two publicly traded companies, Reis, Inc. (NASDAQ: REIS), a commercial real estate marketinformation provider, and Intellect Neurosciences, Inc. (OTC Markets: ILNS), a biopharmaceutical company. He is also a co-founder and director of a numberof private companies in the biotechnology field. He graduated from New York University School of Law, Order of the Coif, in 1975. The Nominating andCorporate Governance Committee believes that Mr. Germain’s past experience as the president of a public company and as the board member of other publiccompanies bring financial expertise, industry knowledge, and merger and acquisition experience to the Board. -75-Table of ContentsGlenn L. Halpryn, 54, has served on the Nominating and Corporate Governance Committee since 2010 and has served as Chairman of the Nominating andCorporate Governance Committee from May 2010 to December 2013. Mr. Halpryn has also served on the Audit Committee since May 2010. Mr. Halprynhas been the chief executive officer and a director of Transworld Investment Corporation, a private investment company, since June 2001. Mr. Halpryncurrently serves as a director of Castle Brands Inc. (AMEX: ROX), a developer and international marketer of premium branded spirits and served as a directorof 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 (NYSE:IDI), a China-based billboard and in-elevator advertising company until June 2011. From April 2010 untilOctober 2011, Mr. Halpryn served as a director of CDSI Holdings, Inc., a public shell company seeking new business opportunities. From September 2008until May 2010, Mr. Halpryn also served as a director of Winston Pharmaceuticals, Inc. (OTC Markets: WPHM), a pharmaceutical company specializing inskin creams and pain medications. From October 2002 to September 2008, Mr. Halpryn served as a director of Ivax Diagnostics, Inc. (AMEX: IVD). FromJune 1987 until April 2012, Mr. Halpryn served as the president of and a beneficial owner of United Security Corporation, a broker-dealer registered withFINRA. The Nominating and Corporate Governance Committee believes that Mr. Halpryn’s past experience as the board member of other public companiesbring financial expertise and industry knowledge to the Board. Executive OfficersThomas C. Varvaro, 45, has served as the Company’s Chief Financial Officer since January 2004 and Secretary since March 2006. He also served as adirector from March 2006 until May 2010. Mr. Varvaro is responsible for overseeing all of Company’s operations including all aspects of accounting,information technology, inventory, distribution, and human resources management. Mr. Varvaro has extensive process mapping and business processimprovement skills, along with a solid information technology background that includes management and implementation experiences ranging from customapplication design to enterprise 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, reporting and bar code tracking implementations. Mr. Varvaro alsohas broad legal experience in intellectual property (IP), contract and employment law. From 1998 to 2004, Mr. Varvaro was employed by Fast Heat Inc., aChicago, Illinois based Global supplier to the plastics, HVAC, packaging, and food processing industries, where he began as controller and was promoted tochief information officer and then chief financial officer during his tenure. During his time there Mr. Varvaro was responsible for all financial mattersincluding accounting, risk management and human resources. From 1993 to 1998, Mr. Varvaro was employed by Leaf Bakery, Inc., Chicago, Illinois, duringits rise to becoming a national leader in specialty products. During his tenure Mr. Varvaro served in information technology and accounting roles, helping toshepherd the company from a single facility to national leader in specialty food products. Mr. Varvaro has a B.S. in Accounting from University of Illinois,Urbana-Champaign and has been certified as a Certified Public Accountant.Troy Rhonemus, 42, has served as the Company’s Chief Operating Officer since March 2014 and a Director of New Technology and Supply Chain fromJanuary 2013 to February 2014. Mr. Rhonemus is responsible for overseeing all of Company’s operations including all aspects of sales, marketing, supplychain management, distribution, and new technology development. Mr. Rhonemus also consults with customers to improve the supply chain management ofraw materials to meet government regulations, which includes developing supply chain strategies, auditing manufacturers and developing an understandingof how to manage supplies from countries outside the Unites States. Mr. Rhonemus has extensive experience in managing operations and supply chain,business strategies, and the roll-out of new processes, technologies and products. From 2006 to 2012, Mr. Rhonemus held several positions at Cargill,Inc. As Truvia® Business Process Manager, he served as the product line lead for managing the operations and supply chain of the Truvia® enterprise fromleaf to consumer products. As Technology Manger, Mr. Rhonemus served as technical lead for process and product development for Truvia® consumerproducts and ingredient business. From 2004 to 2006, Mr. Rhonemus served as Principal Research Scientist at E&J Gallo Winery, where he developedexperimental designs to ensure that all project work was statistically valid in the lab, pilot and production wineries. From 1998 to 2004, Mr. Rhonemusserved as Senior Research Scientist and as Process Technology Manager at Cargill, Inc. In these positions, Mr. Rhonemus solved technical problems andimplemented new technologies into production. He identified potential tolling facilities, coordinated tolling efforts, directly supervised and developed newprocesses and solved technical issues in existing business units in Cargill. Mr. Rhonemus has earned a M.A. in Chemistry and a B.S. in Chemistry from BallState University. -76-Table of ContentsCompliance with Section 16(a) of the Securities Exchange Act of 1934Section 16 of the Exchange Act of 1934, as amended (the “Exchange Act”) requires our executive officers, directors and persons who own more than 10% ofour common stock to file initial reports of ownership and reports of changes in ownership with the SEC and to furnish us with copies of such reports. Basedsolely on our review of the copies of such forms furnished to us and written representations by our officers and directors regarding their compliance withapplicable 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 3, 2015 except as follows: Frank L. Jaksch Jr. was late in filing one report for onetransaction; Michael Brauser was late in filing one report for one transaction; Barry Honig was late in filing one report for one transaction; Stephen Allen waslate 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 forone 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; Thomas C. Varvaro was late in filing one report for one transaction; and Troy A. Rhonemus was latein filing one report for one transaction.Family RelationshipsThere are no family relationships between any of our directors, executive officers or directors.Involvement in Certain Legal ProceedingsDuring the 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.Code of ConductThe Board 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 professionalrelationships; •full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications; •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.Waivers to the Code of Conduct may be granted only by the Board. In the event that the Board grants any waivers of the elements listed above to any of ourofficers, we expect to announce the waiver within four business days on a Current Report on Form 8-K.The Code of Conduct applies to all of the 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-Highlights.” If we amend our Code of Conduct as it applies to the principal executive officer, principal financialofficer, principal accounting officer or controller (or persons performing similar functions) or grant a waiver from any provision of the code of conduct to anysuch person, we shall disclose such amendment or waiver on our website at www.chromadex.com under the tab “Investor Relations-Corporate Governance-Highlights.” -77-Table of ContentsPublic Availability of Corporate Governance DocumentsOur key corporate governance documents, including our Code of Conduct and the charters of our Audit Committee, Compensation Committee andNominating and Corporate Governance Committee are: •available on our corporate website at www.chromadex.com; and •available in print to any stockholder who requests them from our corporate secretary.Director AttendanceThe Board held 4 meetings during 2014. Each director attended at least 75% of Board meetings and meetings of the committees on which he served.Board Qualification and Selection ProcessThe Nominating and Corporate Governance Committee does not have a specific written policy or process regarding the nominations of directors, nor does itmaintain minimum standards for director nominees. However, the Nominating and Corporate Governance Committee does consider the knowledge,experience, integrity and judgment of potential candidates for nominations to the Board. The Nominating and Corporate Governance Committee willconsider persons recommended by stockholders for nomination for election as directors. The Nominating and Corporate Governance Committee will considerand evaluate a director candidate recommended by a stockholder in the same manner as a committee-recommended nominee. Stockholders wishing torecommend director candidates must follow the prior notice requirements as described under “Stockholder Proposals,” below.Board Leadership Structure and Risk OversightThe leadership of the Board is structured so that it is led by non-executive Chairman, Stephen Allen. The Nominating and Corporate Governance Committeebelieves it is in the best interest of the Company to have an independent director as Chairman of the Board considering past experience of Mr. Allen, who hasan extensive business and management expertise in food and nutrition industry.The entire Board of Directors is responsible for oversight of our Company’s risk management process. Management furnishes information regarding risk tothe Board as requested. The Audit Committee discusses risk management with the Company’s management and independent public accountants as set forthin the Audit Committee’s charter. The Compensation Committee reviews the compensation programs of the Company to make sure economic incentives aretied to the long-term interests of the stockholders. The Company believes that innovation and the building of long-term stockholder value are impossiblewithout taking risks. We recognize that imprudent acceptance of risk and the failure to identify risks could be a detriment to stockholder value. Theexecutive officers of the Company are responsible for assessing these risks on a day-to-day basis and for how to best identify, manage and mitigate significantrisks that the Company may face.Board CommitteesThe Board has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Other committees maybe established by the Board from time to time. The following is a description of each of the committees and their composition -78-Table of ContentsAudit CommitteeOur Audit Committee currently consists of three directors: Messrs. Reid Dabney (chairman), Stephen Block and Glenn L. Halpryn. The Board has determinedthat: •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 theNASDAQ Stock Market, Inc., (ii) meet the criteria for independence as set forth in the Exchange Act, (iii) have not participated in thepreparation of our financial statements at any time during the past three years and (iv) are financially literate and have accounting andfinance experience.The designation of Mr. Dabney as an “audit committee financial expert” will not impose on him any duties, obligations or liability that are greater than thosethat are generally imposed on him as a member of our Audit Committee and our Board, and his designation as an “audit committee financial expert” will notaffect the duties, obligations or liability of any other member of our Audit Committee or Board.Audit Committee ReportThe Audit Committee reviews our financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statementsand the reporting process. Our independent registered public accounting firm is responsible for expressing an opinion on the conformity of the auditedfinancial statements with generally accepted accounting principles.In this context, the Audit Committee has reviewed and discussed with management our audited consolidated financial statements for the fiscal year endedJanuary 3, 2015 (our 2014 fiscal year) and the notes thereto. It has discussed with Marcum, LLP, our independent registered public accounting firm for the2014 fiscal year, the matters required to be discussed by Statement of Auditing Standards No. 61, as amended, as adopted by the Public Company AccountingOversight Board in Rule 3200T. The Audit Committee also received the written disclosures and the letter from Marcum, LLP required by applicablerequirements of the Public Company Accounting Oversight Board regarding Marcum’s communications by the Audit Committee concerning independenceand discussed with Marcum, LLP its independence from us. Based on such review and discussions, the Audit Committee recommended to the Board that ouraudited consolidated financial statements be included in this Annual Report on Form 10-K for the fiscal year ended January 3, 2015 and be filed with theSEC. Submitted by: The Audit Committee Of The Board of Directors Reid Dabney (Chairman) Stephen Block Glenn L. HalprynCompensation CommitteeOur Compensation Committee currently consists of three directors: Messrs. Stephen Block (chairman), Hugh Dunkerley and Stephen Allen. The Board hasdetermined 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, asamended (the “Code”). -79-Table of ContentsNominating and Corporate Governance CommitteeOur Nominating and Corporate Governance Committee currently consists of three directors: Stephen Allen (chairman), Glenn L. Halpryn and Mark Germain.The Board has determined that all members of the Nominating and Corporate Governance Committee qualify as “independent” under the independencerequirements of Marketplace Rule 5605(a)(2) of the NASDAQ Stock Market, Inc. Item 11. Executive CompensationCompensation Committee Report Under the rules of the SEC, this Compensation Committee Report is not deemed to be incorporated by reference by any general statement incorporating thisAnnual Report by reference into any filings with the SEC. The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management. Based on this review andthese discussions, the Compensation Committee recommended to the Board of Directors that the following Compensation Discussion and Analysis beincluded in this Annual Report on Form 10-K. Submitted by the Compensation Committee Stephen A. Block, Chairman Hugh Dunkerley Stephen AllenCompensation Discussion and Analysis The following discussion and analysis of compensation arrangements of our named executive officers for 2014 should be read together with thecompensation tables and related disclosures set forth below. We believe our success depends on the continued contributions of our named executive officers. Personal relationships and experience are very important inour industry. Our named executive officers are primarily responsible for many of our critical business development relationships. The maintenance of theserelationships is critical to ensuring our future success as is experience in managing these relationships. Therefore, it is important to our success that we retainthe services of these individuals.General Philosophy Our overall compensation philosophy is to provide an executive compensation package that enables us to attract, retain and motivate executive officers toachieve our short-term and long-term business goals. The goals of our compensation program are to align remuneration with business objectives andperformance, and to enable us to retain and competitively reward executive officers who contribute to the long-term success of the Company. We attempt topay our executive officers competitively in order that we will be able to retain the most capable people in the industry. In making executive compensationand other employment compensation decisions, the Compensation Committee considers achievement of certain criteria, some of which relate to ourperformance and others of which relate to the performance of the individual employee. Awards to executive officers are based on achievement of Companyand individual performance criteria. The Compensation Committee will evaluate our compensation policies on an ongoing basis to determine whether they enable us to attract, retain andmotivate key personnel. To meet these objectives, the Compensation Committee may from time to time increase salaries, award additional stock grants orprovide other short and long-term incentive compensation to executive officers and other employees. -80-Table of ContentsCompensation Program and Forms of Compensation We provide our executive officers with a compensation package consisting of base salary, bonus, equity incentives and participation in benefit plansgenerally available to other employees. In setting total compensation, the Compensation Committee considers individual and company performance, as wellas market information regarding compensation paid by other companies in our industry. All executive officers have employment agreements that establishtheir initial base salaries and set pre-approved goals -- and minimum and maximum opportunities -- for the bonuses and equity incentive awards. Both theCompensation Committee and the Board have approved these agreements. Base Salary. Salaries for our executive officers are initially set based on negotiation with individual executive officers at the time of recruitment and withreference to salaries for comparable positions in the industry for individuals of similar education and background to the executive officers being recruited.We also consider the individual’s experience, reputation in his or her industry and expected contributions to the Company. Base salary is regularly evaluatedby competitive pay and individual job performance. In each case, we take into account the results achieved by the executive, his or her future potential,scope of responsibilities and experience, and competitive salary practices. In some circumstances our executive officers have elected to take less than marketsalaries. These salaries may be increased in the future to market conditions with a competitive base salary that is in line with his or her role andresponsibilities when compared to peer companies of comparable size in similar locations. Bonuses. We design our bonus programs to be both affordable and competitive in relation to the market. Our bonus program is designed to motivateemployees to achieve overall corporate goals. Our programs are designed to avoid entitlements, to align actual payouts with the actual results achieved andto be easy to understand and administer. The Compensation Committee and the executive officer, with input from the other executive officers, work togetherto identify targets and goals for the executive officer; however, the targets and goals themselves are established after deliberation by the CompensationCommittee alone. Upon completion of the fiscal year, the Compensation Committee assesses the executive officer’s performance and, with input frommanagement and the Board, determines the achievement of the bonus targets and the amount to be awarded within the parameters of the executive officer’sagreement with us subject to the impact paying such bonuses will have on the Company’s financial position. Equity-Based Rewards We design our equity programs to be both affordable and competitive in relation to the market. We monitor the market and applicable accounting, corporate,securities and tax laws and regulations and adjust our equity programs as needed. Stock options and other forms of equity compensation are designed toreflect and reward a high level of sustained individual performance over time. We design our equity programs to align employees’ interests with those of ourstockholders. The Compensation Committee and the executive officer, with input from the other executive officers, work together to identify targets andgoals for the executive officer; however, the targets and goals themselves are established after deliberation by the Compensation Committee alone. Uponcompletion of the fiscal year, the Compensation Committee assesses the executive officer’s performance and, with input from management and the Board,determines the achievement of the vesting targets and the amount to be awarded within the parameters of the executive officer’s agreement with us. Timing of Equity Awards Only the Board may approve stock option grants to our executive officers, which grants are recommended to it by the Compensation Committee. Stockoptions are generally granted at 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 withthe executive. The exercise price of a newly granted option is the average price of our common stock on the date of grant. -81-Table of ContentsBenefits Programs We design our benefits programs to be both affordable and competitive in relation to the market while conforming to local laws and practices. We monitorthe market, local laws and practices and adjust our benefits programs as needed. We design our benefits programs to provide an element of core benefits, andto the extent possible, offer options for additional benefits, be tax-effective for employees in each country and balance costs and cost sharing between us andour employees.Performance-Based Compensation and Financial Restatement We have implemented a policy regarding retroactive adjustments to any cash or equity-based incentive compensation paid to our executives where suchpayments were predicated upon the achievement of certain financial results that were subsequently the subject of a financial restatement and have includedthis policy in the employment contracts with our executives. Tax and Accounting Considerations In the review and establishment of our compensation programs, we consider the anticipated accounting and tax implications to us and our executives.Section 162(m) of the Code imposes a limit on the amount of compensation that we may deduct in any one year with respect to our chief executive officerand each of our next four most highly compensated executive officers, unless certain specific and detailed criteria are satisfied. Performance-basedcompensation, as defined in the Code, is fully deductible if the programs are approved by stockholders and meet other requirements. We believe that grantsof equity awards under our Second Amended and Restated 2007 Equity Incentive Plan, or the 2007 Plan, may qualify as performance-based for purposes ofsatisfying the conditions of Section 162(m), thereby permitting us to receive a federal income tax deduction, if applicable, in connection with such awards. Ingeneral, we have determined that we will not seek to limit executive compensation so that it is deductible under Section 162(m). From time to time, however,we monitor whether it might be in our interests to structure our compensation programs to satisfy the requirements of Section 162(m). We seek to maintainflexibility in compensating our executives in a manner designed to promote our corporate goals and therefore our compensation committee has not adopted apolicy requiring all compensation to be deductible. Our compensation committee will continue to assess the impact of Section 162(m) on our compensationpractices and determine what further action, if any, is appropriate. Severance and Change in Control Arrangements Several of our executives have employment and other agreements that provide for severance payment arrangements and/or acceleration of stock optionvesting in the event of an acquisition or other change in control of our company. See “Employment and Consulting Agreements” below for a description ofthe severance and change in control arrangements for our named executive officers. Role of Executives in Executive Compensation Decisions The Board and our Compensation Committee generally seek input from our executive officers when discussing the performance of, and compensation levelsfor, executives. The Compensation Committee also works with our Chief Executive Officer and our Chief Financial Officer to evaluate the financial,accounting, tax and retention implications of our various compensation programs. None of our other executives participates in deliberations relating to his orher compensation. -82-Table of ContentsSummary Compensation TableThe following table sets forth information concerning the annual and long-term compensation earned by our Chief Executive Officer (the principal executiveofficer), our Chief Financial Officer (the principal financial officer) and our Chief Operating Officer, each of whom served during the year ended January 3,2015 as our executive officers. NameYear Salary Bonus StockAwards(1) OptionAwards(2) All OtherCompensation Total($) Frank L. Jaksch Jr.2014 $275,000 $30,000 $352,500(3) $138,518(4) - $796,018 2013 $225,000 $51,242 - - - $276,242 Thomas C. Varvaro2014 $225,000 $24,200 $352,500(5) $115,807(6) - $717,507 2013 $175,000 $29,891 - - - $204,891 Troy A. Rhonemus(7)2014 $179,039 - - $358,723(8) - $537,762 2013 - - - - - - (1)The amounts in the column titled “Stock Awards” above reflect the aggregate award date fair value of restricted stock awards. These restricted stockawards shall vest upon the earlier to occur of the following: (A) the average closing market price of the Company’s common stock exceeds $2.50 pershare over any six month period, (B) the Company experiences a change in control, (C) the Company’s common stock or assets are acquired by, or theCompany merges with, another entity or engages in another form of reorganization as a result of which it is not the surviving corporation, (D) service isterminated without cause for any reason, or (E) the Company’s stock is listed on a national securities exchange, but in no event would any shares vestprior to July 1, 2014. The fair values of these restricted stock awards were based on the trading price of the Company’s common stock on the date ofgrant. (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 endedJanuary 3, 2015. See Note 10 of the ChromaDex Corporation Consolidated Financial Report included in this Form 10-K for the year ended January 3,2015 for a description of certain assumptions in the calculation of the fair value of the Company’s stock options.(3)On January 2, 2014, Frank L. Jaksch Jr. was awarded 250,000 shares of restricted stock. As of January 3, 2015, these shares have not vested.(4)On June 18, 2014, Frank L. Jaksch Jr. was granted options to purchase 150,000 shares of ChromaDex common stock at an exercise price of $1.25. Theseoptions expire on June 18, 2024 and 25% of the options vest on June 18, 2015 and the remaining 75% vest 2.083% monthly thereafter.(5)On January 2, 2014, Thomas C. Varvaro was awarded 250,000 shares of restricted stock. As of January 3, 2015, these shares have not vested.(6)On June 18, 2014, Thomas C. Varvaro was granted options to purchase 125,000 shares of ChromaDex common stock at an exercise price of $1.25. Theseoptions expire on June 18, 2024 and 25% of the options vest on June 18, 2015 and the remaining 75% vest 2.083% monthly thereafter.(7)Troy A. Rhonemus became the Company’s Chief Operating Officer on March 6, 2014.(8)On February 21, 2014, Troy A. Rhonemus was granted options to purchase 250,000 shares of ChromaDex common stock at an exercise price of$1.75. These options expire on February 21, 2024 and 33% of the options vested on February 21, 2015 and the remaining 67% vest 2.778% monthlythereafter. In addition, on June 18, 2014, Troy A. Rhonemus was granted options to purchase 75,000 shares of ChromaDex common stock at an exerciseprice of $1.25. These options expire on June 18, 2024 and 25% of the options vest on June 18, 2015 and the remaining 75% vest 2.083% monthlythereafter. -83-Table of ContentsEmployment and Consulting Agreements The material terms of employment agreements with the named executive officers previously entered into by the Company are described below. Employment Agreement with Frank L. Jaksch Jr. On April 19, 2010, the Company entered into an Amended and Restated Employment Agreement (the “Amended Jaksch Agreement”) with Frank L. Jaksch Jr.The Amended Jaksch Agreement has a three year term, beginning on the date of the Agreement, that automatically renews unless the Amended JakschAgreement is terminated in accordance with its terms. The Amended Jaksch Agreement provides for a base salary of $225,000 (subject to an increase of$50,000 in the event the Company’s common stock is listed on a stock exchange), and provides for an annual cash bonus (based on performance targets) ofup to 40% of his base salary, and two option grants of 800,000 shares of Common Stock in aggregate. The option grants were awarded on May 20, 2010.On January 2, 2014, the Board approved the recommendations of the Company’s Compensation Committee raising the annual base salary of Mr. Jaksch to$275,000 per year and raising the annual cash bonus target for Mr. Jaksch up to 50% of his base salary. In addition, the Board approved granting 250,000shares of the Company’s restricted stock, subject to certain vesting provisions to Mr. Jaksch. In February 2015, the Board approved the recommendations ofthe Company’s Compensation Committee paying Mr. Jaksch a bonus of $85,890 for services provided to the Company during the fiscal year ending January3, 2015.The severance terms of the Amended Jaksch Agreement provide that in the event Mr. Jaksch’s employment with the Company is terminated voluntarily byMr. Jaksch, he will be entitled to any accrued but unpaid base salary, any stock vested through the date of his termination and a pro-rated portion of 50% ofhis salary (50% of his salary being the “Maximum Annual Bonus”) for the year of termination. In addition, if Mr. Jaksch leaves the Company for “GoodReason” 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 suchyear. “Good Reason” means any of the following: (A) the assignment of duties materially inconsistent with those of other employees in similar employmentpositions, and Mr. Jaksch provides written notice to the Company within 60 days of such assignment that such duties are materially inconsistent with thoseduties 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 theAmended Jaksch Agreement, or (C) a failure by the Company to comply with any other material provision of the Amended Jaksch Agreement which has notbeen 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 curedin 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 paidsalary, 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 to12 months paid salary. In the event Mr. Jaksch’s employment terminates as a result of his death or disability, he, or his estate, as the case may be, will be entitled to his accrued butunpaid base salary, stock vested through the date of his termination and, notwithstanding any policy of the Company to the contrary, any annual bonus thatwould be due to him for the fiscal year in which termination pursuant to death or disability took place in an amount no less than the prorated portion of hisMaximum Annual Bonus. At the option of the Board, Mr. Jaksch’s bonus will be either prorated or paid in full to him, or his estate, as the case may be, at thetime he would have received such bonus had he remained an employee of the Company. In the event that Mr. Jaksch is terminated by the Company for “Cause” (as defined in the Amended Jaksch Agreement), he will only be entitled to his accruedbut unpaid base salary, and any stock vested through the date of his termination. In the event that Mr. Jaksch is terminated due to “Cessation of Business” (as defined in the Amended Jaksch Agreement), Mr. Jaksch will be entitled to alump 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 tooccur of the term or renewal term of the agreement or 12 months from the date of termination. In the event the Company terminates Mr. Jaksch’s employment “without Cause”, Mr. Jaksch will be entitled to severance in the form of any stock vestedthrough the date of his termination and continuation of his base salary for a period of eight weeks, or, if Mr. Jaksch enters into a standard separationagreement, Mr. Jaksch will receive continuation of base salary and health benefits, together with applicable fringe benefits as provided to other executiveemployees until the last to occur of the expiration of the term or renewal term then in effect or 24 months from the date of termination (the “SeverancePeriod”), and he will receive his Maximum Annual Bonus if the Severance Period is equal to 24 months or a pro rata portion thereof if less, as well as the fullvesting of any otherwise unvested stock. -84-Table of ContentsEmployment Agreement with Thomas C. Varvaro On April 19, 2010, the Company entered into an Amended and Restated Employment Agreement (the “Amended Varvaro Agreement”) with Thomas C.Varvaro. The Amended Varvaro Agreement has a three year term beginning on the date of the agreement that automatically renews unless the AmendedVarvaro Agreement is terminated in accordance with its terms. The Amended Varvaro Agreement provides for a base salary of $175,000 (subject to anincrease of $50,000 in the event the Company’s common stock is listed on a stock exchange), and provides for an annual cash bonus (based on performancetargets) of up to 30% of his base salary, and provides for two option grants of 400,000 shares of Common Stock in aggregate. The option grants were awardedon May 20, 2010.On January 2, 2014, the Board approved the recommendations of the Company’s Compensation Committee raising the annual base salary of Mr. Varvaro to$225,000 per year and raising the annual cash bonus target for Mr. Varvaro up to 40% of his base salary. In addition, the Board approved granting 250,000shares of the Company’s restricted stock, subject to certain vesting provisions to Mr. Varvaro. In February 2015, the Board approved the recommendations ofthe Company’s Compensation Committee paying Mr. Varvaro a bonus of $56,219 for services provided to the Company during the fiscal year endingJanuary 3, 2015.The severance terms of the Amended Varvaro Agreement provide that in the event Mr. Varvaro’s employment with us is terminated voluntarily byMr. Varvaro he will be entitled to any accrued but unpaid base salary, any stock vested through the date of his termination and a pro-rated portion of 40% ofhis salary (40% of this salary being the “Maximum Annual Bonus”) for the year of termination. In addition, if Mr. Varvaro leaves the Company for GoodReason 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 suchyear. “Good Reason” means any of the following: (A) the assignment of duties materially inconsistent with those of other employees in similar employmentpositions, and Mr. Varvaro provides written notice to the Company within 60 days of such assignment that such duties are materially inconsistent with thoseduties 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 theCompany’s Chief Executive Officer either by the Company without “Cause” or by the Mr. Jaksch for “Good Reason,” and Mr. Varvaro provides writtennotice within 60 days of such termination, or (C) a failure by the Company to comply with any other material provision of the Amended Varvaro Agreementwhich 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 capableof 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 weeksof 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 12months paid salary. In the event Mr. Varvaro is terminated as a result of his death or disability he will be entitled to his accrued but unpaid base salary, stock vested through thedate of his termination and, notwithstanding any policy of the Company to the contrary, any annual bonus that would be due to him for the fiscal year inwhich termination pursuant to death or disability took place in an amount no less than the prorated portion of his Maximum Annual Bonus. Mr. Varvaro’sbonus will be either prorated or paid in full to him, or his estate, as the case may be, at the time he would have received such bonus had he remained anemployee of the Company.In the event that Mr. Varvaro is terminated by the Company for “Cause” (as defined in the Amended Varvaro Agreement), he will only be entitled to hisaccrued but unpaid base salary, and any stock vested through the date of his termination. In the event that Mr. Varvaro is terminated due to a “Cessation of Business” (as defined in the Amended Varvaro Agreement), Mr. Varvaro will be entitled to alump sum payment of base salary and an amount equal to the Maximum Annual Bonus, and continuation of health benefits until the last to occur of the termor renewal term of the agreement or 12 months from the date of termination. In the event the Company terminates Mr. Varvaro’s employment “without Cause,” Mr. Varvaro will be entitled to severance in the form of any stock vestedthrough the date of his termination and continuation of his base salary for a period of eight weeks, or, if Mr. Varvaro enters into a standard separationagreement, Mr. Varvaro will receive continuation of base salary and health benefits, together with applicable fringe benefits as provided to other executiveemployees until the last to occur of the expiration of the term or renewal term then in effect or 24 months from the date of termination (the “SeverancePeriod”), will receive his Maximum Annual Bonus if the Severance Period is equal to 24 months or a pro rata portion thereof if less, as well as the full vestingof any otherwise unvested stock. -85-Table of Contents Employment Agreement with Troy Rhonemus On March 6, 2014, the Company entered into an Employment Agreement (the “Rhonemus Agreement”) with Troy Rhonemus. The Rhonemus Agreement hasa one year term beginning on the date of the agreement that automatically renews unless the Rhonemus Agreement is terminated in accordance with its terms.The Rhonemus Agreement provides for a base salary of $180,000, and provides for an annual cash bonus (based on performance targets) of up to 30% of hisbase salary (30% of this salary being the “Maximum Annual Bonus”), and provides for option grants of 250,000 shares of Common Stock. The option grantswere awarded on February 21, 2014.In February 2015, the Board approved the recommendations of the Company’s Compensation Committee paying Mr. Rhonemus a bonus of $33,731 forservices provided to the Company during the fiscal year ending January 3, 2015.The severance terms of the Rhonemus Agreement provide that in the event Mr. Rhonemus’ employment with us is terminated voluntarily by Mr. Rhonemus,he will be entitled to any accrued but unpaid base salary and any accrued but unpaid welfare and retirement benefits. In addition, if Mr. Rhonemus leaves theCompany for Good Reason he will also be entitled to severance equal to two weeks of base salary for each full year of service to a maximum of eight weeks ofthe base salary. “Good Reason” means a failure by the Company to comply with any other material provision of the Rhonemus Agreement which has notbeen cured within 60 days after notice of such failure has been given by Mr. Rhonemus to the Company, or if such failure is not capable of being cured insuch time, a cure will not have been diligently pursued by the Company within such 60 day period. In the event Mr. Rhonemus is terminated as a result of his death or disability he will be entitled to his accrued but unpaid base salary, and, notwithstandingany policy of the Company to the contrary, any annual bonus that would be due to him for the fiscal year in which termination pursuant to death or disabilityoccurs will be prorated to Mr. Rhonemus (or his estate, as the case may be) at the time Mr. Rhonemus would have received such bonus had he remained anemployee of the Company.In the event that Mr. Rhonemus is terminated by the Company for “Cause” (as defined in the Rhonemus Agreement), he will only be entitled to his accruedbut unpaid base salary, and any accrued but unpaid welfare and retirement benefits. In the event that Mr. Rhonemus is terminated due to a “Cessation of Business” (as defined in the Rhonemus Agreement), Mr. Rhonemus will be entitled to alump sum payment of (i) base salary until the last to occur of (A) the expiration of the remaining portion of the initial term or the then applicable renewalterm, as the case may be, or (B) the expiration of the 12-month period commencing on the date Employee is terminated, and (ii) the Maximum Annual Bonus. In the event the Company terminates Mr. Rhonemus’ employment “without Cause,” Mr. Rhonemus will be entitled to severance equal to two weeks of basesalary for each full year of service to a maximum of eight weeks of the base salary, or, if Mr. Rhonemus enters into a standard separation agreement, Mr.Rhonemus will receive continuation of base salary and health benefits, together with applicable fringe benefits as provided until the expiration of the term orrenewal term then in effect, however, that in the case of medical and dental insurance, until the expiration of 12 months from the date of termination. 