ChromaDex
Annual Report 2015

Plain-text annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K xx ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended January 2, 2016oo 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) Delaware 26-2940963(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.) 10005 Muirlands Blvd. Suite G, Irvine, California 92618(Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (949) 419-0288Securities registered pursuant to Section 12(b) of the Act: Title of each class Name 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 o No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No xIndicate 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 oIndicate 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 oIndicate 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. oIndicate 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 o Accelerated Filer x Non-accelerated filer o (Do not check if smaller reporting company)Smaller Reporting Company o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No xAs of July 2, 2015, the aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $100,113,000. Number of shares of common stock of the registrant outstanding as of March 16, 2016: 109,527,000DOCUMENTS INCORPORATED BY REFERENCE None. Table of Contents TABLE OF CONTENTS Item PART I Cautionary Notice Regarding Forward-Looking Statements 1. Business 11A. Risk Factors 152. Properties 303. Legal Proceedings 304. Mine Safety Disclosures 30 PART II 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 316. Selected Financial Data 347. Management's Discussion and Analysis of Financial Condition and Results of Operations 357A Quantitative and Qualitative Disclosures About Market Risk 478. Financial Statements and Supplementary Data 489. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 819A Controls and Procedures 819B. Other Information 85 PART III 10. Directors, Executive Officers and Corporate Governance 8611. Executive Compensation 9312. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 10513. Certain Relationships and Related Transactions, and Director Independence 10814. Principal Accounting Fees and Services 109 PART IV 15. Exhibits, Financial Statement Schedules 111 Signatures 112 -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 leverages its complementary business units to discover, acquire, develop and commercializepatented and proprietary ingredient technologies that address the dietary supplement, food, beverage, skin care and pharmaceutical markets. In addition tothe Company’s proprietary ingredient technologies segment, the Company also has a core standards and contract services segment, which focuses on naturalproduct fine chemicals (known as “phytochemicals”) and chemistry and analytical testing services and a regulatory consulting segment (known as SpherixConsulting). As a result of the Company’s relationships with leading universities and research institutions, the Company is able to discover and license earlystage, intellectual property-backed ingredient technologies. The Company then utilizes the Company’s business segments to develop commercially viableproprietary ingredients. The Company’s proprietary ingredient portfolio is backed with clinical and scientific research, as well as extensive intellectualproperty protection. -1-Table of Contents Through ChromaDex Analytics, a part of our core standards and contract services business segment, we perform chemistry-based analytical services at ourlaboratory in Boulder, Colorado, supporting quality control or quality assurance activities for the dietary supplement industry. Through Spherix, ourregulatory consulting segment, we provide scientific and regulatory consulting to the clients in the food, supplement and pharmaceutical industries tomanage potential health and regulatory risks. For the fiscal years ended January 2, 2016, January 3, 2015 and December 28, 2013, our revenues wereapproximately $22,014,000 $15,313,000 $10,161,000 respectively. The following table summarizes the Company’s total sales for each of the businesssegments in the last 3 years.Fiscal Years IngredientsSegment Core Standards and ContractServices Segment Regulatory ConsultingSegment(Spherix Consulting) Total2015 $12.5 million $8.4 million $1.1 million $22.0 million2014 $6.8 million $7.5 million $1.0 million $15.3 million2013 $2.4 million $6.5 million $1.1 million $10.2 million We are a leading provider of research and quality-control products and services to the natural products industry. Through our core standards and contractservices segment, customers worldwide in the dietary supplement, food and beverage, cosmetic and pharmaceutical industries use our products, which aresmall quantities of highly-characterized, research-grade, plant-based materials, to ensure the quality of their raw materials and finished products. Customersalso use our analytical chemistry services to support their quality assurance activities, primarily to ensure the identity, potency and safety of their consumerproducts. We have conducted this core standards and contract services business since 1999. 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 business segment provides us with the opportunity to become aware of the results from research and screeningactivities performed on thousands of potential natural product candidates through our relationships with various universities and research institutions. Byselecting the most promising ingredients leveraged from this market-based screening model, which is grounded by primary research performed throughleading universities and institutions, followed by selective investments in further research and development, new proprietary ingredients can be identifiedand brought to various markets with a much lower investment cost and an increased chance of success. Through our ingredients business segment, we develop and commercialize these new ingredients. One of our proprietary ingredients that we commercializedunder this business model is nicotinamide riboside (“NR”), for which our brand name is NIAGEN®. NR is found naturally in trace amounts in milk and otherfoods and is B3 vitamin. The potential beneficial effects of NR in humans include increased anti-aging properties, fatty acid oxidation, mitochondrialactivity, resistance to negative consequences of high-fat diets, protection against oxidative stress, prevention of peripheral neuropathy and blocking muscledegeneration. Published research has shown that NR is a potent precursor to the co-enzyme nicotinamide adenine dinucleotide (NAD+) in the mitochondriaof animals. NAD+ is an important cellular co-factor for improvement of mitochondrial performance and energy metabolism. The Company has built asignificant 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 NAD+ in health human volunteers. In addition, NR was also found to be safe as no adverse events were observedthroughout the clinical trial. In 2015, NR was recognized by the FDA as a “New Dietary Ingredient.” NR was also “Generally Recognized As Safe” by anindependent panel of expert toxicologists. For years 2015, 2014, and 2013, NIAGEN® accounted for approximately 68%, 54%, and 14% of our ingredientsegment’s total sales, respectively. -2-Table of Contents Another one of these proprietary ingredients is pterostilbene, for which is marketed and sold under our brand name, pTeroPure®. Pterostilbene is apolyphenol and a powerful antioxidant that shows promise in a range of health related fields. We have exclusive in-licensed patents and patents pendingrelated to the use of pterostilbene for a number of these benefits, and have filed additional patents related to supplementary benefits, such as a patent jointlyfiled with University of California at Irvine related to its effects on non-melanoma skin cancer. We have successfully conducted a clinical trial, together withthe University of Mississippi, related to its blood pressure lowering effects and expect to conduct additional clinical trials on pterostilbene and anticipateentering the dietary supplement and, if clinical results are favorable, the pharmaceutical market. We believe that we also have opportunities in the skin caremarket and will continue to investigate developing these opportunities internally or through third party partners. We anticipate conducting additionalclinical trials on NR, pterostilbene and other compounds in our pipeline to provide differentiation as we market these proprietary ingredients and supportvarious health-related claims or obtain additional regulatory clearances.Through our regulatory consulting segment (“Spherix”), we provide our clients in the food, supplement and pharmaceutical industries with effectivescientific solutions to manage their potential health and regulatory risks. Our science-based solutions are for both new and existing products that may besubject to product liability and/or exposed to changing scientific standards or public perceptions; literature evaluations; and design and assessment of pre-clinical and clinical safety testing. We specialize in regulatory submissions for food and dietary supplement ingredients. For our clients involved in drugdevelopment within the pharmaceutical industry, we provide similar services as well as risk-based strategies, including intellectual property data andcompliance gap identification, due diligence assessments and investigational new drug writing. Spherix has complemented and expanded our leadership incore standards and contract services business by providing a more comprehensive suite of science-based and regulatory services. Through Spherix, we havemore efficiently advanced products in the dietary supplement, 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 Spherix Consulting Inc., a scientific and regulatory consulting company located in the greater Washington D.C. area andSpherix became a wholly-owned subsidiary of ChromaDex, Inc. In 2011, the Company launched its BluScience retail consumer line based on its proprietaryingredients. However, on March 28, 2013, the Company entered into an asset purchase and sale agreement with NeutriSci International Inc. (“NeutriSci”) andconsummated the sale of the BluScience consumer product line to NeutriSci. Our Strategy Our business strategy is to identify, acquire, reduce-to-practice, and commercialize innovative new proprietary ingredients and technologies, with an initialindustry focus on the dietary supplement, food, beverage, skin care and pharmaceutical markets. We plan to utilize our experienced management team tocommercialize these proprietary ingredient technologies by advancing them through any required regulatory approval processes, selectively conductingclinical trials, arranging for reliable and cost-effective manufacturing, and ultimately either directly selling the products or licensing the intellectual propertyto third parties. We plan to conduct clinical trials to (a) reinforce the health benefits that may be associated with our proprietary ingredients in support ofsales made into the dietary supplement and food, cosmetics and beverage markets, (b) potentially improve the quality or specificity of FDA approved claimwe can make with respect to these health benefits, and (c) potentially lead us toward pharmaceutical applications for our proprietary ingredients. -3-Table of Contents ●Commercialization of intellectual property: We believe that many of our proprietary ingredients currently in development have thepotential to spin off technologies that may themselves be independently capable of commercialization and becoming significant newrevenue sources. We believe that new intellectual property can also be developed from our expansion into new markets. ●Expansion and growth of the core business: Through our core standards and contract services segment, we intend to continue to expandour phytochemical standards and related contract services offerings. Currently, we have approximately 5,000 defined phytochemicalreference standards. ●Expansion into new markets: For both our ingredients segment and core standards and contract services segment, we are developingbusiness in new domestic and international markets. These markets include both the domestic and international botanical drug market andthe market for novel therapeutic botanicals from Asia, South America and Africa. We have also added what we believe to be new andinnovative product offerings, including the screening of compound libraries and the offering of value-added raw materials. 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. 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: ●Proprietary ingredient technologies (ingredients segment). We offer bulk raw materials for inclusion in dietary supplements, food,beverage and cosmetic products. This is an area where we are increasing our focus, as we believe we can secure and defend our marketpositions through patents and long-term manufacturing agreements with our customers and vendors. ●Supply of reference standards, materials & kits (core standards and contract services segment). We supply a wide range of productsnecessary to conduct quality control of raw materials and consumer products. Reference standards and materials and the kits created fromthem are used for research and quality control in the dietary supplements, cosmetics, food and beverages, and pharmaceutical industries. ●Supply of fine chemicals and phytochemicals (core standards and contract services segment). As demand for new natural products andphytochemicals increases, we can scale up and supply our core products in the gram to kilogram scale for companies that require theseproducts for research and new product development. ●Contract services (core standards and contract services segment). We provide a wide range of contract services ranging from routinecontract analysis for the production of dietary supplements, cosmetics, foods and other natural products to elaborate contract research forclients in these industries. ●Consulting services (regulatory consulting segment). We provide a comprehensive range of consulting services in the areas of regulatorysupport, new ingredient or product development, risk management and litigation support. We provide and offer product regulatoryapproval and scientific advisory services. -4-Table of Contents ●Process development (core standards and contract services segment). Developing cost effective and efficient processes for manufacturingnatural products can be very difficult and time consuming. We assist customers in creating processes for cost-effective manufacturing ofnatural products, using “green chemistry.” Products and services in development: ●Nicotinamide riboside (ingredients segment). We are working to develop and conduct additional clinical trials to reinforce the healthbenefits associated with NR, a recently discovered vitamin found naturally in milk. NR is the most efficient B3 vitamin to enhance NAD+energetics. NR has shown promise for improving cardiovascular health, glucose levels and cognitive function and has demonstratedevidence of anti-aging effects. ●Pterostilbene and caffeine co-crystal (ingredients segment). We are working to develop and conduct additional clinical trials to reinforcethe benefits of the co-crystal ingredient comprised of caffeine and pterostilbene. The first human study of this ingredient demonstrated thatit delivers 30 percent more caffeine, stays in the blood stream longer, and is absorbed more slowly than ordinary caffeine. With thisingredient, formulators of energy products may have the ability to reduce the total amount of caffeine in their products by as much as 50%without sacrificing consumers’ expectations from such products. ●Anthocyanin (ingredients segment). We plan to develop an extraction process to concentrate the anthocyanins in Suntava® Purple Cornwhich will be used to produce a highly concentrated anthocyanin ingredient. We will utilize the expertise of a toll manufacturer to producethe commercial ingredient. We believe there is a ready market for cost-effective concentrated anthocyanins having application in dietarysupplements, sports nutrition, food & beverage and skin care. ●Quality verification seal program (core standards and contract services segment). We intend to further develop and expand our offering of“ChromaDex® Quality Verified Seal” program which currently includes (i) supply chain facility audits and inspections to verifycompliance with Good Manufacturing Practices as specified by the FDA; (ii) a comprehensive identity testing program for raw materialsand finished products; (iii) finished product testing for potential contaminants such as microbials, heavy metals and residual solvents; and(iv) provisions for ongoing monitoring to be performed as part of a quality protocol design and managed by ChromaDex. ●Phytochemical libraries (core standards and contract services segment). We intend to continue investing in the development of naturalproduct based libraries by continuing to create these libraries internally as well as through product licensing. ●Plant extracts libraries (core standards and contract services segment). We intend to continue our efforts to create an extensive library ofplant extracts using our already extensive list of botanical reference materials. ●Databases for cross-referencing phytochemicals (core standards and contract services segment). We are working on building a databasefor cross referencing phytochemicals against an extensive list of plants, including links to references to ethnopharmacological,ethnobotanical, and biological activity, as well as clinical evidence. ●Intellectual property (ingredients segment). We plan to utilize our expertise in natural products to license and develop new intellectualproperty that can be licensed to clients in our target industries. ●Process scale manufacturing (ingredients segment/core standards and contact services segment). We intend to invest in a pilot plantfacility that has the capability of manufacturing at a process scale for products that we are planning to take to market as well as explore costsaving processes for existing products. -5-Table of Contents Sales and Marketing Strategy Our sales platform for the ingredients segment and core standards and contract services segment 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.The regulatory consulting segment, operating out of Rockville, Maryland, generates scientific and regulatory consulting revenue from an existing well-established list of Fortune 1000 customers and referrals. Our sales staff for the ingredients, reference standards and analytical service business in Irvine,California also generate leads for Spherix. USA and Canada: For our ingredients segment and core standards and contract services segment, we employ a range of the following marketing activities to promote and sellour products and services: •Catalogs, research publications, brochures and flyers •Tradeshows and conferences •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. International:For our ingredients segment, most of our customers are based currently in U.S. We are looking to expand into international markets through our internationalbusiness partners. For our core standards contract services segment, we use international distributors to market and sell to several foreign countries or markets. The use ofdistributors in some international markets has proven to be more effective than direct sales. Currently, we have exclusive distribution agreements in placewith the following distributors for the following countries or regions: •Europe (LGC Limited) •South America (JMC, Inc.) -6-Table of Contents •China (MeiTech International LLC) •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 •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. For our regulatory consulting segment, we engage on consulting projects for customers all over the world, including Europe, South America, andAsia. Consulting revenues are generated from an existing well-established list of Fortune 1000 customers and referrals. 