2014 Director Compensation From time to time, non-employee directors receive a stock award or a grant of options to buy our common stock. These stock awards and options are grantedunder the Second Amended and Restated 2007 Equity Incentive Plan of the Company, or the 2007 Plan. The number of shares awarded or the number ofoptions granted and the vesting conditions are determined by the Compensation Committee of the Board of Directors. The vesting schedule on the optionsawarded for the fiscal year ended January 3, 2015 is as follows: 8.333% of the options vest monthly. On January 2, 2014, the Company awarded shares of the Company’s restricted stock, subject to certain vesting provisions, to the Company’s independentmembers of the board of directors as follows: Michael H. Brauser 250,000 shares; Barry Honig 250,000 shares, Stephen Block 50,000 shares, Reid Dabney10,000 shares; Hugh Dunkerley 10,000 shares; Mark S. Germain 10,000 shares; and Glenn L. Halpryn 10,000 shares. Effective February 25, 2015 upon theirresignations from the Board, Mr. Brauser’s and Mr. Honig’s unvested options and restricted stock vested immediately. The options issued to Mr. Brauser andMr. Honig shall expire according to their terms as if Mr. Brauser and Mr. Honig had not resigned from the Board. The following table provides information concerning compensation of our non-employee directors who were directors for the fiscal year ended January 3,2015. The compensation reported is for services as directors for the fiscal year ended January 3, 2015. The Company did not compensate its non-employeedirectors for services for the fiscal year ended December 28, 2013. -86-Table of ContentsSummary Compensation Table Name FeesEarned orPaid inCash ($) StockAwards($)(1) OptionAwards($)(2) Non-EquityIncentive PlanCompensation ($) Non-QualifiedDeferredCompensationEarnings ($) All OtherCompensation($) Total($) Stephen Allen (3) - - 262,241 - - - 262,241 Stephen Block(4) - 70,500 60,221 - - - 130,721 Reid Dabney(5) - 14,100 58,396 - - - 72,496 Hugh Dunkerley(6) - 14,100 49,272 - - - 63,372 Mark S. Germain(7) - 14,100 49,272 - - - 63,372 Glenn L. Halpryn(8) - 14,100 54,746 - - - 68,846 Michael H.Brauser(9) - 352,500 58,396 - - - 410,896 Barry Honig(10) - 352,500 58,396 - - - 410,896 (1)The amounts in the column titled “Stock Awards” above reflect the aggregate award date fair value of restricted stock awards. Except as stated belowwith respect to restricted stock held by Mr. Brauser and Mr. Honig, restricted stock awards shall vest upon the earlier to occur of the following: (A) theaverage closing market price of the Company’s common stock exceeds $2.50 per share over any six month period, (B) the Company experiences achange in control, (C) the Company’s common stock or assets are acquired by, or the Company merges with, another entity or engages in another formof reorganization as a result of which it is not the surviving corporation, (D) service is terminated without cause for any reason, or (E) the Company’sstock is listed on a national securities exchange, but in no event would any shares vest prior to July 1, 2014. The fair values of these restricted stockawards were based on the trading price of the Company’s common stock on the date of grant.(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 endedJanuary 3, 2015. See Note 10 of the ChromaDex Corporation Consolidated Financial Report included in this Form 10-K for the year ended January 3,2015 for a description of certain assumptions in the calculation of the fair value of the Company’s stock options. Except as stated below with respect tooptions awarded to Mr. Allen, the options have an exercise price of $1.25 and, except as stated below with respect to options held by Mr. Brauser andMr. Honig, vest 1/12th every month for 12 months commencing in June 2014.(3)On February 21, 2014, Stephen Allen was awarded the option to purchase 200,000 shares of the Company’s common stock with an exercise price of$1.75 per share. On June 18, 2014, Stephen Allen was awarded the option to purchase 82,500 shares of the Company’s common stock.(4)On January 2, 2014, Stephen Block was awarded 50,000 shares of restricted stock. On June 18, 2014, Stephen Block was awarded the option topurchase 82,500 shares of the Company’s common stock.(5)On January 2, 2014, Reid Dabney was awarded 10,000 shares of restricted stock. On June 18, 2014, Reid Dabney was awarded the option to purchase80,000 shares of the Company’s common stock.(6)On January 2, 2014, Hugh Dunkerley was awarded 10,000 shares of restricted stock. On June 18, 2014, Hugh Dunkerley was awarded the option topurchase 67,500 shares of the Company’s common stock.(7)On January 2, 2014, Mark S. Germain was awarded 10,000 shares of restricted stock. On June 18, 2014, Mark S. Germain was awarded the option topurchase 67,500 shares of the Company’s common stock.(8)On January 2, 2014, Glenn L. Halpryn was awarded 10,000 shares of restricted stock. On June 18, 2014, Glenn L. Halpryn was awarded the option topurchase 75,000 shares of the Company’s common stock.(9)On January 2, 2014, Michael H. Brauser was awarded 250,000 shares of restricted stock. On June 18, 2014, Michael Brauser was awarded the option topurchase 80,000 shares of the Company’s common stock. This option award was to vest 1/12th every month for 12 months. Effective February 25,2015, all of Mr. Brauser’s unvested restricted stock and options became fully vested upon his resignation from the Board of Directors.(10)On January 2, 2014, Barry Honig was awarded 250,000 shares of restricted stock. On June 18, 2014, Barry Honig was awarded the option to purchase80,000 shares of the Company’s common stock. This option award was to vest 1/12th every month for 12 months. Effective February 25, 2015, all ofMr. Honig’s unvested restricted stock and options became fully vested upon his resignation from the Board of Directors. -87-Table of ContentsOutstanding Equity Awards at Fiscal Year EndThe following table sets forth certain information regarding stock options and restricted stock granted to our named executive officers outstanding as ofJanuary 3, 2015. Outstanding Stock Options at 2014 Fiscal Year-End Name Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable Equity IncentivePlan Awards:Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions (#) Option ExercisePrice ($) OptionExpiration Date 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 100,000 — — 0.50 5/13/2019 100,000 — — 1.70 5/20/2020 111,979 13,021(1) — 1.54 5/10/2021 145,833 104,167(2) — 0.64 8/28/2022 1,426,064 475,354(3) — 0.945 9/15/2022 — 150,000 (4) — 1.25 6/18/2024 Thomas C. Varvaro 250,000 — — 1.50 12/1/2016 100,000 — — 1.50 4/21/2018 75,000 — — 0.50 5/13/2019 336,700 — — 1.545 5/20/2020 75,000 — — 1.545 5/20/2020 3,841 447(5) — 1.54 5/10/2021 116,667 83,333(6) — 0.64 8/28/2022 647,633 215,878(7) — 0.945 9/15/2022 — 125,000(8) — 1.25 6/18/2024 Troy A. Rhonemus 191,667 208,333 (9) — 0.63 1/25/2023 — 250,000(10) — 1.75 2/21/2024 — 75,000(11) — 1.25 6/18/2024 (1)2,604 of Mr. Jaksch’s options vest on 10th of every month through May 10, 2015.(2)5,208 of Mr. Jaksch’s options vest on 28th of every month through August 28, 2016.(3)52,817 of Mr. Jaksch’s options vest on 15th of every month through September 15, 2015.(4)3,125 of Mr. Jaksch’s options vest on 18th of every month through June 18, 2018.(5)89 of Mr. Varvaro’s options vest on 10th of every month through May 10, 2015.(6)4,167 of Mr. Varvaro’s options vest on 28th of every month through August 28, 2016.(7)23,986 of Mr. Varvaro’s options vest on 15th of every month through September 15, 2015.(8)2,604 of Mr. Varvaro’s options vest on 18th of every month through June 18, 2018.(9)8,333 of Mr. Rhonemus’ options vest on 25th of every month through January 25, 2017.(10)6,944 of Mr. Rhonemus’ options vest on 21st of every month through February 21, 2017.(11)6,250 of Mr. Rhonemus’ options vest on 18th of every month through June 18, 2018. -88-Table of Contents Outstanding Restricted Stock at 2014 Fiscal Year-EndName Number ofShares or Unitsof Stock ThatHave NotVested (#) Market Value ofShares of Unitsof Stock ThatHave Not Vested($) Equity incentiveplan awards: Number ofunearned shares,units or otherrights that havenot vested (#) Equity incentiveplan awards:Market orpayout value ofunearned Shares, units orother rights thathave not vested($) (1) Frank L. Jaksch Jr. — — 500,000(2) $450,000 Thomas C. Varvaro — — 500,000(3) $450,000 Troy A. Rhonemus — — — $— (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 3, 2015.(2)On June 6, 2012, Frank L. Jaksch Jr. was awarded 250,000 shares of restricted stock. These shares shall vest upon the earlier to occur of the following:(A) the average closing market price of the Company’s common stock exceeds $2.00 per share over any six month period, (B) the Company experiencesa change in control, (C) the Company engages in a merger or other reorganization in which it is not the surviving corporation, (D) the Company sells allor substantially all of its assets, (E) service is terminated for any reason, or (F) the Company’s stock is listed on a national securities exchange. Inaddition, on January 2, 2014, Mr. Jaksch was awarded 250,000 shares of restricted stock. These shares shall vest upon the earlier to occur of thefollowing: (A) the average closing market price of the Company’s common stock exceeds $2.50 per share over any six month period, (B) the Companyexperiences a change in control, (C) the Company’s common stock or assets are acquired by, or the Company merges with another entity or engages inanother form of reorganization as a result of which it is not the surviving corporation, (D) service is terminated without cause for any reason, or (E) theCompany’s stock is listed on a national securities exchange, but in no event would any shares vest prior to July 1, 2014. (3)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:(A) the average closing market price of the Company’s common stock exceeds $2.00 per share over any six month period, or (B) the Companyexperiences a change in control, (C) the Company engages in a merger or other reorganization in which it is not the surviving corporation, (D) theCompany sells all or substantially all of its assets, (E) service is terminated for any reason, or (F) the Company’s stock is listed on a national securitiesexchange. In addition, on January 2, 2014, Mr. Varvaro was awarded 250,000 shares of restricted stock. These shares shall vest upon the earlier tooccur of the following: (A) the average closing market price of the Company’s common stock exceeds $2.50 per share over any six month period, (B)the Company experiences a change in control, (C) the Company’s common stock or assets are acquired by, or the Company merges with another entityor engages in another form of reorganization as a result of which it is not the surviving corporation, (D) service is terminated without cause for anyreason, or (E) the Company’s stock is listed on a national securities exchange, but in no event would any shares vest prior to July 1, 2014. -89-Table of ContentsItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersAs of March 12, 2015, there were approximately 107,287,058 shares of our common stock outstanding. The following table sets forth certain informationregarding our common stock, beneficially owned as of March 12, 2015, by each person known to us to beneficially own more than 5% of our common stock,each executive officer and director, and all directors and executive officers as a group. We calculated beneficial ownership according to Rule 13d-3 of theExchange Act as of that date. Shares issuable upon exercise of options or warrants that are exercisable or convertible within 60 days after March 12, 2015 areincluded as beneficially owned by the holder. Beneficial ownership generally includes voting and dispositive power with respect to securities. Unlessotherwise indicated below, the persons and entities named in the table have sole voting and sole dispositive power with respect to all shares beneficiallyowned.Name of Beneficial Owner (1) Shares ofCommonStockBeneficiallyOwned (2) AggregatePercentageOwnership Dr. Phillip Frost (3) 15,252,937 14.22%Michael Brauser (4) 8,738,088 8.13%Barry Honig (5) 8,420,216 7.83%Black Sheep, FLP (6) 6,225,155 5.80%Directors Stephen Allen (7) 268,750 * Stephen Block (8) 563,731 * Reid Dabney (9) 626,867 * Hugh Dunkerley (10) 484,525 * Mark S. Germain (11) 749,774 * Glenn L. Halpryn (12) 1,553,237 1.43%Frank L. Jaksch Jr. (13) 11,527,319 10.43%Named Executive Officers Frank L. Jaksch Jr., Chief Executive Officer (See above) Thomas C. Varvaro, Chief Financial Officer (14) 2,224,900 2.04%Troy Rhonemus, Chief Operating Officer (15) 337,222 * All directors and executive officers as a group (7 Directors plus Chief Financial Officer and Chief Operating Officer) (16) 18,316,325 15.86% *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, 4400Biscayne Blvd., Suite 850, Miami, FL 33137; Barry Honig, 555 South Federal Highway, #450, Boca Raton, FL 33432; and Black Sheep, FLP 6 PalmHill Drive, San Juan Capistrano, CA 92675. (2)Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or dispositive power with respect to sharesbeneficially owned. Unless otherwise specified, reported ownership refers to both voting and dispositive power. Shares of common stock issuableupon the conversion of stock options or the exercise of warrants within the next 60 days are deemed to be converted and beneficially owned by theindividual or group identified in the Aggregate Percentage Ownership column. -90-Table of Contents (3)Includes 5,852,937 shares of common stock held by Frost Gamma Investments Trust and 9,400,000 shares of common stock held by Phillip andPatricia Frost Philanthropic Foundation, Inc. Dr. Phillip Frost is the trustee of Frost Gamma Investments Trust. Frost Gamma Limited Partnership isthe sole and exclusive beneficiary of Frost Gamma Investments Trust. Dr. Frost is one of two limited partners of Frost Gamma Limited Partnership.The general partner of Frost Gamma Limited Partnership is Frost Gamma, Inc. and the sole shareholder of Frost Gamma, Inc. is Frost-NevadaCorporation. Dr. Frost is also the sole shareholder of Frost-Nevada Corporation. Dr. Phillip Frost is President of Phillip and Patricia FrostPhilanthropic Foundation, Inc. Dr. Frost is a stockholder 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. (4)Direct ownership of (i) 1,143,498 shares of common stock; and (ii) through Michael & Betsy Brauser TBE, 3,626,428 shares of commonstock. Indirect ownership through (i) 628,570 Shares held by Grander Holdings, Inc. 401K Profit Sharing Plan of which Mr. Brauser is a trustee; (ii)342,857 Shares held by the Brauser 2010 GRAT of which Mr. Brauser is a trustee; (iii) 342,857 Shares held by Birchtree Capital, LLC of which Mr.Brauser is the manager; (iv) 1,692,856 Shares held by BMB Holdings, LLLP of which Mr. Brauser is the manager of its general partner; and (v)714,284 Shares held by Betsy Brauser Third Amended Trust Agreement beneficially owned by Mr. Brauser's spouse which are disclaimed byhim. Includes 246,738 stock options exercisable within 60 days.(5)Direct ownership of 4,824,959 shares of common stock. Indirect ownership includes (i) 230,000 Shares owned by GRQ Consultants, Inc. DefinedBenefits Plan for the benefit of Mr. Honig; (ii) 966,786 Shares owned by GRQ Consultants, Inc. 401K of which Mr. Honig is the beneficiary; (iii)2,103,571 Shares owned by GRQ Consultants Inc. Roth 401K FBO Renee Honig, Mr. Honig's spouse, of which Mr. Honig has voting and investmentpower and disclaims beneficial ownership; and (iv) 89,900 shares owned by GRQ Consultants, Inc., of which Mr. Honig is the President. Includes205,000 stock options exercisable within 60 days. (6)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 limitedpartners of which are Frank L. Jaksch, Jr., Tricia Jaksch and the Jaksch Family Trust. (7)Includes 268,750 stock options exercisable within 60 days. (8)Includes 513,731 stock options exercisable within 60 days. (9)Includes 616,867 stock options exercisable within 60 days. (10)Includes 474,525 stock options exercisable within 60 days. (11)Includes 739,774 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)Direct ownership of 10,000 shares of common stock. Indirect ownership through IVC Investors, LLLP (in which Glenn Halpryn has an interest) of1,271,428 shares of common stock. Glenn Halpryn disclaims beneficial ownership of these shares except to the extent of any pecuniary interesttherein. Includes 251,809 stock options exercisable within 60 days. (13)Includes 1,429,000 shares owned by the FMJ Family Limited Partnership, beneficially owned by Frank L Jaksch Jr. because Mr. Jaksch Jr. has sharedvoting power for such shares. Includes 6,225,155 shares owned by Black Sheep, FLP beneficially owned by Mr. Jaksch Jr. because he has sharedvoting power and shared dispositive power for such shares. Includes 594,165 shares directly owned by Mr. Jaksch Jr. Includes 3,278,999 stockoptions exercisable within 60 days. -91-Table of Contents (14) Includes 1,717,900 stock options exercisable within 60 days. (15)Direct ownership of 5,000 shares of common stock. Indirect ownership through Toni Rhonemus IRA of 10,000 shares beneficially owned by ToniRhonemus who is Mr. Rhonemus’ wife. Includes 322,222 stock options exercisable within 60 days. (16) Includes 8,184,577 stock options exercisable within 60 days. Equity Compensation Plan InformationThe following table provides information about our equity compensation plans as of January 3, 2015: A B C Plan Category Number ofsecuritiesto be issueduponexercise ofoutstandingoptions,warrantsand rights Weighted-averageexerciseprice ofoutstandingoptions,warrantsand rights Number ofsecuritiesremainingavailable forfutureissuanceunder equitycompensationplans(excludingsecuritiesreflected incolumn (A)) Equity compensation plans approved by security holders 13,974,052 $1.14 4,738,496(1) Equity compensation plans not approved by security holders - - - Total 13,974,052 $1.14 4,738,496(1) (1)Pursuant to our Second Amended and Restated 2007 Equity Incentive Plan, we are authorized to issue shares under this plan that total no more than20% of our shares of common stock issued and outstanding, as determined on a fully diluted basis.Item 13. Certain Relationships and Related Transactions, and Director IndependenceTransactions with Related PersonsThe Company did not have any transactions with related persons during the years ended January 3, 2015 and December 28, 2013.Review, approval or ratification of transactions with related persons.On an ongoing basis, the Audit Committee reviews all “related party transactions” (those transactions that are required to be disclosed in this Annual Reporton Form 10-K by SEC Regulation S-K, Item 404 and under Nasdaq’s rules), if any, for potential conflicts of interest and all such transactions must beapproved by the Audit Committee. -92-Table of ContentsDirector IndependenceUnder the NASDAQ Stock Market Marketplace Rules, a director will only qualify as an independent director if, in the opinion of our Board, that person doesnot have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board hasdetermined that each of Stephen Allen, Stephen Block, Reid Dabney, Hugh Dunkerley, Mark S. Germain and Glenn L. Halpryn has no material relationshipwith 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 independence standards because of he is the Chief Executive Officer of our Company. Item 14. Principal Accounting Fees and Services Audit Fees During the fiscal year ending December 28, 2013, McGladrey, LLP was the Company’s independent registered public accounting firm through December 11,2013. On December 11, 2013, the Audit Committee of the Board approved the dismissal of McGladrey LLP as the Company’s independent registered publicaccounting firm. On December 26, 2013, the Audit Committee of the Board engaged Marcum LLP as its independent registered public accounting firm forthe Company’s fiscal year ending December 28, 2013. During the fiscal year ending January 3, 2015, Marcum LLP remained as the Company’s independentregistered public accounting firm. The following table sets forth fees billed to us by our independent registered public accounting firms during the fiscal years ended January 3, 2015 andDecember 28, 2013 Marcum, LLP 2014 2013 Audit Fees (1) $229,000 $138,000 Audit-Related Fees (2) $5,000 $— Tax Fees (3) $— $— All Other Fees $— $— McGladrey, LLP 2014 2013 Audit Fees $— $38,000 Audit-Related Fees $13,000 $106,000 Tax Fees $36,000 $37,000 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 quarterlyreports. The 2014 amount includes an estimated amount from the engagement letter of the Company’s current auditors and not the final billed amountassociated with the audit of the Company’s financial statements.(2)Audit-related fees include costs incurred for reviews of registration statements and consultations on various accounting matters in support of theCompany’s financial statements.(3)Tax fees consist of fees for tax compliance matters. -93-Table of ContentsPolicy for Pre-Approval of Independent Auditor ServicesThe Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent auditor. These services mayinclude audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval isdetailed as to the specific service or category of service and is generally subject to a specific budget. The independent auditor and management are requiredto periodically communicate to the Audit Committee regarding the extent of services provided by the independent auditor in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. -94-Table of ContentsPART IVItem 15. Exhibits and Financial Statement SchedulesFinancial StatementsReference is made to Item 8. Financial Statements and Supplementary Data of this Form 10-K.List of ExhibitsReference is made to the Exhibit Index immediately preceding such Exhibits of this Form 10-K. -95-Table of Contents SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized, on the 19th day of March 2015. CHROMADEX CORPORATION By: /s/ FRANK L. JAKSCH JR. Frank L. Jaksch Jr. Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant inthe capacities and on the dates indicated.Signature Title Date /s/ FRANK L. JAKSCH JR. Chief Executive Officer and Director March 19, 2015Frank L. Jaksch Jr. (Principal Executive Officer) /s/ THOMAS C. VARVARO Chief Financial Officer and Secretary March 19, 2015Thomas C. Varvaro (Principal Financial and Accounting Officer) /s/ STEPHEN ALLEN Chairman of the Board and Director March 19, 2015Stephen Allen /s/ STEPHEN BLOCK Director March 19, 2015Stephen Block /s/ REID DABNEY Director March 19, 2015Reid Dabney /s/ GLENN L. HALPRYN Director March 19, 2015Glenn L. Halpryn /s/ HUGH DUNKERLEY Director March 19, 2015Hugh Dunkerley /s/ MARK S. GERMAIN Director March 19, 2015Mark S. Germain -96-Table of ContentsEXHIBIT INDEXExhibit No. Description2.1 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 onJune 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’sCurrent 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 asExhibit 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 andChromaDex (incorporated by reference from, and filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with theCommission 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 ofthe Jaksch Family Trust, Margery Germain, Lauren Germain, Emily Germain, Lucie Germain, Frank Louis Jaksch, Jr., and the University ofMississippi Research Foundation (incorporated by reference from, and filed as Exhibit 4.2 to the Company’s Current Report on Form 8-Kfiled with the Commission on June 24, 2008)10.1 ChromaDex, Inc. 2000 Non-Qualified Incentive Stock Option Plan effective October 1, 2000 (incorporated by reference from, and filed asExhibit 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 referencefrom, 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 byreference 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, andfiled 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 onApril 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 onApril 22, 2010)(1)+10.7 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 onNovember 1, 2010)+10.8 Standard Industrial/Commercial Multi-Tenant Lease – Net dated December 19, 2006, by and between ChromaDex, Inc. and SCIF PortfolioII, LLC (incorporated by reference from, and filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the Commissionon June 24, 2008)10.9 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 onForm 8-K filed with the Commission on July 23, 2008) -97-Table of Contents10.10 Second Amendment to Standard Industrial/Commercial Multi-Tenant Lease, made as of May 7, 2013, 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 onForm 8-K filed with the Commission on May 7, 2013)10.11 Lease Agreement dated October 26, 2001, by and between Railhead Partners, LLC and NaPro BioTherapeutics, Inc., as assigned toChromadex Analytics, Inc. on April 9, 2003 and amended on September 24, 2003 (incorporated by reference from, and filed as Exhibit 10.8to the Company’s Current Report on Form 8-K filed with the Commission on June 24, 2008)10.12 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 onForm 8-K filed with the Commission on July 23, 2008)10.13 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 onApril 28, 2009)10.14 Licensing Agreement Nutraceutical Standards effective as of December 31, 1999 between the University of Mississippi ResearchFoundation and ChromaDex (incorporated by reference from, and filed as Exhibit 10.9 to the Company’s Current Report on Form 8-K filedwith the Commission on June 24, 2008)10.15 Equity Based License Agreement dated October 25, 2001, by and between the Company and Bayer Innovation, as amended as of October30, 2003 (incorporated by reference from, and filed as Exhibit 10.10 to the Company’s Current Report on Form 8-K filed with theCommission on June 24, 2008)10.16 Stock Redemption Agreement, dated June 18, 2008 between ChromaDex, Inc. and Bayer Innovation GmbH (formerly named BayerInnovation Beteiligungsgesellschaft mbH) (incorporated by reference from, and filed as Exhibit 10.13 to the Company’s Current Report onForm 8-K filed with the Commission on June 24, 2008)10.17 Technology License Agreement dated June 30, 2008 between The Research Foundation of the State University of New York andChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with theCommission on August 12, 2008)*10.18 License Agreement, dated March 25, 2010 between the University of Mississippi and ChromaDex, Inc. (incorporated by reference from, andfiled as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the Commission on May 18, 2010)*10.19 First Amendment to License Agreement, made as of June 3, 2011 between the University of Mississippi and ChromaDex, Inc. (incorporatedby reference from, and filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 11,2011)*10.20 License Agreement, dated July 5, 2011 between ChromaDex, Inc. and Cornell University (incorporated by reference from, and filed asExhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 10, 2011)*10.21 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 onNovember 10, 2011)*10.22 Exclusive License Agreement, dated July 13, 2012 between Dartmouth College and ChromaDex, Inc. (incorporated by reference from, andfiled as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 8, 2012)*10.23 Exclusive License Agreement, dated March 7, 2013 between Washington University 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 10, 2013)*10.24 Asset Purchase and Sale Agreement, dated as of March 28, 2013, by and between ChromaDex Corporation and NeutriSci International, 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 onMarch 29, 2013)10.25 Senior Secured Convertible Promissory Note, dated as of March 28, 2013, by NeutriSci International, 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 March 29, 2013) -98-Table of Contents10.26 Security Agreement, dated as of March 28, 2013, by and between ChromaDex Corporation and NeutriSci International, Inc. (incorporatedby reference from, and filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on March 29, 2013)10.27 Subsidiary Guaranty, dated as of March 28, 2013, executed by Britlor Health and Wellness, Inc. (incorporated by reference from, and filed asExhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on March 29, 2013)10.28 Royalty Agreement, dated as of March 28, 2013, by and between ChromaDex Corporation and NeutriSci International, Inc. (incorporated byreference from, and filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Commission on March 29, 2013)10.29 Sales Confirmation and Contract, dated as of March 28, 2013, by and Between ChromaDex Corporation and NeutriSci International, Inc.(incorporated by reference from, and filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the Commission onMarch 29, 2013)10.30 Niagen Supply Agreement, dated July 9, 2013, by and between ChromaDex, Inc. and Thorne Research, Inc. (incorporated by reference from,and filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Commission on July 12, 2013)10.31 License Agreement, made as of August 1, 2013, between Green Molecular S.L., Inc. 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 21, 2013)*10.32 Form of Subscription Agreement, dated October 17, 2013, between ChromaDex Corporation and the subscribers (incorporated by referencefrom, and filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 18, 2013)10.33 Assignment and Escrow Agreement by and among ChromaDex Corporation, Alpha Capital Anstalt, NeutriSci International Inc., BritlorHealth and Wellness, Inc. and Grushko & Mittman, P.C. effective as of December 27, 2013 (incorporated by reference from, and filed asExhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 3, 2014)10.34 Niagen Supply Agreement by and between ChromaDex Inc. and 5Linx Enterprises, Inc. effective as of January 3, 2014 (incorporated byreference from, and filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 8, 2014)*10.35 Purenergy Supply Agreement by and between ChromaDex Inc. and 5Linx Enterprises, Inc. effective as of January 3, 2014 (incorporated byreference from, and filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 8, 2014)*10.36 Employment Agreement by and between ChromaDex Corp. and Troy Rhonemus dated March 6, 2014 (incorporated by reference from, andfiled as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on March 10, 2014)+10.37 Exclusive License Agreement, effective as of May 16, 2014 between Dartmouth College and ChromaDex, Inc. (incorporated by referencefrom, and filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 12, 2014)*10.38 First Amendment to the License Agreement, effective as of September 5, 2014 between the Regents of the University of California andChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with theCommission on November 6, 2014)*10.39 Loan and Security Agreement by and between ChromaDex Corporation and Hercules Technology II, L.P., as Lender and HerculesTechnology Growth Capital, Inc., as agent dated September 29, 2014v10.40 License Agreement, effective as of October 15, 2014 between University of Mississippi and ChromaDex, Inc.v**10.41 Transfer and Notice of Conversion by ChromaDex Corporation, Alpha Capital Anstalt and Palladium Capital Advisors, LLC, and byNeutriSci International Inc. and Disani Capital Corp. executed on November 26, 2014v10.42 Share Transfer Agreement by and between ChromaDex Corporation and Emprise Capital Corporation dated November 25, 2014v -99-Table of Contents16.1 Letter from McGladrey LLP, Independent Registered Public Accounting Firm, dated December 17, 2013 re change in certifying accountant(incorporated by reference from, and filed as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed with the Commission onDecember 17, 2013)21.1 Subsidiaries of ChromaDex (incorporated by reference from, and filed as Exhibit 21.1 to the Company’s Annual Report on Form 10-K filedwith the Commission on March 29, 2013)23.1 Consent of Marcum, LLP, Independent Registered Public Accounting Firmv31.1 Certification of the Chief Executive Officer pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amendedv31.2 Certification of the Chief Financial Officer pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amendedv32.1 Certification pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)v _________vFiled herewith.(1)Plan and related Forms were assumed by ChromaDex Corporation pursuant to Agreement and Plan of Merger, dated as of May 21, 2008, amongChromaDex 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 Exhibithave been omitted and are marked by an asterisk.**A redacted version of this Exhibit is filed herewith. An un-redacted version of this Exhibit has been separately filed with the Commission pursuantto an application for confidential treatment. The confidential portions of the Exhibit have been omitted and are marked by an asterisk.  Exhibit 10.39 LOAN AND SECURITY AGREEMENT THIS LOAN AND SECURITY AGREEMENT is made and dated as of September 29, 2014 and is entered into by and between CHROMADEXCORPORATION, a Delaware corporation, and each of its subsidiaries (hereinafter collectively referred to as the “Borrower”), the several banks and otherfinancial institutions or entities that are initially Affiliates of the Agent and, subject to Section 11.7 of this Agreement, from time to time parties to thisAgreement (collectively, referred to as “Lender”) and HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation, in its capacity asadministrative agent for itself and the Lender (in such capacity, the “Agent”). RECITALS A. Borrower has requested Lender to make available to Borrower a loan in an aggregate principal amount of up to Five Million Dollars($5,000,000.00) (the "Term Loan"); and B. Lender is willing to make the Term Loan on the terms and conditions set forth in this Agreement. AGREEMENT NOW, THEREFORE, Borrower, Agent and Lender agree as follows: SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION 1.1 Unless otherwise defined herein, the following capitalized terms shall have the following meanings: “Account Control Agreement(s)” means any agreement entered into by and among the Agent, Borrower and a third party Bank or otherinstitution (including a Securities Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and which grantsAgent a perfected first priority security interest in the subject account or accounts. “ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H. “Advance(s)” means a Term Loan Advance. “Advance Date” means the funding date of any Advance. “Advance Request” means a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A. “Affiliate” means (a) any Person that directly or indirectly controls, is controlled by, or is under common control with the Person inquestion, (b) any Person directly or indirectly owning, controlling or holding with power to vote ten percent (10%) or more of the outstanding votingsecurities of another Person, (c) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled orheld by another Person with power to vote such securities, or (d) any Person related by blood or marriage to any Person described in subsection (a), (b) or (c)of this paragraph. As used in the definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. “Agent” has the meaning given to it in the preamble to this Agreement. “Agreement” means this Loan and Security Agreement, as amended from time to time. “Amortization Date” means November 1, 2015. “Assignee” has the meaning given to it in Section 11.13. “Borrower Products” means all products, software, service offerings, technical data or technology currently being designed, manufacturedor sold by Borrower or which Borrower intends to sell, license, or distribute in the future including any products or service offerings under development,collectively, together with all products, software, service offerings, technical data or technology that have been sold, licensed or distributed by Borrowersince its incorporation. “Borrower’s Principal Market” shall mean the following exchanges or markets on which the Common Stock of the Borrower is then listed orquoted for trading on the date in question: the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, the New YorkStock Exchange or the NYSE MKT, LLC., the OTC Bulletin Board, or the OTCQB published by OTC Market Group, LLC (or any similar organization oragency succeeding to its functions of reporting prices). -1- “Business Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California areclosed for business. “Cash” means all cash and liquid funds. “Change in Control” means any (i) reorganization, recapitalization, consolidation or merger (or similar transaction or series of relatedtransactions) of Borrower or any Subsidiary, sale or exchange of outstanding shares (or similar transaction or series of related transactions) of Borrower or anySubsidiary in which the holders of Borrower or Subsidiary’s outstanding shares immediately before consummation of such transaction or series of relatedtransactions do not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than fifty percent(50%) of the voting power of the surviving entity of such transaction or series of related transactions (or the parent of such surviving entity if such survivingentity is wholly owned by such parent), in each case without regard to whether Borrower or Subsidiary is the surviving entity, or (ii)sale or issuance byBorrower of new shares of Preferred Stock of Borrower to investors, none of whom are current investors in Borrower, and such new shares of Preferred Stockare senior to all existing Preferred Stock and Common Stock with respect to liquidation preferences, and the aggregate liquidation preference of the newshares of Preferred Stock is more than fifty percent (50%) of the aggregate liquidation preference of all shares of Preferred Stock of Borrower; provided,however, a Registered Public Offering or private placement in connection with any bona fide equity raise shall not constitute a Change in Control. “Claims” has the meaning given to it in Section 11.10. “Closing Date” means the date of this Agreement. “Collateral” means the property described in Section 3. “Commitment Fee” means $20,000, which fee has been received by Lender, and shall be deemed fully earned on such date regardless of theearly termination of this Agreement. “Common Stock” means the Common Stock, $0.001 par value per share, of the Company. “Confidential Information” has the meaning given to it in Section 11.12. “Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person withrespect to (i) any Indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed,endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) anyobligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligationsarising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement orarrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that theterm “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any ContingentObligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such ContingentObligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in goodfaith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other supportarrangement. “Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned orhereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest. “Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof, orof any other country. “Deposit Accounts” means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savingsaccount, or certificate of deposit. “Domestic Subsidiary” means any Subsidiary that is not a Foreign Subsidiary. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. “Event of Default” has the meaning given to it in Section 9. “Facility Charge” means $50,000, representing one percent (1.0%) of Maximum Term Loan Amount. “Financial Statements” has the meaning given to it in Section 7.1. -2- “Foreign Subsidiary” means any Subsidiary other than a Subsidiary organized under the laws of any state within the United States. “GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time. “Indebtedness” means indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price ofproperty or services (excluding trade credit entered into in the ordinary course of business due within sixty (60) days), including reimbursement and otherobligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capitallease obligations, and (d) all Contingent Obligations. “Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy orinsolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seekingreorganization, arrangement, or other similar relief. “Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works;Borrower’s applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing, together withBorrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith. “Interest-Only Period” means the period beginning on the Closing Date and expiring on October 31, 2015. “Investment” means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, orany loan, advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person. “Joinder Agreements” means for each Subsidiary other than a Foreign Subsidiary and ChromaSolar, Inc. (to the extent it is exempt pursuantto Section 7.13), a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit G. “Lender” has the meaning given to it in the preamble to this Agreement. “License” means any Copyright License, Patent License, Trademark License or other license of rights or interests. “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien orcharge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retentionagreement, and any lease in the nature of a security interest. “Loan” means the Advances made under this Agreement. “Loan Documents” means this Agreement, the Notes (if any), the ACH Authorization, the Account Control Agreements, the JoinderAgreements, all UCC Financing Statements, the Warrant, the Subordination Agreement (if any)[, the Guaranty,] and any other documents executed inconnection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented orrestated. “Material Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets, prospects or condition(financial or otherwise) of Borrower, taken as a whole; or (ii) the ability of Borrower to perform the Secured Obligations in accordance with the terms of theLoan Documents, or the ability of Agent or Lender to enforce any of its rights or remedies with respect to the Secured Obligations; or (iii) the Collateral orAgent’s Liens on the Collateral or the priority of such Liens. “Maximum Term Loan Amount” means Five Million and No/100 Dollars ($5,000,000). “Maximum Rate” shall have the meaning assigned to such term in Section 2.3. “Note(s)” means a Term Note. “Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patentapplication is pending, in which agreement Borrower now holds or hereafter acquires any interest. “Patents” means all letters patent of, or rights corresponding thereto, in the United States or in any other country, all registrations andrecordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States or any other country. “Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lender or Agent arising under this Agreement or any other LoanDocument; (ii) Indebtedness existing on the Closing Date which is disclosed in Schedule 1A; (iii) Indebtedness of up to $500,000 outstanding at any timesecured by a Lien described in clause (vii) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the lesser of the cost or fairmarket value of the Equipment financed with such Indebtedness; (iv) Indebtedness to trade creditors (including suppliers) incurred in the ordinary course ofbusiness, including Indebtedness incurred in the ordinary course of business with corporate credit cards; (v) Indebtedness that also constitutes a PermittedInvestment; (vi) Subordinated Indebtedness; (vii) reimbursement obligations in connection with letters of credit that are secured by cash or cash equivalentsand issued on behalf of the Borrower or a Subsidiary thereof in an amount not to exceed $250,000 at any time outstanding, (viii) other Indebtedness in anamount not to exceed $250,000 at any time outstanding, and (ix) extensions, refinancings and renewals of any items of Permitted Indebtedness, provided thatthe principal amount is not increased or the terms modified to impose materially more burdensome terms upon Borrower or its Subsidiary, as the case may be. -3- “Permitted Investment” means: (i) Investments existing on the Closing Date which are disclosed in Schedule 1B; (ii) (a) marketable directobligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the dateof acquisition thereof, (b) commercial paper maturing no more than one year from the date of creation thereof and currently having a rating of at least A-2 orP-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (c) certificates of deposit issued by any bank with assets of at least$500,000,000 maturing no more than one year from the date of investment therein, and (d) money market accounts; (iii) repurchases of stock from formeremployees, directors, or consultants of Borrower under the terms of applicable repurchase agreements at the original issuance price of such securities in anaggregate amount not to exceed $250,000 in any fiscal year, provided that no Event of Default has occurred, is continuing or would exist after giving effectto the repurchases; (iv) Investments accepted in connection with Permitted Transfers; (v) Investments (including debt obligations) received in connectionwith the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers orsuppliers arising in the ordinary course of Borrower’s business; (vi) Investments consisting of notes receivable of, or prepaid royalties and other creditextensions, to customers and suppliers who are not Affiliates of Borrower, in the ordinary course of business, provided that this subparagraph (vi) shall notapply to Investments of Borrower in any Subsidiary; (vii) Investments consisting of loans not involving the net transfer on a substantially contemporaneousbasis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of Borrower pursuant to employee stock purchase plans orother similar agreements approved by Borrower’s Board of Directors; (viii) Investments consisting of travel advances in the ordinary course of business; (ix)Investments in newly-formed Domestic Subsidiaries, provided that each such Domestic Subsidiary enters into a Joinder Agreement promptly after itsformation by Borrower and execute such other documents as shall be reasonably requested by Agent; (x) Investments in Foreign Subsidiaries other thanForeign Subsidiaries in existence on the date hereof approved in advance in writing by Agent (such approval not to be unreasonably withheld or delayed);(xi) Investments consisting of in-kind contributions in Foreign Subsidiaries in existence on the date hereof; (xii) joint ventures or strategic alliances in theordinary course of Borrower’s business consisting of the nonexclusive licensing of technology, the development of technology or the providing of technicalsupport, provided that any cash Investments by Borrower do not exceed $250,000 in the aggregate in any fiscal year; (xiii) cash Investments in ForeignSubsidiaries and ChromaSolar, Inc. not to exceed $25,000 in the aggregate; (xiv) additional Investments that do not exceed $250,000 in the aggregate; and(xv) Indebtedness to advisory board members, consultants, officers and directors as disclosed in Schedule 1A. “Permitted Liens” means any and all of the following: (i) Liens in favor of Agent or Lender; (ii) Liens existing on the Closing Date whichare disclosed in Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in goodfaith by appropriate proceedings; provided, that Borrower maintains adequate reserves therefor in accordance with GAAP; (iv) Liens securing claims ordemands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary course of Borrower’s businessand imposed without action of such parties; provided, that the payment thereof is not yet required; (v) Liens arising from judgments, decrees or attachmentsin circumstances which do not constitute an Event of Default hereunder; (vi) the following deposits, to the extent made in the ordinary course ofbusiness: deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids,tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids,tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than Liens arising under ERISA orenvironmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (vii) Liens on Equipment or software or otherintellectual property constituting purchase money Liens and Liens in connection with capital leases securing Indebtedness permitted in clause (iii) of“Permitted Indebtedness”; (viii) Liens incurred in connection with Subordinated Indebtedness; (ix) leasehold interests in leases or subleases and licensesgranted in the ordinary course of business and not interfering in any material respect with the business of the licensor; (x) Liens in favor of customs andrevenue authorities arising as a matter of law to secure payment of custom duties that are promptly paid on or before the date they become due; (xi) Liens oninsurance proceeds securing the payment of financed insurance premiums that are promptly paid on or before the date they become due (provided that suchLiens extend only to such insurance proceeds and not to any other property or assets); (xii) statutory and common law rights of set-off and other similar rightsas to deposits of cash and securities in favor of banks, other depository institutions and brokerage firms; (xiii) easements, zoning restrictions, rights-of-wayand similar encumbrances on real property imposed by law or arising in the ordinary course of business so long as they do not materially impair the value ormarketability of the related property; (xiv) Liens on cash or cash equivalents securing obligations permitted under clause (vii) of the definition of PermittedIndebtedness; and (xv) Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described inclauses (i) through (xi) above; provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lienand the principal amount of the Indebtedness being extended, renewed or refinanced (as may have been reduced by any payment thereon) does not increase. “Permitted Transfers” means (i) sales of Inventory in the ordinary course of business, (ii) exclusive and non-exclusive licenses and similararrangements for the use of Intellectual Property in the ordinary course of business and licenses that could not result in a legal transfer of title of the licensedproperty but that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discreet geographical areas outside ofthe United States in the ordinary course of business, or (iii) dispositions of worn-out, obsolete or surplus Equipment at fair market value in the ordinary courseof business, (iv) sales, transfers and assignments of the Investments set forth on Schedule 1B, and (v) other Transfers of assets having a fair market value of notmore than $250,000 in the aggregate in any fiscal year. “Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,limited liability company, institution, other entity or government. -4- “Preferred Stock” means at any given time any equity security issued by Borrower that has any rights, preferences or privileges senior toBorrower’s common stock. “Prepayment Charge” shall have the meaning assigned to such term in Section 2.5. “Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit,proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto. “Required Lenders” means at any time, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans thenoutstanding. “Registered Public Offering” means an offering of Borrower’s common stock pursuant to a registration statement under the Securities Act of1933 filed with and declared effective by the Securities and Exchange Commission. “SBA” shall have the meaning assigned to such term in Section 7.15. “SBIC” shall have the meaning assigned to such term in Section 7.15. “SBIC Act” shall have the meaning assigned to such term in Section 7.15. “SEC Filings” means all of the Borrower’s Quarterly Reports on Form 10-Q, annual Reports on Form 10-K and Current Reports on Form 8-Kand registration statements filed by the Borrower with the Securities and Exchange Commission since January 1, 2012 and made available to the publicthrough the EDGAR System. “Secured Obligations” means Borrower’s obligations under this Agreement and any Loan Document, including any obligation to pay anyamount now owing or later arising. “Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditionssatisfactory to Agent in its sole discretion. “Subordination Agreement” means any written subordination agreement among Borrower, Agent and the subordinating creditor thereunderregarding specific Subordinated Indebtedness, as applicable. “Subsidiary” means an entity, whether corporate, partnership, limited liability company, joint venture or otherwise, in which Borrowerowns or controls 50% or more of the outstanding voting securities, including each entity listed on Schedule 1 hereto. “Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in aprincipal amount not to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1. “Term Loan Advance” means any Term Loan funds advanced under this Agreement. “Term Loan Interest Rate” means for any day a floating per annum rate of interest equal to the greater of either (i) 9.35% plus the prime rateas reported in The Wall Street Journal minus 3.25%, and (ii) 9.35%. “Term Loan Maturity Date” means April 1, 2018. “Term Note” means a Promissory Note in substantially the form of Exhibit B. “Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned orhereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest. “Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, includingregistrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any Statethereof or any other country or any political subdivision thereof. “UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in theevent that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s Lien on anyCollateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction other than the State of California, then theterm “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereofrelating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions. “Warrant Agreement” means a completed and executed Warrant Agreement in substantially the form attached hereto as Exhibit J. Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or“Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement. Unless otherwise specifically providedherein, any accounting term used in this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance withGAAP, and all financial computations hereunder shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined herein or in theother Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC. -5- SECTION 2. THE LOAN 2.1 [Intentionally Omitted.] 2.2 Term Loan. (a) Advances. Subject to the terms and conditions of this Agreement, Lender will severally (and not jointly) make in an amountnot to exceed its respective Term Commitment, and Borrower agrees to draw, a Term Loan Advance of $2,500,000 on the Closing Date. Beginningafter the Closing Date, and continuing until July 31, 2015, Borrower may request an additional Term Loan Advance in an aggregate amount of up to$2,500,000 (the “Second Advance”). In the event that Borrower shall request the Second Advance then Lender will severally (and not jointly) makethe Second Advance in an amount not to exceed its respective additional Term Commitment. The aggregate outstanding Term Loan Advances maybe up to the Maximum Term Loan Amount. (b) Advance Request. To obtain a Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at leastfive (5) Business Days before the Advance Date) to Agent. Lender shall fund the Term Loan Advance in the manner requested by the AdvanceRequest provided that each of the applicable conditions precedent to such Term Loan Advance (Section 4.1 and Section 4.3 with respect to aninitial Advance Request and Section 4.2 and Section 4.3 with respect to any subsequent Advance Request) is satisfied as of the requested AdvanceDate. (c) Interest. The principal balance of each Term Loan Advance shall bear interest thereon from such Advance Date at the TermLoan Interest Rate based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed. The Term LoanInterest Rate will float and change on the day the Prime Rate changes from time to time. (d) Payment. Borrower will pay interest on each Term Loan Advance on the first day of each month, beginning the month after theAdvance Date and continuing during the Interest-Only Period. Borrower shall repay the aggregate Term Loan principal balance that is outstandingon the day immediately preceding the Amortization Date, in equal monthly installments of principal and interest (mortgage style) beginning on theAmortization Date and continuing on the first Business Day of each month thereafter until the Secured Obligations are repaid. The entire Term Loanprincipal balance and all accrued but unpaid interest hereunder, shall be due and payable on Term Loan Maturity Date. Borrower shall make allpayments under this Agreement without setoff, recoupment or deduction and regardless of any counterclaim or defense. Lender will initiate debitentries to the Borrower’s account as authorized on the ACH Authorization on each payment date of all periodic obligations payable to Lender undereach Term Advance. (e) Optional Payment in Cash or Conversion to Common Stock of Monthly Amount or Prepayment Principal Amount. (i) Borrower Election for Payment in Cash or Conversion to Common Stock. Subject to satisfaction of theConversion Conditions and compliance with the other terms and conditions of this Section 2.2(e), Borrower may elect to pay, in whole or in part,any regularly scheduled installment of principal (a “Principal Installment Payment”) up to an aggregate maximum amount of $500,000 byconverting a portion of the principal of the Term Loan into shares of Common Stock in lieu of payment in cash (such option, the “ConversionOption”). In order to validly exercise a Conversion Option, Borrower (A) must deliver written notice thereof, in the form attached hereto as ExhibitI-1, to Agent (a “Borrower Conversion Election Notice”) five (5) days prior to the applicable due date of the Principal Installment Payment (the“Principal Installment Due Date”) and (B) shall notify the Borrower’s transfer agent of the number of shares of Common Stock to be registered in thename of each Lender by no later than the first trading day following the applicable Principal Installment Due Date (such date, the “Delivery Date”)such aggregate number of shares of Common Stock to (ii) be issued to Lender with respect to such Borrower Conversion Election Notice, as determined in accordancewith this Section 2.2(e) (which shares shall be free of any restrictions on transfer), by no later than the first trading day following the applicableDelivery Date. All payments in respect of a Principal Installment Payment shall be made in cash, unless (i) Borrower timely delivers a BorrowerConversion Election Notice in accordance with the immediately preceding sentence, (ii) Borrower timely credits the shares of Common Stock toeach Lender, free of restrictive legends, in accordance with this Section 2.2(e) and (iii) the Conversion Conditions are satisfied in respect of suchpayment. A Borrower Conversion Election Notice, once delivered by Borrower, shall be irrevocable unless otherwise agreed, in writing, by eachLender. If Borrower elects to make a Principal Installment Payment, in whole or in part, through conversion of such amount into shares of CommonStock, the number of such shares of Common Stock to be issued in respect of such Principal Installment Payment shall be equal to the numberdetermined by dividing (x) the principal amount to be paid in shares of Common Stock by (y) the Fixed Conversion Price. For purposes hereof, the“Fixed Conversion Price” shall be $1.293; provided, however, that upon the occurrence of any stock split, stock dividend, combination of shares orreverse stock split pertaining to the Common Stock, the Fixed Conversion Price shall be proportionately increased or decreased as necessary toreflect the proportionate change in the shares of Common Stock issued and outstanding as a result of such stock split, stock dividend, combinationof shares or reverse stock split. Any shares of Common Stock issued pursuant to a Borrower Conversion Election Notice shall be deemed to beissued upon a partial conversion of the principal of the Note. -6- (iii) Conversion Conditions. Notwithstanding the foregoing, Borrower’s right to deliver, and Lender’sobligation to accept, shares of Common Stock in lieu of payment in cash of a Principal Installment Payment is conditioned on the satisfaction ofeach of the following conditions (the “Conversion Conditions”) as of such Delivery Date: (A) the closing price of the shares of Common Stock asreported by Bloomberg, L.P. on the Borrower’s Principal Market for each of the seven (7) consecutive trading days immediately preceding theDelivery Date shall be greater than or equal to the Fixed Conversion Price; (B) the Common Stock issued in connection with any such payment doesnot exceed 15% of the total trading volume of the Common Stock for the twenty-two (22) consecutive trading days immediately prior to andincluding such Delivery Date; (C) only one Borrower Conversion Election Notice may be given in any calendar month during the amortizationperiod; (D) the aggregate principal amount to be paid in shares of Common Stock pursuant to Section 2.2(e)(i) of this Agreement shall not exceedFive Hundred Thousand Dollars ($500,000); (E) the Common Stock is (and was on each of the twenty-two (22) consecutive trading daysimmediately preceding such Delivery Date) quoted or listed on the Borrower’s Principal Market or other national securities exchange; (F) aregistration statement is effective and available for the resale of all of the shares of Common Stock to be delivered on such Delivery Date, or suchshares of Common Stock are eligible for resale to the public pursuant to Rule 144 without any limitation; (G) after giving effect to the issuance ofsuch shares of Common Stock to Lender, Lender would not (1) beneficially own, together with its Affiliates, Common Stock in excess of thelimitations specified in subsection (d) below and (2) have been issued shares of Common Stock pursuant to all Borrower Conversion ElectionNotices in (iv) an aggregate amount in excess of the Cap, as defined in subsection 2.2(e)(iv) below; (H) as of such DeliveryDate, there is no outstanding Event of Default and there is no breach or default that, if left uncured, would result in an Event of Default; and (I)Borrower shall have sufficient authorized but unissued shares of Common Stock to provide for the issuance of the shares of Common Stock pursuantto the Borrower Conversion Election Notice. If any of the Conversion Conditions are not satisfied as of a Delivery Date, Borrower shall not bepermitted to pay, and Lender shall not be obligated to accept, the Principal Installment Payment in shares of Common Stock, and Borrower shallinstead pay such principal amount in cash; provided, however, that the Conversion Conditions above may be waived by a writing executed by bothBorrower and the Agent. In the event Borrower is relying upon an effective registration statement to satisfy clause (F) of the Conversion Conditions,each of Borrower and Lender shall provide customary indemnification to one another with respect to such registration statement in a form acceptableto Borrower and Lender. By no later than the third trading day following the Delivery Date, Borrower shall (provided that Borrower’s transfer agentis participating in the Fast Automated Securities Transfer Program of the Depository Trust Company) credit to Lender the shares of Common Stockto be delivered by Borrower with respect to the portion of the Principal Installment Payment being paid in shares of CommonStock. Notwithstanding any other provision of this Agreement, Borrower and Lender agree that no exercise of any Conversion Option by Borroweror Lender and no issuance of any shares of Common Stock pursuant to this Section 2.2(e) shall take place, during any period in which Borrower’scounsel has advised Borrower that sales of Common Stock should not be made under applicable law or regulation of any federal or stategovernmental authority or regulatory body. (v) Lender Election for Payment in Cash or Conversion to Common Stock. Subject to satisfaction of theConversion Conditions and compliance with the other terms and conditions of this Section 2.2(e), with respect to any Principal Installment Paymentscheduled from Borrower, a Lender may elect to receive such payment in Common Stock by requiring Borrower to effect a Conversion Option. Inorder to effect such a Conversion Option, the Lender shall deliver a conversion election notice in the form attached hereto as Exhibit I-2 (a “LenderConversion Election Notice”) to Borrower five (5) days prior to the applicable Principal Installment Due Date. Borrower shall notify Borrower’stransfer agent of the number of shares of Common Stock to be registered in the name of each Lender by no later than the first trading day followingthe applicable Delivery Date, with respect to such Lender Conversion Election Notice, as determined in accordance with this Section 2.2(e) (whichto the extent Lender has held the applicable Note for at least six (6) months and the other requirements of Rule 144 (or its successor rule) under theSecurities Act of 1933, as amended, are otherwise also satisfied at the time of the applicable conversion, such shares shall be free of any restrictionson transfer), by no later than the first trading day following the applicable Delivery Date. A Lender Conversion Election Notice, once delivered by aLender, shall be irrevocable unless otherwise agreed, in writing, by Borrower. If Lender elects to receive a Principal Installment Payment in whole orin part, through conversion of such amount into shares of Common Stock, the number of such shares of Common Stock to be(vi) issued in respect of such Principal Installment Payment shall be equal to the number determined by dividing(x) the principal amount to be paid in shares of Common Stock by (y) the Fixed Conversion Price; provided, however, that upon the occurrence ofany stock split, stock dividend, combination of shares or reverse stock split pertaining to the Common Stock, the Fixed Conversion Price shall beproportionately increased or decreased as necessary to reflect the proportionate change in the shares of Common Stock issued and outstanding as aresult of such stock split, stock dividend, combination of shares or reverse stock split. Any shares of Common Stock issued pursuant to a LenderConversion Election Notice shall be deemed to be issued upon partial conversion of the principal of the Note. Notwithstanding the foregoing,Lender’s right to receive, and Borrower’s obligation to issue, shares of Common Stock in lieu of payment in cash of a Principal Installment Paymentis conditioned on the satisfaction of each of the Conversion Conditions (other than 2.2(e)(ii)(C)) and each of the following additional conditions asof such Delivery Date: (A) only one Lender Conversion Election Notice may be given in any calendar month during the amortization period; and(B) the aggregate principal amount to be paid in shares of Common Stock pursuant to Section 2.2(e)(iii) of this Agreement shall not exceed FiveHundred Thousand Dollars ($500,000). (vii) Beneficial Ownership Limitation. Notwithstanding any provision herein to the contrary, Lender, togetherwith its Affiliates, shall not be permitted to beneficially own a number of shares of Common Stock (other than shares that may be deemedbeneficially owned except for being subject to a limitation analogous to the limitation contained in this Section 2.2(e)(iv) in excess of 9.99% of thenumber of shares of Common Stock then issued and outstanding, it being the intent of Borrower and Lender that Lender, together with its Affiliates,not be deemed at any time to have the power to vote or dispose of greater than 9.99% of the number of shares of Common Stock issued andoutstanding at any time; provided, however, that Lender shall have the right, upon 61 days’ prior written notice to Borrower, to waive the 9.99%limitation of this subsection. Notwithstanding anything contained herein to the contrary, Borrower shall not be required to issue or permitted toissue to Lender, and Lender shall not be required or permitted to accept, shares of Common Stock pursuant to a Conversion Election Notice if and tothe extent such issuance, when taking together with all other issuances pursuant to prior Conversion Election Notices, would result in (A) theissuance of more than 19.99% of the Common Stock outstanding as of the date of this Agreement or (B) Lender, together with its Affiliates,beneficially owning in excess of 19.99% of the outstanding Common Stock (each of clauses (A) and (B) are referred to herein as the “Cap”). As usedherein, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934Act”). For any reason at any time, upon written or oral request of Lender, Borrower shall within two business days confirm orally and in writing toLender the number of shares of Common Stock then issued and outstanding as of any given date. -7- (viii) Rule 144. With a view to making available to Lender the benefits of Rule 144 (or its successor rule) andany other rule or regulation of the Securities and Exchange Commission (the “SEC”) that may at any time permit Lender to sell shares of CommonStock issued pursuant to Section 2.2(e) of this Agreement to the public without registration, Borrower covenants and agrees to: (i) make and keeppublic information available, as those terms are understood and defined in Rule 144, until six (6) months after such date as all of the shares ofCommon Stock issued pursuant to Section 2.2(e) of this Agreement may be sold without restriction by Lender pursuant to Rule 144 or any other ruleof similar effect; (ii) file with the SEC in a timely manner (or obtain extensions in respect thereof and file within the applicable grace period) allreports and other documents required of Borrower under the 1934 Act; and (iii) furnish to Lender upon request, as long as Lender owns any shares ofCommon Stock issued pursuant to Section 2.2(e) of this Agreement, such information as may be reasonably requested in order to avail Lender of anyrule or regulation of the SEC that permits the selling of any such shares of Common Stock without registration. (ix) Stock Reservation. Borrower covenants and agrees to reserve from its duly authorized capital stock not lessthan the number of shares of Common Stock that may be issuable upon payment of any Principal Installment Payment pursuant to Section 2.2(e) ofthis Agreement. Borrower further represents, warrants and covenants that, upon issuance of any shares of Common Stock pursuant to Section 2.2(e)of this Agreement, such shares of Common Stock shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights,taxes, liens and charges with respect to the issue thereof. (x) Authorization. For so long as Lender holds any shares of Common Stock issued pursuant to Section 2.2(e) ofthis Agreement, Borrower shall maintain the Common Stock’s authorization for listing on the Borrower’s Principal Market and Borrower shall nottake any action which would reasonably be expected to result in the delisting or suspension of the Common Stock on the Borrower’s PrincipalMarket . 2.3 Maximum Interest. Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent notto contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shalldeem applicable hereto (which under the laws of the State of California shall be deemed to be the laws relating to permissible rates of interest oncommercial loans) (the “Maximum Rate”). If a court of competent jurisdiction shall finally determine that Borrower has actually paid to Lender anamount of interest in excess of the amount that would have been payable if all of the Secured Obligations had at all times borne interest at theMaximum Rate, then such excess interest actually paid by Borrower shall be applied as follows: first, to the payment of the Secured Obligationsconsisting of the outstanding principal; second, after all principal is repaid, to the payment of Lender’s accrued interest, costs, expenses, professionalfees and any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrower. 2.4 Default Interest. In the event any payment is not paid on the scheduled payment date, an amount equal to four percent (4%) ofthe past due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, allSecured Obligations, including principal, interest, compounded interest, and professional fees, shall bear interest at a rate per annum equal to the rateset forth in 2.2(c), plus four percent (4%) per annum. In the event any interest is not paid when due hereunder, delinquent interest shall be added toprincipal and shall bear interest on interest, compounded at the rate set forth in Section 2.2(c) or Section 2.4, as applicable. 2.5 Prepayment. At its option upon at least seven (7) Business Days prior notice to Agent, Borrower may prepay all, but not lessthan all, of the outstanding Advances by paying the entire principal balance, all accrued and unpaid interest thereon, together with a prepaymentcharge equal to the following percentage of the Advance amount being prepaid: if such Advance amounts are prepaid in any of the first twelve (12)months following the Closing Date, 3.0%; after twelve (12) months but prior to twenty four (24) months, 2.0%; and thereafter, 1.0% (each, a“Prepayment Charge”). Borrower agrees that the Prepayment Charge is a reasonable calculation of Lender’s lost profits in view of the difficultiesand impracticality of determining actual damages resulting from an early repayment of the Advances. Borrower shall prepay the outstandingamount of all principal and accrued interest through the prepayment date and the Prepayment Charge upon a Change in Control. 2.6 End of Term Charge. On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays theoutstanding Secured Obligations, or (iii) the date that the Secured Obligations become due and payable, Borrower shall pay Lender a charge of3.75% of all amounts drawn under the Term Loan. Notwithstanding the required payment date of such charge, it shall be deemed earned by Lenderas of the Closing Date. 2.7 Notes. If so requested by Lender by written notice to Borrower, then Borrower shall execute and deliver to Lender (and/or, ifapplicable and if so specified in such notice, to any Person who is an assignee of Lender pursuant to Section 11.13) (promptly after the Borrower’sreceipt of such notice) a Note or Notes to evidence Lender’s Loans. 2.8 Pro Rata Treatment. Each payment (including prepayment) on account of any fee and any reduction of the Term Loans shallbe made pro rata according to the Term Commitments of the relevant Lender. -8- SECTION 3. SECURITY INTEREST 3.1 As security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all theSecured Obligations, Borrower grants to Agent a security interest in all of Borrower’s right, title, and interest in and to the following personalproperty whether now owned or hereafter acquired (collectively, the “Collateral”): (a) Receivables; (b) Equipment; (c) Fixtures; (d) GeneralIntangibles (other than Intellectual Property); (e) Inventory; (f) Investment Property (but excluding thirty-five percent (35%) of the capital stock ofany foreign Subsidiary that constitutes a Permitted Investment); (g) Deposit Accounts; (h) Cash; (i) Goods; and all other tangible and intangiblepersonal property of Borrower whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and whereverlocated, and any of Borrower’s property in the possession or under the control of Agent; and, to the extent not otherwise included, all Proceeds ofeach of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing; provided,however, that the Collateral shall include all Accounts and General Intangibles that consist of rights to payment and proceeds from the sale,licensing or disposition of all or any part, or rights in, the Intellectual Property (the “Rights to Payment”). Notwithstanding the foregoing, if ajudicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property to the extent Borrowerhas rights there in is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of thedate of this Agreement, include such Intellectual Property to the extent necessary to permit perfection of Agent’s security interest in the Rights toPayment. 3.2 Notwithstanding the broad grant of the security interest set forth in Section 3.1, above, the Collateral shall not include morethan 65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by Borrower of any Foreign Subsidiarywhich shares entitle the holder thereof to vote for directors or any other matter. SECTION 4. CONDITIONS PRECEDENT TO LOAN The obligations of Lender to make the Loan hereunder are subject to the satisfaction by Borrower of the following conditions: 4.1 Initial Advance. On or prior to the Closing Date, Borrower shall have delivered to Agent the following: (a) executed originals of the Loan Documents, Account Control Agreements, and all other documents and instruments reasonablyrequired by Agent to effectuate the transactions contemplated hereby or to create and perfect the Liens of Agent with respect to all Collateral, in allcases in form and substance reasonably acceptable to Agent; (b) certified copy of resolutions of Borrower’s board of directors evidencing approval of (i) the Loan and other transactionsevidenced by the Loan Documents; and (ii) the Warrant Agreement and transactions evidenced thereby; (c) certified copies of the Certificate of Incorporation and the Bylaws, as amended through the Closing Date, of Borrower; (d) a certificate of good standing for Borrower from its state of incorporation and similar certificates from all other jurisdictions inwhich it does business and where the failure to be qualified would have a Material Adverse Effect; (e) payment of the Facility Charge and reimbursement of Agent’s and Lender’s current reasonable and documented expensesreimbursable pursuant to this Agreement, which amounts may be deducted from the initial Advance; (f) evidence of insurance contemplated pursuant to Section 6.1 and 6.2; and (g) such other documents as Agent may reasonably request. 4.2 Second Advance. On or before the Advance Date of the Second Advance, Agent shall have conducted an inspection/fieldexamination of the Collateral, the results of which shall be reasonably satisfactory to Agent. Agent shall schedule such inspection promptly afterBorrower’s request, it being the expectation of Borrower and Lender to have the inspection results finalized before March 31, 2015. 4.3 All Advances. On each Advance Date: (a) Agent shall have received (i) an Advance Request for the relevant Advance as required by 2.2(b), each duly executed byBorrower’s Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Agent may reasonably request. (b) The representations and warranties set forth in this Agreement and in Section 5 and in the Warrant shall be true and correct inall material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent suchrepresentations and warranties expressly relate to an earlier date. (c) Borrower shall be in compliance in all material respects with all the terms and provisions set forth herein and in each other LoanDocument on its part to be observed or performed, and at the time of and immediately after such Advance no Event of Default shall have occurredand be continuing. (d) Each Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Dateas to the matters specified in paragraphs (b) and (c) of this Section 4.3 and as to the matters set forth in the Advance Request. 4.4 No Default. As of the Closing Date and each Advance Date, (i) no fact or condition exists that would (or would, with thepassage of time, the giving of notice, or both) constitute an Event of Default and (ii) no event that has had or could reasonably be expected to have aMaterial Adverse Effect has occurred and is continuing. -9- SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER Borrower represents and warrants that: 5.1 Corporate Status. Borrower is a corporation duly organized, legally existing and in good standing under the laws of the Stateof Delaware, and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or location of its properties requiresuch qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse Effect. Borrower’s present name,former names (if any), locations, place of formation, tax identification number, organizational identification number and other information arecorrectly set forth in Exhibit C, as may be updated by Borrower in a written notice (including any Compliance Certificate) provided to Agent afterthe Closing Date. 5.2 Collateral. Borrower owns the Collateral and the Intellectual Property, free of all Liens, except for Permitted Liens. Borrowerhas the power and authority to grant to Agent a Lien in the Collateral as security for the Secured Obligations . 5.3 Consents. Borrower’s execution, delivery and performance of this Agreement and all other Loan Documents, and Borrower’sexecution of the Warrant, (i) have been duly authorized by all necessary corporate action of Borrower, (ii) will not result in the creation orimposition of any Lien upon the Collateral, other than Permitted Liens and the Liens created by this Agreement and the other Loan Documents, (iii)do not violate any provisions of Borrower’s Certificate or Articles of Incorporation (as applicable), bylaws, or to the knowledge of the Borrower, any,law, regulation, order, injunction, judgment, decree or writ to which Borrower is subject and (iv) except as described on Schedule 5.3, do not violateany material contract or agreement that has been filed with the SEC as an exhibit to any SEC Filing or require the consent or approval of any otherPerson which has not already been obtained. The individual or individuals executing the Loan Documents and the Warrant Agreement on behalf ofthe Borrower are duly authorized to do so. 5.4 Material Adverse Effect. No event that has had or could reasonably be expected to have a Material Adverse Effect has occurredand is continuing. Borrower is not aware of any event likely to occur that is reasonably expected to result in a Material Adverse Effect. 5.5 Actions Before Governmental Authorities. Except as described on Schedule 5.5, there are no actions, suits or proceedings atlaw or in equity or by or before any governmental authority now pending or, to the knowledge of Borrower, threatened against or affecting Borroweror its property. 