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 •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. -7-Table of Contents 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 andcontract services segment. We believe that we create value throughout the supply chain of the pharmaceutical, dietary supplements, functional foods andpersonal 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 regulatory consulting segment, we provide product regulatory approval and scientific advisory services to our clients in the food,supplement and pharmaceutical industries with effective solutions to manage potential health and regulatory risks. Our science-based solutions are for bothnew and existing products that may be subject to product liability and/or exposed to changing scientific standards or public perceptions; literatureevaluations; and design and assessment of pre-clinical and clinical safety testing. We specialize in regulatory submissions for food and dietary supplementingredients. For our clients involved in drug development within the pharmaceutical industry, we provide similar services as well as risk-based strategies,including intellectual property data and compliance gap identification, due diligence assessments and investigational new drug writing. By providing amore comprehensive suite of science-based and regulatory services, we will be able to more efficiently advance products in the dietary supplement, food andbeverage, 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 services segment. Our core standards and contract services segment provides 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 proprietary ingredient technologies can beidentified and brought to various markets with a much lower investment cost and an increased chance of success. One of our proprietary ingredients that we commercialized under this business model through our ingredients segment is nicotinamide riboside (“NR”), forwhich our brand name is NIAGEN®. NR is found naturally in trace amounts in milk and other foods and is the most efficient B3 vitamin. The potentialbeneficial effects of NR in humans include increased anti-aging properties, fatty acid oxidation, mitochondrial activity, resistance to negative consequencesof high-fat diets, protection against oxidative stress, prevention of peripheral neuropathy and blocking muscle degeneration. Published research has shownthat NR is a potent precursor to the co-enzyme nicotinamide adenine dinucleotide (NAD+) in the mitochondria of animals. NAD+ is an important cellular co-factor for improvement of mitochondrial performance and energy metabolism. The Company has built a significant patent portfolio pertaining to NR byseparately acquiring patent rights from Cornell University, Dartmouth College and Washington University. We have successfully completed the first humanclinical trial using NR and the results demonstrated that a single dose of NR resulted in statistically significant increases NAD+ in health humanvolunteers. In addition, NR was also found to be safe as no adverse events were observed throughout the clinical trial. In 2015, NR was recognized by theFDA as a “New Dietary Ingredient.” NR was also “Generally Recognized As Safe” by an independent panel of expert toxicologists. -8-Table of Contents Another one of these proprietary ingredients is pterostilbene, for which is marketed and sold under our brand name, pTeroPure®. Pterostilbene is apolyphenol and a powerful antioxidant that shows promise in a range of health related fields. We have exclusive in-licensed patents and patents pendingrelated to the use of pterostilbene for a number of these benefits, and have filed additional patents related to supplementary benefits, such as a patent jointlyfiled with University of California at Irvine related to its effects on non-melanoma skin cancer. We have successfully conducted a clinical trial, together withthe University of Mississippi, related to its blood pressure lowering effects and expect to conduct additional clinical trials on pterostilbene and anticipateentering the dietary supplement and, if clinical results are favorable, the pharmaceutical market. We believe that we also have opportunities in the skin caremarket and will continue to investigate developing these opportunities internally or through third party partners. We anticipate conducting additionalclinical trials on NR, pterostilbene and other compounds in our pipeline to provide differentiation as we market these proprietary ingredients and supportvarious health-related claims or obtain additional regulatory clearances. We continue to identify and in-license novel, proprietary ingredients 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 NIAGEN® and pTeroPure®, these compounds also havepotential in multiple markets. Government Regulation Some of our operations for ingredients segment and core standards and contract services segment are subject to regulation by various United States federalagencies and similar state and international agencies, including the FDA, the Federal Trade Commission (“FTC”), the Department of Commerce, theDepartment of Transportation, the Department of Agriculture and other state and international agencies. These regulators govern a wide variety of productionactivities, from design and development to labeling, manufacturing, handling, selling and distributing of products. From time to time, federal, state andinternational legislation is enacted that may have the effect of materially increasing the cost of doing business or limiting or expanding our permissibleactivities. We cannot predict whether or when potential legislation or regulations will be enacted, and, if enacted, the effect of such legislation, regulation,implementation, or any implemented regulations or supervisory policies would have on our financial condition or results of operations. In addition, theoutcome of any litigation, investigations or enforcement actions initiated by state or federal authorities could result in changes to our operations beingnecessary 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: ingredient testing •product testing; •ingredient testing; •documentation process, batch records, specifications; •product labeling; •product manufacturing and storage; •New Dietary Ingredient (NDI) status; •health claims, advertising and promotion; and •product sales and distribution. -9-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 for the ingredients segment 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. -10-Table of Contents Major CustomersFor our ingredients segment, there were two customers who accounted for more than 10% the Company’s total sales in the last three years. In 2015, CustomerB in our ingredients segment accounted for 11.0% of the Company’s total sales. Customer B accounted for less than 10% of the Company’s total sales for theyears 2014 and 2013. During the year 2014, Customer A in our ingredients segment accounted for 10.2% of the Company’s total sales. Customer Aaccounted for less than 10% of the Company’s total sales for the years 2015 and 2013.Generally, we do not depend upon a single customer, or a few customers and the loss of any one or more would not have a material adverse effect on theingredients segment or the Company. However, due to the volume of ingredients we are selling in relation to the overall Company’s sales, we do expect thatfew of our customers at times may account for more than 10% of the Company’s sales.For the core standards and contract services segment and the regulatory consulting segment, we did not have any customers who accounted for more than10% of the Company’s total sales in the last three years. Competitive Business Conditions For our ingredients segment, we face little direct competition as the new ingredients we offer, such as NIAGEN® and pTeroPure® are backed by intellectualproperties exclusively licensed to us. We, however, face strong indirect competition from other ingredient suppliers who may supply alternative ingredientsthat may have similar characteristics compared to the ingredients we offer. Below is a list of some of the competitors for our ingredients segment. Ingredients Business Segment Competitors •Royal DSM (the Netherlands) •Glanbia plc (Ireland) •BASF (Germany) •Sabinsa Corporation (India/USA) For the core standards and contract services segment, we face competition within the standardization and quality testing niche of the natural products market,though we know of no other companies that offer both reference standards and testing to their customers. Below is a current list of certain competitors. Thesecompetitors have already developed reference standards or contract services or are currently taking steps to develop botanical standards or contract services.Of the competitors listed, some currently sell fine chemicals, which, by default, are sometimes used as reference standards, and others are closely aligned withour market niche so as to reduce any barriers to entry if these companies wish to compete. Some of these competitors currently offer similar services and havethe scale and resources to compete with us for larger customer accounts. Because some of our competitors are larger in total size and capitalization, theylikely have greater access to capital markets, and are in a better position than we are to compete nationally and internationally. Core Standards and Contract Services Segment Competitors •Sigma-Aldrich (USA) •Phytolab (Germany) •US Pharmacopoeia (USA) •Extrasynthese (France) •Covance (USA) -11-Table of Contents •Eurofins (ERF) (France) •Silliker Canada Co. (Canada) For the regulatory consulting segment, there are numerous competitors, including some that are much larger companies with more resources. The success inwinning and retaining clients is heavily dependent on the efforts and reputation of our consultants. We believe the barriers to entry in particular areas of ourconsulting expertise are low. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, Including Duration For our ingredients segment, we currently protect our intellectual property through patents, trademarks, designs and copyrights on our products and services.Our business strategies is to use the intellectual property harnessed from our core standards and contract services segment as the basis for providing newproprietary ingredients to our customers. Our strategy is to develop these proprietary ingredients on our own as well as to license our intellectual property tocompanies who will commercialize it. We anticipate that the net result will be a long term flow of intellectual property milestone and royalty payments for us. The following table sets forth our existing patents and those to which we have licensed rights: Patent Number TitleFiling DateIssued DateExpiresLicensor 6,852,342 Compounds for altering food intake in humans3/26/20022/8/20052/12/2022Co-owned by Avoca, Inc.and ChromaDex 7,205,284 Potent immunostimulants from microalgae7/10/20014/17/20073/9/2022Licensed from University ofMississippi 7,776,326 Methods and compositions for treatingneuropathies6/3/20058/17/20106/3/2025Licensed from WashingtonUniversity 7,846,452 Potent immunostimulatory extracts frommicroalgae7/28/200510/7/20107/28/2025Licensed from University ofMississippi 8,106,184 Nicotinyl Riboside Compositions and Methods ofUse11/17/20061/31/201211/17/2026Licensed from CornellUniversity 8,114,626 Yeast strain and method for using the same toproduce Nicotinamide Riboside3/26/20092/14/20123/26/2029Licensed from DartmouthCollege 8,133,917 Pterostilbene as an agonist for the peroxisomeproliferator-activated receptor alpha isoform10/25/20103/13/201210/25/2030Licensed from theUniversity of Mississippiand U.S. Department ofAgriculture -12-Table of Contents 8,197,807 Nicotinamide Riboside Kinase compositions andMethods for using the same11/20/20076/12/201211/20/2027Licensed from DartmouthCollege 8,227,510 Combine use of pterostilbene and quercetin forthe production of cancer treatment medicaments7/19/20057/24/20127/19/2025Licensed from GreenMolecular S.L. 8,252,845 Pterostilbene as an agonist for the peroxisomeproliferator-activated receptor alpha isoform2/1/20128/28/20122/1/2032Licensed from theUniversity of Mississippiand U.S. Department ofAgriculture 8,318,807 Pterostilbene Caffeine Co-Crystal Forms7/30/201011/27/20127/30/2030Licensed from Laurus LabsPrivate Limited 8,383,086 Nicotinamide Riboside Kinase compositions andMethods for using the same4/12/20122/26/20134/12/2032Licensed from DartmouthCollege 8,524,782 Key intermediate for the preparation of Stilbenes,solid forms of Pterostilbene, and methods formaking the same6/1/20099/3/20136/1/2029Licensed from Laurus LabsPrivate Limited 8,809,400 Method to Ameliorate Oxidative Stress andImprove Working Memory Via PterostilbeneAdministration6/10/20088/19/20146/10/2028Licensed from theUniversity of Mississippiand U.S. Department ofAgriculture 8,841,350 Method 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 our ingredients segment and our core standards and contract services segment, we currently utilize third-party manufacturers to produce and supply theingredients. Following the receipt of products or product components from third-party manufacturers, we currently inspect products, as needed. We expect toreserve the right to inspect and ensure conformance of each product and product component to our specifications. We will also consider manufacturingcertain products or product components internally, if our capacity permits, when demand or quality requirements make it appropriate to do so. -13-Table of Contents For certain reference standards, ChromaDex Analytics operates laboratory operations and a manufacturing facility for our core standards and contract servicessegment. We currently maintain our own manufacturing equipment and have the ability to manufacture certain products in limited quantities, ranging frommilligrams to kilograms. We intend to contract for the manufacturing of products that we develop and enter into strategic relationships or license agreementsfor sales and marketing of products that we develop when 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. Following 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 ingredients, chemicals, phytochemicals and reference materials that will provide productsin compliance with our guidelines. Research and Development For our ingredients segment, we have completed the first human clinical trial on our proprietary ingredient nicotinamide riboside (“NR”) and the resultsdemonstrated that a single dose of NR resulted in statistically significant increases in the co-enzyme nicotinamide adenine dinucleotide (NAD+) in healthyhuman volunteers. In addition, NR was also found to be safe as no adverse events were observed. In 2015, NR was recognized by the FDA as a “New DietaryIngredient.” NR was also “Generally Recognized As Safe” by an independent panel of expert toxicologists. We have also successfully conducted a clinical trial, together with the University of Mississippi, on our proprietary ingredient pterostilbene for its bloodpressure lowering effects. We expect to conduct additional clinical trials on this compound and we anticipate entering the dietary supplement and, if clinicalresults are favorable, possibly the pharmaceutical markets as well. We also have completed a study on our proprietary ingredient pterostilbene with caffeineco-crystal. The first human study of this ingredient demonstrated that it delivers 30 percent more caffeine, stays in the blood stream longer, and is absorbedmore slowly than ordinary caffeine. We anticipate conducting additional clinical trials on NR and other compounds in our pipeline to providedifferentiation as we market these proprietary ingredients and support various health-related claims or obtain additional regulatory clearances.Research and development costs for our ingredients segment for the fiscal years ended January 2, 2016, January 3, 2015 and December 28, 2013 wereapproximately $892,000, $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. -14-Table of Contents Working Capital The Company’s working capital at the end of years 2015, 2014 and 2013 was approximately $4.4 million, $2.2 million and $1.6 million, respectively. TheCompany measures working capital by adding trade receivables and inventories, and subtracting accounts payable. The majority of the working capital isconsumed by our ingredients segment as the operations require a large amount of inventory to be on hand. As the ingredients segment grows, more workingcapital will likely be needed to support the operations. As of January 2, 2016, the Company had approximately $7.2 million of inventory for our ingredientssegment, which represented approximately 38% of the Company’s total assets. Backlog Orders For our ingredients segment, we have minimal backlog orders as we carry inventory on hand for most of the ingredients we offer and we ship upon the receiptof customer’s purchase orders. For the core standards and contract services segment, we normally have a small backlog of orders for reference standards. These orders amount toapproximately $25,000 or less. Because we carry 5,000 different reference standards, we may not always have the items in stock at the time of customers’orders. These backlog orders are normally fulfilled within 2 to 3 months. FacilitiesFor information on our facilities, see “Properties” in Item 2 of this Form 10-K. EmployeesAs of January 2, 2016, ChromaDex (including ChromaDex Analytics and Spherix Consulting, Inc.) had 82 employees, 80 of whom were full-time and 2 ofwhom were part-time. We consider our relationships with our employees to be satisfactory. None of our employees is covered by a collective bargainingagreement. Item 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 provided us with access to a term loan of up to $5 million. The first advance and second advance,if any, were to be repaid in equal monthly installments of principal and interest (mortgage style) through the loan’s maturity on April 1, 2018, following aninitial interest-only period that was to conclude on October 31, 2015. The remaining $2.5 million of the term loan was to be drawn down in part or in full atour option at any time but no later than July 31, 2015. The term loan bears interest at the rate per year equal to the greater of either (i) 9.35% plus the primerate as reported in The Wall Street Journal minus 3.25%, or (ii) 9.35%. -15-Table of ContentsOn June 17, 2015, we and Hercules Technology II, L.P entered into Amendment No. 1 (the “Amendment”) to the Loan Agreement. Pursuant to theAmendment, the parties agreed that the interest only period would be extended to March 31, 2016, with monthly installements of principal and interestcommencing on April 1, 2016. The maturity date remains unchanged at April 1, 2018 and any remaining principal balance of the loan and all unpaid interestis due on the maturity date. The Amendment became effective on June 18, 2015 upon the funding of the full amount of the $2.5 million second advance. Forfurther details on the Loan Agreement, please refer to Note 7. Loan Payable appearing on Item 8 Financial Statements and Supplementary Data of this AnnualReport on Form 10-K.As of January 2, 2016 and March 16, 2016, we had $5.0 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; •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. -16-Table of Contents 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 net losses of approximately$2,771,000, $5,388,000 and $4,420,000 for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively. As of January 2, 2016,our accumulated deficit was approximately $42.3 million. We have not achieved profitability on an annual basis. We may not be able to reach a level ofrevenue to achieve profitability. If our revenues grow slower than anticipated, or if operating expenses exceed expectations, then we may not be able toachieve profitability in the 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 will be sufficient to meet our projected operating plansthrough at least March 18, 2017, we may require additional funds, either through additional equity or debt financings or collaborative agreements or fromother sources. We have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on termsfavorable to us, or at all. In the event that we are unable to obtain additional financing, we may be unable to implement our business plan. Even with suchfinancing, we have a history of operating losses and there can be no assurance that we will ever become profitable.