5.6 Laws. To the knowledge of the Borrower, Borrower is not in violation of any law, rule or regulation, or in default with respectto any judgment, writ, injunction or decree of any governmental authority, where such violation or default is reasonably expected to result in aMaterial Adverse Effect. Borrower is not in default in any material respect under any provision of any material agreement or instrument, in eachinstance that is attached as an exhibit to an SEC Filing evidencing Indebtedness, or any other material agreement to which it is a party or by which itis bound. 5.7 Information Correct and Current. No information, report, Advance Request, financial statement, exhibit or schedule furnished,by or on behalf of Borrower to Agent in connection with any Loan Document or included therein or delivered pursuant thereto contained, containsor will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, inthe light of the circumstances under which they were, are or will be made, not misleading at the time such statement was made or deemed made.Additionally, any and all financial or business projections provided by Borrower to Agent, whether prior to or after the Closing Date, shall be (i)provided in good faith and based on the most current data and information available to Borrower, and (ii) the most current of such projectionsprovided to Borrower’s Board of Directors. 5.8 Tax Matters. Except as described on Schedule 5.8, (a) Borrower has filed all federal, state and local tax returns that it isrequired to file, (b) Borrower has duly paid or fully reserved for all taxes or installments thereof (including any interest or penalties) as and when due,which have or may become due pursuant to such returns, and (c) Borrower has paid or fully reserved for any tax assessment received by Borrower forthe three (3) years preceding the Closing Date, if any (including any taxes being contested in good faith and by appropriate proceedings). 5.9 Intellectual Property Claims. Except as disclosed in Schedule 5.9, Borrower is the sole owner of, or otherwise has the right touse, the Intellectual Property. Except as described on Schedule 5.9, (i) each of the material Copyrights, Trademarks and Patents is valid andenforceable, (ii) no material part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and (iii) no claim has beenmade to Borrower that any material part of the Intellectual Property violates the rights of any third party. Exhibit D is a true, correct and complete listof each of Borrower’s Patents, registered Trademarks, registered Copyrights, and material agreements filed as an Exhibit to an SEC Filing underwhich Borrower licenses Intellectual Property from third parties (other than shrink-wrap software licenses), together with application or registrationnumbers, as applicable, owned by Borrower or any Subsidiary, in each case as of the Closing Date. Borrower is not in material breach of, nor hasBorrower failed to perform any material obligations under, any of the foregoing contracts, licenses or agreements and, to Borrower’s knowledge, nothird party to any such contract, license or agreement is in material breach thereof or has failed to perform any material obligations thereunder. 5.10 Intellectual Property. Except as described on Schedule 5.10, Borrower has, or in the case of any proposed business, will have,all material rights with respect to Intellectual Property necessary in the operation or conduct of Borrower’s business as currently conducted andproposed to be conducted by Borrower. Without limiting the generality of the foregoing, and in the case of Licenses, except for restrictions that areunenforceable under Division 9 of the UCC. Borrower owns or has the right to use, pursuant to valid licenses, all software development tools, libraryfunctions, compilers and all other third-party software and other items that are used in the design, development, promotion, sale, license,manufacture, import, export, use or distribution of Borrower Products. -10- 5.11 Borrower Products. Except as described on Schedule 5.11, no Intellectual Property owned by Borrower or Borrower Producthas been or is subject to any actual or, to the knowledge of Borrower, threatened litigation, proceeding (including any proceeding in the UnitedStates Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement agreement orstipulation that restricts in any manner Borrower’s use, transfer or licensing thereof or that may affect the validity, use or enforceability thereof.There is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection with any litigation orproceeding that obligates Borrower to grant licenses or ownership interest in any future Intellectual Property related to the operation or conduct ofthe business of Borrower or Borrower Products. Borrower has not received any written notice or claim, or, to the knowledge of Borrower, oral noticeor claim, challenging or questioning Borrower’s ownership in any Intellectual Property (or written notice of any claim challenging or questioningthe ownership in any licensed Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficialownership with respect thereto nor, to Borrower’s knowledge, is there a reasonable basis for any such claim. To the best of Borrower’s knowledge,neither Borrower’s use of its Intellectual Property nor the production and sale of Borrower Products infringes the Intellectual Property or other rightsof others. 5.12 Financial Accounts. Exhibit E, as may be updated by the Borrower in a written notice provided to Agent after the ClosingDate is a true, correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary maintains DepositAccounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding Investment Property, and such exhibit correctlyidentifies the name, address and telephone number of each bank or other institution, the name in which the account is held, a description of thepurpose of the account, and the complete account number therefor. 5.13 Employee Loans. Borrower has no outstanding loans to any employee, officer or director of the Borrower nor has Borrowerguaranteed the payment of any loan made to an employee, officer or director of the Borrower by a third party. 5.14 Capitalization and Subsidiaries. Borrower’s capitalization as of the Closing Date is set forth on Schedule 5.14 annexedhereto. Borrower does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments. Attached asSchedule 5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true, correct and complete list of eachSubsidiary. SECTION 6. INSURANCE; INDEMNIFICATION 6.1 Coverage. For so long as any Indebtedness the Secured Obligations pursuant to any of the Loan Documents remainoutstanding, Borrower shall cause to be carried and maintained commercial general liability insurance, on a claims-made form, against riskscustomarily insured against in Borrower’s line of business. Such risks shall include the risks of bodily injury, including death, property damage,personal injury, advertising injury, and contractual liability per the terms of the indemnification agreement found in Section 6.3. Borrower mustmaintain a minimum of $2,000,000 of commercial general liability insurance for each occurrence. Borrower has and agrees to maintain a minimumof $2,000,000 of directors’ and officers’ insurance for each occurrence and $5,000,000 in the aggregate. Borrower has and agrees to maintain aminimum of $2,000,000 of errors and omissions insurance in connection with its professional and consulting activities for each occurrence and$2,000,000 in the aggregate. So long as there are any Secured Obligations outstanding, Borrower shall also maintain a key man life insurancepolicy for the Chief Executive Officer/president in form and substance reasonably satisfactory to Agent, naming Agent as designated payee. So longas there are any Secured Obligations outstanding, Borrower shall also cause to be carried and maintained insurance upon the Collateral, insuringagainst all risks of physical loss or damage howsoever caused, in an amount not less than the full replacement cost of the Collateral, provided thatsuch insurance may be subject to standard exceptions and deductibles. 6.2 Certificates. Borrower shall deliver to Agent certificates of insurance that evidence Borrower’s compliance with its insuranceobligations in Section 6.1 and the obligations contained in this Section 6.2. Borrower’s insurance certificate shall state Agent is an additionalinsured for commercial general liability, a designated payee for the key man life insurance policy, a loss payee for all risk property damageinsurance, subject to the insurer’s approval, and a loss payee for property insurance and additional insured for liability insurance for any futureinsurance that Borrower may acquire from such insurer. Attached to the certificates of insurance will be additional insured endorsements for liabilityand lender’s loss payable endorsements in form and substance reasonably acceptable to the Agent for all risk property damage insurance. Allcertificates of insurance will provide for a minimum of ten (10) days advance written notice to Agent of cancellation or due to a non-payment ofpremium. 6.3 Indemnity. Borrower agrees to indemnify and hold Agent, Lender and their officers, directors, employees, agents, in-houseattorneys, representatives and shareholders (each, an “Indemnified Person”) harmless from and against any and all claims, costs, expenses, damagesand liabilities (including such claims, costs, expenses, damages and liabilities based on liability in tort, including strict liability in tort), includingreasonable attorneys’ fees and disbursements and other costs of investigation or defense (including those incurred upon any appeal) (collectively,“Liabilities”), that may be instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended,suspended or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or arisingout of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith, or arising out of thedisposition or utilization of the Collateral, excluding in all cases Liabilities to the extent resulting primarily from any Indemnified Person’s grossnegligence or willful misconduct. Borrower agrees to pay, and to save Agent and Lender harmless from, any and all liabilities with respect to, orresulting from any delay in paying, any and all excise, sales or other similar taxes (excluding taxes imposed on or measured by the net income ofAgent or Lender) that may be payable or determined to be payable with respect to any of the Collateral or this Agreement. In no event shall anyIndemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits,business or anticipated savings). -11- SECTION 7. COVENANTS OF BORROWER Borrower agrees as follows: 7.1 Financial Reports. Borrower shall furnish to Agent unless otherwise made available in a filing with the Securities andExchange Commission on the EDGAR System with a link to the applicable filing emailed to Agent at the addresses set forth below, the financialstatements and reports listed hereinafter (the “Financial Statements”): (a) as soon as practicable (and in any event within 30 days) after the end of each month, unaudited interim and year-to-datefinancial statements as of the end of such month (prepared on a consolidated and consolidating basis, if applicable), including balance sheet andrelated statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of anymaterial litigation by or, to the knowledge of the Borrower, against Borrower) or any other occurrence that would reasonably be expected to have aMaterial Adverse Effect, all certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared inaccordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year end adjustments, and (iii) they do not containcertain non-cash items that are customarily included in quarterly and annual financial statements; (b) as soon as practicable (and in any event within 45 days) after the end of each calendar quarter, unaudited interim and year-to-date financial statements as of the end of such calendar quarter (prepared on a consolidated and consolidating basis, if applicable), includingbalance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including thecommencement of any material litigation by or against Borrower) or any other occurrence that would reasonably be expected to have a MaterialAdverse Effect, certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordancewith GAAP, except (i) for the absence of footnotes, and (ii) that they are subject to normal year end adjustments; as well as the most recentcapitalization table for Borrower, including the weighted average exercise price of employee stock options; (c) as soon as practicable (and in any event within one hundred fifty (150) days) after the end of each fiscal year, unqualifiedaudited financial statements as of the end of such year (prepared on a consolidated and consolidating basis, if applicable), including balance sheetand related statements of income and cash flows, and setting forth in comparative form the corresponding figures for the preceding fiscal year,certified by the Borrower’s current independent auditors or by a firm of independent certified public accountants selected by Borrower andreasonably acceptable to Agent, accompanied by any management report from such accountants; (d) as soon as practicable (and in any event within 30 days) after the end of each month, a Compliance Certificate in the form ofExhibit F; (e) as soon as practicable (and in any event within 15 days) after the end of each month, a report showing agings of accountsreceivable and accounts payable; (f) promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reportsthat Borrower has made available to holders of its Preferred Stock (as applicable) and copies of any regular, periodic and special reports orregistration statements that Borrower files with the Securities and Exchange Commission or any governmental authority that may be substitutedtherefor, or any national securities exchange; (g) at the same time and in the same manner as it gives to its directors, copies of all notices, minutes, consents and other materialsthat Borrower provides to its directors in connection with meetings of the Board of Directors, and within 30 days after each such meeting, minutes ofsuch meeting, provided that in all cases Borrower may exclude confidential compensation information and all information pertaining to executivesessions and corporate financings. (h) financial and business projections promptly following their approval by Borrower’s Board of Directors, and in any event,within 45 days following the end of Borrower’s fiscal year, as well as budgets, operating plans and other financial information reasonably requestedby Agent. Borrower shall not (without the consent of Agent, such consent not to be unreasonably withheld or delayed), make any change in its (a) accountingpolicies or reporting practices, except as required by GAAP or (b) fiscal years or fiscal quarters. The fiscal year of Borrower shall end on the lastSaturday of the calendar year. The executed Compliance Certificate may be sent via facsimile to Agent at (650) 473-9194 or via e-mail to cnorman@herculestech.com. All FinancialStatements required to be delivered pursuant to clauses (a), (b) and (c) shall be sent via e-mail to financialstatements@herculestech.com with a copy tocnornman@herculestech.com provided, that if e-mail is not available or sending such Financial Statements via e-mail is not possible, they shall besent via facsimile to Agent at: (866) 468-8916, attention Chief Credit Officer. 7.2 Management Rights. Borrower shall permit any representative that Agent or Lender authorizes, including its attorneys andaccountants, to inspect the Collateral and examine and make copies and abstracts of the books of account and records of Borrower at reasonabletimes and upon reasonable notice during normal business hours. Such inspections shall be conducted no more often than once every six monthsunless an Event of Default has occurred and is continuing, in which case such inspections shall occur as often as Lender shall determine isappropriate. In addition, any such representative shall have the right to meet with management and officers of Borrower to discuss such books ofaccount and records. In addition, Agent or Lender shall be entitled at reasonable times and intervals to consult with and advise the management andofficers of Borrower concerning significant business issues affecting Borrower. Such consultations shall not unreasonably interfere with Borrower’sbusiness operations. The parties intend that the rights granted Agent and Lender shall constitute “management rights” within the meaning of 29C.F.R Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by Agent or Lender with respect to any business issuesshall not be deemed to give Agent or Lender, nor be deemed an exercise by Agent or Lender of, control over Borrower’s management or policies. -12- 7.3 Further Assurances. Borrower shall from time to time execute, deliver and file, alone or with Agent, any financing statements,security agreements, collateral assignments, notices, control agreements, or other documents reasonably requested by Agent to perfect or give thehighest priority to Agent’s Lien on the Collateral. Borrower shall from time to time procure any instruments or documents as may be requested byAgent, and take all further action that may be necessary or desirable, or that Agent may reasonably request, to perfect and protect the Liens grantedhereby and thereby. In addition, and for such purposes only, Borrower hereby authorizes Agent to execute and deliver on behalf of Borrower and tofile such financing statements, collateral assignments, notices, control agreements, security agreements and other documents without the signature ofBorrower either in Agent’s name or in the name of Agent as agent and attorney-in-fact for Borrower. Borrower shall protect and defend Borrower’stitle to the Collateral and Agent’s Lien thereon against all Persons claiming any interest adverse to Borrower or Agent other than Permitted Liens. 7.4 Indebtedness. Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, orpermit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower anobligation to prepay any Indebtedness, except for the conversion of Indebtedness into equity securities and the payment of cash in lieu of fractionalshares in connection with such conversion. 7.5 Collateral. Borrower shall at all times keep the Collateral, the Intellectual Property and all other property and assets used inBorrower’s business or in which Borrower now or hereafter holds any interest free and clear from any legal process or Liens whatsoever (except forPermitted Liens), and shall give Agent prompt written notice of any legal process affecting the Collateral, the Intellectual Property, such otherproperty and assets, or any Liens thereon, provided however, that the Collateral and such other property and assets may be subject to Permitted Liensexcept that there shall be no Liens whatsoever on Intellectual Property. Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’stitle to its assets from and against all Persons claiming any interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries at all timesto keep such Subsidiary’s property and assets free and clear from any legal process or Liens whatsoever (except for Permitted Liens, providedhowever, that there shall be no Liens whatsoever on Intellectual Property), and shall give Agent prompt written notice of any legal process affectingsuch Subsidiary’s assets. Borrower shall not agree with any Person other than Agent or Lender not to encumber its property. 7.6 Investments. Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permitany of its Subsidiaries so to do, other than Permitted Investments. 7.7 Distributions. Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or otherequity interest other than pursuant to employee, director or consultant repurchase plans or other similar agreements, provided, however, in each casethe repurchase or redemption price does not exceed the original consideration paid for such stock or equity interest, or (b) declare or pay any cashdividend or make a cash distribution on any class of stock or other equity interest, except that a Subsidiary may pay dividends or make distributionsto Borrower, or (c) lend money to any employees, officers or directors or guarantee the payment of any such loans granted by a third party in excessof $100,000 in the aggregate or (d) waive, release or forgive any Indebtedness owed by any employees, officers or directors in excess of $100,000 inthe aggregate. 7.8 Transfers. Except for Permitted Transfers, Borrower shall not voluntarily or involuntarily transfer, sell, lease, license, lend or inany other manner convey any equitable, beneficial or legal interest in any material portion of its assets. 7.9 Mergers or Acquisitions. Borrower shall not merge or consolidate, or permit any of its Subsidiaries to merge or consolidate,with or into any other business organization (other than mergers or consolidations of (a) a Subsidiary which is not a Borrower into anotherSubsidiary or into Borrower or (b) a Borrower into another Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all ofthe capital stock or property of another Person. 7.10 Taxes. Borrower and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (togetherwith any related interest or penalties) now or hereafter imposed or assessed against Borrower, Agent, Lender or the Collateral or upon Borrower’sownership, possession, use, operation or disposition thereof or upon Borrower’s rents, receipts or earnings arising therefrom. Borrower shall file onor before the due date therefor all personal property tax returns in respect of the Collateral. Notwithstanding the foregoing, Borrower may contest, ingood faith and by appropriate proceedings, taxes for which Borrower maintains adequate reserves therefor in accordance with GAAP. 7.11 Corporate Changes. Neither Borrower nor any Subsidiary shall change its corporate name, legal form or jurisdiction offormation without twenty (20) days’ prior written notice to Agent. Neither Borrower nor any Subsidiary shall suffer a Change in Control. NeitherBorrower nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it has provided prior written noticeto Agent; and (ii) such relocation shall be within the continental United States. Neither Borrower nor any Subsidiary shall relocate any item ofCollateral (other than (x) sales of Inventory in the ordinary course of business, (y) relocations of Equipment having an aggregate value of up to$150,000 in any fiscal year, and (z) relocations of Collateral from a location described on Exhibit C to another location described on Exhibit C)unless (i) it has provided prompt written notice to Agent, (ii) such relocation is within the continental United States and, (iii) if such relocation is to athird party bailee, it has delivered a bailee agreement in form and substance reasonably acceptable to Agent. -13- 7.12 Deposit Accounts. Neither Borrower nor any Subsidiary shall maintain any Deposit Accounts, or accounts holdingInvestment Property, except with respect to which Agent has an Account Control Agreement. 7.13 Borrower shall notify Agent of each Subsidiary formed subsequent to the Closing Date and, within 15 days of formation, shallcause any such Domestic Subsidiary to execute and deliver to Agent a Joinder Agreement. Notwithstanding the above, ChromaSolar, Inc. shall beexempt from the requirement to execute and deliver a Joinder Agreement until such time as its aggregate assets including revenues exceed $25,000. 7.14 Notification of Event of Default. Borrower shall notify Agent immediately of the occurrence of any Event of Default, suchnotice to be sent via facsimile to Agent. 7.15 Agent and Lender have received a license from the U.S. Small Business Administration (“SBA”) to extend loans as a smallbusiness investment company (“SBIC”) pursuant to the Small Business Investment Act of 1958, as amended, and the associated regulations(collectively, the “SBIC Act”). Portions of the loan to Borrower will be made under the SBA license and the SBIC Act. Addendum 1 to thisAgreement outlines various responsibilities of Agent, Lender and Borrower associated with an SBA loan, and such Addendum 1 is herebyincorporated in this Agreement. 7.16 Post-Closing Items. Borrower shall use its commercially reasonable efforts to deliver or cause to be delivered the documentslisted on Schedule 7.16 on or before the corresponding dates set forth on Schedule 7.16. SECTION 8. [RESERVED.] SECTION 9. EVENTS OF DEFAULT The occurrence of any one or more of the following events shall be an Event of Default: 9.1 Payments. Borrower fails to pay any amount due under this Agreement or any of the other Loan Documents on the due date,provided, however, that an Event of Default shall not occur on account of a failure to pay due solely to an administrative or operational error ofAgent in auto-debiting Borrower’s account, or of any depositary institution that is crediting by ACH or wiring such payment if Borrower had thefunds to make the payment when due and makes the payment within three (3) days following Borrower’s knowledge of such failure to pay; or 9.2 Covenants. Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement, orany of the other Loan Documents or any other agreement among Borrower, Agent and Lender, and (a) with respect to a default under any covenantunder this Agreement (other than under Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15 and 7.16), any other Loan Document or any other agreementamong Borrower, Agent and Lender, such default continues for more than fifteen (15) days after the earlier of the date on which (i) Agent or Lenderhas given notice of such default to Borrower and (ii) Borrower has actual knowledge of such default or (b) with respect to a default under any ofSections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15 and 7.16, the occurrence of such default; or 9.3 Material Adverse Effect. A circumstance has occurred that results in a Material Adverse Effect; or 9.4 Representations. Any representation or warranty made by Borrower in any Loan Document or in the Warrant shall have beenfalse or misleading in any material respect; or 9.5 Insolvency. Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts as theybecome due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file a voluntary petition inbankruptcy; or (iv) shall file any petition, answer, or document seeking for itself any reorganization, arrangement, composition, readjustment,liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent to such circumstances; or (v) shall seek orconsent to or acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower or of all or any substantial part (i.e., 33-1/3% or more)of the assets or property of Borrower; or (vi) shall cease operations of its business as its business has normally been conducted, or terminatesubstantially all of its employees; or (vii) Borrower or its directors or majority shareholders shall take any action initiating any of the foregoingactions described in clauses (i) through (vi); or (B) either (i) thirty (30) days shall have expired after the commencement of an involuntary actionagainst Borrower seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present orfuture statute, law or regulation, without such action being dismissed or all orders or proceedings thereunder affecting the operations or the businessof Borrower being stayed; or (ii) a stay of any such order or proceedings shall thereafter be set aside and the action setting it aside shall not be timelyappealed; or (iii) Borrower shall file any answer admitting or not contesting the material allegations of a petition filed against Borrower in any suchproceedings; or (iv) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings;or (v) thirty (30) days shall have expired after the appointment, without the consent or acquiescence of Borrower, of any trustee, receiver orliquidator of Borrower or of all or any substantial part of the properties of Borrower without such appointment being vacated; or 9.6 Attachments; Judgments. Any portion of Borrower’s assets is attached or seized, or a levy is filed against any such assets, or ajudgment or judgments is/are entered for the payment of money, individually or in the aggregate, of at least $100,000, or Borrower is enjoined or inany way prevented by court order from conducting any part of its business; -14- 9.7 Other Obligations. The occurrence of any default under any agreement or obligation of Borrower involving any Indebtednessin excess of $50,000, or the occurrence of any default under any agreement or obligation of Borrower that could reasonably be expected to have aMaterial Adverse Effect; 9.8 Enforcement Actions. The pursuit by the SEC of criminal and/or civil charges against Borrower and/or any of its current orformer officers and directors in connection with the Bluescience asset sale and any transactions related thereto, including without limitation theaccounting treatment of any equity or convertible note or notes; or 9.9 Notwithstanding any contrary provision of this Agreement, in the event that the Company shall fail to comply with Section2.2(e) of this Agreement for any reason, such failure by the Company to deliver shares of its Common Stock to the Lender shall not constitute anEvent of Default if the Borrower shall make the applicable Payment (including (a) the principal amount of the applicable Principal InstallmentPayment, and (b) the aggregate amount of any increase in the fair market value of the shares of Common Stock that were to have been delivered onthe payment date from the fair market value of such shares on the date the Borrower actually makes the applicable payment in Cash) in Cash in lieuof issuing the Lender the Common Stock contemplated in Section 2.2(e). SECTION 10. REMEDIES 10.1 General. Upon and during the continuance of any one or more Events of Default, (i) Agent may, at its option, accelerate anddemand payment of all or any part of the Secured Obligations together with a Prepayment Charge and declare them to be immediately due andpayable (provided, that upon the occurrence of an Event of Default of the type described in Section 9.5, all of the Secured Obligations shallautomatically be accelerated and made due and payable, in each case without any further notice or act), (ii) Agent may, at its option, sign and file inBorrower’s name any and all collateral assignments, notices, control agreements, security agreements and other documents it deems necessary orappropriate to perfect or protect the repayment of the Secured Obligations, and in furtherance thereof, Borrower hereby grants Agent an irrevocablepower of attorney coupled with an interest, and (iii) Agent may notify any of Borrower’s account debtors to make payment directly to Agent,compromise the amount of any such account on Borrower’s behalf and endorse Agent’s name without recourse on any such payment for depositdirectly to Agent’s account. Agent may exercise all rights and remedies with respect to the Collateral under the Loan Documents or otherwiseavailable to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon, or otherwisedispose of all or any part of the Collateral and the right to occupy, utilize, process and commingle the Collateral. All Agent’s rights and remediesshall be cumulative and not exclusive. 10.2 Collection; Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Agent may, at any time orfrom time to time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its then condition orfollowing any commercially reasonable preparation or processing, in such order as Agent may elect. Any such sale may be made either at public orprivate sale at its place of business or elsewhere. Borrower agrees that any such public or private sale may occur upon ten (10) calendar days’ priorwritten notice to Borrower. Agent may require Borrower to assemble the Collateral and make it available to Agent at a place designated by Agentthat is reasonably convenient to Agent and Borrower. The proceeds of any sale, disposition or other realization upon all or any part of the Collateralshall be applied by Agent in the following order of priorities: First, to Agent and Lender in an amount sufficient to pay in full Agent’s and Lender’s costs and professionals’ and advisors’ reasonable feesand expenses as described in Section 11.11; Second, to Lender in an amount equal to the then unpaid amount of the Secured Obligations (including principal, interest, and the DefaultRate interest), in such order and priority as Agent may choose in its sole discretion; and Finally, after the full, final, and indefeasible payment in Cash of all of the Secured Obligations, to any creditor holding a junior Lien on theCollateral, or to Borrower or its representatives or as a court of competent jurisdiction may direct. Agent shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with theobligations of a secured party under the UCC. 10.3 No Waiver. Agent shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any otherPerson, and Borrower expressly waives all rights, if any, to require Agent to marshal any Collateral. 10.4 Cumulative Remedies. The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers andremedies given by statute or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided hereinshall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent. -15- SECTION 11. MISCELLANEOUS 11.1 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective andvalid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall beineffective only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the remainingprovisions of this Agreement. 11.2 Notice. Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of processor other communication (including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents orwith respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received uponthe earlier of: (i) the day of transmission by facsimile or hand delivery or delivery by an overnight express service or overnight mail delivery service;or (ii) the third calendar day after deposit in the United States mails, with proper first class postage prepaid, in each case addressed to the party to benotified as follows: (a) If to Agent: HERCULES TECHNOLOGY GROWTH CAPITAL, INC. Legal DepartmentAttention: Chief Legal Officer and Chad Norman400 Hamilton Avenue, Suite 310Palo Alto, CA 94301Facsimile: 650-473-9194Telephone: 650-289-3060 (b) If to Lender: HERCULES TECHNOLOGY II, L.P.Legal DepartmentAttention: Chief Legal Officer and Chad Norman400 Hamilton Avenue, Suite 310Palo Alto, CA 94301Facsimile: 650-473-9194Telephone: 650-289-3060 (c) If to Borrower: CHROMADEX CORPORATIONAttention: Frank Jaksch, Chief Executive Officer10005 Muirlands Blvd., Suite GIrvine, CA 92618Facsimile: 949-356-1601Telephone: 949-419-0288 With a copy to:Sichenzia Ross Friedman Ference LLP61 Broadway, 32nd FloorNew York, NY 10006Attn: Harvey J. Kesner, Esq. Edward H. Schauder, Esq.Facsimile: 212-930-9725Telephone: 212-930-9700 or to such other address as each party may designate for itself by like notice. -16- 11.3 Entire Agreement; Amendments. (a) This Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto inrespect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure orconfidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereofor thereof (including Agent’s revised proposal letter dated August 6, 2014 and accepted by Borrower on August 13, 2014). (b) Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modifiedexcept in accordance with the provisions of this Section 11.3(b). The Required Lenders and Borrower party to the relevant Loan Document may, or,with the written consent of the Required Lenders, the Agent and the Borrower party to the relevant Loan Document may, from time to time, (i) enterinto written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to thisAgreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (ii)waive, on such terms and conditions as the Required Lenders or the Agent, as the case may be, may specify in such instrument, any of therequirements of this Agreement or the other Loan Documents or any default or Event of Default and its consequences; provided, however, that nosuch waiver and no such amendment, supplement or modification shall (A) forgive the principal amount or extend the final scheduled date ofmaturity of any Loan, extend the scheduled date of any amortization payment in respect of any Term Loan, reduce the stated rate of any interest orfee payable hereunder) or extend the scheduled date of any payment thereof, in each case without the written consent of each Lender directlyaffected thereby; (B) eliminate or reduce the voting rights of any Lender under this Section 11.3(b) without the written consent of such Lender; (C)reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights andobligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release a Borrower from itsobligations under the Loan Documents, in each case without the written consent of all Lenders; or (D) amend, modify or waive any provision ofSection 11.17 without the written consent of the Agent. Any such waiver and any such amendment, supplement or modification shall apply equallyto each Lender and shall be binding upon Borrower, the Lender, the Agent and all future holders of the Loans. 11.4 negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, thisAgreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring anyparty by virtue of the authorship of any provisions of this Agreement. 11.5 No Waiver. The powers conferred upon Agent and Lender by this Agreement are solely to protect its rights hereunder andunder the other Loan Documents and its interest in the Collateral and shall not impose any duty upon Agent or Lender to exercise any suchpowers. No omission or delay by Agent or Lender at any time to enforce any right or remedy reserved to it, or to require performance of any of theterms, covenants or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy to which Agent or Lender isentitled, nor shall it in any way affect the right of Agent or Lender to enforce such provisions thereafter. 11.6 Survival. All agreements, representations and warranties contained in this Agreement and the other Loan Documents or inany document delivered pursuant hereto or thereto shall be for the benefit of Agent and Lender and shall survive the execution and delivery of thisAgreement and the expiration or other termination of this Agreement. 11.7 Successors and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and bebinding on Borrower and its permitted assigns (if any). Borrower shall not assign its obligations under this Agreement or any of the other LoanDocuments without Agent’s express prior written consent, and any such attempted assignment shall be void and of no effect. Agent and Lender mayassign, transfer, or endorse its rights hereunder and under the other Loan Documents without prior notice to Borrower, and all of such rights shallinure to the benefit of Agent’s and Lender’s successors and assigns; provided, that, prior to the occurrence and the continuance of any Event ofDefault, neither Agent nor Lender shall assign, transfer, or endorse its rights hereunder and under the other Loan Documents to any party other thanan Affiliate of Agent or Lender without Borrower’s prior written consent which shall not be unreasonably withheld or delayed. 11.8 Governing Law. This Agreement and the other Loan Documents have been negotiated and delivered to Agent and Lender inthe State of California, and shall have been accepted by Agent and Lender in the State of California. Payment to Agent and Lender by Borrower ofthe Secured Obligations is due in the State of California. This Agreement and the other Loan Documents shall be governed by, and construed andenforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of anyother jurisdiction. 11.9 Consent to Jurisdiction and Venue. All judicial proceedings (to the extent that the reference requirement of Section 11.10 isnot applicable) arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state or federal courtlocated in the State of California. By execution and delivery of this Agreement, each party hereto generally and unconditionally: (a) consents tononexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or venue in Santa ClaraCounty, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocablyagrees to be bound by any judgment rendered thereby in connection with this Agreement or the other Loan Documents. Service of process on anyparty hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice setforth in Section 11.2, and shall be deemed effective and received as set forth in Section 11.2. Nothing herein shall affect the right to serve process inany other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction. -17- 11.10 Mutual Waiver of Jury Trial / Judicial Reference. (a) Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by anexperienced and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire thattheir disputes be resolved by a judge applying such applicable laws. EACH OF BORROWER, AGENT AND LENDER SPECIFICALLY WAIVESANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTYCLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, LENDER OR THEIRRESPECTIVE ASSIGNEE OR BY AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE AGAINST BORROWER. This waiver extends to allsuch Claims, including Claims that involve Persons other than Agent, Borrower and Lender; Claims that arise out of or are in any way connected tothe relationship among Borrower, Agent and Lender; and any Claims for damages, breach of contract, tort, specific performance, or any equitable orlegal relief of any kind, arising out of this Agreement, any other Loan Document. (b) If the waiver of jury trial set forth in Section 11.10(a) is ineffective or unenforceable, the parties agree that all Claims shall beresolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable refereeor, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara County, California. Such proceeding shall be conductedin Santa Clara County, California, with California rules of evidence and discovery applicable to such proceeding. (c) In the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.9, anyprejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by lawnotwithstanding that all Claims are otherwise subject to resolution by judicial reference. 11.11 Professional Fees. Borrower promises to pay Agent’s and Lender’s reasonable fees and expenses necessary to finalize theloan documentation, including but not limited to reasonable attorneys fees (not estimated to exceed $15,000), UCC searches, filing costs, and othermiscellaneous expenses. In addition, Borrower promises to pay any and all reasonable attorneys’ and other professionals’ fees and expenses incurredby Agent and Lender after the Closing Date in connection with or related to: (a) the Loan; (b) the administration, collection, or enforcement of theLoan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) theprotection, preservation, audit, field exam, sale, lease, liquidation, or disposition of Collateral or the exercise of remedies with respect to theCollateral; (f) any legal, litigation, administrative, arbitration, or out of court proceeding in connection with or related to Borrower or the Collateral,and any appeal or review thereof; and (g) any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure,or other action related to Borrower, the Collateral, the Loan Documents, including representing Agent or Lender in any adversary proceeding orcontested matter commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof. 11.12 Confidentiality. (a) Agent and Lender acknowledge that certain items of Collateral and information provided to Agent and Lender by Borrower areconfidential and proprietary information of Borrower, if and to the extent such information either (i) is marked as confidential by Borrower at thetime of disclosure, or (ii) should reasonably be understood to be confidential (the “Confidential Information”). Accordingly, Agent and Lenderagree that any Confidential Information it may obtain in the course of acquiring, administering, or perfecting Agent’s security interest in theCollateral shall not be disclosed to any other Person or entity in any manner whatsoever, in whole or in part, without the prior written consent ofBorrower, except that Agent and Lender may disclose any such information: (i) to its own directors, officers, employees, accountants, counsel andother professionaladvisors and to its Affiliates if Agent or Lender in their sole discretion determines that any such party should have access to suchinformation in connection with such party’s responsibilities in connection with the Loan or this Agreement and, provided that such recipient of suchConfidential Information either (x) agrees to be bound by the confidentiality provisions of this paragraph or (y) is otherwise subject toconfidentiality restrictions that reasonably protect against the disclosure of Confidential Information; (ii) if such information is generally availableto the public; (iii) if required or appropriate in any report, statement or testimony submitted to any governmental authority having or claiming tohave jurisdiction over Agent or Lender; (iv) if required or appropriate in response to any summons or subpoena or in connection with any litigation,to the extent permitted or deemed advisable by Agent’s or Lender’s counsel; (v) to comply with any legal requirement or law applicable to Agent orLender; (vi) to the extent reasonably necessary in connection with the exercise of any right or remedy under any Loan Document, including Agent’ssale, lease, or other disposition of Collateral after default; (vii) to any participant or assignee of Agent or Lender or any prospective participant orassignee; provided, that such participant or assignee or prospective participant or assignee agrees in writing to be bound by this Section prior todisclosure; or (viii) otherwise with the prior consent of Borrower; provided, that any disclosure made in violation of this Agreement shall not affectthe obligations of Borrower or any of its Affiliates or any guarantor under this Agreement or the other Loan Documents and provided further thatwith respect to the disclosure of Confidential Information pursuant to clauses (iii) through (viii) of this Section 11.12(a), Agent and Lender agree togive the Borrower prompt notice thereof (to the extent reasonably practicable and legally permissible) so that the Borrower may seek a protectiveorder or other appropriate remedy prior to such disclosure. (b) Agent and Lender further acknowledge that the Borrower is a publicly traded company. As such, Agent and Lender agree not touse any material non-public Confidential Information in connection with the purchase or sale of the securities of the Borrower. Lender and Agentfurther acknowledge that such use may constitute a violation of securities laws. (c) Agent and Lender acknowledge and agree that in the event they fail to comply with their obligations hereunder, Borrower shall,in addition to any other remedies available to it at law or in equity, be entitled to seek specific performance to enforce the terms of this Section11.12. -18- 11.13 Assignment of Rights. Borrower acknowledges and understands that Agent or Lender may sell and assign all or part of itsinterest hereunder and under the Loan Documents to any Person or entity (an “Assignee”), provided, that, prior to the occurrence and thecontinuance of any Event of Default, neither Agent nor Lender shall assign, transfer, or endorse its rights hereunder and under the other LoanDocuments to any party other than an Affiliate of Agent or Lender without Borrower’s prior written consent which shall not be unreasonablywithheld or delayed. After any such assignment the term “Agent” or “Lender” as used in the Loan Documents shall mean and include suchAssignee, and such Assignee shall be vested with all rights, powers and remedies of Agent and Lender hereunder with respect to the interest soassigned; but with respect to any such interest not so transferred, Agent and Lender shall retain all rights, powers and remedies hereby given. Nosuch assignment by Agent or Lender shall relieve Borrower of any of its obligations hereunder. Lender agrees that in the event of any transfer by itof the Note(s)(if any), it will endorse thereon a notation as to the portion of the principal of the Note(s), which shall have been paid at the time ofsuch transfer and as to the date to which interest shall have been last paid thereon. 11.14 Revival of Secured Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continueto be effective if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes anassignment for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets, or if any payment ortransfer of Collateral is recovered from Agent or Lender. The Loan Documents and the Secured Obligations and Collateral security shall continue tobe effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance of the Secured Obligations or any transferof Collateral to Agent, or any part thereof is rescinded, avoided or avoidable, reduced in amount, or must otherwise be restored or returned by, or isrecovered from, Agent, Lender or by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” orotherwise, all as though such payment, performance, or transfer of Collateral had not been made. In the event that any payment, or any part thereof,is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall be deemed,without any further action or documentation, to have been revived and reinstated except to the extent of the full, final, and indefeasible payment toAgent or Lender in Cash. 11.15 Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in anynumber of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but allof which counterparts shall constitute but one and the same instrument. 11.16 No Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide orcreate any third-party beneficiary rights or any other rights of any kind in any Person other than Agent, Lender and Borrower unless specificallyprovided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely among Agent, theLender and the Borrower. 11.17 Agency. (a) Lender hereby irrevocably appoints Hercules Technology Growth Capital, Inc. to act on its behalf as the Agent hereunder andunder the other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to theAgent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. (b) Lender agrees to indemnify the Agent in its capacity as such (to the extent not reimbursed by Borrower and without limitingthe obligation of Borrower to do so), according to its respective Term Commitment percentages (based upon the total outstanding Term LoanCommitments) in effect on the date on which indemnification is sought under this Section 11.7, from and against any and all liabilities, obligations,losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time be imposed on,incurred by or asserted against the Agent in any way relating to or arising out of, this Agreement, any of the other Loan Documents or anydocuments contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by theAgent under or in connection with any of the foregoing; The agreements in this Section shall survive the payment of the Loans and all otheramounts payable hereunder. (c) Agent in Its Individual Capacity. The Person serving as the Agent hereunder shall have the same rights and powers in itscapacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender” shall, unless otherwiseexpressly indicated or unless the context otherwise requires, include each such Person serving as Agent hereunder in its individual capacity. (d) Exculpatory Provisions. The Agent shall have no duties or obligations except those expressly set forth herein and in the otherLoan Documents. Without limiting the generality of the foregoing, the Agent shall not: (i) be subject to any fiduciary or other implied duties, regardless of whether any default or any Event of Default has occurredand is continuing; (ii) have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powersexpressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writingby the Lender, provided that the Agent shall not be required to take any action that, in its opinion or the opinion of itscounsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law; and (iii) except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and the Agent shall not beliable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to orobtained by any Person serving as the Agent or any of its Affiliates in any capacity. -19- (e) The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Lender or as theAgent shall believe in good faith shall be necessary, under the circumstances or (ii) in the absence of its own gross negligence or willful misconduct. (f) The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representationmade in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document deliveredhereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or otherterms or conditions set forth herein or therein or the occurrence of any default or Event of Default, (iv) the validity, enforceability, effectiveness orgenuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any conditionset forth in Section 4 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent. (g) Reliance by Agent. Agent may rely, and shall be fully protected in acting, or refraining to act, upon, any resolution, statement,certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document that it has no reason to believe to be otherthan genuine and to have been signed or presented by the proper party or parties or, in the case of cables, telecopies and telexes, to have been sentby the proper party or parties. In the absence of its gross negligence or willful misconduct, Agent may conclusively rely, as to the truth of thestatements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to Agent and conforming to therequirements of the Loan Agreement or any of the other Loan Documents. Agent may consult with counsel, and any opinion or legal advice of suchcounsel shall be full and complete authorization and protection in respect of any action taken, not taken or suffered by Agent hereunder or underany Loan Documents in accordance therewith. Agent shall have the right at any time to seek instructions concerning the administration of theCollateral from any court of competent jurisdiction. Agent shall not be under any obligation to exercise any of the rights or powers granted to Agentby this Agreement, the Loan Agreement and the other Loan Documents at the request or direction of Lenders unless Agent shall have been providedby Lender with adequate security and indemnity against the costs, expenses and liabilities that may be incurred by it in compliance with suchrequest or direction. 11.18 Publicity. (a) Borrower consents to the publication and use by Agent or Lender and any of its member businesses andAffiliates of (i) Borrower's name (including a brief description of the relationship among Borrower, Agent and Lender) and logo and a hyperlink toBorrower’s web site, separately or together, in Agent or Lender’s written and oral presentations, advertising, promotional and marketing materials,client lists, public relations materials or on its web site (together, the "Lender Publicity Materials"); (ii) the names of officers of Borrower in theLender Publicity Materials; and (iii) Borrower’s name, trademarks or servicemarks in any news release concerning Agent or Lender. Any suchpublicity contemplated pursuant to this Section 11.18 shall be sent to Borrower for its prior written approval, such approval not to be unreasonablywithheld or delayed. (b) Except as required to be disclosed by law, legal or judicial process or by any governmental or regulatory body, neither Borrower nor any of itsmember businesses and Affiliates shall, without Agent’s consent, publicize or use (i) Agent’s or Lender's name (including a brief description of therelationship among Borrower, Agent and Lender), logo or hyperlink to Agent’s or Lender’s web site, separately or together, in written and oralpresentations, advertising, promotional and marketing materials, client lists, public relations materials or on its web site (together, the "BorrowerPublicity Materials"); (ii) the names of officers of Agent or Lender in the Borrower Publicity Materials; and (iii) Agent’s or Lender’s name,trademarks, servicemarks in any news release concerning Borrower. To the extent reasonably practicable in compliance with the Borrower'sregulatory requirements, the Borrower shall provide Agent with a draft of its Current Report on Form 8-K (the "Required 8-K") in connection with itsdisclosure requirements of the transactions contemplated by this Agreement and the Loan Documents for their review and comment. Agent shall useits commercially reasonable efforts to provide any comments to the Borrower within one business day. Notwithstanding the foregoing, the Borrowershall be entitled to file the Required 8-K with the SEC within four (4) business days after the execution and delivery of this Agreement. -20- (SIGNATURES TO FOLLOW) IN WITNESS WHEREOF, Borrower, Agent and Lender have duly executed and delivered this Loan and Security Agreement as of the day and yearfirst above written. BORROWER: CHROMADEX CORPORATION Signature: /s/ Thomas C. VarvaroPrint Name: Thomas C. VarvaroTitle: CFO CHROMADEX, INC. Signature: /s/ Thomas C. VarvaroPrint Name: Thomas C. VarvaroTitle: CFO CHROMADEX ANALYTICS, INC. Signature: /s/ Thomas C. VarvaroPrint Name: Thomas C. VarvaroTitle: CFO SPHERIX CONSULTING, INC. Signature: /s/ Thomas C. VarvaroPrint Name: Thomas C. VarvaroTitle: CFO Accepted in Palo Alto, California: AGENT: HERCULES TECHNOLOGY GROWTH CAPITAL, INC. By: /s/ Ben Bang Ben Bang, Associate General Counsel LENDER:HERCULES TECHNOLOGY II, L.P.,a Delaware limited partnership By: Hercules Technology SBIC Management, LLC, its General PartnerBy: Hercules Technology Growth Capital, Inc., its ManagerBy: /s/ Ben Bang Ben Bang, Associate General Counsel -21- Table of Addenda, Exhibits and Schedules Addendum 1: SBA Provisions Exhibit A:Advance Request Attachment to Advance Request Exhibit B:Term Note Exhibit C:Name, Locations, and Other Information for Borrower Exhibit D:Borrower’s Patents, Trademarks, Copyrights and Licenses Exhibit E:Borrower’s Deposit Accounts and Investment Accounts Exhibit F:Compliance Certificate Exhibit G:Joinder Agreement Exhibit H:ACH Debit Authorization Agreement Exhibit I-1:Borrower Conversion Election Notice Exhibit I-2:Lender Conversion Election Notice Exhibit J:Warrant Agreement Schedule 1SubsidiariesSchedule 1.1CommitmentsSchedule 1AExisting Permitted IndebtednessSchedule 1BExisting Permitted InvestmentsSchedule 1CExisting Permitted LiensSchedule 5.5Actions Before Governmental AuthoritiesSchedule 5.10Intellectual PropertySchedule 5.14CapitalizationSchedule 7.16Post-Closing Items -22- ADDENDUM 1 to LOAN AND SECURITY AGREEMENT (a) Borrower’s Business. For purposes of this Addendum 1, Borrower shall be deemed to include its “affiliates” as defined in Title13 Code of Federal Regulations Section 121.103. Borrower represents and warrants to Agent and Lender as of the Closing Date and covenants toAgent and Lender for a period of one year after the Closing Date with respect to subsections 2, 3, 4, 5, 6 and 7 below, as follows: 1. Size Status. Borrower does not have tangible net worth in excess of $18 million or average net income after Federalincome taxes (excluding any carry-over losses) for the preceding two completed fiscal years in excess of $6 million; 2. No Relender. Borrower’s primary business activity does not involve, directly or indirectly, providing funds to others,purchasing debt obligations, factoring, or long-term leasing of equipment with no provision for maintenance or repair; 3. No Passive Business. Borrower is engaged in a regular and continuous business operation (excluding the mere receipt ofpayments such as dividends, rents, lease payments, or royalties). Borrower’s employees are carrying on the majority ofday to day operations. Borrower will not pass through substantially all of the proceeds of the Loan to another entity; 4. No Real Estate Business. Borrower is not classified under Major Group 65 (Real Estate) or Industry No. 1531 (OperativeBuilders) of the SIC Manual. The proceeds of the Loan will not be used to acquire or refinance real property unlessBorrower (x) is acquiring an existing property and will use at least 51 percent of the usable square footage for its businesspurposes; (y) is building or renovating a building and will use at least 67 percent of the usable square footage for itsbusiness purposes; or (z) occupies the subject property and uses at least 67 percent of the usable square footage for itsbusiness purposes. 5. No Project Finance. Borrower’s assets are not intended to be reduced or consumed, generally without replacement, as thelife of its business progresses, and the nature of Borrower’s business does not require that a stream of cash payments bemade to the business's financing sources, on a basis associated with the continuing sale of assets (e.g., real estatedevelopment projects and oil and gas wells). The primary purpose of the Loan is not to fund production of a single itemor defined limited number of items, generally over a defined production period, where such production will constitute themajority of the activities of Borrower (e.g., motion pictures and electric generating plants). 6. No Farm Land Purchases. Borrower will not use the proceeds of the Loan to acquire farm land which is or is intended tobe used for agricultural or forestry purposes, such as the production of food, fiber, or wood, or is so taxed or zoned. 7. No Foreign Investment. The proceeds of the Loan will not be used substantially for a foreign operation. At the time ofthe Loan, Borrower will not have more than 49 percent of its employees or tangible assets located outside the UnitedStates. The representation in this subsection (7) is made only as of the date hereof and shall not continue for one year ascontemplated in the first sentence of this Section 1. (b) Small Business Administration Documentation. Agent and Lender acknowledge that Borrower completed, executed anddelivered to Agent SBA Forms 480, 652 and 1031 (Parts A and B) together with a business plan showing Borrower’s financial projections (includingbalance sheets and income and cash flows statements) for the period described therein and a written statement (whether included in the purchaseagreement or pursuant to a separate statement) from Agent regarding its intended use of proceeds from the sale of securities to Lender (the “Use ofProceeds Statement”). Borrower represents and warrants to Agent and Lender that the information regarding Borrower and its affiliates set forth inthe SBA Form 480, Form 652 and Form 1031 and the Use of Proceeds Statement delivered as of the Closing Date is accurate and complete. (c) Inspection. The following covenants contained in this Section (c) are intended to supplement and not to restrict the relatedprovisions of the Loan Documents. Subject to the preceding sentence, Borrower will permit, for so long as Lender holds any debt or equitysecurities of Borrower, Agent, Lender or their representative, at Agent’s or Lender’ expense, and examiners of the SBA to visit and inspect theproperties and assets of Borrower, to examine its books of account and records, and to discuss Borrower’s affairs, finances and accounts withBorrower’s officers, senior management and accountants, all at such reasonable times as may be requested by Agent or Lender or the SBA. (d) Annual Assessment. Promptly after the end of each calendar year (but in any event prior to February 28 of each year) and atsuch other times as may be reasonably requested by Agent or Lender, Borrower will deliver to Agent a written assessment of the economic impact ofLender’s investment in Borrower, specifying the full-time equivalent jobs created or retained in connection with the investment, the impact of theinvestment on the businesses of Borrower in terms of expanded revenue and taxes, other economic benefits resulting from the investment (such astechnology development or commercialization, minority business development, or expansion of exports) and such other information as may berequired regarding Borrower in connection with the filing of Lender’s SBA Form 468. Lender will assist Borrower with preparing such assessment. In addition to any other rights granted hereunder, Borrower will grant Agent and Lender and the SBA access to Borrower’s books and records for thepurpose of verifying the use of such proceeds. Borrower also will furnish or cause to be furnished to Agent and Lender such other informationregarding the business, affairs and condition of Borrower as Agent or Lender may from time to time reasonably request. -23- (e) Use of Proceeds. Borrower will use the proceeds from the Loan only for purposes set forth in Section 7.15. Borrower willdeliver to Agent from time to time promptly following Agent’s request, a written report, certified as correct by Borrower's Chief Financial Officer,verifying the purposes and amounts for which proceeds from the Loan have been disbursed. Borrower will supply to Agent such additionalinformation and documents as Agent reasonably requests with respect to its use of proceeds and will permit Agent and Lender and the SBA to haveaccess to any and all Borrower records and information and personnel as Agent deems necessary to verify how such proceeds have been or are beingused, and to assure that the proceeds have been used for the purposes specified in Section 7.15. (f) Activities and Proceeds. Neither Borrower nor any of its affiliates (if any) will engage in any activities or use directly orindirectly the proceeds from the Loan for any purpose for which a small business investment company is prohibited from providing funds by theSBIC Act, including 13 C.F.R. §107.720. Without obtaining the prior written approval of Agent, Borrower will not change within 1 year of the datehereof, Borrower’s current business activity to a business activity which a licensee under the SBIC Act is prohibited from providing funds by theSBIC Act. (g) Redemption Provisions. Notwithstanding any provision to the contrary contained in the Certificate of Incorporation ofBorrower, as amended from time to time (the “Charter”), if, pursuant to the redemption provisions contained in the Charter, Lender is entitled to aredemption of its warrant pursuant to the Warrant Agreement, such redemption (in the case of Lender) will be at a price equal to the redemption priceset forth in the Charter (the “Existing Redemption Price”). If, however, Lender delivers written notice to Borrower that the then current regulationspromulgated under the SBIC Act prohibit payment of the Existing Redemption Price in the case of an SBIC (or, if applied, the Existing RedemptionPrice would cause the common stock to lose its classification as an “equity security” and Lender has determined that such classification isunadvisable), the amount Lender will be entitled to receive shall be the greater of (i) fair market value of the securities being redeemed taking intoaccount the rights and preferences of such securities plus any costs and expenses of the Lender incurred in making or maintaining such warrant, and(ii) the Existing Redemption Price where the amount of accrued but unpaid dividends payable to the Lender is limited to Borrower's earnings plusany costs and expenses of the Lender incurred in making or maintaining such warrant; provided, however, the amount calculated in subsections (i)or (ii) above shall not exceed the Existing Redemption Price. (h) Compliance and Resolution. Borrower agrees that a failure to comply with Borrower’s obligations under this Addendum, orany other set of facts or circumstances where it has been asserted by any governmental regulatory agency (or Agent or Lender believes that there is asubstantial risk of such assertion) that Agent, Lender and their affiliates are not entitled to hold, or exercise any significant right with respect to, anysecurities issued to Lender by Borrower, will constitute a breach of the obligations of Borrower under the financing agreements among Borrower,Agent and Lender. In the event of (i) a failure to comply with Borrower’s obligations under this Addendum; or (ii) an assertion by any governmentalregulatory agency (or Agent or Lender believes that there is a substantial risk of such assertion) of a failure to comply with Borrower’s obligationsunder this Addendum, then (i) Agent, Lender and Borrower will meet and resolve any such issue in good faith to the satisfaction of Borrower, Agent,Lender, and any governmental regulatory agency, and (ii) upon request of Lender or Agent, Borrower will cooperate and assist with any assignmentof the financing agreements among Hercules Technology II, L.P., and Hercules Technology Growth Capital, Inc. -24- EXHIBIT A ADVANCE REQUEST To: Agent: Date: __________, 20__ Hercules Technology Growth Capital, Inc. (the “Agent”) 400 Hamilton Avenue, Suite 310Palo Alto, CA 94301Facsimile: 650-473-9194Attn: ChromaDex Corporation (“Borrower”) hereby requests from Hercules Technology Growth Capital, Inc. (“Agent”), as agent for Hercules Technology II, L.P.(“Lender”) an Advance in the amount of _____________________ Dollars ($________________) on ______________, _____ (the “Advance Date”)pursuant to the Loan and Security Agreement among Borrower, Agent and Lender (the “Agreement”). Capitalized words and other terms used but nototherwise defined herein are used with the same meanings as defined in the Agreement. Please: (a) Issue a check payable to Borrower ________ or (b) Wire Funds to Borrower’s account ________ Bank: _____________________________Address: _____________________________ _____________________________ ABA Number: _____________________________Account Number: _____________________________Account Name: _____________________________ Borrower represents that the conditions precedent to the Advance set forth in the Agreement are satisfied and shall be satisfied upon the making ofsuch Advance, including but not limited to: (i) that no event that has had or could reasonably be expected to have a Material Adverse Effect has occurredand is continuing; (ii) that the representations and warranties set forth in the Agreement and in the Warrant are and shall be true and correct in all materialrespects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warrantiesexpressly relate to an earlier date; (iii) that Borrower is in compliance with all the terms and provisions set forth in each Loan Document on its part to beobserved or performed; and (iv) that as of the Advance Date, no fact or condition exists that would (or would, with the passage of time, the giving of notice, orboth) constitute an Event of Default under the Loan Documents. Borrower hereby represents that Borrower’s corporate status and locations have not changed since the date of the Agreement or, if the Attachment tothis Advance Request is completed, are as set forth in the Attachment to this Advance Request. Borrower agrees to notify Agent promptly before the funding of the Loan if any of the matters which have been represented above shall not be trueand correct on the Borrowing Date and if Agent has received no such notice before the Advance Date then the statements set forth above shall be deemed tohave been made and shall be deemed to be true and correct as of the Advance Date. Executed as of [ ], 20[ ]. BORROWER: CHROMADEX CORPORATION SIGNATURE:________________________ TITLE:_____________________________ PRINT NAME:______________________ -25- ATTACHMENT TO ADVANCE REQUEST Dated: _______________________ Borrower hereby represents and warrants to Agent that Borrower’s current name and organizational status is as follows: Name:ChromaDex Corporation Type of organization:Corporation State of organization:Delaware Organization file number: Borrower hereby represents and warrants to Agent that the street addresses, cities, states and postal codes of its current locations are as follows: -26- EXHIBIT B SECURED TERM PROMISSORY NOTE $[ ],000,000Advance Date: ___ __, 20[ ] Maturity Date: _____ ___, 20[ ]FOR VALUE RECEIVED, ChromaDex Corporation, a Delaware corporation, for itself and each of its Subsidiaries (the “Borrower”) hereby promisesto pay to the order of Hercules Technology II, L.P., a Delaware limited partnership or the holder of this Note (the “Lender”) at 400 Hamilton Avenue, Suite310, Palo Alto, CA 94301 or such other place of payment as the holder of this Secured Term Promissory Note (this “Promissory Note”) may specify from timeto time in writing, in lawful money of the United States of America, the principal amount of [ ] Million Dollars ($[ ],000,000) or such other principal amountas Lender has advanced to Borrower, together with interest at the Term Loan Interest Rate as such term is defined in that that certain Loan and SecurityAgreement dated September 29, 2014, by and among Borrower, Hercules Technology Growth Capital, Inc., a Maryland corporation (the “Agent”) and theseveral banks and other financial institutions or entities from time to time party thereto as lender (as the same may from time to time be amended, modified orsupplemented in accordance with its terms, the “Loan Agreement”). This Promissory Note is the Term Note referred to in, and is executed and delivered in connection with, the Loan Agreement, and is entitled to thebenefit and security of the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement), to which reference is made for a statement ofall of the terms and conditions thereof. All payments shall be made in accordance with the Loan Agreement. All terms defined in the Loan Agreement shallhave the same definitions when used herein, unless otherwise defined herein. An Event of Default under the Loan Agreement shall constitute a default underthis Promissory Note. Borrower waives presentment and demand for payment, notice of dishonor, protest and notice of protest under the UCC or any applicablelaw. Borrower agrees to make all payments under this Promissory Note without setoff, recoupment or deduction and regardless of any counterclaim ordefense. This Promissory Note has been negotiated and delivered to Lender and is payable in the State of California. This Promissory Note shall be governedby and construed and enforced in accordance with, the laws of the State of California, excluding any conflicts of law rules or principles that would cause theapplication of the laws of any other jurisdiction. BORROWER FOR ITSELFAND ON BEHALF OF ITSSUBSIDIARIES: CHROMADEX CORPORATION By: Title: -27- EXHIBIT C NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER 1. Borrower represents and warrants to Agent that Borrower’s current name and organizational status as of the Closing Date is as follows: Name:ChromaDex Corporation Type of organization:Corporation State of organization:Delaware Organization file number: 2. Borrower represents and warrants to Agent that for five (5) years prior to the Closing Date, Borrower did not do business under any other name ororganization or form except the following: Name: Used during dates of: Type of Organization: State of organization: Organization file Number: Borrower’s fiscal year ends on December 31 Borrower’s federal employer tax identification number is: 33-0880006 3. Borrower represents and warrants to Agent that its chief executive office is located at 10005 Muirlands Blvd., Suite G, Irvine, CA 92618. -28- EXHIBIT D BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES Patents and Patent Applications PATENT APP. NUMBERPATENTNUMBERTITLE OF PATENTISSUE DATEAPP DATEASSIGNEEUS61/535143 PTEROSTILBENE AND STATIN COMBINATIONFOR TREATMENT OF METABOLIC DISEASE,CARDIOVASCULAR DISEASE, ANDINFLAMMATION 9/15/2011CHROMADEX, INC.USPCT/US2013/039105 PTEROSTILBENE AND CURCUMINCOMBINATION FOR TREATMENT OFOXIDATIVE STRESS AND INFLAMMATION 5/1/2013CHROMADEX, INC.US61/484977 METHOD FOR INDUCING UDP-GLUCURONOSYLTRANSFERASE ACTIVITYUSING PTEROSTILBENE 5/11/2011CO-INVENTOR WITHUNIVERSITY OFCALIFORNIA US6852342COMPOUNDS FOR ALTERING FOOD INTAKE INHUMANS2/8/2005 CO-INVENTOR WITHAVOCA, INC. Trademarks and Trademark Applications · Trademarks registered or trademark applications submitted by ChromaDex, Inc. o US: ChromaDex®, Puenergy®, pTeroPure®, ProC3G®, anthopure®, NIAGENTM, NUTRAGAC®, pTeroBerry®, ,o MEXICO: pTeroPureCopyrights None.Licenses to Use Trademarks, Patents and Copyrights of Others GeographyPatent App #Patent #Title of PatentPatent IssueDatePatentApplicationDateAssigneeUS 8106184Nicotinoyl riboside compositions andmethods of use1/31/2012 CornellUS 8114626Yeast strain and method for using thesame to produce nicotinamide riboside2/14/2012 DartmouthUS 8197807Nicotinamide riboside kinasecompositions and methods for usingthe same6/12/2012 DartmouthUS 8383086Nicotinamide riboside kinasecompositions and methodsfor using thesame2/26/2013 DartmouthUS 7776326Methods and compositions for treatingneuropathies8/17/2010 Washington UniversityUS11/542832 Yeast strain and method for using thesameto produce nicotinamide riboside 3/18/2010DartmouthUS13/260392 Yeast strain and method for using thesameto produce nicotinamide riboside 3/18/2010DartmouthUS20120164270 (A1) Yeast strain and method for using thesame to produce nicotinamide riboside 6/28/2012DartmouthPCTUS2010/027792 Yeast strain and method for using thesame to produce nicotinamide riboside 3/18/2010Dartmouth -29- WO2010111111 A1 Yeast strain and method for using thesame to produce nicotinamide riboside 3/18/2010DartmouthUS60/886854 Methods and compositions for treatingneuropathies 1/28/2008Washington UniversityUS12/524718 Methods and compositions for treatingneuropathies 1/28/2008Washington UniversityUS20100047177 A1 Methods and compositions for treatingneuropathies 2/25/2010Washington UniversityPCT2008/001085 Methods and compositions for treatingneuropathies 1/28/2008Washington UniversityWO2008091710 A2 Methods and compositions for treatingneuropathies 1/28/2008Washington UniversityCA2676609 Methods and compositions for treatingneuropathies 1/28/2008Washington UniversityMX20090008022 Methods and compositions for treatingneuropathies Washington UniversityUS2012172584 A1 Nicotinoyl riboside compositions andmethods of use 1/17/2012CornellIN4525Delnp/2008 Nicotinoyl riboside compositions andmethods of use 11/17/2006CornellEP1957086 A2 Nicotinoyl riboside compositions andmethods of use 11/17/2006CornellCN101360421 A Nicotinoyl riboside compositions andmethods of use 11/17/2006CornellAU2006238858 A2 Nicotinamide riboside kinasecompositionsand methods for using the same3/14/2013 DartmouthCA2609633 Nicotinamide riboside kinasecompositionsand methods for using the same 4/20/2006DartmouthUS60/577233 Methods and compositions for treatingneuropathies 6/4/2004Washington UniversityUS60/641330 Methods and compositions for treatingneuropathies 1/4/2005Washington UniversityPCT2005/019524 Methods and compositions for treatingneuropathies 6/3/2005Washington UniversityWO2006001982 A2 Methods and compositions for treatingneuropathies 6/3/2005Washington UniversityZL200580018114.8 Methods and compositions for treatingneuropathies Washington UniversityCN1964627 Methods and compositions for treatingneuropathies10/19/2011 Washington UniversityUS11/144358 Methods and compositions for treatingneuropathies 6/3/2005Washington UniversityUS12/790722 Methods and compositions for treatingneuropathies 6/3/2005Washington UniversityUS20100272702 A1 Methods and compositions for treatingneuropathies 6/3/2005Washington UniversityEP20050790283 Methods and compositions for treatingneuropathies 6/3/2005Washington UniversityEP1755391 A2 Methods and compositions for treatingneuropathies 6/3/2005Washington UniversityUS 8133917Pterostilbene as an agonist for theperoxisome proliferator-activatedreceptor alpha isoform3/13/2012 University of Mississippiand U.S. Depart ofAgricultureUS 8252845Pterostilbene as an agonist for theperoxisome proliferator-activatedreceptor alpha isoform2/26/2013 University of Mississippiand U.S. Depart ofAgricultureUS12/136341 Method to Ameliorate Oxidative Stressand Improve Working Memory viaPterostilbene Administration 8/8/2011University of Mississippiand U.S. Depart ofAgriculture -30- US13/105470 Anxiolytic Effects of Pterostilbene 5/11/2011University of Mississippiand U.S. Depart ofAgricultureKOR10-2012-7013257 Use of pterostilbene as medicament forprevention and/or treatment of skindiseases, damages or injuries or ascosmetic 2012Green Molecular S.LMX2012/005013 Use of pterostilbene as medicament forprevention and/or treatment of skindiseases, damages or injuries or ascosmetic 2012Green Molecular S.L.RUS2012122241 Use of pterostilbene as medicament forprevention and/or treatment of skindiseases, damages or injuries or ascosmetic 2012Green Molecular S.LUS13/504056 Use of pterostilbene as medicament forprevention and/or treatment of skindiseases, damages or injuries or ascosmetic 10/29/2010Green Molecular S.L.US 8227510Combine use of pterostilbene andquercetin for the production of cancertreatment medicaments7/24/2012 Green Molecular S.L.EU 5774387.4Combine use of pterostilbene andquercetin for the production of cancertreatment medicaments3/18/2009 Green Molecular S.L.EU 10775793.2Use of pterostilbene as medicament forprevention and/or treatment of skindiseases, damages or injuries or ascosmetic7/24/2013 Green Molecular S.L.CA2778151 Use of pterostilbene as medicament forprevention and/or treatment of skindiseases, damages or injuries or ascosmeting 10/29/2010Green Molecular S.L.CHN201080048865.5 Use of pterostilbene as medicament forprevention and/or treatment of skindiseases, damages or injuries or ascosmetic Green Molecular S.L.ISRL219318 Use of pterostilbene as medicament forprevention and/or treatment of skindiseases, damages or injuries or ascosmetic Green Molecular S.L.JPN2012-535862 Use of pterostilbene as medicament forprevention and/or treatment of skindiseases, damages or injuries or ascosmetic 2012Green Molecular S.L.US61/484977 Method for Inducing UDP-lucuronosyltrasferase Activity UsingPterostilbene 5/11/2011UC RegentsUS13/466,827 Method for Inducing UDP-lucuronosyltrasferase Activity UsingPterostilbene 5/8/2012UC RegentsPCTUS2012/064993 Method for Inducing UDP-lucuronosyltrasferase Activity UsingPterostilbene 11/14/2012UC RegentsUS62/046,065 Prevention of UV-induced hyperplasiaandDNA damage in skin by Pterostilbene 9/4/2014UC RegentsUS62/046,068 Prevention of UV-induced loss ofbarrierfunction in skin by Pterostilbene 9/4/2014UC RegentsUS61/249188 Use of Polyphenols in the Treatment ofCancer 10/6/2009Green Molecular S.L.US 7338791Production of Flavonoids byRecombinantMicroorganisms3/4/2008 State Univ of New York -31- EXHIBIT E BORROWER’S DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS Deposit Accounts Institution Name and AddressAccount NumberAverage Balance in AccountName of Account Owner Wells Fargo N.A. $900,000ChromaDex, Inc. Wells Fargo N.A. $0 (Zero Balance Account)ChromaDex Analytics, Inc. Wells Fargo N.A. $150,000Spherix Consulting, Inc. Investment Accounts None. -32- EXHIBIT F COMPLIANCE CERTIFICATE Hercules Technology Growth Capital, Inc. (as “Agent”) 400 Hamilton Avenue, Suite 310 Palo Alto, CA 94301 Reference is made to that certain Loan and Security Agreement dated September 29, 2014 and all ancillary documents entered into in connectionwith such Loan and Security Agreement all as may be amended from time to time, (hereinafter referred to collectively as the “Loan Agreement”) by andamong Hercules Technology Growth Capital, Inc. (the “Agent”), the several banks and other financial institutions or entities from time to time party thereto(collectively, the “Lender”) and Hercules Technology Growth Capital, Inc., as agent for the Lender (the “Agent”) and ChromaDex Corporation (the“Company”) as Borrower. All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement. The undersigned is an Officer of the Company, knowledgeable of all Company financial matters, and is authorized to provide certification ofinformation regarding the Company; hereby certifies that [no Event of Default exists and there exists no fact or condition that would, with the passage oftime, the giving of notice, or both, constitute an Event of Default] [or if any Event of Default exists or there exists any fact or condition that would, with thepassage of time, the giving of notice, or both, constitute an Event of Default under the Loan Documents, describe the same]. The undersigned further certifiesthat the attached Financial Statements are prepared in accordance with GAAP (except for the absence of footnotes with respect to unaudited financialstatement and subject to normal year end adjustments) and are consistent from one period to the next except as explained below. REPORTING REQUIREMENTREQUIREDCHECK IF ATTACHEDInterim Financial StatementsMonthly within 30 days Interim Financial StatementsQuarterly within 45 days Audited Financial StatementsFYE within 150 days Very Truly Yours, CHROMADEX CORPORATION By:____________________________ Name: _____________________________ Its:____________________________ -33- EXHIBIT G FORM OF JOINDER AGREEMENT This Joinder Agreement (the “Joinder Agreement”) is made and dated as of [ ], 20[ ], and is entered into by andbetween__________________., a ___________ corporation (“Subsidiary”), and HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Marylandcorporation (as “Agent”). RECITALS A. Subsidiary’s Affiliate, ChromaDex Corporation (“Company”) has entered into that certain Loan and Security Agreement dated September 29,2014, with the several banks and other financial institutions or entities from time to time party thereto as lender (collectively, the “Lender”) and the Agent, assuch agreement may be amended (the “Loan Agreement”), together with the other agreements executed and delivered in connection therewith; B. Subsidiary acknowledges and agrees that it will benefit both directly and indirectly from Company’s execution of the Loan Agreement and theother agreements executed and delivered in connection therewith; AGREEMENT NOW THEREFORE, Subsidiary and Agent agree as follows: 1. The recitals set forth above are incorporated into and made part of this Joinder Agreement. Capitalized terms not defined herein shall have the meaningprovided in the Loan Agreement. 