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. -17-Table of Contents We anticipate that our current cash and cash equivalents and cash generated from operations will be sufficient to implement our operating plan through atleast March 18, 2017. Our capital requirements will depend on many 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 18, 2017 both to meet our projected operating plans after March 18, 2017and 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. No 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. -18-Table of ContentsThe 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 the size or growth rate of the vitamin, mineral and dietary supplement market could have a material adverse effect on our business.Underlying market conditions are subject to change based on economic conditions, consumer preferences and other factors that are beyond our control,including media attention and scientific research, which may be positive or negative.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.We 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, the products we sell are produced by third-party manufacturers. As a marketer of productsmanufactured 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 subjectto various product liability claims, including, among others, that our products include inadequate instructions for use or inadequate warnings concerningpossible side effects and interactions with other substances. A product liability claim against us could result in increased costs and could adversely affect ourreputation with our customers, which, in turn, could have a materially adverse effect on our business, results of operations, financial condition and cash flows. -19-Table of ContentsWe 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. Our operating results may fluctuate significantly as a result of a variety of factors, many of which are outside of our control. We are subject to the following factors, among others, that may negatively affect our operating results: • 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; -20-Table of Contents • 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. 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; -21-Table of Contents • 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 infringed theintellectual 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. 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. -22-Table of Contents 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. 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. Without these technologies, our product may not besuccessful and our business would be harmed if the patents were infringed on or misappropriated without action by such third parties. We have obtained licenses from third parties for patents and patent application rights related to the products we are developing, allowing us to 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. -23-Table of Contents 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. 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. -24-Table of Contents 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. 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. -25-Table of ContentsRisks 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. If we experience a significant disruption in our information technology systems or if we fail to implement new systems 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. -26-Table of Contents 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. If we should in the future become required to obtain regulatory approval to market and sell our goods we will not be able to generate any revenues 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. -27-Table of Contents 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. 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. -28-Table of Contents 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. 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. -29-Table of Contents 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 2, 2016, we had outstanding options exercisable for an aggregate of 15,734,755 shares of common stock at a weighted average exercise price of$1.15 per share and outstanding warrants exercisable for an aggregate of 1,269,020 shares of common stock at a weighted average exercise price of $1.34 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 2, 2016, we lease approximately 15,000 square feet of office space in Irvine, California with 5 years remaining on the lease, approximately13,000 square feet of space for laboratory manufacturing in Boulder, Colorado with 4 months remaining on the lease, and approximately 1,700 square feet ofoffice space in Rockville, Maryland with 4 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 2, 2016, our total annual rentalexpense was approximately $536,000. Subsequent to the year ended January 2, 2016, we entered into a lease amendment to extend the term of the lease for our research facility located in Boulder,Colorado through April 2023.Subsequent to the year ended January 2, 2016, we entered into a lease amendment to lease an office space of approximately 2,300 square feet located inRockville, Maryland through April 2021. 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. -30-Table of Contents PART IIItem 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 2, 2016 Quarter Ended High Low January 2, 2016 $1.52 $1.12 October 3, 2015 $1.42 $1.02 July 4, 2015 $1.48 $1.13 April 4, 2015 $1.54 $0.85 Fiscal Year Ending January 3, 2015 Quarter Ended High CLow 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 On March 10, 2016, the closing bid quotation was $1.49. 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. -31-Table of Contents In 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. Performance GraphThe chart below compares the annual percentage change in the cumulative total return on our common stock with the NASDAQ Capital Market CompositeIndex and the S&P SmallCap 600 Health Care Index. The chart shows the value as of January 2, 2016, of $100 invested on January 1, 2011. The stock priceperformance below is not necessarily indicative of future performance. -32-Table of Contents 1/1/11 12/31/11 12/29/12 12/28/13 1/3/15 1/2/16 ChromaDex Corporation 100.00 40.44 40.85 117.65 66.18 89.71 NASDAQ Composite 100.00 100.62 116.97 166.27 188.90 200.15 S&P SmallCap 600 Health Care 100.00 90.92 104.60 149.33 158.97 180.15 Holders of Our Common StockAs of March 10, 2016, we had approximately 64 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. -33-Table of Contents Item 6. Selected Financial DataThe annual financial information set forth below has been derived from our audited consolidated financial statements. The information should be read inconnection with, and is qualified in its entirety by reference to, Management’s Discussion and Analysis, the consolidated financial statements and notesincluded elsewhere in this report and in our SEC filings. Years Ended 2015 2014 2013 2012 2011 Consolidated Statement of Operations Data Sales, net $22,014,140 $15,313,179 $10,160,964 $11,610,494 $8,112,610 Cost of sales 13,533,132 9,987,514 7,027,828 9,335,057 5,640,791 Gross profit 8,481,008 5,325,665 3,133,136 2,275,437 2,471,819 Operating expenses: Sales and marketing 2,326,788 2,136,584 2,357,605 5,520,141 2,539,252 Research and development 891,601 513,671 134,040 141,573 96,788 General and administrative 7,416,451 7,860,930 4,982,976 8,250,157 7,700,018 Loss from investment in affiliate - 45,829 44,961 - - Operating expenses 10,634,840 10,557,014 7,519,582 13,911,871 10,336,058 Operating loss (2,153,832) (5,231,349) (4,386,446) (11,636,434) (7,864,239) Nonoperating income (expenses): Interest income 3,325 2,013 1,251 3,014 1,397 Interest expense (616,033) (158,849) (34,330) (29,006) (32,142)Nonoperating expenses (612,708) (156,836) (33,079) (25,992) (30,745) Loss before income taxes (2,766,540) (5,388,185) (4,419,525) (11,662,426) (7,894,984)Provision for income taxes (4,527) - - - - Net loss $(2,771,067) $(5,388,185) $(4,419,525) $(11,662,426) $(7,894,984) Basic and Diluted loss per common share $(0.03) $(0.05) $(0.04) $(0.13) $(0.12) Basic and Diluted weighted average common shares outstanding 107,632,022 106,459,379 99,987,443 90,268,802 68,306,812 -34-Table of Contents At The End of Year 2015 2014 2013 2012 2011 Consolidated Balance Sheet Data Cash $5,549,672 $3,964,750 $2,261,336 $520,000 $420,152 Working capital (1) 4,400,432 2,189,442 1,602,008 3,717,610 1,379,025 Total assets 18,749,209 11,516,847 8,986,892 9,034,521 6,269,905 Long term debt 3,345,335 1,977,113 - - - Total stockholders' equity $5,274,674 $3,998,391 $5,665,451 $3,993,329 $2,561,286 (1) Trade receivables plus inventories less accounts payable. Years Ended 2015 2014 2013 2012 2011 Consolidated Cash Flow Data Net cash used in operating activities $(2,111,138) $(2,580,406) $(3,906,011) $(10,119,713) $(4,098,829) Net cash provided by (used in) investing activities (647,731) 1,590,275 998,651 (76,565) (176,663) Net cash provided by financing activities $4,343,791 $2,693,545 $4,648,696 $10,296,126 $2,469,185 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 are a natural products company that leverage our complementary business units to discover, acquire, develop and commercialize patented and proprietaryingredient technologies that address the dietary supplement, food, beverage, skin care and pharmaceutical markets. In addition to our ingredienttechnologies unit, we also have business units focused on natural product fine chemicals (known as “phytochemicals”), chemistry and analytical testingservices, and product regulatory and safety consulting (known as Spherix Consulting). As a result of our relationships with leading universities and researchinstitutions, we are able to discover and license early stage, intellectual property-backed ingredient technologies. We then utilize our in-house chemistry,regulatory and safety consulting business units to develop commercially viable ingredients. Our ingredient portfolio is backed by clinical and scientificresearch, as well as extensive intellectual property protection. 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. -35-Table of Contents We anticipate that our current cash and cash generated from operations will be sufficient to meet our projected operating plans through at least March 18,2017. We may, however, seek additional capital prior to March 18, 2017, both to meet our projected operating plans after March 18, 2017 and/or to fund ourlonger 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 2, 2016, January 3, 2015 and December 28, 2013 were approximately $22,014,000, $15,313,000and $10,161,000, respectively. We incurred a net loss of approximately $2,771,000, $5,388,000 and $4,420,000 for the twelve-month periods ended January2, 2016, January 3, 2015 and December 28, 2013, respectively. This equated to $0.03, $0.05 and $0.04 losses per basic and diluted share for the twelve-month periods ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively. 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 Jan. 2, 2016 Jan. 3, 2015 Dec. 28, 2013 Sales $22,014,140 $15,313,179 $10,160,964 Cost of sales 13,533,132 9,987,514 7,027,828 Gross profit 8,481,008 5,325,665 3,133,136 Operating expenses -Sales and marketing 2,326,788 2,136,584 2,357,605 -Research and development 891,601 513,671 134,040 -General and administrative 7,416,451 7,860,930 4,982,976 -Loss from investment in affiliate - 45,829 44,961 Nonoperating -Interest income 3,325 2,013 1,251 -Interest expenses (616,033) (158,849) (34,330)Provision for income taxes (4,527) - - Net loss $(2,771,000) $(5,388,185) $(4,419,525) -36-Table of Contents Year Ended January 2, 2016 Compared to Year Ended January 3, 2015 Net Sales. Net sales consist of gross sales less discounts and returns. Twelve months ending January 2,2016 January 3,2015 Change Net sales: Ingredients $12,542,000 $6,857,000 83% Core standards and contract services 8,419,000 7,487,000 12% Scientific and regulatory consulting 1,053,000 969,000 9% Total net sales $22,014,000 $15,313,000 44% ·The increase in sales for the ingredients segment is due to increased sales throughout most of the ingredients we sell, with “NIAGEN®” contributinga majority of the increase. ·The increase in sales for the core standards and contract services segment is primarily due to increased sales of analytical testing and contractservices. ·The increase in sales for the scientific and regulatory consulting segment is due to the timing of completion of consulting projects for customers. Cost of Sales. Costs of sales include raw materials, labor, overhead, and delivery costs. Twelve months ending January 2, 2016 January 3, 2015 Amount % ofnet sales Amount % ofnet sales Cost of sales: Ingredients $6,664,000 53% $4,257,000 62% Core standards and contract services 6,347,000 75% 5,141,000 69% Scientific and regulatory consulting 522,000 50% 589,000 61% Total cost of sales $13,533,000 61% $9,987,000 65% The cost of sales, as a percentage of net sales, decreased 4%. ·The decrease in cost of sales, as a percentage of net sales, for the ingredients segment is largely due to price reductions from our suppliers throughincreased purchase volumes. ·The increase in cost as a percentage of net sales for the core standards and contract services segment is mainly due to increased costs in fine chemicalreference standards as we reduced the carrying values for the portion of the inventory that are considered slow-moving and obsolete. -37-Table of Contents ·The percentage decrease in cost of sales for the scientific and regulatory consulting segment is largely due to higher utilizations of in-houseconsulting labor versus 3rd party consultants. 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 ofproducts and services. Twelve months ending January 2,2016 January 3,2015 Change Gross profit: Ingredients $5,878,000 $2,600,000 126% Core standards and contract services 2,072,000 2,346,000 -12% Scientific and regulatory consulting 531,000 380,000 40% Total gross profit $8,481,000 $5,326,000 59% ·The increased gross profit for the ingredients segment is due to the increased sales of the ingredient portfolio we offer, as well as lower prices fromour suppliers as a result of increased purchase volumes. ·The decreased gross profit for the core standards and contract services segment is largely due to increased costs in fine chemical reference standardsas we reduced the carrying values for the portion of the inventory that are considered slow-moving and obsolete. ·The increased gross profits for the scientific and regulatory consulting segment are largely due to higher utilizations of in-house consulting labor. Operating Expenses – Sales and Marketing. Sales and Marketing Expenses consist of salaries, advertising and marketing expenses. Twelve months ending January 2,2016 January 3,2015 Change Sales and marketing expenses: Ingredients $1,112,000 $1,081,000 3% Core standards and contract services 1,202,000 976,000 23% Scientific and regulatory consulting 13,000 80,000 -84% Total sales and marketing expenses $2,327,000 $2,137,000 9% ·For the ingredients segment, we were able to maintain sales and marketing expenses at a similar level to 2014 despite the significant increase insales. We do anticipate some increased expenses going forward as we increase marketing efforts for our proprietary ingredients. ·For the core standards and contract services segment, the increases are largely due to hiring additional sales and marketing staff and making certainoperational changes. Wages and travel expenses for sales and marketing staff increased by approximately $164,000 in 2015, compared to 2014. -38-Table of Contents ·For the scientific and regulatory consulting segment, we had significantly reduced sales and marketing expenses compared to 2014 and planon continuing to do so in the future. Operating Expenses – Research and Development. Research and Development Expenses mainly consist of clinical trials and process development expensesfor our line of proprietary ingredients. Twelve months ending January 2,2016 January 3,2015 Change Research and development expenses: Ingredients $892,000 $514,000 74% ·All our research and development efforts are for the ingredients segment. In 2015, we increased our research and development efforts with a focus onour “NIAGEN®” brand. Operating Expenses – General and Administrative. General and Administrative Expenses consist of general company administration, IT, accounting andexecutive management. Twelve months ending January 2,2016 January 3,2015 Change General and administrative $7,416,000 $7,861,000 -6% ·One of the factors that contributed to the decrease in general and administrative expenses was a decrease in share-based compensation. In 2015, ourshare-based compensation decreased to approximately $1,978,000, compared to approximately $2,917,000 in 2014. In 2014, we had higher share-based compensation expenses as we awarded an aggregate of 1,090,000 shares of restricted stock to the Company’sofficers and members of the board of directors. The fair values of these restricted stock awards were approximately $1,537,000 in aggregate, whichwere expensed over a period of six months from January 2, 2014 to July 1, 2014. Nonoperating – Interest Income. Interest income consists of interest earned on money market accounts. Interest income for the twelve-month period endedJanuary 2, 2016, was approximately $3,000, a slight increase compared to approximately $2,000 for the twelve-month period ended January 3, 2015. Nonoperating – Interest Expense. Interest expense consists of interest on loan payable and capital leases. Twelve months ending January 2,2016 January 3,2015 Change Interest expense $616,000 $159,000 287% -39-Table of Contents ·The increase in interest expense was mainly related to the Term Loan Agreement dated September 29, 2014, between the Company and HerculesTechnology II, L.P, which the Company drew down first $2.5 million on September 29, 2014 and second $2.5 million on June 18, 2015. For moreinformation on this term loan, please refer to Note 7 of Financial Statements appearing in Part II, Item 8 of this report. Depreciation and Amortization. For the twelve-month period ended January 2, 2016, we recorded approximately $286,000 in depreciation compared toapproximately $223,000 for the twelve-month period ended January 3, 2015. We depreciate our assets on a straight-line basis, based on the estimated usefullives of the respective assets. We amortize intangible assets using a straight-line method over 10 years. In the twelve-month period ended January 2, 2016, werecorded amortization on intangible assets of approximately $45,000 compared to approximately $36,000 for the twelve-month period ended January 3,2015. Income Taxes. At January 2, 2016 and January 3, 2015, the Company maintained a full valuation allowance against the entire deferred income tax balancewhich resulted in an effective tax rate of 0.2% for 2015 and 0% for 2014. Net cash used in operating activities. Net cash used in operating activities for the twelve-month period ended January 2, 2016 was approximately$2,111,000 as compared to approximately $2,580,000 for the twelve-month period ended January 3, 2015. Along with the net loss, an increase in inventoriesand trade receivables were the largest uses of cash during the twelve-month period ended January 2, 2016. Net cash used in operating activities for thetwelve-month period ended January 3, 2015 largely reflects increase in inventories, trade receivables along with the net loss, as well.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.Net cash provided by (used in) investing activities. Net cash used in investing activities was approximately $648,000 for the twelve-month period endedJanuary 2, 2016, compared to approximately $1,590,000 provided by for the twelve-month period ended January 3, 2015. Net cash used in investingactivities for the twelve-month period ended January 2, 2016 mainly consisted of purchases of leasehold improvements and equipment and intangible assets.Net cash provided by investing activities for the twelve-month period ended January 3, 2015 principally consisted of proceeds received from unrelated thirdparties from the assignment of the Senior Note and the sale of the Preferred Shares. NeutriSci originally issued the Senior Note and the Preferred Shares to theCompany as a part of the consideration for the purchase of BluScience product line.Net cash provided by financing activities. Net cash provided by financing activities was approximately $4,344,000 for the twelve-month period endedJanuary 2, 2016, compared to approximately $2,694,000 for the twelve-month period ended January 3, 2015. Net cash provided by financing activities forthe twelve-month period ended January 2, 2016 mainly consisted of proceeds from the 2nd draw of the term loan we entered into with Hercules Technology II,L.P, as well as proceeds from issuance of our common stock and warrants through a private offering to our existing stockholders. Net cash provided byfinancing activities for the twelve-month period ended January 3, 2015 mainly consisted of proceeds from the loan we entered into with HerculesTechnology II, L.P.Trade Receivables. As of January 2, 2016, we had approximately $2,451,000 in trade receivables as compared to approximately $1,907,000 as of January 3,2015. This increase was largely due to the increase in our ingredients segment sales. Inventories. As of January 2, 2016, we had approximately $8,174,000 in inventory, compared to approximately $3,734,000 as of January 3, 3015. Thisincrease was mainly due to increase in inventory for the ingredients business segment, as we were able to obtain a favorable purchase price from the supplierby increasing the purchase volume. As of January 2, 2016, our inventory consisted of approximately $7,174,000 of bulk ingredients and approximately$1,000,000 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 and pharmaceutical industries tomanufacture their final products. Phytochemical reference standards are small quantities of plan-based compounds typically used to research an array ofpotential attributes or for quality control purposes. The Company has approximately 5,000 defined standards and holds a lot of these standards as inventoryin small quantities, mostly in grams and milligrams. -40-Table of Contents Our 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 reduces the carrying value for slow-moving and obsolete inventory, inventory not meeting qualitystandards and inventory subject to expiration. The reduction of the carrying value for slow-moving and obsolete inventory is based on current estimates offuture product demand, market conditions and related management judgment. Any significant unanticipated changes in future product demand or marketconditions that vary from current 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 2, 2016, we had $6,224,000 in accounts payable compared to approximately $3,452,000 as of January 3, 2015. Thisincrease was primarily due the purchase of inventory for our ingredients business segment and reflects the timing of payments related. Advances from Customers. As of January 2, 2016, we had approximately $272,000 in advances from customers compared to approximately $243,000 as ofJanuary 3, 2015. These advances are for large-scale consulting projects, contract services and contract research projects where we require a deposit beforebeginning work. This increase was due to obtaining more of such large-scale projects during the 2nd half of the twelve-month period ended January 2, 2016. Year Ended January 3, 2015 Compared to Year Ended December 28, 2013 Net Sales. Net sales consist of gross sales less discounts and returns. Twelve months ending January 3,2015 December 28,2013 Change Net sales: Ingredients $6,857,000 $2,430,000 182% Core standards and contract services 7,487,000 6,644,000 13% Scientific and regulatory consulting 969,000 1,147,000 -16% Other - (60,000) -100% Total net sales $15,313,000 $10,161,000 51% ·The increase in sales for the ingredients segment was due to increased sales of most of the ingredients we sell, “NIAGEN®” in particular, which welaunched in the third quarter of 2013. ·The increase in sales for the core standards and contract services segment was due to increased sales of both phytochemical reference standards andcontract services. ·The decrease in sales for the scientific and regulatory consulting segment was due to our having completed fewer consulting projects in 2014, thanin 2013. ·In 2013, we had net sales of approximately ($60,000) related to our BluScience retail consumer line, which is represented as “Other” in the abovetable. On March 28, 2013, the Company entered into an asset purchase and sale agreement with NeutriSci International Inc. and consummated thesale of BluScience product line to NeutriSci. Cost of Sales. Costs of sales include raw materials, labor, overhead, and delivery costs. Twelve months ending January 3, 2015 December 28, 2013 Amount % ofnet sales Amount % ofnet sales Cost of sales: Ingredients $4,257,000 62% $1,501,000 62% Core standards and contract services 5,141,000 69% 4,894,000 74% Scientific and regulatory consulting 589,000 61% 632,000 55% Other - - 1,000 -2% Total cost of sales $9,987,000 65% $7,028,000 69% ·The cost of sales as a percentage of net sales for the ingredients segment was identical at 62% for both 2014 and 2013. ·The decrease in cost of sales as a percentage of net sales for the core standards and contract services segment was largely due to increased sales inanalytical testing and contract services area, which the sales increased about 13% in 2014 compared to 2013. Fixed labor costs make up themajority of costs for analytical testing and contract services and these fixed labor costs did not increase in proportion to sales. ·The increase in cost of sales as a percentage of net sales for the scientific and regulatory consulting segment was largely due to completing fewerconsulting projects during 2014 than during 2013. ·In 2013, we had cost of sales of approximately $1,000 related to our BluScience retail consumer line, which is represented as “Other” in the abovetable. On March 28, 2013, the Company entered into an asset purchase and sale agreement with NeutriSci International Inc. and consummated thesale of BluScience product line to NeutriSci. 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 ofproducts and services. -41-Table of Contents Twelve months ending January 3,2015 December 28,2013 Change Gross profit: Ingredients $2,600,000 $929,000 180% Core standards and contract services 2,346,000 1,750,000 34% Scientific and regulatory consulting 380,000 515,000 -26% Other - (61,000) -100% Total gross profit $5,326,000 $3,133,000 70% ·The increased sales throughout our ingredient portfolio, especially for our recently launched “NIAGEN®” was the main factor for the increase ingross profit for the ingredients segment. ·The increased sales of analytical testing and contract services which resulted in a higher labor utilization rate as well as increased fixed costcoverage, was the primary reason for the increase in gross profit for the core standards and contract services segment. ·For the scientific and regulator consulting segment, the decrease in sales which resulted in a lower labor utilization rate was the reason for thedecrease in gross profit. ·In 2013, we had gross profit of approximately ($61,000) related to our BluScience retail consumer line, which is represented as “Other” in the abovetable. On March 28, 2013, the Company entered into an asset purchase and sale agreement with NeutriSci International Inc. and consummated thesale of BluScience product line to NeutriSci. Operating Expenses – Sales and Marketing. Sales and Marketing Expenses consist of salaries, advertising and marketing expenses. Twelve months ending January 3,2015 December 28,2013 Change Sales and marketing expenses: Ingredients $1,081,000 $752,000 44% Core standards and contract services 976,000 1,460,000 -33% Scientific and regulatory consulting 80,000 15,000 433% Other - 131,000 -100% Total sales and marketing expenses $2,137,000 $2,358,000 -9% ·For the ingredients segment, the increase was largely due to increased marketing efforts for our line of proprietary ingredients. ·For the core standards and contract services segment, the decrease was largely due to reduction of sales and marketing staff and a decrease inmarketing and advertising spend. ·For the scientific and regulatory consulting segment, the increase was largely due to our increased marketing efforts to raise the awareness of ourconsulting services within the industry. ·In 2013, we had sales and marketing expenses of approximately $131,000 related to our BluScience retail consumer line, which are represented as“Other” in the above table. On March 28, 2013, the Company entered into an asset purchase and sale agreement with NeutriSci International Inc.and consummated the sale of BluScience product line to NeutriSci. Operating Expenses – Research and Development. Research and Development Expenses mainly consist of clinical trials and process development expensesfor our line of proprietary ingredients. -42-Table of Contents Twelve months ending January 3,2015 December 28,2013 Change Research and development expenses: Ingredients $514,000 $134,000 284% ·All our research and development efforts are for the ingredients segment. In 2014, we significantly increased our research and development effortsfor our line of proprietary ingredients compared to 2013. In 2014, we conducted safety studies related to our “NIAGEN®” as well as a human clinicaltrial study on “PURENERGY®.” Operating Expenses – General and Administrative. General and Administrative Expenses consist of general company administration, IT, accounting andexecutive management. Twelve months ending January 3,2015 December 28,2013 Change General and administrative $7,861,000 $4,983,000 58% ·One of the factors that contributed to this increase was an increase in share-based compensation expense. Our share-based compensation expense forthe twelve-month period ended January 3, 2015 was approximately $2,917,000 as compared to approximately $1,288,000 for the twelve-monthperiod ended December 28, 2013. During the twelve-month period ended January 3, 2015, the Company recognized expenses for the 1,090,000shares 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 was an increase in expenses related to the patents we license, including maintenance, consulting,filing and related royalty expenses. Our patent related expenses increased to approximately $815,000 as compared to $294,000 for the twelve-month period ended December 28, 2013. ·In addition, during the twelve-month period ended January 3, 2015, there was an increase of approximately $176,000 in wages and related expensesas a result of hiring additional personnel to support our operations. There was also one-time expense for $125,000 during the twelve-month periodended January 3, 2015, which we have paid as a settlement 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 endedJanuary 3, 2015, was approximately $2,000 as compared to $1,000 for the twelve-month period ended December 28, 2013. Nonoperating – Interest Expense. Interest expense consists of interest on loan payable and capital leases. Twelve months ending January 3,2015 December 28,2013 Change Interest expense $159,000 $34,000 368% ·The increase was largely related to the Loan Agreement the Company entered into with Hercules Technology II, L.P., which the Company has drawndown $2.5 million on September 29, 2014. -43-Table of Contents Depreciation and Amortization. For the twelve-month period ended January 3, 2015, we recorded approximately $223,000 in depreciation compared toapproximately $246,000 for the twelve-month period ended December 28, 2013. In the twelve-month period ended January 3, 2015, we recordedamortization on intangible assets of approximately $36,000 compared to approximately $24,000 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 taxbalance which resulted in an effective tax rate of zero for 2014 and 2013. Net cash used in operating activities. Net 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 ininventories and trade receivables were the largest uses of cash during the twelve-month period ended January 3, 2015. Net cash used in operating activitiesfor the twelve-month period ended December 28, 2013 largely reflects decrease in accounts payable and increase in inventories, along with the net loss. Net cash provided by investing activities. Net cash provided by investing activities was approximately $1,590,000 for the twelve-month period endedJanuary 3, 2015, compared to approximately $999,000 for the twelve-month period ended December 28, 2013. Net cash provided by investing activities forthe twelve-month period ended January 3, 2015 mainly consisted of proceeds received from unrelated third parties from the assignment of the Senior Noteand the sale of the Preferred Shares. NeutriSci originally issued the Senior Note and the Preferred Shares to the Company as a part of the consideration for thepurchase of BluScience product line. Net cash provided investing activities for the twelve-month period ended December 28, 2013 mainly consisted of cashconsideration received from 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 activities. Net cash provided by financing activities was approximately $2,694,000 for the twelve-month period endedJanuary 3, 2015, compared to approximately $4,649,000 for the twelve-month period ended December 28, 2013. Net cash provided by financing activitiesfor 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 cashprovided by financing activities for the twelve-month period ended December 28, 2013 mainly consisted of proceeds from issuance of our common stockthrough a private offering as well as from the exercise of warrants. Liquidity and Capital Resources For the twelve-month periods ended January 2, 2016, January 3, 2015 and December 28, 2013, the Company has incurred operating losses of approximately$2,154,000, $5,231,000 and $4,386,000, respectively. Net cash used in operating activities for the twelve-month periods ended January 2, 2016, January 3,2015 and December 28, 2013 was approximately $2,111,000, $2,580,000 and $3,906,000, respectively. The losses and the uses of cash are primarily due toexpenses associated with the development and expansion of our operations. These operations have been financed through capital contributions, the issuanceof common stock and warrants through private placements, 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. -44-Table of ContentsWhile we anticipate that our current cash, cash equivalents and cash generated from operations will be sufficient to meet our projected operating plansthrough at least March 18, 2017, we may seek additional capital prior to March 18, 2017, both to meet our projected operating plans through and after March18, 2017 and to fund our longer term strategic objectives. To the extent we are unable to raise additional cash or generate sufficient revenue to meet ourprojected operating plans prior to March 18, 2017, we will revise our projected operating plans accordingly. 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. Off-Balance Sheet Arrangements During the fiscal years ended January 2, 2016 and January 3, 2015, we had no off-balance sheet arrangements other than ordinary operating leases asdisclosed in the accompanying financial statements. Contractual Obligations and Commitments. The following table summarizes our contractual obligations and other commitments as of January 2, 2016: Payments due by period Total 2016 2017 2018 2019 2020 Loan payable $5,188,000 $1,370,000 $1,992,000 $1,826,000 $- $- Capital leases 754,000 268,000 247,000 198,000 41,000 - Operating leases 994,000 355,000 225,000 233,000 181,000 - Purchase obligations 4,228,000 3,592,000 636,000 - - - Total $11,164,000 $5,585,000 $3,100,000 $2,257,000 $222,000 $- Loan payable. We have entered into a Loan and Security Agreement with Hercules Technology II, L.P. The $5 million term loan, on which only interest isdue through March 31, 2016, will begin to amortize in installment payments of principal and interest starting in April 2016 and continuing through April2018. There is also an additional $187,500 end of term charge we will be required to pay. Capital leases. We lease equipment under capitalized lease obligations with a term of typically 4 or 5 years. We make monthly instalment payments forthese leases. Operating leases. We lease our office and research facilities in California, Colorado and Maryland under operating lease agreements that expire on variousdates from April 2016 through September 2019. We make monthly payments on these leases. Purchase obligations. We enter into purchase obligations with various vendors for goods and services that we need for our operations. The purchaseobligations for goods and services include inventory, research and development, and outsourced laboratory services. -45-Table of Contents 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.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 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 reflected 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 reduces the carrying value for slow-moving and obsolete inventory, inventory not meeting qualitystandards and inventory subject to expiration. The reduction of the carrying value for slow-moving and obsolete inventory is based on current estimates offuture product demand, market conditions and related management judgment. Any significant unanticipated changes in future product demand or marketconditions that vary from current 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. -46-Table of Contents Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk The Company had an outstanding loan payable of $5.0 million at January 2, 2016. Interest is payable monthly at the greater of either (i) 9.35% plus theprime rate as reported in The Wall Street Journal (the “Prime Rate”) minus 3.25%, or (ii) 9.35%. If the Prime Rate rises, the Company will incur more interestexpenses. The loan is repayable in installments through April 1, 2018, following an initial interest-only period until March 31, 2016.Our capital lease obligations bear interest at a fixed rate and therefore have no exposure to changes in interest rates.The Company’s cash consists of short term, high liquid investments in money market funds managed by banks. Due to the short-term duration of ourinvestment portfolio and the relatively low risk profile of our investments, a sudden change in interest rates would not have a material effect on either the fairmarket value of our portfolio, our operating results or our cash flows. Foreign Currency RiskAll of our long-lived assets are located within the United States and we do not hold any foreign currency denominated financial instruments. Effects of Inflation We do not believe that inflation and changing prices during the years ended January 2, 2016, January 3, 2015 and December 28, 2013 had a significantimpact on our results of operations. -47-Table of ContentsItem 8. Financial Statements and Supplementary Data The financial statements are set forth in the pages listed below. PageReport of Independent Registered Public Accounting Firm49Consolidated Balance Sheets at January 2, 2016 and January 3, 201550Consolidated Statements of Operations for the Years Ended January 2, 2016, January 3, 2015 and December 28, 201351Consolidated Statements of Stockholders’ Equity for the Years Ended January 2, 2016, January 3, 2015 and December 28, 201352Consolidated Statements of Cash Flows for the Years Ended January 2, 2016, January 3, 2015 and December 28, 201353Notes to Consolidated Financial Statements55 -48-Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Audit Committee of theBoard of Directors and Shareholders ofChromaDex Corporation We have audited the accompanying consolidated balance sheets of ChromaDex Corporation and Subsidiaries (the “Company”) as of January 2, 2016 andJanuary 3, 2015, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended January 2, 2016, January 3,2015 and December 28, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to expressan opinion on these financial statements 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 consolidated