2. By signing this Joinder Agreement, Subsidiary shall be bound by the terms and conditions of the Loan Agreement the same as if it were the Borrower(as defined in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided however, that (a) with respect to (i) Section 5.1 of the LoanAgreement, Subsidiary represents that it is an entity duly organized, legally existing and in good standing under the laws of [ ], (b) neither Agentnor Lender shall have any duties, responsibilities or obligations to Subsidiary arising under or related to the Loan Agreement or the other agreementsexecuted and delivered in connection therewith, (c) that if Subsidiary is covered by Company’s insurance, Subsidiary shall not be required to maintainseparate insurance or comply with the provisions of Sections 6.1 and 6.2 of the Loan Agreement, and (d) that as long as Company satisfies therequirements of Section 7.1 of the Loan Agreement, Subsidiary shall not have to provide Agent separate Financial Statements. To the extent that Agentor Lender has any duties, responsibilities or obligations arising under or related to the Loan Agreement or the other agreements executed and deliveredin connection therewith, those duties, responsibilities or obligations shall flow only to Company and not to Subsidiary or any other Person orentity. By way of example (and not an exclusive list): (i) Agent’s providing notice to Company in accordance with the Loan Agreement or as otherwiseagreed among Company, Agent and Lender shall be deemed provided to Subsidiary; (ii) a Lender’s providing an Advance to Company shall be deemedan Advance to Subsidiary; and (iii) Subsidiary shall have no right to request an Advance or make any other demand on Lender. 3. Subsidiary agrees not to certificate its equity securities without Agent’s prior written consent, which consent may be conditioned on the delivery ofsuch equity securities to Agent in order to perfect Agent’s security interest in such equity securities. 4. Subsidiary acknowledges that it benefits, both directly and indirectly, from the Loan Agreement, and hereby waives, for itself and on behalf on any andall successors in interest (including without limitation any assignee for the benefit of creditors, receiver, bankruptcy trustee or itself as debtor-in-possession under any bankruptcy proceeding) to the fullest extent provided by law, any and all claims, rights or defenses to the enforcement of thisJoinder Agreement on the basis that (a) it failed to receive adequate consideration for the execution and delivery of this Joinder Agreement or (b) itsobligations under this Joinder Agreement are avoidable as a fraudulent conveyance. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -34- [SIGNATURE PAGE TO JOINDER AGREEMENT] SUBSIDIARY: _________________________________. By: Name: Title: Address: Telephone: ___________ Facsimile: ____________ AGENT: HERCULES TECHNOLOGY GROWTH CAPITAL, INC. By:____________________________________ Name:__________________________________ Title: ___________________________________ Address: 400 Hamilton Ave., Suite 310 Palo Alto, CA 94301 Facsimile: 650-473-9194 Telephone: 650-289-3060 -35- EXHIBIT H ACH DEBIT AUTHORIZATION AGREEMENT Hercules Technology Growth Capital, Inc.Hercules Technology II, L.P. 400 Hamilton Avenue, Suite 310 Palo Alto, CA 94301 Re: Loan and Security Agreement dated September 29, 2014 between ChromaDex Corporation (“Borrower”), Hercules Technology II, as Lender,and Hercules Technology Growth Capital, Inc., as Agent (“Company”) (the “Agreement”) In connection with the above referenced Agreement, the Borrower hereby authorizes the Company to initiate debit entries for the periodic payments dueunder the Agreement to the Borrower’s account indicated below. The Borrower authorizes the depository institution named below to debit to such account. DEPOSITORY NAMEBRANCHCITYSTATE AND ZIP CODETRANSIT/ABA NUMBERACCOUNT NUMBER This authority will remain in full force and effect so long as any amounts are due under the Agreement. CHROMADEX CORPORATION By: _________________________________________ Date: ________________________________________ -36- EXHIBIT I-1 BORROWER CONVERSION ELECTION NOTICE [INSERT DATE] Hercules Technology Growth Capital, Inc. and Hercules Technology II, L.P.400 Hamilton Avenue, Suite 310Palo Alto, CA 94301 Reference is made to that certain Loan and Security Agreement dated September 29, 2014 and all ancillary documents entered into in connectionwith such Loan and Security Agreement all as may be amended from time to time, (hereinafter referred to collectively as the “Loan Agreement”) betweenHercules Technology Growth Capital, Inc., as Agent [and a Lender] and Hercules Technology II, L.P., as a Lender, and ChromaDex Corporation (the“Company”) as Borrower. All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement. Borrower hereby irrevocably elects to make the Principal Installment Payment in the amount of $_________ due on [________] (the “DeliveryDate”) in shares of Common Stock in accordance with Section 2.2(e) of the Loan Agreement.1 The number of shares of Common Stock to be delivered toLender, on or prior to the Delivery Date, is [_____________], which amount was determined in accordance with Section 2.2(e) of the Loan Agreement. Thestock certificates shall be delivered free and clear of any restrictive legends. Borrower hereby represents, warrants and certifies to Lender that, as of the date hereof, all of the Conversion Conditions have beensatisfied. Borrower acknowledges and agrees that its right to pay the Principal Installment Payment in Common Stock in accordance with this ConversionElection Notice is subject to the satisfaction of all of the Conversion Conditions on the Delivery Date and, to the extent any of the Conversion Conditionsare not satisfied on the Delivery Date, Borrower shall pay the Principal Installment Payment in cash. Sincerely, CHROMADEX CORPORATION By:____________________________ Name:____________________________ Its:____________________________ 1 Note: In accordance with Section 2.2(e) of the Loan Agreement, the Delivery Date must be at least 10 days following the date of delivery of this ConversionElection Notice. -37- EXHIBIT I-2 LENDER CONVERSION ELECTION NOTICE [INSERT DATE] ChromaDex Corporation 10005 Muirlands Blvd., Suite G Irvine, CA 92618 Attention: Frank Jaksch, Chief Executive Officer Reference is made to that certain Loan and Security Agreement dated September 29, 2014 and all ancillary documents entered into in connectionwith such Loan and Security Agreement all as may be amended from time to time, (hereinafter referred to collectively as the “Loan Agreement”) betweenHercules Technology Growth Capital, Inc., as Agent and Hercules Technology II, L.P., as a Lender, and ChromaDex Corporation (the “Company”) asBorrower. All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement. Lender hereby irrevocably elects to accept the Principal Installment Payment in the amount of $_________ due on [________] (the “DeliveryDate”) in shares of Common Stock in accordance with Section 2.2(e) of the Loan Agreement.2 The number of shares of Common Stock to be delivered toLender, on or prior to the Delivery Date, is [_____________], which amount was determined in accordance with Section 2.2(e) of the Loan Agreement. Thestock certificates shall be delivered free and clear of any restrictive legends. Lender hereby represents, warrants and certifies to Borrower that, as of the date hereof, all of the Conversion Conditions have been satisfied. Lenderacknowledges and agrees that its right to receive the Principal Installment Payment in Common Stock in accordance with this Conversion Election Notice issubject to the satisfaction of all of the Conversion Conditions on the Delivery Date and, to the extent any of the Conversion Conditions are not satisfied onthe Delivery Date, Lender shall accept the Principal Installment Payment in cash. Sincerely, LENDER AND AGENT: HERCULES TECHNOLOGY GROWTH CAPITAL, INC., as Agent HERCULES TECHNOLOGY II, L.P.,as a Lender By:Hercules Technology SBIC Management, LLC, its General Partner By: By:Hercules Technology Growth Capital, Inc., its ManagerName: Title: By: Name: Title: 2 Note: In accordance with Section 2.2(e) of the Loan Agreement, the Delivery Date must be at least 10 days following the date of delivery of this ConversionElection Notice. -38- EXHBIT J THIS WARRANT, AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT, HAVE NOT BEEN REGISTERED UNDERTHE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OFCOUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOTREQUIRED UNDER THE ACT, OR ANY APPLICABLE STATE SECURITIES LAWS. WARRANT AGREEMENT To Purchase Shares of Stock of CHROMADEX CORPORATION Dated as of September 29, 2014 (the “Effective Date”) WHEREAS, ChromaDex Corporation, a Delaware corporation, has entered into a Loan and Security Agreement of even date herewith (the “LoanAgreement”) with Hercules Technology Growth Capital, Inc., a Maryland corporation, in its capacity as administrative agent, and Hercules Technology II,L.P., a Delaware limited partnership, as a lender (the “Warrantholder”) and the other lender parties thereto; WHEREAS, the Company (as defined below) desires to grant to Warrantholder, in consideration for, among other things, the financialaccommodations provided for in the Loan Agreement, the right to purchase shares of Stock (as defined below) pursuant to this Warrant Agreement (the“Agreement”); NOW, THEREFORE, in consideration of the Warrantholder executing and delivering the Loan Agreement and providing the financialaccommodations contemplated therein, and in consideration of the mutual covenants and agreements contained herein, the Company and Warrantholderagree as follows: SECTION 1. GRANT OF THE RIGHT TO PURCHASE COMMON STOCK. For value received, the Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditionshereinafter set forth, to subscribe for and purchase, from the Company, an aggregate number of fully paid and non-assessable shares of the Common Stockequal to the quotient derived by dividing (a) the Warrant Coverage (as defined below) by (b) the Exercise Price (defined below). The Exercise Price of suchshares is subject to adjustment as provided in Section 8. As used herein, the following terms shall have the following meanings: “Act” means the Securities Act of 1933, as amended. “Company” means ChromaDex Corporation, a Delaware corporation, and any successor or surviving entity that assumes the obligations ofthe Company under this Agreement pursuant to Section 8(a). “Charter” means the Company’s Articles of Incorporation, Certificate of Incorporation or other constitutional document, as may beamended from time to time. “Common Stock” means the Company’s common stock, $0.001 par value per share; “Exercise Price” means $1.062 per share, subject to adjustment pursuant to Section 8;“Merger Event” means any sale, lease or other transfer of all or substantially all assets of the Company or any merger or consolidationinvolving the Company in which the Company is not the surviving entity, or in which the outstanding shares of the Company’s capital stock areotherwise converted into or exchanged for shares of preferred stock or other securities or property of another entity; “Purchase Price” means, with respect to any exercise of this Agreement, an amount equal to the Exercise Price as of the relevant timemultiplied by the number of shares of Common Stock. “SEC” means the U.S. Securities and Exchange Commission. “Warrant Coverage” means $445,000. -39- SECTION 2. TERM OF THE AGREEMENT. Except as otherwise provided for herein, the term of this Agreement and the right to purchase Common Stock as granted herein (the “Warrant) shallcommence on the Effective Date and shall be exercisable for a period ending five (5) years from the Effective Date. SECTION 3. EXERCISE OF THE PURCHASE RIGHTS. (a) Exercise. The purchase rights set forth in this Agreement are exercisable by the Warrantholder, in whole or in part, at any time, or fromtime to time, prior to the expiration of the term set forth in Section 2, by tendering to the Company at its principal office a notice of exercise in the formattached hereto as Exhibit I (the “Notice of Exercise”), duly completed and executed. Promptly upon receipt of the Notice of Exercise and the payment of thePurchase Price in accordance with the terms set forth below, and in no event later than three (3) days thereafter, the Company shall issue to the Warrantholdera certificate for the number of shares of Common Stock purchased and shall execute the acknowledgment of exercise in the form attached hereto as Exhibit II(the “Acknowledgment of Exercise”) indicating the number of shares which remain subject to future purchases, if any. The Purchase Price may be paid at the Warrantholder’s election either (i) by cash or check, or (ii) by surrender of all or a portion of the Warrant forshares of Common Stock to be exercised under this Agreement and, if applicable, an amended Agreement representing the remaining number of sharespurchasable hereunder, as determined below (“Net Issuance”). If the Warrantholder elects the Net Issuance method, the Company will issue Common Stockin accordance with the following formula: X = Y(A-B)A Where:X =the number of shares of Common Stock to be issued to the Warrantholder. Y =the number of shares Common Stock requested to be exercised under this Agreement. A =the fair market value of one (1) share of Common Stock at the time of issuance of such shares of Common Stock. B =the Exercise Price. For purposes of the above calculation, current fair market value of Common Stock shall mean with respect to each share of Common Stock: (i) if the Common Stock is traded on a securities exchange, the fair market value shall be deemed to be the product of (x) the priorday closing price before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into whicheach share of Common Stock is convertible (as applicable) at the time of such exercise; or (ii) if the Common Stock is traded over-the-counter, the fair market value shall be deemed to be the product of (x) the prior dayclosing bid and asked price quoted on the NASDAQ system (or similar system) before the day the current fair market value of the securities is beingdetermined and (y) the number of shares of Common Stock into which each share of Common Stock is convertible (as applicable) at the time of such exercise; (iii) if at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ National Market or theover-the-counter market, the current fair market value of Common Stock shall be the product of (x) the highest price per share which the Company couldobtain from a willing buyer (not a current employee or director) for shares of Common Stock sold by the Company, from authorized but unissued shares, asdetermined in good faith by its Board of Directors and (y) the number of shares of Common Stock into which each share of Common Stock is convertible (asapplicable) at the time of such exercise, unless the Company shall become subject to a Merger Event, in which case the fair market value of Common Stockshall be deemed to be the per share value received by the holders of the Company’s Common Stock on a common equivalent basis pursuant to such MergerEvent. Upon partial exercise by either cash or Net Issuance, the Company shall promptly issue an amended Agreement representing the remaining numberof shares purchasable hereunder. All other terms and conditions of such amended Agreement shall be identical to those contained herein, including, but notlimited to the Effective Date hereof. -40- (b) Exercise Prior to Expiration. To the extent this Agreement is not previously exercised as to all Common Stock subject hereto, and if thefair market value of one share of the Common Stock is greater than the Exercise Price then in effect, this Agreement shall be deemed automatically exercisedpursuant to Section 3(a) (even if not surrendered) immediately before its expiration. For purposes of such automatic exercise, the fair market value of oneshare of the Common Stock upon such expiration shall be determined pursuant to Section 3(a). To the extent this Agreement or any portion thereof isdeemed automatically exercised pursuant to this Section 3(b), the Company agrees to promptly notify the Warrantholder of the number of shares of CommonStock, if any, the Warrantholder is to receive by reason of such automatic exercise. SECTION 4. RESERVATION OF SHARES. During the term of this Agreement, the Company will at all times have authorized and reserved a sufficient number of shares of its Common Stock toprovide for the exercise of the rights to purchase Common Stock as provided for herein, and shall have authorized and reserved a sufficient number of sharesof its Common Stock to provide for the conversion of the shares of Common Stock issuable hereunder. SECTION 5. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Agreement, but in lieu of such fractional sharesthe Company shall make a cash payment therefor upon the basis of the then fair market value of one share of Common Stock. SECTION 6. NO RIGHTS AS STOCKHOLDER. This Agreement does not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Company prior to the exercise of thisAgreement. SECTION 7. WARRANTHOLDER REGISTRY. The Company shall maintain a registry showing the name and address of the registered holder of this Agreement. Warrantholder’s initial address, forpurposes of such registry, is set forth below Warrantholder’s signature on this Agreement. Warrantholder may change such address by giving written noticeof such changed address to the Company. SECTION 8. ADJUSTMENT RIGHTS. The Exercise Price and the number of shares of Common Stock purchasable hereunder are subject to adjustment, as follows: (a) Merger Event. If at any time there shall be Merger Event, then, as a part of such Merger Event, lawful provision shall be made so that theWarrantholder shall thereafter be entitled to receive, upon exercise of this Agreement, the number of shares of Common Stock or other securities or property(collectively, “Reference Property”) that the Warrantholder would have received in connection with such Merger Event if Warrantholder had exercised thisAgreement immediately prior to the Merger Event. In any such case, appropriate adjustment (as determined in good faith by the Company’s Board ofDirectors) shall be made in the application of the provisions of this Agreement with respect to the rights and interests of the Warrantholder after the MergerEvent to the end that the provisions of this Agreement (including adjustments of the Exercise Price and adjustments to ensure that the provisions of thisSection 8 shall thereafter be applicable, as nearly as possible, to the purchase rights under this Agreement in relation to any Reference Property thereafteracquirable upon exercise of such purchase rights) shall continue to be applicable in their entirety, and to the greatest extent possible. Without limiting theforegoing, in connection with any Merger Event, upon the closing thereof, the successor or surviving entity shall assume the obligations of thisAgreement; provided that the foregoing assumption requirement shall not apply if (i) the consideration to be paid for or in respect of the outstanding sharesof Common Stock in such Merger Event consists solely of cash and/or readily marketable securities, and (ii) the value of such consideration (as determined atclosing in accordance with the definitive executed transaction documents) to be paid for or in respect of each outstanding share of Common Stock is at leastthree (3) times the Exercise Price in effect as of immediately prior to the closing of such Merger Event. In connection with a Merger Event and uponWarrantholder’s written election to the Company, the Company shall cause this Warrant Agreement to be exchanged for the consideration that Warrantholderwould have received if Warrantholder had chosen to exercise its right to have shares issued pursuant to the Net Issuance provisions of this Warrant Agreementwithout actually exercising such right, acquiring such shares and exchanging such shares for such consideration. The provisions of this Section 8(a) shallsimilarly apply to successive Merger Events. (b) Reclassification of Shares. Except for Merger Events subject to Section 8(a), and subject to Section 8(f), if the Company at any timeshall, by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase rights under thisAgreement exist into the same or a different number of securities of any other class or classes, this Agreement shall thereafter represent the right to acquiresuch number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchaserights under this Agreement immediately prior to such combination, reclassification, exchange, subdivision or other change. The provisions of this Section8(b) shall similarly apply to successive combination, reclassification, exchange, subdivision or other change. -41- (c) Subdivision or Combination of Shares. If the Company at any time shall combine or subdivide its Common Stock, (i) in the case of asubdivision, the Exercise Price shall be proportionately decreased and the number of shares of Common Stock issuable hereunder shall be proportionatelyincreased, or (ii) in the case of a combination, the Exercise Price shall be proportionately increased and the number of shares of Common Stock issuablehereunder shall be proportionately decreased. (d) Stock Dividends. If the Company at any time while this Agreement is outstanding and unexpired shall: (i) pay a dividend with respect to the Common Stock payable in Common Stock, then the Exercise Price shall be adjusted, fromand after the date of determination of stockholders entitled to receive such dividend or distribution, to that price determined by multiplying the ExercisePrice in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Common Stockoutstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total number of shares of Common Stockoutstanding immediately after such dividend or distribution; or (ii) make any other distribution with respect to Common Stock (or stock into which the Common Stock is convertible, asapplicable), except any distribution specifically provided for in any other clause of this Section 8, then, in each such case, provision shall be made by theCompany such that the Warrantholder shall receive upon exercise or conversion of this Warrant a proportionate share of any such distribution as though itwere the holder of the Common Stock (or other stock for which the Common Stock is convertible, as applicable) as of the record date fixed for thedetermination of the stockholders of the Company entitled to receive such distribution. (e) [Intentionally Omitted.] (f) Notice of Adjustments. If: (i) the Company shall declare any dividend or distribution upon its stock, whether in stock, cash, property orother securities; (ii) there shall be any Merger Event; (iii) the Company shall sell, lease, license or otherwise transfer all or substantially all of its assets; or (iv)there shall be any voluntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall send to theWarrantholder: (A) at least thirty (30) days’ prior written notice of the date on which the books of the Company shall close or a record shall be taken for suchdividend, distribution, subscription rights (specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights tovote in respect of such Merger Event, dissolution, liquidation or winding up; and (B) in the case of any such Merger Event, sale, lease, license or othertransfer of all or substantially all assets, dissolution, liquidation or winding up, at least thirty (30) days’ prior written notice of the date when the same shalltake place (and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other propertydeliverable upon such Merger Event, dissolution, liquidation or winding up). Each such written notice shall set forth, in reasonable detail, (i) the event requiring the notice, and (ii) if any adjustment is required to be made, (A)the amount of such adjustment, (B) the method by which such adjustment was calculated, (C) the adjusted Exercise Price (if the Exercise Price has beenadjusted), and (D) the number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be given in accordance with Section12(g) below. (g) Reserved. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. (a) Reservation of Common Stock. The Common Stock issuable upon exercise of the Warrantholder’s rights has been duly and validlyreserved and, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and non-assessable, and will be free of anytaxes, liens, charges or encumbrances of any nature whatsoever; provided, that the Common Stock issuable pursuant to this Agreement may be subject torestrictions on transfer under state and/or federal securities laws. The Company has made available to the Warrantholder true, correct and complete copies ofits Charter and current bylaws. The issuance of certificates for shares of Common Stock upon exercise of this Agreement shall be made without charge to theWarrantholder for any issuance tax in respect thereof. The Company shall not be required to pay any tax which may be payable in respect of any transfer andthe issuance and delivery of any certificate in a name other than that of the Warrantholder. (b) Due Authority. The execution and delivery by the Company of this Agreement and the performance of all obligations of the Companyhereunder, including the issuance to Warrantholder of the right to acquire the shares of Common Stock and the Common Stock into which it may beconverted, have been duly authorized by all necessary corporate action on the part of the Company. This Agreement: (1) does not violate the Company’sCharter or current bylaws; (2) does not contravene any law or governmental rule, regulation or order applicable to it; and (3) does not and will not contraveneany provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which it is a party or by which it is bound. ThisAgreement constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its terms. (c) Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of anystate, federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of itsobligations under this Agreement, except for the filing of notices pursuant to Regulation D under the Act and any filing required by applicable statesecurities law, which filings will be effective by the time required thereby. -42- (d) Issued Securities. All issued and outstanding shares of Common Stock or any other securities of the Company have been dulyauthorized and validly issued and are fully paid and nonassessable. All outstanding shares of Common Stock, Common Stock and any other securities wereissued in full compliance with all federal and state securities laws. In addition, as of the date immediately preceding the date of this Agreement: (i) The authorized capital of the Company consists of (A) 150,000,000 shares of Common Stock, of which 106,913,985 shares areissued and outstanding, and (B) 0 shares of Preferred Stock. (ii) The Company has reserved 18,626,802 shares of Common Stock for issuance under its Equity Incentive Plan(s), under which13,852,830 options are outstanding. There are no other options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwiseacquire any authorized but unissued shares of the Company’s capital stock or other securities of the Company. The Company has no outstanding loans toany employee, officer or director of the Company, and the Company agrees not to enter into any such loan or otherwise guarantee the payment of any loanmade to an employee, officer or director by a third party. (iii) In accordance with the Company’s Charter, no stockholder of the Company has preemptive rights to purchase new issuancesof the Company’s capital stock. (e) Registration Rights. The Company agrees that the shares of Common Stock issued and issuable upon exercise of this Warrant, shall havethe “Piggyback,” and S-3 registration rights, or S-1 registration rights in the event that the Company is not S-3 eligible, pursuant to and as set forth in theCompany’s investor rights agreement or similar agreement (the “Investor Rights Agreement”), as applicable, on a pari passu basis with the holders ofoutstanding shares of Common Stock who are parties thereto. The provisions set forth in the Company’s Investor Rights Agreement or similar agreementrelating to such registration rights in effect as of the Effective Date may not be amended, modified or waived without the prior written consent of theWarrantholder unless such amendment, modification or waiver affects the rights associated with the shares of Common Stock issued and issuable uponexercise hereof in the same manner as such amendment, modification, or waiver affects the rights associated with all outstanding shares of Common Stockwhose holders are parties thereto. If at any time the Company shall determine to file with the SEC a registration statement relating to an offering for theaccount of others under the Act of any of its equity securities (other than on Form S-4, Form S-8 or their then equivalents relating to equity securities to beissued solely in connection with any acquisition of any entity or business, or equity securities issuable in connection with stock option or other bona fide,employee benefit plans) the Company shall use its best efforts to include in such registration statement all of the shares of Common Stock issued and issuableupon exercise of this Warrant. Notwithstanding the contrary in this Section 9(e), the Company shall not be obligated to register such shares of CommonStock if at such time such shares may be sold without restriction pursuant to Rule 144. (f) Other Commitments to Register Securities. Except as set forth in this Agreement, the Company is not, pursuant to the terms of any otheragreement currently in existence, under any obligation to register under the Act any of its presently outstanding securities or any of its securities which mayhereafter be issued. (g) Exempt Transaction. Subject to the accuracy of the Warrantholder’s representations in Section 10, the issuance of the Common Stockupon exercise of this Agreement, and the issuance of the Common Stock upon conversion of the Common Stock, will each constitute a transaction exemptfrom (i) the registration requirements of Section 5 of the Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the applicablestate securities laws. (h) Compliance with Rule 144. If the Warrantholder proposes to sell Common Stock issuable upon the exercise of this Agreement, or theCommon Stock into which it is convertible, in compliance with Rule 144 promulgated by the SEC, then, upon Warrantholder’s written request to theCompany, the Company shall furnish to the Warrantholder, within ten days after receipt of such request, a written statement confirming the Company’scompliance with the filing requirements of the SEC as set forth in such Rule, as such Rule may be amended from time to time. (i) Information Rights. During the term of this Warrant, Warrantholder shall be entitled to the information rights contained in Section 7.1 ofthe Loan Agreement, and Section 7.1 of the Loan Agreement is hereby incorporated into this Agreement by this reference as though fully set forth herein,provided, however, that the Company shall not be required to deliver a Compliance Certificate once all Indebtedness (as defined in the Loan Agreement)owed by the Company to Warrantholder has been repaid. SECTION 10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER. This Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder: (a) Investment Purpose. The right to acquire Common Stock is being acquired for investment and not with a view to the sale or distributionof any part thereof, and the Warrantholder has no present intention of selling or engaging in any public distribution of such rights or the Common Stockexcept pursuant to an effective registration statement or an exemption from the registration requirements of the Act. -43- (b) Private Issue. The Warrantholder understands (i) that the Common Stock issuable upon exercise of this Agreement is not registeredunder the Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Agreement will be exempt from theregistration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth inthis Section 10. (c) Financial Risk. The Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluatingthe merits and risks of its investment, and has the ability to bear the economic risks of its investment. (d) Risk of No Registration. The Warrantholder understands that if the Company does not register with the SEC pursuant to Section 12 ofthe Securities Exchange Act of 1934 (the “1934 Act”), or file reports pursuant to Section 15(d) of the 1934 Act, or if a registration statement covering thesecurities under the Act is not in effect when it desires to sell (i) the rights to purchase Common Stock pursuant to this Agreement or (ii) the Common Stockissuable upon exercise of the right to purchase, it may be required to hold such securities for an indefinite period. The Warrantholder also understands thatany sale of (A) its rights hereunder to purchase Common Stock or (B) Common Stock issued or issuable hereunder which might be made by it in relianceupon Rule 144 under the Act may be made only in accordance with the terms and conditions of that Rule. (e) Accredited Investor. Warrantholder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501 ofRegulation D, as presently in effect. (f) Short Sales. Warrantholder warrants that it is has not previously engaged in short sales of the Common Stock, and Warrantholdercovenants that it will not engage in short sales of the Common Stock. Subject to compliance with applicable federal and state securities laws, this Agreement and all rights hereunder are transferable, in whole or in part,with the Company’s prior written consent (provided that no consent shall be required for transfers to affiliates of Warrantholder or if the Company is indefault under the Loan Agreement) and without charge to the holder hereof (except for transfer taxes) upon surrender of this Agreement properlyendorsed. Each taker and holder of this Agreement, by taking or holding the same, consents and agrees that this Agreement, when endorsed in blank, shall bedeemed negotiable, and that the holder hereof, when this Agreement shall have been so endorsed and its transfer recorded on the Company’s books, shall betreated by the Company and all other persons dealing with this Agreement as the absolute owner hereof for any purpose and as the person entitled to exercisethe rights represented by this Agreement. The transfer of this Agreement shall be recorded on the books of the Company upon receipt by the Company of anotice of transfer in the form attached hereto as Exhibit III (the “Transfer Notice”), at its principal offices and the payment to the Company of all transfer taxesand other governmental charges imposed on such transfer. Until the Company receives such Transfer Notice, the Company may treat the registered ownerhereof as the owner for all purposes. SECTION 11. MISCELLANEOUS. (a) Effective Date. The provisions of this Agreement shall be construed and shall be given effect in all respects as if it had been executedand delivered by the Company on the date hereof. This Agreement shall be binding upon any successors or assigns of the Company. (b) Remedies. In the event of any default hereunder, the non-defaulting party may proceed to protect and enforce its rights either by suit inequity and/or by action at law, including but not limited to an action for damages as a result of any such default, and/or an action for specific performance forany default where Warrantholder will not have an adequate remedy at law and where damages will not be readily ascertainable. The Company expresslyagrees that it shall not oppose an application by the Warrantholder or any other person entitled to the benefit of this Agreement requiring specificperformance of any or all provisions hereof or enjoining the Company from continuing to commit any such breach of this Agreement. (c) No Impairment of Rights. The Company will not, by amendment of its Charter or through any other means, avoid or seek to avoid theobservance or performance of any of the terms of this Agreement, but will at all times in good faith assist in the carrying out of all such terms and in thetaking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against impairment. (d) Additional Documents. The Company, upon execution of this Agreement, shall provide the Warrantholder with certified resolutionswith respect to the representations, warranties and covenants set forth in Sections 9(a) through 9(d), 9(f) and 9(g). The Company shall also supplydocumentation reasonably necessary to evaluate whether to exercise (in cash or a net issuance basis) this Warrant, including without limitation, (i) anymerger/purchase/asset sale agreement and related documents and estimated payout allocations to each of the respective stockholders, warrant and optionholders in connection with a Merger Event, (ii) the most recent capitalization tables, 409A valuations (if any), and board determination of share value(including any waterfall or per share allocations provided to the share/unitholders), and (iii) most recent articles of incorporation or organization (asapplicable). (e) Attorney’s Fees. In any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, theprevailing party shall be entitled to attorneys’ fees and expenses and all costs of proceedings incurred in enforcing this Agreement. For the purposes of thisSection 12(e), attorneys’ fees shall include without limitation fees incurred in connection with the following: (i) contempt proceedings; (ii) discovery; (iii)any motion, proceeding or other activity of any kind in connection with an insolvency proceeding; (iv) garnishment, levy, and debtor and third partyexaminations; and (v) post-judgment motions and proceedings of any kind, including without limitation any activity taken to collect or enforce anyjudgment. -44- (f) Severability. In the event any one or more of the provisions of this Agreement shall for any reason be held invalid, illegal orunenforceable, the remaining provisions of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by amutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal orunenforceable provision. (g) Notices. Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or othercommunication that is required, contemplated, or permitted under this Agreement or with respect to the subject matter hereof shall be in writing, and shall bedeemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission by facsimile or hand delivery iftransmission or delivery occurs on a business day at or before 5:00 pm in the time zone of the recipient, or, if transmission or delivery occurs on a non-business day or after such time, the first business day thereafter, or the first business day after deposit with an overnight express service or overnight maildelivery service; or (ii) the third calendar day after deposit in the United States mails, with proper first class postage prepaid, and shall be addressed to theparty to be notified as follows: If to Warrantholder: HERCULES TECHNOLOGY II, L.P.Legal DepartmentAttention: Chief Legal Officer400 Hamilton Avenue, Suite 310Palo Alto, CA 94301Facsimile: 650-473-9194Telephone: 650-289-3060 (i) If to the Company: CHROMADEX CORPORATIONAttention: Chief Executive Officer10005 Muirlands Blvd., Suite GIrvine, CA 92618Facsimile: 949-356-1601Telephone: 949-419-0288or to such other address as each party may designate for itself by like notice. (h) Entire Agreement; Amendments. This Agreement constitute the entire agreement and understanding of the parties hereto in respect ofthe subject matter hereof, and supersede and replace in their entirety any prior proposals, term sheets, letters, negotiations or other documents or agreements,whether written or oral, with respect to the subject matter hereof (including Warrantholder’s proposal letter dated August 6, 2014 and accepted by theCompany on August 13, 2014). None of the terms of this Agreement may be amended except by an instrument executed by each of the parties hereto. (i) Headings. The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation ofthis Agreement or any provisions hereof. (j) No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event anambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption orburden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. (k) No Waiver. No omission or delay by Warrantholder at any time to enforce any right or remedy reserved to it, or to require performanceof any of the terms, covenants or provisions hereof by the Company at any time designated, shall be a waiver of any such right or remedy to whichWarrantholder is entitled, nor shall it in any way affect the right of Warrantholder to enforce such provisions thereafter. (l) Survival. All agreements, representations and warranties contained in this Agreement or in any document delivered pursuant hereto shallbe for the benefit of Warrantholder and shall survive the execution and delivery of this Agreement and the expiration or other termination of this Agreement. (m) Governing Law. This Agreement have been negotiated and delivered to Warrantholder in the State of California, and shall have beenaccepted by Warrantholder in the State of California. Delivery of Common Stock to Warrantholder by the Company under this Agreement is due in the Stateof California. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict oflaws principles that would cause the application of laws of any other jurisdiction. -45- (n) Consent to Jurisdiction and Venue. All judicial proceedings arising in or under or related to this Agreement may be brought in any stateor federal court of competent jurisdiction located in the State of California. By execution and delivery of this Agreement, each party hereto generally andunconditionally: (a) consents to personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or venue in SantaClara County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agreesto be bound by any judgment rendered thereby in connection with this Agreement. Service of process on any party hereto in any action arising out of orrelating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 12(g), and shall be deemed effectiveand received as set forth in Section 12(g). Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right ofeither party to bring proceedings in the courts of any other jurisdiction. (o) Mutual Waiver of Jury Trial. Because disputes arising in connection with complex financial transactions are most quickly andeconomically resolved by an experienced and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), theparties desire that their disputes be resolved by a judge applying such applicable laws. EACH OF THE COMPANY AND WARRANTHOLDERSPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM,THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY THE COMPANY AGAINST WARRANTHOLDER ORITS ASSIGNEE OR BY WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE COMPANY. This waiver extends to all such Claims, including Claims thatinvolve Persons other than Company and Warrantholder; Claims that arise out of or are in any way connected to the relationship between the Company andWarrantholder; and any Claims for damages, breach of contract, specific performance, or any equitable or legal relief of any kind, arising out of thisAgreement. (p) Judicial Reference. If the waiver of jury trial set forth above is ineffective or unenforceable, the parties agree that all Claims shall beresolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable referee or, if theparties cannot agree, a referee selected by the Presiding Judge of Santa Clara County, California. Such proceeding shall be conducted in Santa Clara County,California, with California rules of evidence and discovery applicable to such proceeding. (q) Prejudgment Relief. In the event Claims are to be resolved by arbitration, either party may seek from a court of competent jurisdictionidentified in Section 12(n), any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extentpermitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference. (r) Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number ofcounterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of whichcounterparts shall constitute but one and the same instrument. [Remainder of Page Intentionally Left Blank] -46- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by its officers thereunto duly authorized as of the EffectiveDate. COMPANY: CHROMADEX CORPORATION By:Name:Title: WARRANT HOLDER: HERCULES TECHNOLOGY II, L.P.,a Delaware limited partnership By:Hercules Technology SBIC Management, LLC,its General Partner By:Hercules Technology Growth Capital, Inc., its Manager By: Name: Ben BangTitle: Associate General Counsel -47- EXHIBIT I NOTICE OF EXERCISE To: CHROMADEX CORPORATION (1)The undersigned Warrantholder hereby elects to purchase [_______] shares of the Common Stock of ChromaDex Corporation, pursuant to the termsof the Agreement dated the 29th day of September, 2014 (the “Agreement”) between ChromaDex Corporation and the Warrantholder, and [CASHPAYMENT: tenders herewith payment of the Purchase Price in full, together with all applicable transfer taxes, if any.] [NET ISSUANCE: electspursuant to Section 3(a) of the Agreement to effect a Net Issuance.] (2)Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as isspecified below. (Name) (Address) WARRANT HOLDER:HERCULES TECHNOLOGY II, L.P., a Delaware limited partnership By: Hercules Technology SBIC Management, LLC,its General Partner By: Hercules Technology Growth Capital, Inc.,its Manager By: Title: Name: -48- EXHIBIT II ACKNOWLEDGMENT OF EXERCISEThe undersigned [____________________________________], hereby acknowledge receipt of the “Notice of Exercise” from HerculesTechnology L.P. II, a Delaware limited partnership to purchase [____] shares of the Common Stock of ChromaDex Corporation pursuant to the terms of theAgreement, and further acknowledges that [______] shares remain subject to purchase under the terms of the Agreement. COMPANYCHROMADEX CORPORATION By: Title: Date: -49- EXHIBIT III TRANSFER NOTICE (To transfer or assign the foregoing Agreement execute this form and supply required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, the foregoing Agreement and all rights evidenced thereby are hereby transferred and assigned to (Please Print) whose address is Dated: Holder’s Signature: Holder’s Address: Signature Guaranteed: NOTE: The signature to this Transfer Notice must correspond with the name as it appears on the face of the Agreement, without alteration orenlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence ofauthority to assign the foregoing Agreement. Acknowledged and accepted: CHROMADEX CORPORATION By: Title: Date: -50-  SCHEDULE 1 SUBSIDIARIES NameJurisdictionDate of Formation ChromaDex Inc. California, USA February 22, 2000 ChromaDex Analytics, Inc. Nevada, USA February 5, 2003 Spherix Consulting, Inc. Delaware, USA April 11, 2008ChromaDex UK LimitedNorthern Irelend, UKAugust 4, 2014ChromaSolar, Inc.Nevada, USA February 14, 2011 -51- SCHEDULE 1.1 COMMITMENTS LENDERTERM COMMITMENTHERCULES TECHNOLOGY II, L.P.$5,000,000TOTAL COMMITMENTS$5,000,000 SCHEDULE 1A PERMITTED INDEBTEDNESS Debt Provider Start DateEnd DateEstimated PaymentsRemaining(Including Interest)*Equipment Leased with LienGE Capital SolutionsMar, 2010Feb, 2015$29,184Laboratory EquipmentQuantum AnalyticsNov, 2011Oct, 2016$19,685Laboratory EquipmentCIT Financial ServicesJan, 2012Dec, 2016$28,366Phone SystemThermo Fisher FinanceDec, 2012Nov, 2017$14,008Laboratory EquipmentUS BankJan, 2013Dec, 2017$65,392Laboratory EquipmentUS BankJuly, 2013June, 2018$51,438Laboratory EquipmentSusquehanna CommercialOct, 2013Sep, 2018$51,624Laboratory EquipmentM2 Lease FundOct, 2013Sep, 2018$76,419Laboratory EquipmentQuantum AnalyticsApr, 2014Mar, 2019$244,294Laboratory EquipmentQuantum AnalyticsSep, 2014Aug, 2019$121,867Laboratory Equipment -52- SCHEDULE 1B PERMITTED INVESTMENTS 1. Leases of equipment, security agreements naming the Company or its subsidiaries as secured party · Bruker FTNIR Lab Equipment loaned to our customer “Beehive Botanicals” located at 16297 W. Nursery Road, Hayward, WI 54843. · Bruker FTNIR Lab Equipment loaned to our customer “Soft Gel Technologies, Inc.” located at 6982 Bandini Blvd., Los Angeles, CA 90040. 2. 670,658 shares of Series I Preferred Shares of NeutriSci International Inc. (“NeutriSci”), an Alberta corporation located in Canada. Of this amount, anumber of shares having a value of $500,000 will be transferred to Alpha Capital Anstalt, a Lichtenstein anstalt upon the earlier of (a) December 31, 2014;or (b) the consummation by NeutriSci of any action resulting in the shares of its common stock being listed on an exchange. In addition, a number ofshares having a value of $50,000 will be transferred to Palladium Capital Advisors, LLC upon the consummation by NeutriSci of any action resulting inthe shares of its common stock being listed on an exchange. SCHEDULE 1C PERMITTED LIENS The Company currently has following capital leases, which there are liens on the equipment we are leasing. Lease Provider(Lien Holder)Start DateEnd DateEstimated PaymentsRemaining(Including Interest)*Equipment Leased with LienGE Capital SolutionsMar, 2010Feb, 2015$29,184Laboratory EquipmentQuantum AnalyticsNov, 2011Oct, 2016$19,685Laboratory EquipmentCIT Financial ServicesJan, 2012Dec, 2016$28,366Phone SystemThermo Fisher FinanceDec, 2012Nov, 2017$14,008Laboratory EquipmentUS BankJan, 2013Dec, 2017$65,392Laboratory EquipmentUS BankJuly, 2013June, 2018$51,438Laboratory EquipmentSusquehanna CommercialOct, 2013Sep, 2018$51,624Laboratory EquipmentM2 Lease FundOct, 2013Sep, 2018$76,419Laboratory EquipmentQuantum AnalyticsApr, 2014Mar, 2019$244,294Laboratory EquipmentQuantum AnalyticsSep, 2014Aug, 2019$121,867Laboratory Equipment* The remaining payment amount is as of end of September 30, 2014. SCHEDULE 5.5 ACTIONS BEFORE GOVERNMENTAL AUTHORITIES An inquiry by Securities Commission Exchange related to our restatements of financials during fiscal year 2013 and our internal controls for thefiscal year 2012 and 2013. SCHEDULE 5.10 INTELLECTUAL PROPERTY Behind in payments on the following license, but neither a material breach nor failure to perform material obligation because still within cureperiod: License Agreement between ChromaDex, Inc. and Green Molecular, SL,dated August 1, 2013Schedule 5.11 Borrower Products -53- SCHEDULE 5.10 CAPITALIZATION (As of September 30, 2014) ChromaDex CorporationAuthorized / Reserved(Shares)Issued andOutstanding(Shares)Common Stock150,000,000105,239,985Unvested Restricted Stock- 1,674,000Total Common Stock, Including Unvested Restricted Stock150,000,000106,913,985 Stock Options 18,626,802 14,022,830 SCHEDULE 7.16 POST-CLOSING ITEMS Borrower shall deliver or cause to be delivered to Agent: 1. On or before October 31, 2014, a Consent of Landlord in form reasonably satisfactory to Agent with the landlord of the premises leased by Borrowerat 10005 Muirlands Blvd. Suite G, Irvine, CA 92618. 2. On or before October 31, 2014, a Consent of Landlord in form reasonably satisfactory to Agent with the landlord of the premises leased by Borrowerat 11900 Parklawn Drive, Suite 200, Rockville, MD 20852. 3. On or before November 7, 2014, a Consent of Landlord in form reasonably satisfactory to Agent with the landlord of the premises leased byChromaDex Analytics, Inc. at 2830 Wilderness Place, Boulder, CO 80301. 4. On or before October 31, 2014, a Bailee Acknowledgment in form reasonably satisfactory to Agent from Westset Distribution, Inc., the bailee inpossession of Borrower’s inventory located at 14041 Rosecrans Ave., La Mirada, CA 90638. 5. On or before October 31, 2014, the Bylaws of Spherix Consulting, Inc. 6. On or before October 5, 2014, the Articles of Incorporation, Bylaws and Good Standing Certificates of ChromaDex, Inc. Exhibit 10.40 LICENSE AGREEMENT THIS LICENSE AGREEMENT is made as of this October 15, 2014 (“Effective Date”) by and between the UNIVERSITY OF MISSISSIPPI, an educationalinstitution with a principal address at University, Mississippi 38677 (“UM”) and CHROMADEX, a corporation organized and existing under the laws ofCalifornia with a principal address 10005 Muirlands Blvd Suite G, Irvine, California 92618 (“CHROMADEX”) RECITALS WHEREAS, UM is the owner of certain patent applications and other technology related to a proprietary extract of blue green algae. WHEREAS, CHROMADEX wishes to acquire certain rights and licenses with respect to the proprietary extract of blue green algae in accordance with theterms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound herby, the parties heretoagree as follows: ARTICLE 1 DEFINITIONS 1.1Unless otherwise provided in this Agreement, the following terms when used with initial capital letters shall have the meanings set forth below: "Affiliate" means, when used with reference to CHROMADEX, any person directly or indirectly controlling, controlled by or under common control withCHROMADEX. "Bankruptcy Event" means the person in question becomes insolvent, or voluntary or involuntary proceedings by or against such person are instituted inbankruptcy or under any insolvency law, or a receiver or custodian is appointed for such person, or proceedings are instituted by or against such person forcorporate dissolution of such person, which proceedings, if involuntary, shall not have been dismissed within sixty (60) days after the date of filing, or suchperson makes an assignment for the benefit of creditors, or substantially all of the assets of such person are seized or attached and not released within sixty(60) days thereafter. "Calendar Quarter" means each three-month period, or any portion thereof, beginning on January 1, April 1, July 1 and October 1. “Calendar Year” means each twelve-month period commencing upon January 1. "Confidential Information" means all technical information, developments, discoveries, methods, techniques, formulae, processes and other informationrelating to the Licensed Technology that UM or CHROMADEX owns or controls on the date hereof or owns or controls during the term of this Agreement,including by way of illustration and not limitation, designs, data, drawings, documents, models, business practices, financial data and other similarinformation. "Field" means the use of the proprietary blue green algae extract in food, beverage, and dietary supplement products in all therapeutic categories for humanuse. “Improvements” means any improvement, modification or other refinement, regardless of the patentability thereof to (a) the subject matter of the LicensedTechnology, within the scope of the inventions claimed in the Patents, or (b) the development, manufacture, use or sale of which, except for the licensesgranted herein, would infringe a valid claim of any of the Patents. “Know-How” means all information, technical data and assistance, inventions and discoveries of UM disclosed or provided to CHROMADEX by UMrelating to the exploitation of any invention described in the Patents. "Licensed Technology" means and includes UM Know-How, the Patents and Improvements.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION “Net Sales” means the gross amount charged by CHROMADEX for a Licensed Product less the items specifically listed in Schedule C. If a Licensed Productis sold for consideration other than solely cash, the fair market value of such other consideration shall be included in the Net Sales Price. If a LicensedProduct is sold in a package or kit containing another product or service which is not a Licensed Product, the Net Sales Price for purposes of calculating theroyalty under Article 3 hereof shall be calculated by multiplying the Net Sales Price of the combination product or service by the fraction of A/A+B, where"A" is the Net Sales Price of the Licensed Product or Service when sold separately and "B" is the Net Sales Price of the other product or service or products orservices when sold. In the event it becomes necessary for CHROMADEX or a Sublicensee to license patent rights owned by a Third Party to make, use or sella Licensed Product, then CHROMADEX or Sublicensee shall have the right to obtain a license from such Third Party and CHROMADEX shall have the rightto credit fifty percent (50%) of any payment made to such a Third Party under such license against up to fifty percent (50%) of the amounts payable to UMunder Article 3 on a going-forward basis. Any credit pursuant to this Paragraph shall be available to CHROMADEX with respect to the full royalty payablepursuant to Article 3, but no such credit shall be available if the License Product is sold in a package or kit containing another product which is not aLicensed Product if the Third Party license is necessary solely because of another product and not the Licensed Product. In addition, any credit thatCHROMADEX is unable to use in full within the particular royalty reporting period in which such credit is earned may be rolled forward from one royaltyreporting period to the next. "Patent(s)" means the issued patents summarized in Appendix A which relate to the Licensed Technology, owned or controlled by UM during the term of thisAgreement. “Patent Expenses” means (a) all out-of-pocket fees, expenses, and charges related to the Patents incurred by UM in connection with the preparation, filing,prosecution, issuance, re-issuance, re-examination, interference, and/or maintenance of applications for patent or equivalent protection for the Patentscurrently contained or that may be added with written approval of CHROMADEX to Appendix A, and (b) an administrative fee in the amount of fifteenpercent (15%) of any prosecution and maintenance fees as the result of new patent applications added to Appendix A by mutual written agreement of theparties. "Person" means an individual, partnership, corporation, joint venture, unincorporated association, or other entity, or a government or department of agencythereof. "Products" means any article or portion thereof, which is made, produced, or used in whole or in part, by or with the use of the Licensed Technology. “Sunk Patent Expenses” means Patent Expenses incurred by UM before the Effective Date of the Agreement. "Technical Information" means and includes all technical information, trade secrets, developments, discoveries, Know-How, methods, techniques, formulae,processes and other information relating to the Licensed Technology that UM owns or controls on the date hereof or owns or controls in the future, includingby way of illustration and not limitation, designs, data, drawings, documents, models, and other similar information. "Valid Claim" means a claim of an unexpired issued Patent that has not been withdrawn, canceled or disclaimed or held invalid by a court or governmentalauthority of competent jurisdiction in an unappealed or unappealable decision. ARTICLE 2GRANT OF LICENSE2.1Grant of License. Subject to the terms and conditions contained in this Agreement, UM hereby grants to CHROMADEX an exclusive, non-transferrable except otherwise allowed in this Agreement, worldwide, royalty-bearing right and license to use and practice the Licensed Technologyto make, have made, use, and sell Products in the Field. Notwithstanding the foregoing, UM expressly reserves a non-transferable royalty-free rightto use the Licensed Technology in the Field itself, including use by its faculty, staff and researchers, for educational and research purposes only.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 2.2Right to Sub-license. CHROMADEX shall not have the right to sub-license to any third party, in whole or in part, its rights under this Agreementwithout the written permission of UM, such permission to will not be unreasonably withheld. In the event CHROMADEX wishes to sub-license thePatent rights, UM and CHROMADEX will initiate good faith negotiations to determine equitable licensing terms and conditions. As a subsequentcondition of granting sub-licenses, CHROMADEX will provide UM with full and complete copies of all contracts and agreements between it andany sub-licensee within ten (10) business days after execution of same. UM will maintain such copies and their terms in confidence as required inArticle 8. A grant of a sub-license will be invalid if any agreement between CHROMADEX and such sub-licensee prohibits, restricts or conditionsCHROMADEX’s provision of such copies to UM as required in this article.2.3No Rights by Implication. No rights or licenses with respect to the Licensed Technology are granted or deemed granted hereunder or in connectionherewith, other than those rights or licenses expressly granted in this Agreement. ARTICLE 3LICENSING FEES3.1Upfront Payments. In consideration of the license granted hereunder, CHROMADEX shall pay UM the following non-refundable payments:(a) [*] dollars ($[*]) within fifteen (15) days of the Effective Date of this Agreement, and(b) [*] dollars ($[*]) within one hundred and eighty (180) days of the Effective Date of this Agreement.3.2Royalties. In further consideration of the rights and licenses granted hereunder, CHROMADEX shall pay UM a royalty of [*] percent ([*]%) of NetSales of all Products. CHROMADEX agrees to pay UM at least the following minimum royalties during the term of this Agreement:Calendar Year 1: $[*] Calendar Year 2: $[*] Calendar Year 3: $[*] Calendar Year 3 and beyond. The minimum shall increase [*]% per year over the Year 3 amount to a maximum of $[*] per year. 3.3Payments. Royalties and other amounts payable under this Agreement shall be paid within thirty (30) days following the last day of the CalendarQuarter in which royalties and other amounts accrue. The last such payment shall be made within thirty (30) days after termination of thisAgreement. Payments shall be deemed paid as of the day on which they are received by UM.3.4Reimbursement of Patent Expenses. CHROMADEX will reimburse UM’s Sunk Patent Expenses totaling $[*] within fifteen (15) days of theEffective Date. CHROMADEX will reimburse UM’s Patent Expenses incurred after the Effective Date within thirty (30) days of receipt of an invoicefrom UM detailing the Patent Expenses incurred by UM.3.5Reports. CHROMADEX shall deliver to UM within thirty (30) days after the end of each Calendar Quarter following commercial sale of a Product areport setting forth in reasonable detail the calculation of the royalties and other amounts payable to UM for such Calendar Quarter pursuant to thisArticle 3, including, without limitation, the Products sold in each country during such Calendar Quarter, the Net Sales thereof, and, within sixty (60)days after the end of each Calendar Quarter, and similar reports containing corresponding information relating to royalties payable due to sales bypermitted sub-licensees pursuant to Article 2.2. An example of an acceptable royalty report is provided in Appendix C.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 3.6Currency, Place of Payment, Interest.(a) All dollar amounts referred to in this Agreement are expressed in United States dollars. All payments to UM under this Agreement shall bemade in United States dollars (or other legal currency of the United States), as directed by UM, by check payable to the University ofMississippi” or by wire transfer to an account as UM may designate from time to time.(b) If CHROMADEX receives revenues from sales of Products in a currency other than United States dollars, royalties shall be converted intoUnited States dollars at the applicable conversion rate for the foreign currency as published in the “Exchange Rates” table in the easternedition of The Wall Street Journal as of the last date of the Calendar Quarter.(c) Amounts that are not paid when due shall accrue interest-from the due date until paid, at an annual rate equal to the “Prime Rate” plus 5% aspublished in the “Money Rates” table in the eastern edition of The Wall Street Journal as of the due date.3.7Records. CHROMADEX will maintain complete and accurate books and records that enable the royalties payable hereunder to be verified. Therecords for each Calendar Quarter shall be maintained for two years after the submission of each report under Article 3.7 hereof. Upon reasonableprior notice to CHROMADEX, UM and its accountants shall have access to the books and records of CHROMADEX to conduct a review or auditthereof no more than two (2) times per years. Such access shall be available during normal business hours. In the event such audit reveals any errorin the computation of Net Sales exceeding 5% of the amount owed, the CHROMADEX shall promptly reimburse UM for all reasonable expenses andcosts incurred in the conduct of such review or audit. ARTICLE 4CERTAIN OBLIGATIONS OF CHROMADEX4.1CHROMADEX Efforts. CHROMADEX shall use its reasonable efforts to develop for commercial use and to market Products as soon as practicable,and to continue to market Products as long as commercially viable, all as is consistent with sound and reasonable business practice.4.2Compliance with Laws. CHROMADEX shall use its best efforts to comply with all prevailing laws, rules and regulations pertaining to thedevelopment, testing, manufacture, marketing and import or export of Products. Without limiting the foregoing, CHROMADEX acknowledges thatthe transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commoditiesand technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations,among other things, prohibit or require a license for the export of certain types of technical data to specified countries. CHROMADEX will complywith all United States laws and regulations controlling the export of commodities and technical data.4.3Government Approvals. CHROMADEX will be responsible for obtaining, at its cost and expense, all governmental approvals required tocommercially market Products.4.4Patent Notices. CHROMADEX shall mark or cause to be marked all Products made or sold in the United States with all applicable patent numbers. Ifit is not practical for a Product to be so marked, then CHROMADEX shall mark or cause to be marked the package for each Product with allapplicable patent numbers. 4.5 Bankruptcy or Equivalent. CHROMADEX will provide written notice to UM prior to the filing of a petition in bankruptcy or equivalent ifCHROMADEX intends to file a voluntary petition, or, if known by CHROMADEX through statements or letters from a creditor or otherwise, if athird party intends to file an involuntary petition in bankruptcy against CHROMADEX. Notice will be given at least 75 days before the plannedfiling or, if such notice is not feasible, as soon as CHROMADEX is aware of the planned filing. CHROMADEX's failure to perform this obligation isdeemed to be a material pre-petition incurable breach under this Agreement not subject to the 60-day notice requirement of Section 9.2, and UM isdeemed to have terminated this Agreement forty-five (45) days prior to the filing of the bankruptcy.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION ARTICLE 5REPRESENTATIONS5.1Representations of UM. UM represents to CHROMADEX as follows:(a) this Agreement, when executed and delivered by UM, will be the legal, valid and binding obligation of UM, enforceable against UM inaccordance with its terms; (b)UM terminated a previous license agreement that granted rights to the Licensed Technology. UM has not granted rights to the LicensedTechnology to any person other than CHROMADEX since terminating the previous license agreement; (c)UM has not received any written notice that the Licensed Technology infringes the proprietary rights of any third party; (d)the inventions claimed in the Patents to the knowledge of UM have not been publicly used, offered for sale, or disclosed in a printedpublication by employees of UM more than one year prior to the filing of the U.S. application for the Patents.5.2Representations and Warranties of CHROMADEX. CHROMADEX represents and warrants to UM as follows: (a)CHROMADEX is a corporation duly organized, validly existing and in good standing under the laws of California and has all requisitecorporate power and authority to execute, deliver and perform this Agreement; (b)This Agreement, when executed and delivered by CHROMADEX, will be the legal, valid and binding obligation of CHROMADEX,enforceable against CHROMADEX in accordance with its terms; (c)the execution, delivery and performance of this Agreement by CHROMADEX does not conflict with, or constitute a breach or default under,(i) the charter documents of CHROMADEX,(ii) any law, order, judgment or governmental rule or regulation applicable to CHROMADEX, or(iii) any provision of any agreement, contract, commitment or instrument to which CHROMADEX is a party; and the execution,delivery and performance of this Agreement by CHROMADEX does not require the consent, approval or authorization of, ornotice, declaration, filing or registration with, any governmental or regulatory authority. ARTICLE 6LIABILITY AND INDEMNIFICATION6.1No warranties; Limitation on Liability. EXCEPT AS EXPLICITLY SET FORTH IN THIS AGREEMENT, UM MAKES NO REPRESENTATIONS ORWARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO: (I) COMMERCIAL UTILITY; OR (II) MERCHANTABILITY OR FITNESS FOR APARTICULAR PURPOSE; OR (III) THAT THE USE OF THE LICENSED TECHNOLOGY WILL NOT INFRINGE ANY PATENT, COPYRIGHT ORTRADEMARK OR OTHER PROPRIETARY OR PROPERTY RIGHTS OF OTHERS. UM SHALL NOT BE LIABLE TO CHROMADEX,CHROMADEX’S SUCCESSORS OR ASSIGNS OR ANY THIRD PARTY WITH RESPECT TO ANY CLAIM ON ACCOUNT OF, OR ARISINGFROM, THE USE OF INFORMATION IN CONNECTION WITH THE LICENSED TECHNOLOGY SUPPLIED HEREUNDER OR THEMANUFACTURE, USE OR SALE OF PRODUCTS OR ANY OTHER MATERIAL OR ITEM DERIVED THEREFROM.6.2Liability. UM is an agency of the State of Mississippi under the management and control of the Board of Trustees of the State Institutions of HigherLearning (IHL). As authorized by law, IHL maintains a program of self-insurance for purposes of workers’ compensation and general liability,pursuant to the Mississippi Tort Claims Act as set forth in Chapter 46, Title 11, Mississippi Code 1972, as amended. Accordingly, any liability ofUM for any damages, losses, or costs arising out of or related to acts performed by UM or it employees under this Agreement is governed by the TortClaims Act.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 6.3CHROMADEX Indemnification. CHROMADEX will indemnify, defend and hold harmless UM, its trustees, officers, agents and employees(collectively, the “Indemnified Parties”), from and against any and all liability, loss, damage, action, claim or expense suffered or incurred by theIndemnified Parties which results from or arises out of (individually, a “Liability” and collectively, the “Liabilities”): (a) breach by CHROMADEX of any duty, covenant or agreement contained inthis Agreement or a lawsuit, action, or claim brought by any thirdparty that includes any allegation which, if proven true, would constitute a breach by CHROMADEX of any duty, covenant oragreement contained in this Agreement. (b) the development, use, manufacture, promotion, sale, distribution or other disposition of any Products by CHROMADEX, its Affiliates,assignees, vendors or other third parties, for personal injury, including death, or property damage arising from any of the foregoing. Theindemnification obligation under Article 6.3 shall not apply to any contributory negligence or product liability of the Indemnified Party whichmay have occurred prior to the execution of this Agreement. CHROMADEX will indemnify and hold harmless the Indemnified Parties from andagainst any Liabilities resulting from: (i) any product liability or other claim of any kind related to the use by a third party of a Product that was manufactured,sold, distributed or otherwise disposed by CHROMADEX, its Affiliates, assignees, vendors or other third parties;(ii) clinical trials or studies conducted by or on behalf of CHROMADEX relating to any Products, including, withoutlimitation, any claim by or on behalf of a human subject of any such clinical trial or study, any claim arising from theprocedures specified in any protocol used in any such clinical trial or study, any claim of deviation, authorized orunauthorized, from the protocols of any such clinical trial or study, any claim resulting from or arising out of themanufacture or quality control by a third party of any substance administered in any clinical trial or study;(iii) CHROMADEX’s failure to comply with all prevailing laws, rules and regulations pertaining to the development, testing,manufacture, marketing and import or export of Products. 6.4Procedures. The Indemnified Party shall promptly notify CHROMADEX of any claim or action giving rise to a Liability subject to the provisions ofArticle 6.3. CHROMADEX shall have the duty to defend any such claim or action, at its cost and expense. Indemnified Party must have the right,however, to approve counsel through the Mississippi Attorney General and through its governing board to represent it, and such approval will notbe unreasonably withheld. In the event CHROMADEX or any of its parents, affiliates or subsidiaries is also named in a particular claim,CHROMADEX may choose the same attorneys who defend the Indemnified Parties to defend CHROMADEX unless there arises a conflict of interestbetween the CHROMADEX and one or more of the Indemnified Parties or among the Indemnified Parties. The indemnification rights of UM or otherIndemnified Party contained herein are in addition to all other rights which such Indemnified Party may have at law or in equity or otherwise. 6.5Product Liability Insurance. Beginning with the commencement of human clinical trials of any Product and continuing for a period of time afterCHROMADEX ceases manufacturing and marketing Products that is reasonable based upon industry standards, CHROMADEX and its Affiliatesshall maintain general liability and product liability insurance that is reasonable based upon industry standards, but not less than $2 million perincident and $2 million in the aggregate. CHROMADEX and its AFFILIATES will procure and maintain policies of property damage insurance of$1 million per claim and $2 million in the aggregate. The insurance amounts specified herein shall not be deemed a limitation on CHROMADEX’sindemnification liability under this Agreement. CHROMADEX shall provide UM with copies of such policies, upon request of UM. CHROMADEXshall notify UM at least ten (10) days prior to cancellation of any such coverage.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION ARTICLE 7PATENTS AND INFRINGEMENT 7.1Prosecution of Patents. (a)Responsibilities for Patent Prosecution and Maintenance. (i)UM through outside patent counsel is responsible for preparing, filing, and prosecuting any patent applications, maintaining any issued patents,and prosecuting and maintaining any and all continuations, continuations-in-part, divisional, substitutions, reissues, or re-examinations (or theforeign equivalent of these) related to the Patents. CHROMADEX will reimburse UM for patent expenses as detailed in Article 3.4. (ii)UM through outside patent counsel will prepare, file, and prosecute patent applications for the Patents in the United States. UM through outsidepatent counsel will also prepare, file, and prosecute international applications for the Patents under the Patent Cooperation Treaty.CHROMADEX will specify in writing to UM the additional foreign countries in which patent applications are to be filed and prosecuted. UMwhen possible will notify CHROMADEX ninety (90) days in advance of a national stage filing deadline for all Patents, and CHROMADEX willspecify such additional countries no later than thirty (30) days before the national stage filing deadline for the pertinent patent application. (iii)UM through is solely responsible for making decisions regarding the content of U.S. and foreign applications to be filed under Patents andprosecution of the applications, continuations, continuations-in-part, divisional, substitutions, reissues, or re-examinations (or the foreignequivalent of these) related thereto. UM will not seek to narrow the scope of a pending application without obtaining CHROMADEX’sconsent, which consent shall not be unreasonably withheld or delayed. UM shall use its good faith efforts to provide CHROMADEX with acopy of all materials to be filed with the U.S. Patent and Trademark Office and its foreign equivalents at least ten (10) business days prior tothe planned filing and afford CHROMADEX the right to comment; provided, however, in the event such documents are not timely sent, nobreach of contract shall be deemed to have occurred. (iv)CHROMADEX will cooperate with UM in the filing, prosecution, and maintenance of any Patents. UM will advise CHROMADEX promptly as toall material developments with respect to the applications. Copies of all papers received and filed in connection with prosecution of applicationsin all countries will be provided promptly after receipt or filing to CHROMADEX to enable it to advise UM concerning the applications. (vi)Each party agrees to promptly forward all written communications from the other party regarding prosecution of the Patents to its patentcounsel as appropriate, with a written confirmation to the other party that the communications have been forwarded. 7.2 Infringement by Third Party. In the event that CHROMADEX or UM becomes aware of suspected infringement of the Patent, they shall promptly notify the other parties of suchsuspected infringement. CHROMADEX or UM directly or together, may bring suit to abate infringement of the Patents, or communicate with apotential infringer, with prior approval from the other parties. In the event that one party intends to bring suit relating to suspected infringement, itshall promptly notify the other parties of its intention to sue so that the other parties may have the opportunity to approve and participate in andshare costs and recoveries from said suit. If only one party brings suit and the other parties choose not to participate in said suit, the party that bringsthe suit shall be liable for all litigation costs and shall be entitled to retain all recoveries therefrom.