financial position of ChromaDexCorporation and Subsidiaries, as of January 2, 2016 and January 3, 2015, and the consolidated results of its operations and its cash flows for the years endedJanuary 2, 2016, January 3, 2015 and December 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 2, 2016, 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 17, 2016 expressed an unqualified opinion onthe effectiveness of the Company’s internal control over financial reporting. /s/ Marcum llpMarcum LLPNew York, NYMarch 17, 2016 -49-Table of ContentsChromaDex Corporation and Subsidiaries Consolidated Balance Sheets January 2, 2016 and January 3, 2015 2015 2014 Assets Current Assets Cash $5,549,672 $3,964,750 Trade receivables, net of allowances of $367,000 and $38,000, respectively 2,450,591 1,906,709 Inventories 8,173,799 3,734,341 Prepaid expenses and other assets 373,567 292,891 Total current assets 16,547,629 9,898,691 Leasehold Improvements and Equipment, net 1,788,645 1,264,660 Deposits 58,883 57,435 Intangible assets, net 354,052 296,061 Total assets $18,749,209 $11,516,847 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $6,223,958 $3,451,608 Accrued expenses 1,302,865 853,685 Current maturities of loan payable 1,528,578 223,358 Current maturities of capital lease obligations 219,689 148,278 Customer deposits and other 272,002 234,435 Deferred rent, current 39,529 69,456 Total current liabilities 9,586,621 4,980,820 Loan payable, less current maturities, net 3,345,335 1,977,113 Capital lease obligations, less current maturities 444,589 423,015 Deferred rent, less current 97,990 137,508 Total liabilities 13,474,535 7,518,456 Commitments and contingencies Stockholders' Equity Common stock, $.001 par value; authorized 150,000,000 shares; issued and outstanding 2015 108,010,766 and 2014 105,271,058 shares 108,011 105,271 Additional paid-in capital 47,462,052 43,417,442 Accumulated deficit (42,295,389) (39,524,322)Total stockholders' equity 5,274,674 3,998,391 Total liabilities and stockholders' equity $18,749,209 $11,516,847 See Notes to Consolidated Financial Statements. -50-Table of Contents ChromaDex Corporation and Subsidiaries Consolidated Statements of Operations Years Ended January 2, 2016, January 3, 2015 and December 28, 2013 2015 2014 2013 Sales, net $22,014,140 $15,313,179 $10,160,964 Cost of sales 13,533,132 9,987,514 7,027,828 Gross profit 8,481,008 5,325,665 3,133,136 Operating expenses: Sales and marketing 2,326,788 2,136,584 2,357,605 Research and development 891,601 513,671 134,040 General and administrative 7,416,451 7,860,930 4,982,976 Loss from investment in affiliate - 45,829 44,961 Operating expenses 10,634,840 10,557,014 7,519,582 Operating loss (2,153,832) (5,231,349) (4,386,446) Nonoperating income (expense): Interest income 3,325 2,013 1,251 Interest expense (616,033) (158,849) (34,330)Nonoperating expenses (612,708) (156,836) (33,079) Loss before income taxes (2,766,540) (5,388,185) (4,419,525)Provision for income taxes (4,527) - - Net loss $(2,771,067) $(5,388,185) $(4,419,525) Basic and Diluted loss per common share $(0.03) $(0.05) $(0.04) Basic and Diluted weighted average common shares outstanding 107,632,022 106,459,379 99,987,443 See Notes to Consolidated Financial Statements. -51-Table of ContentsChromaDex Corporation and Subsidiaries Consolidated Statement of Stockholders' Equity Years Ended January 2, 2016, January 3, 2015 and December 28, 2013 Total Common Stock Additional Accumulated Stockholders' Shares Amount Paid-inCapital 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 Issuance of common stock, net of offering costs of $25,000 1,600,000 1,600 1,973,293 - 1,974,893 Exercise of stock options 120,708 121 94,725 - 94,846 Vested restricted stock 684,000 684 (684) - - Share-based compensation 335,000 335 1,977,276 - 1,977,611 Net loss - - - (2,771,067) (2,771,067) Balance, January 2, 2016 108,010,766 $108,011 $47,462,052 $(42,295,389) $5,274,674 See Notes to Consolidated Financial Statements. -52-Table of Contents ChromaDex Corporation and Subsidiaries Consolidated Statements of Cash Flows Years Ended January 2, 2016, January 3, 2015 and December 28, 2013 2015 2014 2013 Cash Flows From Operating Activities Net loss $(2,771,067) $(5,388,185) $(4,419,525) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation of leasehold improvements and equipment 285,536 222,721 246,175 Amortization of intangibles 45,014 35,589 23,532 Share-based compensation expense 1,977,611 2,916,924 1,287,917 Allowance for doubtful trade receivables 329,844 28,779 (441,340) Loss from disposal of equipment 19,643 20,400 66,378 Loss from impairment of intangibles 19,495 - - Loss from investment in affiliate - 45,829 44,961 Non-cash financing costs 188,442 49,527 - Changes in operating assets and liabilities: Trade receivables (873,726) (1,096,695) 1,560,070 Other receivable - 215,000 (215,000) Inventories (4,439,458) (1,530,216) (466,352) Prepaid expenses and other assets (82,124) (91,053) (62,913) Accounts payable 2,772,350 2,157,192 (1,618,450) Accrued expenses 449,180 196,978 (204,891) Customer deposits and other 37,567 (311,609) 235,777 Deferred rent (69,445) (51,587) 57,650 Net cash used in operating activities (2,111,138) (2,580,406) (3,906,011) Cash Flows From Investing Activities Purchases of leasehold improvements and equipment (525,231) (123,096) (137,349) Purchase of intangible assets (122,500) (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 (used in) investing activities (647,731) 1,590,275 998,651 -53- Cash Flows From Financing Activities Proceeds from issuance of common stock, net of issuance costs 1,974,893 - 2,980,000 Proceeds from exercise of stock options 94,846 467,149 138,369 Proceeds from exercise of warrants - - 1,638,748 Proceeds from loan payable 2,500,000 2,500,000 - Payment of debt issuance costs (15,000) (102,866) - Principal payments on capital leases (210,948) (170,738) (108,421)Net cash provided by financing activities 4,343,791 2,693,545 4,648,696 Net increase in cash 1,584,922 1,703,414 1,741,336 Cash Beginning of Year 3,964,750 2,261,336 520,000 Cash Ending of Year $5,549,672 $3,964,750 $2,261,336 Supplemental Disclosures of Cash Flow Information Cash payments for interest $427,591 $74,996 $34,330 Supplemental Schedule of Noncash Investing Activity Capital lease obligation incurred for the purchase of equipment $303,933 $322,802 $302,017 Retirement of fully depreciated equipment - cost $121,213 $56,110 $- Retirement of fully depreciated equipment - accumulated depreciation $(121,213) $(56,110) $- Supplemental Schedule of Noncash Operating Activity Stock issued to settle outstanding payable balance $- $146,494 $- Supplemental Schedule of Noncash Share-based Compensation 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, related to loan payable $- $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. -54-Table of Contents Note 1. Nature of Business and Liquidity Nature 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 leverages its complementary business units to discover, acquire, develop andcommercialize patented and proprietary ingredient technologies that address the dietary supplement, food, beverage, skin care and pharmaceuticalmarkets. In addition to the Company’s ingredient technologies unit, the Company also has business units focused on natural product fine chemicals (knownas “phytochemicals”), chemistry and analytical testing services, and product regulatory and safety consulting (known as Spherix Consulting). As a result ofthe Company’s relationships with leading universities and research institutions, the Company is able to discover and license early stage, intellectualproperty-backed ingredient technologies. The Company then utilizes the Company’s in-house chemistry, regulatory and safety consulting business units todevelop commercially viable ingredients. The Company’s ingredient portfolio is backed by clinical and scientific research, as well as extensive intellectualproperty protection.Liquidity: The Company has incurred a loss from operations of approximately $2.2 million and a net loss of approximately $2.8 million for the year endedJanuary 2, 2016, and net losses of approximately $5.4 million and $4.4 million for the years ended January 3, 2015 and December 28, 2013, respectively. Asof January 2, 2016, the cash and cash equivalents totaled approximately $5,550,000.While we anticipate that our current cash, cash equivalents and cash to be generated from operations will be sufficient to meet our projected operating plansthrough at least March 18, 2017, we may require additional funds, either through additional equity or debt financings or collaborative agreements or fromother sources. We have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on termsfavorable to us, or at all. If adequate financing is not available, the Company will further delay, postpone or terminate product and service expansion andcurtail certain selling, general and administrative operations. The inability to raise additional financing may have a material adverse effect on the futureperformance 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 2, 2016 (referred to as 2015)consisted of 52 weeks, the fiscal year ended January 3, 2015 (referred to as 2014) consisted of 53 weeks and the fiscal year ended December 28, 2013 (referredto as 2013) consisted of 52 weeks. Every fifth or sixth fiscal year, the inclusion of an extra week occurs due to the Company’s floating year-end date. Thefiscal year 2016 will include 52 weeks.Changes in accounting principle: In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require thatdebt issuance costs related to a debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistentwith debt discounts. The recognition and measurement guidance for debt issuance costs have not changed.The Company early adopted the amendments in this ASU effective as of April 4, 2015. As of January 2, 2016 and January 3, 2015, the Company hadunamortized debt issuance costs of approximately $65,000 and $91,000, respectively. The Company had previously presented the debt issuance costs asother noncurrent assets in its consolidated balance sheet as of January 3, 2015 in the Company’s Annual Report on Form 10-K filed with the Commission onMarch 19, 2015. The early adoption has resulted in adjustments to the Company’s consolidated balance sheet as of January 3, 2015, by reclassifying thedebt issuance costs as a direct deduction from the carrying amount of the debt liability. Below are the effects of the change on the consolidated balance sheetas of January 3, 2015. -55-Table of Contents ChromaDex Corporation and Subsidiaries Condensed Consolidated Balance Sheet January 3, 2015 PreviouslyReported Adjustments As Adjusted Assets Current Assets $9,898,691 $- $9,898,691 Leasehold Improvements and Equipment, net 1,264,660 - 1,264,660 Other Noncurrent Assets 444,857 (91,361) 353,496 Total assets $11,608,208 $(91,361) $11,516,847 Liabilities and Stockholders' Equity Current Liabilities $4,980,820 $- $4,980,820 Loan payable, less current maturities, net 2,068,474 (91,361) 1,977,113 Capital lease obligations, less current maturities 423,015 - 423,015 Deferred rent, less current 137,508 - 137,508 Total liabilities 7,609,817 (91,361) 7,518,456 Total stockholders' equity 3,998,391 - 3,998,391 Total liabilities and stockholders' equity $11,608,208 $(91,361) $11,516,847 Use 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 years ended January 2, 2016 and January 3, 2015, the Company calculated the expected volatility rate based on thecombined volatilities of publicly held companies in similar industries and volatility of the Company’s common stock. Based on the expected term of stockoptions, a 20~100% weight was assigned to the volatility of the Company’s common stock as the historical volatility of the Company’s common stock fromJune 2008 through April 2010 was exceptionally high due to a thinly traded market. Below table illustrates the Company’s historical volatility and theaverage daily trading volume of the Company’s common stock from June 2008 through April 2010 and from April 2010 through December 2015. -56-Table of ContentsPeriod Volatility Average DailyTradingVolume 6/20/2008 ~ 4/19/2010 402% 11,455 4/20/2010 ~ 1/2/2016 74% 147,703 The weighted average expected volatilities for the stock options granted during the twelve-month period ended January 2, 2016 and January 3, 2015following the update to our estimate are approximately 76% and 75%, respectively. The weighted average expected volatility would have beenapproximately 30~40% for these two years, had we computed solely based on the volatility rates of similarly situated public companies. For the year endedDecember 28, 2013, the weighted average expected volatility the Company used to estimate the fair value of the Company’s stock options granted wasapproximately 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.Shipping and handling fees billed to customers and the cost of shipping and handling fees billed to customers are included in net sales. For the years endingin January 2, 2016, January 3, 2015 and December 28, 2013, shipping and handling fees billed to customers were approximately $113,000, $115,000 and$110,000, respectively, and the cost of shipping and handling fees billed to customers were approximately, $112,000, $130,000 and $128,000,respectively. Shipping and handling 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.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. -57-Table of Contents 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 2, 2016 andJanuary 3, 2015 are as follows: 2015 2014 Reference standards $1,239,338 $1,760,305 Bulk ingredients 7,195,461 2,298,036 8,434,799 4,058,341 Less valuation allowance 261,000 324,000 $8,173,799 $3,734,341 Our normal operating cycle for reference standards is currently longer than one year. The Company has approximately 5,000 defined reference standards andholds a lot of these standards as inventory in small quantities, mostly in grams and milligrams. Due to the large number of different items we carry, certaingroups of these reference standards have sales frequency that is slower than others and varies greatly year to year. In addition, for certain reference standards,the cost saving is advantageous when purchased in larger quantities and we have taken advantage of such opportunities when available. Such factors haveresulted in an operating cycle to be more than one year on average. The Company gains competitive advantage through the broad offering of referencestandards and it is critical for the Company to continue to expand its library of reference standards it offers for the growth of business. Nevertheless, theCompany has recently made changes in its reference standards inventory purchasing practice, which the management believes will result in an improvedturnover rate and shorter operating cycle without impacting our competitive advantage. The Company regularly reviews inventories on hand and reduces the carrying value for slow-moving and obsolete inventory, inventory not meeting qualitystandards and inventory subject to expiration. The reduction of the carrying value for slow-moving and obsolete inventory is based on current estimates offuture product demand, market conditions and related management judgment. Any significant unanticipated changes in future product demand or marketconditions that vary from current expectations could have an impact on the value of inventories. Intangible 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. -58-Table of ContentsCustomer 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. The 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 2012 to 2015, which statutes expire in 2016 to 2019, 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 2,2016, 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.Advertising: The Company expenses the production costs of advertising the first time the advertising takes place. Advertising expense for the periods endedJanuary 2, 2016, January 3, 2015 and December 28, 2013 were approximately $104,000, $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 fair value of the Company’s stock options is estimated at the date of grant using the Black-Scholes based option valuation model. For the volatilityassumption, please refer to the earlier section “Changes in accounting estimates” of this note. The dividend yield assumption is based on the Company’shistory and expectation of future dividend payouts on the common stock. The risk-free interest rate is based on the implied yield available on U.S. treasuryzero-coupon issues with an equivalent remaining term. For the expected term, the Company uses SEC Staff Accounting Bulletin No. 107 simplified methodsince most of the options granted were “plain vanilla” options with following characteristics: (i) the share options are granted at the market price on the grantdate; (ii) exercisability is conditional on performing service through the vesting date on most options; (iii) If an employee terminates service prior to vesting,the employee would forfeit the share options; (iv) if an employee terminates service after vesting, the employee would have 30 days to exercise the shareoptions; and (v) the share options are nontransferable and nonhedgeable. -59-Table of ContentsThe 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 thehighest 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. 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. -60-Table of ContentsIn February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-01 requires that a lessee recognize the assets and liabilities that arise fromoperating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-useasset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make anaccounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required torecognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Public business entities should applythe amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application ispermitted for all public business entities and all nonpublic business entities upon issuance. We are currently evaluating the impact of our pending adoptionof ASU 2014-09 on our consolidated financial statements. 