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION ARTICLE 8CONFIDENTIALITY, PUBLICATIONS AND USE OF NAME8.1Confidentiality. To the extent allowed by law, both parties shall maintain in confidence and shall not disclose to any third party the ConfidentialInformation received pursuant to this Agreement, without the prior written consent of the disclosing party except that the Confidential Informationmay be disclosed by either party only to those third parties (x) who have a need to know the information in connection with the exercise by eitherparty of its rights under this Agreement and who agreed in writing to keep the information confidential to the same extent as is required of the partiesunder this Article 8.1, or (y) to whom either party is legally obligated to disclose the information. The foregoing obligation shall not apply toinformation which:(a) is, at the time of disclosure, publicly known or available to the public, provided that Information will not be deemed to be within thepublic domain merely because individual parts of such Information are found separately within the public domain, but only if all thematerial features comprising such Confidential Information are found in combination in the public domain;(b) recipient can demonstrate by written records that Confidential Information was previously known to it prior to disclosure by thedisclosing party;(c) is hereafter furnished to recipient by a third party, as a matter of right and without restriction on disclosure,;(d) is made public by disclosing party;(e) is disclosed with the written approval of either party;(f) is the subject of a legally binding court order compelling disclosure, provided that recipient must give disclosing party notice of anyrequest for disclosure pursuant to any legal proceeding, within two (2) business days of receipt of such request by recipient to theextent possible, and recipient must cooperate with disclosing party in disclosing party’s efforts in obtaining appropriate protectiveorders to preserve the confidentiality of the Confidential Information. 8.2Publications. Should UM desire to disclose publicly, in writing or by oral presentation, Confidential Information related to the LicensedTechnology, UM shall notify CHROMADEX in writing of its intention at least ninety (90) days before such disclosure. UM shall include with suchnotice a description of the oral presentation or, in the case of a manuscript or other proposed written disclosure, a current draft of such writtendisclosure. CHROMADEX may request UM, no later than ninety (90) days following the receipt of UM’s notice, to file a patent application,copyright or other filing related to such Invention. All such filings shall be subject to the provisions of Article 9.1 of this Agreement. Upon receiptof such request, UM shall arrange for a delay in publication, to permit filing of a patent or other application by the CHROMADEX. ShouldCHROMADEX reasonably determine that more than ninety (90) days is required in order to file any such patent information (including additionaltime required to perform additional research required for adequate patent disclosure), or, if CHROMADEX reasonably determines that suchConfidential Information cannot be adequately protected through patenting and such Confidential Information has commercial value as a tradesecret, then publication or disclosure shall be postponed until the parties can mutually agree upon a reasonable way to proceed.8.3Use of Name. Neither CHROMADEX nor UM shall directly or indirectly use the other party’s name, seal, logo, trademark, or service mark, or anyadaptation of them, or the name of any trustee, officer or employee thereof, without that party’s prior written consent. Neither CHROMADEX norUM shall disclose the terms of this Agreement to third parties except that UM or CHROMADEX may disclose this Agreement to any sub-licensee orAffiliate and may disclose an accurate description of the terms of this Agreement to the extent required under federal or state securities, tax, grantadministration, or other disclosure laws, provided that UM shall take steps to preserve the confidentiality of such information to the extent allowedby law.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION ARTICLE 9TERM AND TERMINATION9.1Term. This Agreement and the licenses granted herein shall commence on the Effective Date and shall continue, subject to earlier termination underArticles 9.2 or 9.3 hereof, until the expiration of the last to expire of the Patents or for ten (10) years after first commercial sale of a Product,whichever is longer, after which CHROMADEX shall have a fully paid up, royalty free, worldwide right and license to make, have make, use, sell,offer for sale and import Product for any use or purpose. At the end of the Term, the Parties agree to negotiate in good faith an extension of theAgreement so that CHROMADEX may continue to license the remaining Licensed Technology, including but not limited to UM Know-How andImprovements, still used by ChromaDex. 9.2Termination by UM. Upon the occurrence of any of the events set forth below (“Events of Default”),UM shall have the right to terminate this Agreement by giving writtennotice of termination, such terminationeffective with the giving of such notice: (a) nonpayment of any amount payable to UM that is continuing sixty (60) calendar days after UM gives CHROMADEX writtennotice of such nonpayment; (b) any breach by CHROMADEX of any covenant (other than a payment breach referred to in clause (a) above or a Marketing Planbreach referred to in section 9.3 below) or any representation or warranty contained in this Agreement that is continuing sixty (60)calendar days after UM gives CHROMADEX written notice of such breach; (c) CHROMADEX fails to comply with the terms of the license granted under Article 2 hereof and such noncompliance is continuingsixty (60) calendar days after UM gives CHROMADEX notice of such noncompliance; (d) CHROMADEX becomes subject to a Bankruptcy Event; (e) the dissolution or cessation of operations by CHROMADEX; (f) If, during the term of this Agreement, CHROMADEX fails to keep at least one (1) Product on the market after the first commercialsale for a continuous period of one (1) year; where such noncompliance is continuing sixty (60) calendar days after UM givesCHROMADEX written notice of such noncompliance. 9.3Marketing Plan. CHROMADEX shall provide UM with a Marketing Plan that includes CHROMADEX’s research plans and financial projections forthe Licensed Technology. Such Marketing Plan will be added to Appendix B and be incorporated herein by reference. UM shall be entitled toterminate this Agreement if CHROMADEX fails to meet the pre-established milestones contained in the Marketing Plan. The milestones may bechanged as agreed upon in advance in writing by both parties. UM shall give written notice of its decision to terminate this Agreement specifying afailure of the Marketing Plan milestones. Unless CHROMADEX has remedied such failure or both parties have agreed, in writing, to a revisedmilestone schedule within sixty (60) days after receipt of such notice, this Agreement will be deemed to terminate as of the expiration of such sixty(60) day period.9.4Termination by CHROMADEX. CHROMADEX shall have the right to terminate this Agreement, at any time with or without cause, upon sixty (60)days’ written notice to the UM.9.5Rights and Duties Upon Termination. Within thirty (30) days after termination of this Agreement, each party shall return to the other party anyConfidential Information of the other party. In the event of an early termination of this Agreement, CHROMADEX shall have the right to use or sellall the Licensed Product(s) on hand or in the process of manufacturing at the time of such early termination, provided that CHROMADEX shall beobligated to pay to UM a royalty on such sales as set forth in this Agreement if, at that time a royalty or other payment would otherwise by payablepursuant to the terms of this Agreement.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION Within thirty (30) days after termination of this Agreement by the UM under Article 9.2 or by CHROMADEX without Cause under Article 9.4,CHROMADEX, Affiliates and sub-licensees agree: (a) to provide UM with copies of all results of research, development and marketing studies pertaining to the Products and LicensedTechnology; (b) to provide UM an electronic and paper copy of any documents and correspondence related to the Licensed Technology andProduct(s) between CHROMADEX and the Food and Drug Administration and other domestic and foreign government agencies; and (c) to provide UM with an electronic and paper copy of any and all patent and trademark documents and correspondence related tothe Licensed Technology and Product(s) between CHROMADEX and the U.S. Patent Office and foreign government equivalents. (d) that UM shall own all right, title and interest in said research, development and marketing results as well as regulatory andintellectual property related applications submitted to all government agencies. CHROMADEX, Affiliates and sub-licensees shallassign all patents related to Product in which UM is not an inventor to UM. (e) to perform all acts deemed necessary of desirable by UM to permit and assist it, in evidencing, perfecting, obtaining, maintaining,defending and enforcing UM’s ownership rights and/or any assignment with respect to inventions and patents to be assigned to UM inany and all countries at UM’s expense. Such acts may include, but are not limited to, execution of documents and assistance orcooperation in legal proceedings. Upon termination, CHROMADEX, Affiliates and sub-licensees herby irrevocably designate andappoint UM and its duly authorized officers and agents, as its agents and attorneys-in-fact to act for and in its behalf and instead ofCHROMADEX, Affiliates and sub-licensees, to execute and file any documents and to do all other lawfully permitted acts to further theforegoing purposes with the same legal force and effect as if executed by CHROMADEX, Affiliates and sub-licensees.9.6Provisions Surviving Termination. CHROMADEX’s obligation to pay any royalties accrued but unpaid prior to termination of this Agreement shallsurvive such termination. CHROMADEX shall owe UM royalties on sales when CHROMADEX has received payments from a sub-licensee orAffiliate. In addition, all provisions required to interpret the rights and obligations of the parties arising prior to the termination date shall surviveexpiration or termination of this Agreement. ARTICLE 10OTHER TERMS AND CONDITIONS 10.1Assignment. This Agreement and the rights and benefits conferred upon CHROMADEX hereunder may not be transferred or assigned to any Person,directly or by merger, by sale or assignment of membership interests in CHROMADEX, or by other operation of law, without the express writtenpermission of UM, which permission will not be unreasonably withheld. Notwithstanding the requirement set forth in the preceding sentence,CHROMADEX may assign or transfer its interests in this Agreement without written permission from UM in the following circumstances:(a) an assignment in connection with the sale or transfer of all or substantially all of CHROMADEX’s assets which relate to thedevelopment, manufacture, sale or use of the Patents or a Product(s) provided that the buyer or transferee is at least as financiallystable as CHROMADEX and following the sale or transfer would be as capable of performing its obligations under this Agreement asCHROMADEX would be; or(b) an assignment of a security interest in this Agreement as a part of a security interest in all or substantially all of the CHROMADEX’sassets which relate to the Patents or a Product(s). Any prohibited assignment of this Agreement or the rights hereunder shall be nulland void. No assignment shall relieve CHROMADEX of responsibility for the performance of any accrued obligations, which it hasprior to such assignment. This Agreement shall inure to the benefit of permitted assigns of CHROMADEX.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 10.2No Waiver. A waiver by either party of a breach or violation of any provision of this Agreement will not constitute or be construed as a waiver ofany subsequent breach or violation of that provision or as a waiver of any breach or violation of any other provision of this Agreement.10.3Independent Contractor. Nothing herein shall be deemed to establish a relationship of principal and agent between UM and CHROMADEX, nor anyof their agents or employees for any purpose whatsoever. This Agreement shall not be construed as constituting UM and CHROMADEX as partners,or as creating any other form of legal association or arrangement which could impose liability upon one party for the act or failure to act of the otherparty. No employees or staff of UM shall be entitled to any benefits applicable to employees of CHROMADEX. Neither party shall be bound by theacts or conduct of the other party.10.4Notices. Any notice under this Agreement shall be sufficiently given if sent in writing by prepaid, first class, certified or registered mail, returnreceipt requested, addressed as follows: if to UM, to: University of Mississippi P.O. Box 1848 100 Barr Hall University, MS 38677 Attention: Dr. Walter G. Chambliss Director of Technology Management if to CHROMADEX, to: ChromaDex Inc., Chief Financial Officer 10005 Muirlands Blvd Suite G Irvine, CA 92818 or to such other addresses as may be designated from time to time by notice given in accordance with the terms of this Article.10.5Entire Agreement. This Agreement embodies the entire understanding between the parties relating to the subject matter hereof and supersedes allprior understandings and agreements, whether written or oral. This Agreement may not be modified or varied except by a written document signedby duly authorized representatives of both parties.10.6Severability. In the event that any provision of this Agreement shall be held to be unenforceable, invalid or in contravention of applicable law, suchprovision shall be of no effect, the remaining portions of this Agreement shall continue in full force and effect, and the parties shall negotiate ingood faith to replace such provision with a provision which effects to the extent possible the original intent of such provision.10.7Force Majeure. In the event that either party’s performance of its obligations under this Agreement shall be prevented by any cause beyond itsreasonable control, including without limitation acts of God, acts of government, shortage of material, accident, fire, delay or other disaster,provided that the effected party shall have used its reasonable best efforts to avoid or remove the cause of such nonperformance and to minimize theduration and negative affect of such nonperformance, then such effected party’s performance shall be excused and the time for performance shall beextended for the period of delay or inability to perform due to such occurrence. The affected party shall continue performance under this Agreementusing its best efforts as soon as such cause is removed.10.8Headings. Any headings and captions used in this Agreement are for convenience of reference only and shall not affect its construction orinterpretation.10.9No Third Party Benefits. Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties hereto or theirpermitted assigns, any benefits, rights or remedies.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 10.10Governing Law. This Agreement shall be construed in accordance with and governed by the internal laws of the State of Mississippi, excluding suchstate’s rules relating to conflicts of laws, and its form, execution, validity, construction and effect shall be determined in accordance with suchinternal laws. 10.11Counterparts. This Agreement shall become binding when any one or more counterparts hereof, individually or taken together, shall bear thesignatures of each of the parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original asagainst the party whose signature appears thereon, but all of which taken together shall constitute but one and the same instrument. Delivery of anexecuted counterpart of a signature page to this Agreement by e-mail shall be effective as delivery of a manually executed counterpart of thisAgreement. 10.12Resolution of Disputes. In the event of any dispute, controversy or claim arising out of or relating to this Agreement, or to any breach hereof, theparties shall attempt first to resolve the dispute by good faith negotiation. If the parties are unable to reach agreement by negotiating in good faiththey agree to seek resolution of the dispute by non-binding mediation in accordance with the mediation rules of the American ArbitrationAssociation (“AAA”).  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION IN WITNESS WHEREOF, the parties hereto have duly executed this License Agreement as of the date first above written. UNIVERSITY OF MISSISSIPPI /s/ Walter G. Chambliss10/15/14 Walter G. Chambliss, Ph.D. Date Director of Technology Management, Office ofResearch & Sponsored Programs Acknowledged by: /s/ David S. Pasco10/17/14 David S. Pasco, Ph.D. Date Assistant Director, National Center for NaturalProducts Research /s/ David D Allen 10/17/14David D Allen, Ph.D. DateDean, School of Pharmacy CHROMADEX, INC. /s/ Frank Jaksch12/1/14 Frank Jaksch Date Chief Executive Officer  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION APPENDIX APATENTSUM1410: Potent Immunostimulants from MicroalgaeUSSN: 10/332,323Issued Patent: 7,205,284Issued: 4/17/2007Expiration: 3/9/22International Filings and Issued Patents:Australia 2001273330Canada 2412600France 1301191Germany 601 15 654.4Netherlands 1301191South Korea 10-08314080000 Great Britain 1301191Mexico 254542Japan 2002-508454 UM1940: Potent Immunostimulatory Extracts from MicroalgaeUSSN 11/191,726Issued Patent: 7,846,452Issued: 10/7/2010Expiration: 7/28/2025  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION APPENDIX B MARKETING PLAN  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION APPENDIX C Example Sales and Royalty Report CHROMADEX: UM Agreement ID: Period Covered: through Prepared by:Date: (Company Representative) Approved by: Date: (Company Representative) If license agreement covers several major product lines, please prepare a separate report for each line. Then combine all product lines into a summary report. Report Type: Single Product or Process Line Report: (product name) Multiproduct Summary Report, Page ____of ____ Other Compensation: Annual Payments, milestones, or other fees& compensation Details: Amount Due: No Compensation of Royalty Due thisPeriod Reason:  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION CountryQuantity ProducedQuantity SoldGross Sales ($)*Net Sales ($)Royalty RateConversion Rate (ifapplicable)Royalty Due thisPeriodUSA Canada Japan Other: TOTAL: * To calculate net sales, use the following space to list separately the specific types of allowed deductions under the license agreement and the correspondingamounts: Then calculate the final Net Sales amount by subtracting these amounts from Gross Sales, and note in the column above.Exhibit 10.41 TRANSFER AND NOTICE OF CONVERSION TO:NeutriSci International Inc. ("NeutriSci")AND TO:Disani Capital Corp. ("Disani") WHEREAS the undersigned, ChromaDex Corporation ("ChromaDex") is the holder of 670,658 Series I Preferred Shares (the "Preferred Shares") in thecapital of NeutriSci, and which Preferred Shares are convertible into 2,682,632 Class A Common Shares of NeutriSci, upon the holder providing writtennotice to NeutriSci; AND WHEREAS ChromaDex has entered into an assignment and escrow agreement (the "Assignment Agreement"), dated December 27, 2013, withNeutriSci, Alpha Capital Anstalt ("Alpha"), Britlor Health and Wellness, Inc. ("Britlor"), and Grushko & Mittman, P.C. (the "Escrow Agent"), pursuant towhich ChromaDex has agreed to transfer a portion of the Preferred Shares to Alpha and NeutriSci agreed to deliver such shares on the satisfaction of certainconditions set forth in the Assignment Agreement; AND WHEREAS ChromaDex has agreed to transfer a portion of the Preferred Shares and NeutriSci agreed to deliver such shares to Palladium CapitalAdvisors, LLC ("Palladium"), pursuant to the terms of the Assignment Agreement; AND WHEREAS the parties to the Assignment Agreement desire to amend the terms of the Assignment Agreement, such that the transfer of Preferred Sharesfrom ChromaDex to Alpha and Palladium, as contemplated in the Assignment Agreement, is effective as of the date hereto, and in the amounts set forthherein; AND WHEREAS NeutriSci has entered into an amalgamation agreement (the "Amalgamation Agreement"), dated March 6, 2014, with Disani and 1803796Alberta Ltd., a wholly-owned subsidiary of Disani, pursuant to which Disani has agreed to acquire all of the outstanding share capital of NeutriSci, and inconsideration for the acquisition, the holders of the Class A Common Shares of NeutriSci will each be entitled to receipt 1.7 "Units" of Disani, as constitutedfollowing completion of a consolidation of its share capital on a three (3) for one (1) basis, in exchange for each Class A Common Share held; AND WHEREAS each "Unit" of Disani consists of 0.l5 Disani Common Shares, 0.25 Disani Series A Preferred Shares, 0.30 Disani Series B Preferred Shares,and 0.30 Disani Series C Preferred Shares; AND WHEREAS upon the completion of the transfer of Preferred Shares, and effective immediately prior to receipt of the conditional approval of the TSXVenture Exchange to the acquisition of NeutriSci by Disani, each of ChromaDex, Alpha and Palladium desire to give notice to NeutriSci, that they haveelected to convert all of the Preferred Shares to Class A Common Shares of NeutriSci. THE UNDERSIGNED, ChromaDex, NeutriSci, Britlor, and Alpha, hereby agree that the Assignment Agreement is amended such that: (i)the transfers of Preferred Shares to each of Alpha and Palladium, as contemplated in the Assignment Agreement, are completedeffective immediately prior to the Conversion (as defined below) contemplated by this Agreement, and each of the parties to thisTransfer and Notice of Conversion agrees to take all such actions as are necessary in order to complete such transfers; (ii)the number of Preferred Shares to be transferred to Alpha shall be 108,676, and not as may otherwise be indicated in the AssignmentAgreement; and (iii)the number of Preferred Shares to be transferred to Palladium shall be 10,868, and not as may otherwise be indicated in theAssignment Agreement. THE UNDERSIGNED, Palladium, not being a party to the Assignment Agreement, hereby acknowledges and agrees to accept 10,868 Preferred Shares, infull satisfaction of any Preferred Shares it may have been entitled to receive pursuant to any of the transactions contemplated herein or the AssignmentAgreement. THE UNDERSIGNED, ChromaDex, Palladium, and Alpha, hereby provide notice to NeutriSci that, effective immediately prior to receipt of the conditionalapproval of the TSX Venture Exchange to the acquisition of NeutriSci by Disani (the "Conversion"), they have elected to convert all of the Preferred Sharesheld by each into Class A Common Shares of NeutriSci, and NeutriSci agrees upon surrender of the certificates evidencing the Preferred Shares, that they willtake all such actions as are necessary to complete the conversion. THE UNDERSIGNED, ChromaDex and NeutriSci, hereby agree to waive any restrictions preventing the conversion of the Preferred Shares, which wouldresult in ChromaDex holding more than 9.99% of the voting share capital of NeutriSci, and agree to waive any notice period to which they may otherwise beentitled. THE UNDERSIGNED, ChromaDex, Palladium, and Alpha, each acknowledge and agree that upon completion of the amalgamation contemplated by theAmalgamation Agreement, they will receive the following Units of Disani, respectively: (i)ChromaDex:3,747,574 Units (ii)Palladium:73,900 Units (iii)Alpha:739,000 Units THIS NOTICE OF CONVERSION may be signed by the undersigned parties in as many counterparts as may be necessary, each of which so signed shall bedeemed to be an original, and such counterparts together shall constitute one and the same instrument and notwithstanding the date of execution shall bedeemed to bear the date set forth below.  FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, the undersigned parties have executed this Notice ofConversion, as of the 5th day of November, 2014, and further agree this Notice of Conversion, and the terms and rights contained herein, is irrevocablewithout the prior written consent of all of the undersigned parties. THE UNDERSIGNED, NeutriSci, agrees that if the Units are not delivered to Alpha and Palladium on or before November 30, 2014, Alpha shall have theright to cancel this Agreement.THE UNDERSIGNED agree, that if the Amalgamation closes at a valuation lower than $0.75 per share, this Agreement shall be null and void. CHROMADEX CORPORATION ALPHA CAPITAL ANSTALTPer:/s/ Frank L. Jaksch Jr. Per:/s/ Konrad Ackerman Authorized Signatory Authorized Signatory PALLADIUM CAPITAL ADVISORS, LLC NEUTRISCI INTERNATIONAL INC.Per:/s/ Joel Padowitz Per:/s/ Keith Bushfield Authorized Signatory Authorized Signatory BRlTLOR HEALTH AND WELLNESS, INC. Per:/s/ Keith Bushfield Authorized Signatory Exhibit 10.42 SHARE TRANSFER AGREEMENT THIS AGREEMENT (the “Agreement”) dated as of the 25th day of November, 2014 BETWEEN: CHROMADEX CORPORATION, a company formed under the laws of the State of Delaware and having an officelocated at Suite G, 10005 Muirlands, Irvine, California, 92618 (herein called the "Transferor") AND: EMPRISE CAPITAL CORPORATION, a corporation incorporated under the laws of the British Columbia and havingan address at 1600, 609 Granville Street, Vancouver, British Columbia, V7Y 1C3 (herein called the "Transferee") WHEREAS: A. The Transferor is the beneficial owner of 670,658 series I preferred shares (the "Preferred Shares") in the capital of NeutriSci International Inc. (the"Company"); B. The Preferred Shares are convertible, subject to certain terms and restrictions, into class "A" common shares in the capital of the Company, on the basis offour (4) class "A" common shares for every one (1) Preferred Share converted; C. The Transferor has executed a notice to convert all of the Preferred Shares (the "Conversion"), and the Transferee, or its assignees, wishes to purchase,2,204,456 of the resulting class "A" common shares of the Company (the "Shares"), on the terms and conditions contained herein; and D. The Company has informed the Transferor and Transferee that it intends to enter into a transaction (the "Transaction") in which all of the outstandingclass "A" common shares of the Company would be acquired by Disani Capital Corp. ("Disani"), and in consideration every holder of class "A" commonshares of the Company would be entitled to received 1.7 Disani units (the "Disani Units") for every one (1) share so held. Each Disani Unit is comprised of0.15 Disani common shares, as constituted following completion by Disani of a three-for-one consolidation of its common share capital, 0.25 Disani series Apreferred shares, 0.30 Disani series B preferred shares, and 0.30 Disani series C preferred shares. NOW THEREFORE THIS AGREEMENT WITNESSES that for good and valuable consideration, the receipt and sufficiency of which is herebyacknowledge and for premises and of the mutual covenants and agreements herein contained the parties hereby agree as follows: 1. TRANSFER 1.1 The Transferor hereby agrees to transfer and sell (the "Transfer") to the Transferee the Shares, on the terms and conditions contained herein and on thedate and time set forth in Section 3.1 hereto. 2. CONSIDERATION FOR THE SHARES 2.1 The aggregate sale price payable by the Transferee to the Transferor for the Shares shall be US$749,514.80 (the "Price"). 2.2 In consideration for the Shares, the Transferee shall pay to the Transferor the Price, on the terms and conditions set forth herein. 3. CLOSING OF THE TRANSFER 3.1 The closing date of the Transfer (the "Closing Date") shall be the date upon which the Transaction is completed. The Transfer shall be deemed to occurimmediately prior to the consummation of the Transaction, such that the Transferee, or its assignees, shall be entitled to 3,747,574 Disani Units on closing ofthe Transaction. 3.2 On the Closing Date, the Transferor shall convey to the Transferee good and valid title to the Shares, free and clear of all liens, claims, charges andencumbrances.  4. DELIVERIES 4.1 On or before the Closing Date, the Transferor shall direct the Company and Disani, as applicable, to deliver to the Transferee, or its nominees, sharecertificates representing the Disani Units, duly registered in the name of the Transferee and against delivery of the funds representing the Price to theTransferor. Notwithstanding the foregoing, however, Transferor shall not be liable for Disani’s or the Company’s failure to honor these instructions. 5. REPRESENTATIONS AND WARRANTIES 5.1 The Transferor represents and warrants to and covenants with the Transferee that: (a) Transferor has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby andotherwise to carry out its obligations hereunder. No consent, approval, or Agreement of any individual or entity is required to be obtainedby the Transferor in connection with the execution and performance by the Transferor of this Agreement or the execution and performanceby the Transferor of any agreements, instruments, or other obligations entered into in connection with this Agreement. (b) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and the compliancewith the terms hereof will not (i) violate any governmental law or rule applicable to Transferor, (ii) conflict with any provision of thecertificate of incorporation or by-laws (or similar organizational document) of Transferor, (iii) conflict with any contract to which Transferoris a party or by which it is otherwise bound, or (iv) require any approval, authorization, consent, license, exemption, filing or registrationwith any court, arbitrator or governmental entity, other than, subject to the advice of counsel to Transferor, the filing of a Form 8-K pursuantto the rules and regulations promulgated by the Securities and Exchange Commission. (c) Assuming completion of the Conversion, the Transferor has good right, full power and absolute authority to transfer, sell and deliver to theTransferee all respective ownership in the Shares, free of any liens, charges, encumbrances or the like. (d) Transferor shall deliver to the Transferee any other documents necessary or advisable to effect the Transfer. 5.2 The Transferee represents and warrants to and covenants with the Transferor that: (a) Transferee has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby andotherwise to carry out its obligations hereunder. No consent, approval, or agreement of any individual or entity is required to be obtainedby the Transferee in connection with the execution and performance by the Transferee of this Agreement or the execution and performanceby the Transferee of any agreements, instruments, or other obligations entered into in connection with this Agreement. (b) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and the compliancewith the terms hereof will not (i) violate any governmental law or rule applicable to Transferee, (ii) conflict with any provision of thecertificate of incorporation or by-laws (or similar organizational document) of Transferee, (iii) conflict with any contract to whichTransferee is a party or by which it is otherwise bound, or (iv) require any approval, authorization, consent, license, exemption, filing orregistration with any court, arbitrator or governmental entity. (c) Transferee shall deliver to the Transferor any other documents necessary or advisable to effect the Transfer. (d) The Transferee acknowledges that the Preferred Shares, the Shares and the Disani Units have not been registered under the United StatesSecurities Act of 1933, as amended nor under the laws of any state of the United States and will be subject to applicable resale restrictionsin Canada. (e) Transferee (and each of its designees to be issued the Shares or the Disani Units) (i) is an “accredited investor,” as that term is defined inRegulation D under the Securities Act of 1933, as amended; (ii) has such knowledge, skill and experience in business and financial matters,based on actual participation, that Transferee is capable of evaluating the merits and risks of an investment in the Company and Disani andthe suitability thereof as an investment for Transferee; (iii) has received such documents and information as it has requested and has had anopportunity to ask questions of representatives of Company and Disani concerning the terms and conditions of the investment proposedherein, and such questions were answered to the satisfaction of Transferee; and (iv) is in a financial position to hold the Shares and DisaniUnits for an indefinite time and is able to bear the economic risk and withstand a complete loss of its investment in Company and Disani.  (f) Transferee is aware of the Company’s and Disani’s business affairs and financial conditions and has reached an informed andknowledgeable decision to purchase the Shares. (g) Transferee is proceeding on the assumption that the Transferor is in possession of material, non-public information concerning theTransaction, the Company and Disani and their direct and indirect subsidiaries, if any, which is not or may not be known to the Transfereeand that the Transferor has not disclosed to the Transferee. (h) Transferee is voluntarily assuming all risks associated with the sale of the Shares and expressly warrants and represents that (i) Transferorhas not made, and Transferee disclaims the existence of or its reliance on, any representation by the Transferor concerning the Company,Disani, the Shares or the Disani Units; (ii) Transferee is not relying on any disclosure or non-disclosure made or not made, or thecompleteness thereof, in connection with or arising out of the Transaction or the sale of the Shares ; (iii) Transferee has no claims againstthe Transferor with respect to the foregoing and if any such claim may exist, Transferee, recognizing its disclaimer of reliance and theTransferor’s reliance on such disclaimer as a condition to entering into this transaction, covenants and agrees not to assert it againstTransferor or Transferor’s respective partners, representatives, agents or affiliates; (iv) Transferor shall have no liability other than deliveryof the Shares in accordance with the terms hereunder; and (v) Transferee waives and releases any claim that it might have against theTransferor or any of Transferor’s respective partners, representatives, agents and affiliates whether under applicable securities law orotherwise, based on Transferor’s knowledge, possession, or nondisclosure to Transferee of any material, non-public information concerningthe Transaction, the Company, Disani, and their direct and indirect subsidiaries, if any. 6. TIME OF THE ESSENCE 6.1 Time shall, in all respects, be of the essence hereof. 7. FURTHER ASSURANCES 7.1 The parties to this agreement will do, execute and deliver or will cause to be done, executed and delivered all such further acts, documents and things asmay be reasonably required for the purpose of giving effect to this agreement. 8. COUNTERPARTS 8.1 This agreement may be executed by fax and in any number of counterparts all of which when taken together shall be deemed to be one and the samedocument and not withstanding their actual date of execution shall be deemed to be dated as of the date first above written. 9. INDEPENDENT LEGAL ADVICE 9.1 The Transferor and the Transferee acknowledge and agree that Anfield Sujir Kennedy & Durno acts as counsel to Disani, and in no way acts for theindividual Transferor and Transferee and that in execution of this agreement, each person signing has waived the need for or has obtained independent legaladvice. 10. ENUREMENT 10.1 The terms and conditions contained in this agreement will enure to the benefit of and be binding upon the respective successors and assigns of theparties. 11. ASSIGNMENT 11.1 The parties to this agreement agree that the Transferee may assign this Agreement, or all or any part of their rights hereunder without the prior consent ofthe Transferor. 12. ENTIRE AGREEMENT 12.1 This Agreement constitutes the entire agreement of the parties, superseding and terminating any and all prior or contemporaneous oral and writtenagreements, understandings or letters of intent between or among the parties with respect to the subject matter of this Agreement. No part of this Agreementmay be modified or amended, nor may any right be waived, except by a written instrument which expressly refers to this Agreement, states that it is amodification or amendment of this Agreement and is signed by the parties to this Agreement, or, in the case of waiver, by the party granting the waiver. Nocourse of conduct or dealing or trade usage or custom and no course of performance shall be relied on or referred to by any party to contradict, explain orsupplement any provision of this Agreement, it being acknowledged by the parties to this Agreement that this Agreement is intended to be, and is, thecomplete and exclusive statement of the Agreement with respect to its subject matter. Any waiver shall be limited to the express terms thereof and shall notbe construed as a waiver of any other provisions or the same provisions at any other time or under any other circumstances.  13. SEVERABILITY 13.1 If any section, term or provision of this Agreement shall to any extent be held or determined to be invalid or unenforceable, the remaining sections,terms and provisions shall nevertheless continue in full force and effect. 14. GOVERNING LAW, VENUE AND JURY TIRAL 14.1 This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements executed and to beperformed wholly within such State, without regard to any principles of conflicts of law. Each of the parties hereby irrevocably consents and agrees that anylegal or equitable action or proceeding arising under or in connection with this Agreement shall be brought in the federal or state courts located in theCounty of New York in the State of New York, by execution and delivery of this Agreement, irrevocably submits to and accepts the jurisdiction of saidcourts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent to any service of process made either (x) in the manner set forth inSection 7(c) of this Agreement (other than by telecopier), or (y) any other method of service permitted by law. 14.2 Waiver of Jury Trial. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF ANY SUIT, ACTIONOR PROCEEDING TO ENFORCE THIS AGREEMENT OR ANY OTHER ACTION OR PROCEEDING WHICH MAY ARISE OUT OF OR IN ANY WAY BECONNECTED WITH THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS.  IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.CHROMADEXCORPORATIONPer: /s/ Frank JakschAuthorized SignatoryEMPRISE CAPITALCORPORATIONPer: /s/ Emprise Capital CorporationAuthorized Signatory Exhibit 23.1 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENTWe consent to the incorporation by reference in the Registration Statements of ChromaDex Corporation and Subsidiaries on Form S-8 [File No. 333-196434,File No. 333-168029, File No. 333-154402, and File No. 333-154403] of our report dated March 19, 2015, with respect to our audits of the consolidatedfinancial statements of ChromaDex Corporation and Subsidiaries as of January 3, 2015 and December 28, 2013 and for the years ended January 3, 2015 andDecember 28, 2013 and our report dated March 19, 2015 with respect to our audit of the effectiveness of internal control over financial reporting ofChromaDex Corporation and Subsidiaries as of January 3, 2015, which reports are included in this Annual Report on Form 10-K of ChromaDex Corporationand Subsidiaries for the year ended January 3, 2015. /s/ Marcum llp Marcum llpNew York, NYMarch 19, 2015Exhibit 31.1Certification of the Principal Executive OfficerPursuant to§240.13a−14 or §240.15d−14 of the Securities Exchange Act of 1934, as amendedI, Frank L. Jaksch Jr., certify that:1. I have reviewed this annual report on Form 10−K of ChromaDex Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a−15(e) and 15d−15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15a-15(f)) for theregistrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: March 19, 2015/s/ FRANK L. JAKSCH JR.Frank L. Jaksch Jr.Chief Executive Officer(Principal Executive Officer)Exhibit 31.2Certification of the Principal Financial OfficerPursuant to§240.13a−14 or §240.15d−14 of the Securities Exchange Act of 1934, as amendedI, Thomas C. Varvaro., certify that:1. I have reviewed this annual report on Form 10−K of ChromaDex Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a−15(e) and 15d−15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15a-15(f)) for theregistrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: March 19, 2015/s/ THOMAS C. VARVAROThomas C. VarvaroChief Financial Officer(Principal Accounting Officer)Exhibit 32.1Certification Pursuant to 18 U.S.C. Section 1350(as adopted pursuant to Section 906 of the Sarbanes−Oxley Act of 2002)In connection with this annual report of ChromaDex Corporation (the “Company”) on Form 10−K for the year ending January 3, 2015 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), we, Frank L. Jaksch Jr., Chief Executive Officer of the Company, and Thomas C.Varvaro, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes−Oxley Act of2002, that, to our knowledge:1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.Date: March 19, 2015/s/ FRANK L. JAKSCH JR.Frank L. Jaksch Jr.Chief Executive Officer(Principal Executive Officer)/s/ THOMAS C. VARVAROThomas C. VarvaroChief Financial Officer(Principal Accounting Officer)

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