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 years ended January 2, 2016, January 3,2015 and December 28, 2013. Years Ended 2015 2014 2013 Net loss $(2,771,067) $(5,388,185) $(4,419,525) Basic and diluted loss per common share $(0.03) $(0.05) $(0.04) Weighted average common shares outstanding (1): 107,632,022 106,459,379 99,987,443 Potentially dilutive securities (2): Stock options 15,734,755 13,974,052 13,160,955 Warrants 1,269,020 469,020 - Convertible debt 773,395 773,395 - (1) Includes 1,214,127, 1,623,186 and 500,000 weighted average nonvested shares of restricted stock for the years 2015, 2014 and 2013, respectively, which are participating securities that feature voting and dividend rights. (2) Excluded from the computation of loss per share as their impact is antidilutive. Note 4. Intangible Assets -61-Table of Contents Intangible assets consisted of the following: 20152014 Gross CarryingAccumulatedNetGross CarryingAccumulatedNet AmountAmortizationAmountAmountAmortizationAmount Amortized intangible assets: License agreements and other $1,249,500 $ 895,458 $ 354,052 $1,205,275 $ 909,224 $ 296,061 Amortization expenses on amortizable intangible assets included in the consolidated statement of operations for the years ended January 2, 2016, January 3,2015 and December 28, 2013 were approximately $45,000, $36,000 and $24,000, respectively. The unamortized expense is expected to be recognized overa weighted average period of 8.2 years as of January 2, 2016. In December 2015, the Company decided to discontinue its efforts to commercialize and market products associated with the patent the Company licensedfrom the Research Foundation of State University of New York in June 2008. The Company paid a license fee of approximately $78,000 and the licensedrights to the patent were recognized as intangible assets with an estimated fair value of approximately $78,000 and a useful life of 10 years. At January 2,2016, the Company determined that these assets no longer had any carrying value as the Company discontinued its operations related to these assets. Estimated aggregate amortization expense for each of the next five years is as follows: Years ending December: 2016 $45,000 2017 45,000 2018 45,000 2019 45,000 2020 42,000 Thereafter 132,000 $354,000 Note 5. Leasehold Improvements and Equipment Leasehold improvements and equipment consisted of the following: 2015 2014 Laboratory equipment $3,737,908 $3,151,748 Leasehold improvements 513,453 495,240 Computer equipment 404,228 329,737 Furniture and fixtures 17,056 13,039 Office equipment 21,547 7,877 Construction in progress 4,420 68,141 4,698,612 4,065,782 Less accumulated depreciation 2,909,967 2,801,122 $1,788,645 $1,264,660 -62-Table of Contents Depreciation expenses on leasehold improvements and equipment included in the consolidated statement of operations for the years ended January 2, 2016,January 3, 2015 and December 28, 2013 were approximately $286,000, $223,000 and $246,000, respectively. The Company leases equipment under capitalized lease obligations with a total cost of approximately $1,137,000 and 1,074,000 and accumulatedamortization of $231,000 and $243,000 as of January 2, 2016 and January 3, 2015, respectively. Note 6. Capitalized Lease Obligations Minimum future lease payments under capital leases as of January 2, 2016, are as follows: Year ending December: 2016 $267,601 2017 246,752 2018 197,899 2019 41,304 Total minimum lease payments 753,556 Less amount representing interest at a rate of approximately 8.6% per year 89,278 Present value of net minimum lease payments 664,278 Less current portion 219,689 Long-term obligations under capital leases $444,589 Interest expenses related to capital leases were approximately $62,000, $47,000 and $34,000 for the years ended January 2, 2016, January 3, 2015 andDecember 28, 2013, respectively. Note 7. Loan Payable Loan payable as of January 2, 2016 consists of the following: Principal amount payable for following years ending December 2016 $1,370,454 2017 1,991,688 2018 1,637,858 Total principal payments 5,000,000 Accrued end of term charge 68,082 Total loan payable 5,068,082 Less unamortized debt discount 194,169 Less current portion 1,528,578 Loan payable – long term $3,345,335 -63-Table of Contents 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 $554,000 and $112,000 for the years ended January 2, 2016 and January 3, 2015, respectively.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 provided us with access to a term loan of up to $5 million. The first $2.5 millionof the term loan was funded at closing. The first advance was to be repaid in equal monthly installments of principal and interest (mortgage style) through theloan’s maturity on April 1, 2018, following an initial interest-only period that was to conclude on October 31, 2015. In connection with the loan, theCompany 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 interest rate as of January 2, 2016 was 9.60%. The Company may prepay all, but no less than all, of the outstanding loan balance, subjectto prepayment charges of 3% during the first twelve months following closing, 2% during the next twelve months and 1% thereafter. On the earliest to occurof the (a) the loan maturity date, (b) the date the Company prepays the outstanding loan balance or (c) the date the outstanding loan balance becomes dueand payable, the Company will pay Lender an end of 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.On June 17, 2015, the Company and Hercules Technology II, L.P entered into Amendment No. 1 (the “Amendment”) to the Loan Agreement. Pursuant to theAmendment, the parties agreed that the interest only period shall be extended to March 31, 2016. The maturity date remains unchanged at April 1, 2018 andany remaining principal balance of the loan and all unpaid interest shall be due on the maturity date. The Amendment became effective on June 18, 2015upon the funding of the full amount of the $2.5 million second advance and payment of a nonrenewable facility fee of $15,000.The second advance of $2.5 million is treated as if the Company entered into a separate loan. The facility fee of $15,000 is treated as debt issuance costs andare being amortized as interest expense using the effective interest method over the term of the loan. There is also additional $94,000 end of term charge theCompany will pay, which is 3.75% of the $2.5 million drawn. The end of term charge is being accrued as additional interest expense using the effectiveinterest rate method over the term of the loan. -64-Table of ContentsThe Company determined that the amended terms of the first advance of $2.5 million on September 29, 2014 were not substantially different from theoriginal terms. The Company reflected the change prospectively as yield adjustments, based on the revised terms.Debt Issuance Costs and End of Term ChargeThe Company incurred debt issuance costs of approximately $103,000 and $15,000 for the first and second advance, respectively, in connection with thisterm loan. The debt issuance costs are being amortized as interest expense using the effective interest method over the term of the loan. Amortization of debtissuance costs were $41,000 and $12,000 for the years ended January 2, 2016 and January 3, 2015 and the remaining unamortized debt issuance costs of$65,000 are presented as a direct deduction from the carrying amount of the debt liability. In addition, the Company will pay an end of term charge of$188,000, which is 3.75% of the $5.0 million drawn under the loan. The end of term charge is being accrued as additional interest expense using theeffective interest rate method over the term of the loan. The Company accrued $58,000 and $10,000 of this fee during the years ended January 2, 2016 andJanuary 3, 2015, respectively.Warrant Issued to LenderThe Company determined the Warrant issued to Lender during the year ended January 3, 2015 to be equity classified. The Company estimated the fair valueof this Warrant as of the issuance date using 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 $273,000. Ultimately, the Company allocated$246,000 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. Amortizations of this debt discount were $90,000 and $28,000 forthe years ended January 2, 2016 and January 3, 2015, respectively. Note 8. Income Taxes The provision for income tax consists of following: 2015 2014 2013 Current Federal $- $- $- State 4,527 - - Deferred (net of valuation allowance) Federal - - - State - - - Income tax provision $4,527 $- - -65-Table of Contents At January 2, 2016 and January 3, 2015, the Company maintained a full valuation allowance against the entire deferred income tax balance which resulted inan effective tax rates of 0.2%, 0% and 0% for years 2015, 2014 and 2013, respectively. The valuation allowance increased by $381,000 as of January 2,2016. 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: 2015 2014 2013 Federal income tax expense at statutory rate (34.0)% (34.0)% (34.0)%State income tax, net of federal benefit (5.1)% (5.3)% (4.3)%Permanent differences 5.7% 2.7% 2.6%Change in tax rates 0.7% (6.1)% (3.7)%Expirations of net operating losses 17.4% 0.0% 0.0%Change in valuation allowance 13.7% 42.8% 39.2%Other 1.8% (0.1)% 0.2%Effective tax rate 0.2% 0.0% 0.0% The deferred income tax assets and liabilities consisted of the following components as of January 2, 2016 and January 3, 2015: 2015 2014 Deferred tax assets: Net operating loss carryforward $10,860,000 $10,593,000 Capital loss carryforward 808,000 808,000 Stock options and restricted stock 3,048,000 2,934,000 Inventory reserve 249,000 226,000 Allowance for doubtful accounts 144,000 15,000 Accrued expenses 277,000 125,000 Deferred revenue - 4,000 Intangibles 23,000 26,000 Deferred rent 54,000 81,000 15,463,000 14,812,000 Less valuation allowance (15,050,000) (14,669,000) 413,000 143,000 Deferred tax liabilities: Leasehold improvements and equipment (284,000) (108,000)Prepaid expenses (129,000) (35,000) (413,000) (143,000) $- $- The Company has tax net operating loss carryforwards for federal and state income tax purposes of approximately $29,006,000 and $23,610,000,respectively which begin to expire in the year ending December 31, 2023 and 2016, respectively. In addition, the Company has tax capital loss carry forwardavailable to offset future federal taxable capital income of approximately $2,065,000 which will expire in the year ending December 31, 2019. Under the Internal 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 2, 2016 and January 3, 2015. -66-Table of Contents Note 9. Share-Based Compensation 9A. 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 3,321,226 at January 2, 2016. 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 2, 2016, January 3, 2015 and December 28,2013.Year Ended December 2015 2014 2013 Expected term 5.8 years 5.8 years 6.0 years Expected Volatility 75.8% 74.6% 32.8%Expected dividends 0.0% 0.0% 0.00%Risk-free rate 1.7% 1.9% 1.5% 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: Weighted Average Remaining Aggregate Number of Exercise Contractual Fair Intrinsic Shares Price Term Value ValueOutstanding at December 29, 2012 12,202,558 $1.08 8.25 Options Granted 805,000 0.81 10.00 $0.29 Options Exercised (26,038) 0.51 Options Expired (75,000) 0.50 Options Forfeited (792,865) 1.19 Outstanding at December 28, 2013 12,113,655 $1.06 7.43 Options Granted 2,233,987 1.39 10.00 $0.90 Options Classification from Employee to Non-Employee (113,151) 0.76 8.68 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 Options Granted 2,191,685 1.22 10.00 $0.76 Options Classification from Employee to Non-Employee (1,542,071) 0.93 7.78 Options Exercised (120,708) 0.79 Options Forfeited (310,274) 1.31 Outstanding at January 2, 2016 12,942,233 $1.17 6.44 $ 2,123,923 Exercisable at January 2, 2016 10,034,596 $1.16 5.73 $ 1,921,746 -67-Table of Contents The aggregate intrinsic values in the table above are based on the Company’s closing stock price of $1.22 on the last day of business for the year endedJanuary 2, 2016. The aggregate intrinsic values for options exercised during the years ended January 2, 2016, January 3, 2015, and December 28, 2013 wereapproximately $58,000, $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.The following table summarizes performance based stock options activity: Weighted Average Remaining Aggregate Number of Exercise Contractual Fair Intrinsic Shares Price Term Value Value Outstanding at December 29, 2012 145,834 $1.59 8.27 Options Granted 200,000 0.63 10.00 $0.22 Options Exercised - - Options Forfeited (145,834) 1.59 Outstanding at December 28, 2013 200,000 $0.63 9.08 Options Granted - - Options Exercised - - Options Forfeited - - Outstanding at January 3, 2015 200,000 $0.63 8.08 Options Granted - - Options Exercised - - Options Forfeited - - Outstanding at January 2, 2016 200,000 $0.63 7.08 $118,000 Exercisable at January 2, 2016 145,833 $0.63 7.08 $86,041 -68-Table of Contents The aggregate intrinsic value in the table above are, based on the Company’s closing stock price of $1.22 on the last day of business for the period endedJanuary 2, 2016. As of January 2, 2016, there was approximately $1,805,000 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 2.36 years. 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: WeightedAverage Award-Date Shares Fair Value Unvested shares at December 29, 2012 500,000 $0.69 Granted - - Vested - - Forfeited - - 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 Granted - - Vested (520,000) 1.41 Forfeited - - Unvested shares at January 2, 2016 1,070,000 $1.07 Expected to Vest as of January 2, 2016 1,070,000 $1.07 During the year ended January 2, 2016, several members of the Company’s Board of Directors (the “Board”) resigned from the Board and received immediatevesting of their unvested restricted stock of 520,000 shares. The expense for the vested restricted stock was recognized during the fiscal year ended January3, 2015.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. Theaward includes the vested shares described above for members who resigned from the Board. These shares were to vest upon the earlier to occur of thefollowing: (i) the market price of the Company’s stock exceeds a certain price, or (ii) one of other certain triggering events, including the termination of theofficers and members of the board of directors without cause for any reason. The fair values of 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 of grant. The expense related to the restricted stock award has beenamortized over the period of six months through July 1, 2014, as the Company determined the requisite service period to be 6 months as that is when they areeligible to vest. -69-Table of ContentsSubsequent to the year ended January 2, 2016, the Company and each of the executives and members of the Board amended the restricted stock awards toprovide that the awards shall not vest upon the market price of the Company’s stock exceeding a certain price or listing of the Company’s stock on a nationalsecurities exchange. Employee Option and Restricted Stock Compensation The Company recognized share-based compensation expense of approximately $1,543,000, $2,747,000 and $958,000 in general and administrativeexpenses in the statement of operations for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively. 9B. 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: Weighted Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term ValueOutstanding at December 29, 2012 1,097,300 $1.23 5.26 Options Granted - - Options Exercised (250,000) 0.50 Options Forfeited - - Outstanding at December 28, 2013 847,300 $1.44 5.74 Options Granted 90,000 1.24 10.00 Options Classification from Employee to Non-Employee 113,151 0.76 8.68 Options Exercised - - Options Forfeited - - Outstanding at January 3, 2015 1,050,451 $1.35 5.46 Options Granted - - Options Classification from Employee to Non-Employee 1,542,071 0.93 7.78 Options Exercised - - Options Forfeited - - Outstanding at January 2, 2016 2,592,522 $1.10 6.04 $550,111 Exercisable at January 2, 2016 2,558,772 $1.10 6.00 $549,961 -70-Table of ContentsThe aggregate intrinsic values in the table above are, based on the Company’s closing stock price of $1.22 on the last day of business for the year endedJanuary 2, 2016. Stock and Restricted Stock Awards Restricted 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. On January 27, 2015, theCompany awarded 350,000 shares of the Company’s common stock to non-employees. 210,000 of these shares were treated as stock awards as the sharesvested immediately on the date of award, and the remaining 140,000 shares, which were initially treated as unvested restricted stock, vested on May 28,2015. The fair values of the awards, which totaled approximately $350,000, were measured based on the trading prices of the Company’s stock on the date ofaward and the date vested. The expense related to these stock awards were fully recognized during the twelve-month period ended January 2, 2016. In addition, 24,000 shares of restricted stock that were granted to a certain non-employee during the fiscal year ended January 3, 2015 became vested duringthe twelve-month period ended January 2, 2016. The fair value of these vested restricted shares was approximately $30,000, which represents the marketvalue of the Company’s common stock on respective vesting dates charged to expense.The following table summarizes activity of restricted stock awards issued to non-employees: WeightedAverage Shares Fair Value Unvested shares at December 29, 2012 - $- Granted - - Vested - - Forfeited - - Unvested shares at December 28, 2013 - $- Granted 96,000 1.30 Vested (20,000) 1.17 Forfeited - - Unvested shares at January 3, 2015 76,000 $0.90 Granted 140,000 0.86 Vested (164,000) 1.21 Forfeited - - Unvested shares expected to vest at January 2, 2016 52,000 $1.22 As of January 2, 2016, there was approximately $63,000 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 2.2 years as of January 2, 2016.There were also stock awards made in 2014, which the Company has recognized a portion of the expense in 2015 as the required service periods extendedinto 2015. During the twelve months ended January 3, 3015, the Company awarded an aggregate of 65,000 shares and recognized a total expense ofapproximately $129,000. 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. -71-Table of ContentsWarrant Awards On October 27, 2014, the Company awarded a warrant to purchase 50,000 shares of the Company’s common stock with an exercise price of $1.10 pershare. The term of the warrant was 2 years. This warrant has not been exercised as of January 2, 2016. On August 7, 2012, the Company awarded a warrant to purchase 250,000 shares of the Company’s common stock with an exercise price of $0.75 pershare. The term of the warrant was 2 years. On December 9, 2013, the non-employee who held the warrant elected a cashless exercise pursuant to theprovisions of the warrant and received 74,186 shares of common stock in lieu of 250,000 shares for a cash payment of $0.75 per share. The intrinsic value ofthe warrant exercised was approximately $91,000. Non-Employee Option, Stock, Restricted Stock and Warrant AwardsFor non-employee share-based compensation, the Company recognized share-based compensation expense of approximately $435,000, $170,000 and$330,000 in general and administrative expenses in the statement of operations for the years ended January 2, 2016, January 3, 2015 and December 28, 2013,respectively. Note 10. Stock Issuance On November 4, 2015, the Company entered into Securities Purchase Agreements (“SPAs”) with certain existing stockholders to raise $2,000,000 in aregistered direct offering. Pursuant to the SPAs, the Company sold a total of 200,000 Units at a purchase price of $10.00 per Unit, with each Unit consistingof eight shares of the Company’s common stock and a warrant to purchase four shares of common stock (800,000 total) with an exercise price of $1.50 and aterm of 3 years. The aggregate estimated fair value of the warrants was approximately $489,000 and these warrants were determined to be classified asequity. The fair value was estimated at the date of issuance using the Black-Scholes based valuation model. The table below outlines the assumptions for thewarrants issued. November 9,2015 Fair value of common stock $1.47 Volatility 62.26%Expected dividends 0.00%Contractual term 3.0 years Risk-free rate 1.27%In Fiscal Year 2014, the Company issued 126,605 shares of common stock to vendors to settle outstanding payables balances of approximately $146,000. 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. Note 11. Warrants -72-Table of Contents The following table summarizes activity of warrants at January 2, 2016, 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 Value Outstanding 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 Warrants Issued 800,000 1.50 Warrants Exercised - - Warrants Expired - - Outstanding and exercisable at January 2, 2016 1,269,020 $1.34 3.07 $72,205 The aggregate intrinsic values in the table above are based on the Company’s closing stock price of $1.22 on the last day of business for the year endedJanuary 2, 2016. Note 12. 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 fromApril 2016 through September 2019. Monthly lease payments range from $1,424 per month to $23,472 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 as of January 2, 2016 are as follows: Fiscal years ending: 2016 $355,000 2017 225,000 2018 233,000 2019 181,000 $994,000 -73-Table of Contents Rent expense was approximately $536,000, $537,000, and $519,000 for the years ended January 2, 2016, January 3, 2015 and December 28, 2013,respectively. Subsequent to the year ended January 2, 2016, the Company entered into a lease amendment to extend the term of the lease for its research facility located inBoulder, Colorado through April 2023. Pursuant to the lease amendment, the Company will make monthly lease payments range from $23,472 to $27,210,as the payments escalate during the term of the lease.Subsequent to the year ended January 2, 2016, the Company entered into a lease amendment to lease an office space located in Rockville, Maryland throughApril 2021. Pursuant to the lease amendment, the Company will make monthly lease payments range from $3,450 to $3,883, as the payments escalate duringthe term of the lease.RoyaltyThe Company has 11 licensing agreements with leading research universities and other patent holders, pursuant to which the Company acquired patentsrelated to certain products the Company offers to its customers. These agreements afford for future royalty payments based on contractual minimums andexpire at various dates from December 31, 2019 through April 12, 2032. Yearly minimum royalty payments including license maintenance fees range from$5,000 per year to $50,000 per year, however, these minimum payments escalate each year with a maximum of $200,000 per year. In addition, the Companyis required to pay a range of 2% to 8% of sales related to the licensed products under these agreements. Total royalty expenses including licensemaintenance fees from continuing operations for the years ended January 2, 2016, January 3, 2015 and December 28, 2013 were approximately $583,000,$323,000 and $111,000, respectively under these agreements. Minimum royalties including license maintenance fees for the next five years are as follows:Fiscal years ending: 2016 $308,000 2017 365,000 2018 403,000 2019 539,000 2020 374,000 $1,989,000 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 2, 2016, 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 “Jaksch Agreement”) with Frank L. Jaksch Jr. TheJaksch Agreement automatically renews unless terminated in accordance with its terms. On January 2, 2014, the Board approved raising the annual basesalary of Mr. Jaksch to $275,000 per year and the annual cash bonus target up to 50% of his base salary. On March 14, 2016, the Board increased the basesalary of Mr. Jaksch to $320,000. -74-Table of ContentsThe severance terms provide that in the event Mr. Jaksch’s employment with the Company is terminated voluntarily, he will be entitled to any accrued butunpaid base salary, any stock vested through the date of his termination and a pro-rated portion of 50% of his salary for the bonus. In addition, if Mr. Jakschleaves the Company for “Good Reason”, (as defined in Jaksch Agreement), he will also be entitled to severance equal to 50% of his salary, and he will bedeemed to 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, inwhich case he will receive compensation up to 12 months paid salary. In the event the Company terminates Mr. Jaksch’s employment “without Cause” (as defined in the Jaksch Agreement), Mr. Jaksch will be entitled toseverance 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. Jakschenters into a standard separation agreement, Mr. Jaksch will receive continuation of base salary and health benefits, together with applicable fringe benefitsuntil 24 months from the date of termination (the “Severance Period”), and he will receive a bonus of 50% of his base salary as well as the full vesting of anyotherwise unvested stock.Employment Agreement with Thomas C. VarvaroOn April 19, 2010, the Company entered into an Amended and Restated Employment Agreement (the “Varvaro Agreement”) with Thomas C. Varvaro. TheVarvaro Agreement automatically renews unless terminated in accordance with its terms. On January 2, 2014, the Board approved raising the annual basesalary of Mr. Varvaro to $225,000 per year and raising the annual cash bonus target up to 40% of his base salary. On March 14, 2016, the Board increased thebase salary of Mr. Varvaro to $250,000.The severance terms provide that in the event Mr. Varvaro’s employment with us is terminated voluntarily, he will be entitled to any accrued but unpaid basesalary, any stock vested through the date of his termination and a pro-rated portion of 40% of his salary for the bonus. In addition, if Mr. Varvaro leaves theCompany for “Good Reason” (as defined in the Varvaro Agreement), he will also be entitled to severance equal to 50% of his salary, 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 up to 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 until 24 months from the date oftermination (the “Severance Period”), will receive a bonus of 40% of his base salary as well as the full vesting of 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. On March 17, 2015, the Board increased the base salary to $190,000. TheRhonemus Agreement provides for an annual cash bonus (based on performance targets) of up to 30% of his base salary. On March 14, 2016, the Boardincreased the base salary of Mr. Rhonemus to $210,000.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. -75-Table of ContentsIn 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. Note 13. Related Party Transactions On August 28, 2015, the Company entered into an Exclusive Supply Agreement (the “Supply Agreement”) with Healthspan Research, LLC(“Healthspan”). Under the terms of the Supply Agreement, Healthspan agreed to purchase NIAGEN® from the Company and the Company granted toHealthspan worldwide rights for resale of specific dietary supplements containing NIAGEN® in certain markets. Pursuant to the terms of the Supply Agreement, in exchange for a 4% equity interest in Healthspan, the Company agreed to initially supply NIAGEN® toHealthspan free of charge and thereafter at a fixed price and, in exchange for an additional 5% equity interest in Healthspan, the Company will grant toHealthspan certain exclusive rights to resell NIAGEN® in certain direct response channels. Healthspan will pay the Company royalties on the cumulativeworldwide net sales of its finished products containing NIAGEN®. The exclusivity rights will remain for so long as Healthspan meets certain minimumpurchase requirements. In the event that, during the initial term, the Company terminates the exclusivity rights due to failure to meet the minimum purchaserequirements or for any reason other than a material breach of the Supply Agreement by Healthspan, then the 5% equity interest shall be automaticallyredeemed for a purchase price of $1.00 effective upon the date of termination of the exclusivity rights. In connection with the foregoing, also on August 28, 2015, the Company and Healthspan entered into an interest purchase agreement and limited liabilitycompany agreement pursuant to which the Company was issued 9% of the outstanding equity interests of Healthspan. Rob Fried, a director of the Company,is the manager of Healthspan and owns 91% of the outstanding equity interests of Healthspan. The Supply Agreement, interest purchase agreement andlimited liability company agreement were unanimously approved by the independent directors of the Company. As of January 2, 2016, the Company had not shipped any NIAGEN® to Healthspan and Healthspan did not issue any equity interests to theCompany. Accordingly, there is no accounting recognition of this arrangement for the twelve-month period ended on January 2, 2016. Note 14. Business Segmentation and Geographical Distribution Since 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.·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.·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. -76-Table of Contents ·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 2, 2016 Ingredients CoreStandards andContractServices Regulatory segment segment Consultingsegment Other Total Net sales $12,542,314 $8,418,672 $1,053,154 $- $22,014,140 Cost of sales 6,664,164 6,346,903 522,065 - 13,533,132 Gross profit 5,878,150 2,071,769 531,089 - 8,481,008 Operating expenses: Sales and marketing 1,111,993 1,201,455 13,340 - 2,326,788 Research and development 891,601 - - - 891,601 General and administrative - - - 7,416,451 7,416,451 Operating expenses 2,003,594 1,201,455 13,340 7,416,451 10,634,840 Operating income (loss) $3,874,556 $870,314 $517,749 $(7,416,451) $(2,153,832) Year ended CoreStandards and January 3, 2015 Ingredients ContractServices Regulatory segment segment Consultingsegment Other Total Net sales $6,857,177 $7,487,189 $968,813 $- $15,313,179 Cost of sales 4,257,347 5,141,667 588,500 - 9,987,514 Gross profit 2,599,830 2,345,522 380,313 - 5,325,665 Operating expenses: Sales and marketing 1,081,209 975,800 79,575 - 2,136,584 Research and development 513,671 - - - 513,671 General and administrative - - - 7,860,930 7,860,930 Loss from investment in affiliate - - - 45,829 45,829 Operating expenses 1,594,880 975,800 79,575 7,906,759 10,557,014 Operating income (loss) $1,004,950 $1,369,722 $300,738 $(7,906,759) $(5,231,349) -77-Table of Contents Year ended December 28, 2013 Ingredientssegment CoreStandards andContractServicessegment Scientific andRegulatoryConsultingsegment Other Total Net sales $2,430,699 $6,643,832 $1,146,718 $(60,285) $10,160,964 Cost of sales 1,501,187 4,893,649 632,037 955 7,027,828 Gross profit (loss) 929,512 1,750,183 514,681 (61,240) 3,133,136 Operating expenses: Sales and marketing 752,121 1,459,620 14,705 131,159 2,357,605 Research and development 134,040 - - - 134,040 General and administrative - - - 4,982,976 4,982,976 Loss from investment in affiliate - - - 44,961 44,961 Operating expenses 886,161 1,459,620 14,705 5,159,096 7,519,582 Operating income (loss) $43,351 $290,563 $499,976 $(5,220,336) $(4,386,446) At January 2, 2016 Ingredientssegment CoreStandards andContractServicessegment Scientific andRegulatoryConsultingsegment Other Total Total assets $9,105,502 $3,306,624 $111,765 $6,225,318 $18,749,209 At January 3, 2015 Ingredientssegment CoreStandards andContractServicessegment Scientific andRegulatory Consultingsegment Other Total Total assets $3,757,073 $3,220,518 $105,711 $4,433,545 $11,516,847 Revenues from international sources for the ingredients segment approximated $277,000, $35,000 and $22,000 for the years ended January 2, 2016, January3, 2015 and December 28, 2013, respectively. Revenues from international sources for the core standards and contract services segment approximated$1,651,000, $1,756,000 and $1,488,000 for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively. Revenues frominternational sources for the scientific and regulatory consulting segment approximated $283,000, $104,000 and $450,000 for the years ended January 2,2016, January 3, 2015 and December 28, 2013, respectively. International sources which the Company generates revenue include Europe, North America,South America, Asia, and Oceania. The Company’s long-lived assets are located within the United States. Disclosure of major customers During the year ended January 2, 2016 Customer B in our ingredients segment accounted for 11.0% of the Company’s total sales. Customer B accounted forless than 10% of the Company’s total sales for the years ended January 3, 2015 and December 28, 2013. During the year ended January 3, 2015, Customer A in our ingredients segment accounted for 10.2% of the Company’s total sales. Customer A accounted forless than 10% of the Company’s total sales for the years ended January 2, 2016 and December 28, 2013. -78-Table of Contents Note 15. Quarterly Financial Information (unaudited) Three Months Ended April 4, 2015 July 4, 2015 October 3,2015 January 2,,2016 Sales, net $5,260,971 $6,101,380 $6,287,309 $4,364,480 Cost of sales 3,333,347 3,630,688 3,805,679 2,763,418 Gross profit 1,927,624 2,470,692 2,481,630 1,601,062 Operating expenses 2,833,708 2,654,752 2,304,500 2,841,880 Operating income (loss) (906,084) (184,060) 177,130 (1,240,818) Nonoperating expenses (119,431) (131,132) (180,846) (181,299)Provision for income taxes - - - (4,527) Net loss $(1,025,515) $(315,192) $(3,716) $(1,426,644) Basic and Diluted loss per common share $(0.01) $(0.00) $(0.00) $(0.01) Basic and Diluted weighted average common shares outstanding 107,198,597 107,409,894 107,442,916 108,476,686 Three Months Ended March 29,2014 June 28, 2014 September 27,2014 January 3,2015 Sales, net $3,074,138 $3,856,154 $4,139,710 $4,243,177 Cost of sales 2,089,130 2,457,388 2,616,764 2,824,232 Gross profit 985,008 1,398,766 1,522,946 1,418,945 Operating expenses 2,823,773 3,040,194 2,170,380 2,522,667 Operating loss (1,838,765) (1,641,428) (647,434) (1,103,722) Nonoperating expenses (9,251) (11,714) (12,219) (123,652) Net loss $(1,848,016) $(1,653,142) $(659,653) $(1,227,374) Basic and Diluted loss per common share $(0.02) $(0.02) $(0.01) $(0.01) Basic and Diluted weighted average common shares outstanding 106,076,361 106,185,584 106,610,400 106,929,049 Three Months Ended March 30,2013 June 29, 2013 September 28,2013 December 28,2013 Sales, net $2,334,566 $2,706,896 $2,718,207 $2,401,295 Cost of sales 1,661,726 1,746,158 1,968,020 1,651,924 Gross profit 672,840 960,738 750,187 749,371 Operating expenses 2,089,325 1,973,839 1,991,960 1,464,458 Operating loss (1,416,485) (1,013,101) (1,241,773) (715,087) Nonoperating expenses (7,587) (7,765) (8,490) (9,237) Net loss $(1,424,072) $(1,020,866) $(1,250,263) $(724,324) Basic and Diluted loss per common share $(0.02) $(0.01) $(0.01) $(0.01) Basic and Diluted weighted average common shares outstanding 94,626,120 99,833,963 101,309,939 104,179,748 -79-Table of Contents Note 16. Subsequent Events Subsequent to the year ended January 2, 2016, the Company entered into Securities Purchase Agreement (“SPA”) with an existing stockholder to raise$500,000 in a registered direct offering. Pursuant to the SPA, the Company sold a total of 384,615 Units at a purchase price of $1.30 per Unit, with each Unitconsisting of one share of the Company’s common stock and a warrant to purchase one half of a share of common stock with an exercise price of $1.60 and aterm of 3 years. The offering was made pursuant to a prospectus supplement dated March 11, 2016 and an accompanying prospectus dated May 8, 2015pursuant to the Company’s shelf registration statement on Form S-3 that was filed with the Securities and Exchange Commission on May 8, 2015 and becameeffective on June 5, 2015 (File No. 333-203204). The prospectus supplement registered the shares of common stock issued in the offering and the commonstock underlying the warrants.On March 14, 2016, the Board of Directors increased the base salaries of Frank L. Jaksch Jr., Thomas C. Varvaro and Troy A. Rhonemus, the Company’s ChiefExecutive Officer, Chief Financial Officer and Chief Operating Officer, respectively. Effective as of March 14, 2016, the base salary for Mr. Jaksch increasedfrom $275,000 to $320,000, an increase of 16.4%, the base salary for Mr. Varvaro increased from $225,000 to $250,000, an increase of 11.1%, and the basesalary for Mr. Rhonemus increased from $190,000 to $210,000, an increase of 10.5%. -80-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 2, 2016. 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 2, 2016. -81-Table of Contents 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; -82-Table of Contents (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 (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 2, 2016. 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 2, 2016, 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.” -83-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 2, 2016, 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 January2, 2016, 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 2, 2016 and January 3, 2015 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years endedJanuary 2, 2016, January 3, 2015 and December 28, 2013 of the Company and our report dated March 17, 2016 expressed an unqualified opinion on thosefinancial statements. /s/ Marcum LLPMarcum LLPNew York, NYMarch 17, 2016 -84-Table of ContentsItem 9B. Other InformationOn March 14, 2016, the Board of Directors increased the base salaries of Frank L. Jaksch Jr., Thomas C. Varvaro and Troy A. Rhonemus, the Company’s ChiefExecutive Officer, Chief Financial Officer and Chief Operating Officer, respectively. Effective as of March 14, 2016, the base salary for Mr. Jaksch increasedfrom $275,000 to $320,000, an increase of 16.4%, the base salary for Mr. Varvaro increased from $225,000 to $250,000, an increase of 11.1%, and the basesalary for Mr. Rhonemus increased from $190,000 to $210,000, an increase of 10.5%. -85-Table of Contents PART 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.47Chief Executive Officer and DirectorThomas Varvaro46Chief Financial OfficerTroy Rhonemus43Chief Operating OfficerStephen R. Allen (2)(3)66Chairman of the BoardStephen A. Block (1)(2)71DirectorReid Dabney (1)64DirectorHugh Dunkerley (2)42DirectorJeff Baxter (1)(3)54DirectorRobert Fried (3)56Director (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 R. Allen, an existing Board member, to serve as Chairman of the Board. Mr. Allen remainedon 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, 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. On April 16, 2015, the Board appointed Jeff Baxter to serve as a member ofthe Board. Also on April 16, 2015, Mark Germain resigned from the Board. Mr. Germain’s resignation was not as a result of any disagreements with theCompany’s operations, policies or practices. On July 9, 2015, the Board appointed Robert Fried to serve as a member of the Board. Also on July 9, 2015,Glenn Halpryn resigned from the Board. Mr. Halpryn’s resignation was not as a result of any disagreements with the Company’s operations, policies orpractices.Listed below are the biographical summaries and ages as of March 10, 2016 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., 47, 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. -86-Table of ContentsStephen R. Allen, 66, 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, 71, 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. Until December 2011, he also served as the chairman of the board of directors of Blue Pacific Flavorsand Fragrances, Inc., and, until March 2012, as a director of Allylix, Inc. He served on the boards of directors of these privately held companies since 2008,and 2007, respectively. Mr. Block retired as senior vice president, general counsel and secretary of International Flavors and Fragrances Inc., a leadingcreator, manufacturer and seller of flavors and fragrances (IFF) in December 2003, having been IFF’s chief legal officer since 1993. During his eleven years atIFF he also led the company’s Regulatory Affairs Department. Prior to 1993, Mr. Block served as senior vice president, general counsel, secretary and directorof GAF Corporation, a company specializing in specialty chemicals and building materials, and its publicly traded subsidiary International SpecialtyProducts Inc., held various management positions with Celanese Corporation, a company specializing in synthetic fibers, chemicals and plastics, andpracticed law with the New York firm of Stroock & Stroock & Lavan. Mr. Block currently serves as an industry consultant and as a Venture Partner of K5Venture Partners, LLC, an Orange County early stage venture firm. He is also a Managing Director of K5 Venture Partner, LLC’s affiliated accelerator K5Launch and a member of the executive committee of the Orange County network of Tech Coast Angels, a leading investing group. Mr. Block received hisB.A. cum laude in Russian Studies from Yale University and his law degree from Harvard Law School. The Nominating and Corporate GovernanceCommittee believes that Mr. Block’s experience as the chief legal officer of one of the world’s leading flavor and fragrance companies contributes to theBoard’s understanding of the flavor industry, including the Board’s perspective on the strategic interests of potential collaborators, the regulation of theindustry, and the viability of various commercial strategies. In addition, Mr. Block’s experience in the area of corporate governance and public companyfinancial reporting is especially valuable to the Board in his capacity as a member of both the Audit Committee and the Compensation Committee. Reid Dabney, 64, 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 November 2014 to the present, he has served as the chief financial officer and secretary of Code Rebel Corporation(NASDAQ: CDRB) (a Software As A Service (SaaS) and Systems Integration technology provider). From December 2014 to December 2015, he served as amanaging director and chief compliance officer of CVCapital Securities, LLC. From October 2012 to November 2013, he served as a managing director ofMerriman Capital, Inc. From May 2008 to July 2012, he served as a managing director of Monarch Bay Associates, LLC. From March 2005 to November2008, Mr. Dabney served as Cecors, Inc.'s (OTC Markets: CEOS) (a SaaS technology provider) senior vice president and chief financial officer. From July2003 to the present, Mr. Dabney has been engaged by CFO911 as a managing director and business and financial consultant. From January 2003 to August2004, Mr. Dabney served as vice president of National Securities, a broker-dealer firm specializing in raising equity for private operating businesses that haveagreed to become public companies through reverse merger transactions with publicly traded shell companies. From June 2002 to January 2003, Mr. Dabneywas the chief financial officer of House Ear Institute in Los Angeles, California. Mr. Dabney received a B.A. from Claremont McKenna College and anM.B.A. in Finance from the University of Pennsylvania's Wharton School. Mr. Dabney also holds Series 7, 24, 63, 79 and 99 licenses from the FinancialIndustry Regulatory Authority (FINRA). The Nominating and Corporate Governance Committee believes that Mr. Dabney's experience as chief financialofficer of a public company and his extensive experience dealing with financial markets qualify him to chair the Audit Committee and that Mr. Dabneybrings financial, merger and acquisition experience, and a background working with public marketplaces to the Board. -87-Table of ContentsHugh Dunkerley, 42, 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. Currently Mr. Dunkerley is President of Fondinvest Capital SAS, a 20 year old Paris based PrivateEquity Fund of Funds business. Mr. Dunkerley has been a Managing Director of Burnham Securities Inc., a New York based investment bank, from September2013 to December 2015. Prior to Burnham, Mr. Dunkerley was an EVP, Capital Markets of COR Capital LLC, an investment fund based in Santa Monica,CA. Mr. Dunkerley has also been the President and Director of The Valor Group, a Bermudian based and listed company that oversees a portfolio of insuranceassets in the EU. Mr. Dunkerley was a Manager of Capital Markets for the FDIC, Division of Resolutions and Receiverships, from February 2009 to March2011 where he was active in implementing the Dodd-Frank Wall Street Reform Act, along with the oversight of securities and derivatives portfolios for largemoney center banks. He was president and chief executive officer of Cecors, Inc. (OTCBB:CEOS.OB), a Software As A Service (SaaS) technology provider,from October 2007 to February 2009. He had served as Cecor's chief operating officer and as vice president of corporate finance starting in June2006. During 2006 Mr. Dunkerley also served as VP of Small-Mid Cap Equities at Hunter Wise Financial Group, LLC, specializing in investment bankingadvisory services to US and EU companies. Mr. Dunkerley received his undergraduate degree from the University of Westminster, London and earned aMBA from South Bank University, London. Mr. Dunkerley also holds Series 7, 24, 66 and 79 licenses from FINRA. The Nominating and CorporateGovernance Committee believe that Mr. Dunkerley's experience as the chief executive officer of a public company and his extensive financial marketexperience qualify him to sit on the Compensation Committee and that Mr. Dunkerley brings financial and mergers and acquisitions experience, andexperience with public marketplaces and regulatory oversight to the Board. His previous experience as an employee of the Company also allows him toprovide a unique perspective of and extensive knowledge on the industries in which the Company operates. Jeff Baxter, 54, has served as a director of the Company since April 2015 and has served as a member of the Audit Committee and the Nominating andCorporate Governance Committee since April 2015. Mr. Baxter has served as President and CEO and a Director of VBI Vaccines, Inc. (NASDAQ:VBIV) since2009. Previously, he was managing partner for the venture capital firm, The Column Group, where he played a pivotal role in the creation of several biotechcompanies including Immune Design Corp., a vaccine company based on the Lentiviral vector platform and TLR adjuvant technologies. Until July of 2006,Mr. Baxter was SVP, R&D Finance and Operations, of GlaxoSmithKline (GSK). In his 19 years of pharma experience at GSK, he has held line managementroles in R&D, commercial, manufacturing, Finance and The Office of the CEO. His most recent position in the global R&D organization includedresponsibility for finance, pipeline resource planning and allocation, business development deal structuring and SROne (GSK's in-house $125 millionventure capital fund). He also chaired GSK's R&D Operating Board. Prior to GSK, he worked at Unilever and British American Tobacco. Mr. Baxter waseducated at Thames Valley University and is a Fellow of the Chartered Institute of Management Accountants (FCMA). The Nominating and CorporateGovernance Committee believes that Mr. Baxter’s past experience in the pharmaceutical industry bring financial expertise, industry knowledge, and researchand development experience to the Board. Robert Fried, 56, has served as a director of the Company since July 2015 and has served as a member of the Nominating and Corporate GovernanceCommittee since July 2015. Mr. Fried served as Chairman of the Board of Directors of IDI, Inc. (NYSE MKT:IDI) (formerly Tiger Media, Inc.), an informationsolutions provider focused on the multi-billion dollar data fusion market and formerly a Chinese advertising company prior to its merger with the parentcompany of Interactive Data, LLC, from 2011 until June 2015. From 2007-2009, he was the president, CEO and a director of Ideation AcquisitionCorporation, a special purpose acquisition company. Mr. Fried is the founder and CEO of Feeln, a subscription streaming video service, which was acquiredby Hallmark Cards Inc. in 2012. Since then, he manages digital businesses for Hallmark including Feeln, Hallmark e-cards, and Hallmark Print onDemand. Mr. Fried is also an Academy Award winning motion picture producer whose credits include Rudy, Collateral, Boondock Saints, So I Married anAxe Murderer, Godzilla, and numerous others. From December 1994 until June 1996, he was President and CEO of Savoy Pictures, a unit of Savoy PicturesEntertainment, Inc., which was sold in 1996 to Silver King Communications, which is now a part of InterActive Corp. Mr. Fried has also held severalexecutive positions including Executive Vice President in charge of Production for Columbia Pictures, Director of Film Finance and Special Projects forColumbia Pictures, and Director of Business Development at Twentieth Century Fox. Mr. Fried holds an M.S. from Cornell University and an M.B.A. from theColumbia University Graduate School of Business. The Nominating and Corporate Governance Committee believes that Mr. Fried’s past experience asChairman of the Board of Directors of another public company bring financial expertise and industry knowledge to the Board. -88-Table of ContentsExecutive OfficersThomas C. Varvaro, 46, 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. Since April 2015, Mr. Varvaro has served on the board of directors ofMabVax Therapeutics Holdings, Inc. (OTCQB:MBVX), which he is a member of the audit, compensation and nominating and governance committees. Mr.Varvaro has extensive process mapping and business process improvement skills, along with a solid information technology background that includesmanagement and implementation experiences ranging from custom application design to enterprise wide system deployment. Mr. Varvaro also has hands-onexperience 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 also has broad legal experience in intellectual property (IP), contract and employmentlaw. From 1998 to 2004, Mr. Varvaro was employed by Fast Heat Inc., a Chicago, Illinois based global supplier to the plastics, HVAC, packaging, and foodprocessing industries, where he began as controller and was promoted to chief information officer and then chief financial officer during his tenure. Duringhis time there Mr. Varvaro was responsible for all financial matters including accounting, risk management and human resources. From 1993 to 1998, Mr.Varvaro was employed by Maple Leaf Bakery, Inc., Chicago, Illinois, during its rise to becoming a leader in specialty bakery products. During his tenure Mr.Varvaro served in information technology and accounting roles while helping to shepherd the company from a single facility to national leader in specialtybakery products. Mr. Varvaro has a B.S. in Accounting from University of Illinois, Urbana-Champaign and has been certified as a Certified PublicAccountant.Troy Rhonemus, 43, 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. AsTruvia® Business Process Manager, he served as the product line lead for managing the operations and supply chain of the Truvia® enterprise from leaf toconsumer products. As Technology Manger, Mr. Rhonemus served as technical lead for process and product development for Truvia® consumer productsand ingredient business. From 2004 to 2006, Mr. Rhonemus served as Principal Research Scientist at E&J Gallo Winery, where he developed experimentaldesigns to ensure that all project work was statistically valid in the lab, pilot and production wineries. From 1998 to 2004, Mr. Rhonemus served as SeniorResearch Scientist and as Process Technology Manager at Cargill, Inc. In these positions, Mr. Rhonemus solved technical problems and implemented newtechnologies into production. He identified potential tolling facilities, coordinated tolling efforts, directly supervised and developed new processes andsolved technical issues in existing business units in Cargill. Mr. Rhonemus has earned a M.A. in Chemistry and a B.S. in Chemistry from Ball StateUniversity. -89-Table of Contents Compliance 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 2, 2016 except as follows: Jeff Baxter was late in filing Initial Statement ofBeneficial Ownership of Securities on Form 3.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.”Public Availability of Corporate Governance Documents -90-Table of ContentsOur 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 8 meetings during 2015. Each director attended at least 75% of Board meetings and meetings of the committees on which he served except asfollows: Hugh Dunkerley attended 50% of Board meetings during 2015.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 compositionAudit CommitteeOur Audit Committee currently consists of three directors: Messrs. Reid Dabney (chairman), Stephen Block and Jeff Baxter. The Board has determined that: •Mr. Dabney qualifies as an “audit committee financial expert,” as defined by the SEC in Item 407(d)(5) of Regulation S-K; and -91-Table of Contents •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 2, 2016 (our 2015 fiscal year) and the notes thereto. It has discussed with Marcum, LLP, our independent registered public accounting firm for the2015 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 2, 2016 and be filed with theSEC. Submitted by: The Audit Committee Of The Board of DirectorsReid Dabney (Chairman)Stephen BlockJeff Baxter Compensation 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”). -92-Table of Contents Compensation Committee Interlocks and Insider ParticipationNone of the members of our Compensation Committee is an officer or employee of our Company. None of our executive officers currently serves, or in thepast year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on ourBoard or Compensation Committee. Nominating and Corporate Governance CommitteeOur Nominating and Corporate Governance Committee currently consists of three directors: Stephen Allen (chairman), Jeff Baxter and Robert Fried. TheBoard 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 2015 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. -93-Table of Contents 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.Compensation 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 based on the Company’s and the executive officer’s performance and market conditions to acompetitive base salary that is in line with his or her role and responsibilities 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.In 2015, we paid bonuses of $85,890, $56,219 and $33,731, respectively to our executive officers Frank L. Jaksch Jr., Thomas C. Varvaro and Troy A.Rhonemus. These bonus amounts were calculated based upon achievements of the Company’s sales and Earnings Before Interest, Taxes, Depreciation,Amortization and Share-based compensation (“EBITDAS”) targets for the fiscal year 2014. The sales and EBITDAS targets were from the Company’s 2014budget. Tables below illustrate how the bonus amounts were calculated for Mr. Jaksch, Mr. Varvaro and Mr. Rhonemus -94-Table of ContentsBonus calculation for Mr. Jaksch – for fiscal year 2014, paid in 2015Metric Floor(in 1,000s) Target(in 1,000s) Actual(in 1,000’s) Achievement% fromFloor toTarget (1) TargetBonus% (2) PayoutBonus% (3) BaseSalary BonusPayment(4) Sales $14,149 $18,865 $15,313 24.7% 25.0% 6.2% $275,000 $16,973 EBITDAS N/A $(1,885) $(1,880) 100.2% 25.0% 25.1% $275,000 $68,917 Total $85,890 Bonus calculation for Mr. Varvaro – for fiscal year 2014, paid in 2015Metric Floor(in 1,000s) Target(in 1,000s) Actual(in 1,000’s) Achievement% fromFloor toTarget (1) TargetBonus% (2) PayoutBonus% (3) BaseSalary BonusPayment(4) Sales $14,149 $18,865 $15,313 24.7% 20.0% 4.9% $225,000 $11,109 EBITDAS N/A $(1,885) $(1,880) 100.2% 20.0% 20.0% $225,000 $45,110 Total $56,219 Bonus calculation for Mr. Rhonemus – for fiscal year 2014, paid in 2015Metric Floor(in 1,000s) Target(in 1,000s) Actual(in 1,000’s) Achievement% fromFloor toTarget (1) TargetBonus% (2) PayoutBonus% (3) BaseSalary BonusPayment(4) Sales $14,149 $18,865 $15,313 24.7% 15.0% 3.7% $180,000 $6,665 EBITDAS N/A $(1,885) $(1,880) 100.2% 15.0% 15.0% $180,000 $27,066 Total $33,731 (1) Achievement % for sales is calculated by linearly interpolating the actual amount from floor to target, with floor being 0% and target being100%. Achievement % for EBITDAS is calculated by following formula: Achievement % = 1-((Target – Actual)/Target)(2) Per employment agreement, Mr. Jaksch, Mr. Varvaro and Mr. Rhonemus are entitled to receive a bonus up to 50%, 40% and 30% of base salary,respectively. For each metric, 50% of this amount was allocated.(3) Payout bonus % is calculated by multiplying achievement % to target bonus %.(4) Bonus payment is calculated by multiplying payout bonus % to base salaryIn 2016, we plan to pay bonuses of $55,000, $36,000 and $22,800, respectively to Mr. Jaksch, Mr. Varvaro and Mr. Rhonemus for services performed during2015. These amounts were calculated based upon the Company's overall performance, including achievement of sales and profitability targets for the fiscalyear 2015. Unlike the bonuses paid in 2015, which were based on the Company's financial performance for fiscal year 2014, the amounts to be paid out in2016 were determined on a discretionary basis by our Compensation Committee. The bonus pay out % was determined as 20%, 16% and 12% of base salaryfor Mr. Jaksch, Mr. Varvaro and Mr. Rhonemus, respectively. These amounts represent payouts of 40% of the total bonus opportunity for eachexecutive. When determining the bonus pay out %, our Compensation Committee considered numerous factors including the following milestones that theCompany achieved during 2015: (i) first year to achieve net sales of $20 million or more; (ii) our top selling ingredient, nicotinamide riboside ("NR") wasrecognized by the FDA as a "New Dietary Ingredient." NR was also "Generally Recognized As Safe" by an independent panel of expert toxicologists; (iii)successful launch of "Quality Seal Verification" program, which brought a revenue of $400,000; and (iv) entering into joint development agreement with TheProcter & Gamble Company ("P&G") for use of our proprietary ingredient in P&G branded products, for which P&G will make payments based onachievement of various milestones. -95-Table of ContentsEquity-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.On June 6, 2012, Frank L. Jaksch Jr. and Thomas C. Varvaro were each awarded 250,000 shares of restricted stock. In addition, on January 2, 2014, Mr.Jaksch and Mr. Varvaro were each awarded 250,000 shares each of restricted stock. These shares were to originally vest upon the earlier to occur of thefollowing: (i) the market price of the Company’s stock exceeds a certain price, or (ii) one of other certain triggering events, including the termination of theofficers and members of the board of directors without cause for any reason. These awarded shares were not vested as of January 2, 2016. On March 7, 2016,the Company and each of the executives amended the restricted stock awards to provide that the awards shall not vest upon the market price of theCompany’s stock exceeding a certain price or listing of the Company’s stock on a national securities exchange. 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.Benefits 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. One of the benefits programs we offer is a broad-based 401(k) plan to which we make contributions in cash.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. -96-Table of Contents 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.The Role of Stockholder Say-on-Pay VotesThe Company provides its stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay proposal”). At theCompany’s 2015 annual meeting of stockholders, the stockholders recommended, on an advisory basis, a three-year frequency with which the Companyshould conduct future stockholder advisory votes on named executive officer compensation. The Compensation Committee will consider the outcome of theCompany’s say-on-pay votes when making future compensation decisions for the named executive officers.Summary 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 2,2016 as our executive officers. NameYear Salary Bonus StockAwards(1) OptionAwards(2) All OtherCompensation(3) Total($) Frank L. Jaksch Jr.2015 $275,000 $85,890 - $114,857(4) $8,642 $484,389 2014 $275,000 $30,000 $352,500(5) $138,518(6) $7,748 $803,766 2013 $225,000 $51,242 - - $6,827 $283,069 Thomas C. Varvaro2015 $225,000 $56,219 - $96,229(7) $8,437 $385,885 2014 $225,000 $24,200 $352,500(8) $115,807(9) $6,816 $724,323 2013 $175,000 $29,891 - - $3,900 $208,791 Troy A. Rhonemus(10)2015 $186,962 $33,731 - $76,091(11) $6,642 $303,426 2014 $179,039 - - $358,723(12) $5,371 $543,133 2013 - - - - - - -97-Table of Contents (1) The amounts in the column titled “Stock Awards” above reflect the aggregate award date fair value of restricted stock awards. These restricted stockawards originally had following vesting conditions: the earlier to occur of (A) the average closing market price of the Company’s common stockexceeds $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 areacquired by, or the Company merges with, another entity or engages in another form of reorganization as a result of which it is not the survivingcorporation, (D) service is terminated without cause for any reason, or (E) the Company’s stock is listed on a national securities exchange. The fairvalues of these restricted stock awards were based on the trading price of the Company’s common stock on the date of grant. On March 7, 2016 theCompany and each of the executives amended the restricted stock awards to provide that the awards shall not vest upon the market price of theCompany’s common stock exceeding $2.50 per share or listing of the Company’s stock on a national securities exchange. (2)The amounts in the column titled “Option Awards” above reflect the aggregate grant date fair value of stock option awards for the fiscal years endedJanuary 2, 2016 and January 3, 2015. See Note 9 of the ChromaDex Corporation Consolidated Financial Report included in this Form 10-K for theyear ended January 2, 2016 for a description of certain assumptions in the calculation of the fair value of the Company’s stock options.(3) The amounts in this column titled “All Other Compensation” above reflect matching 401(k) contributions.(4)On July 6, 2015, Frank L. Jaksch Jr. was granted options to purchase 150,000 shares of ChromaDex common stock at an exercise price of $1.22. Theseoptions expire on July 6, 2025 and 25% of the options vest on July 6, 2016 and the remaining 75% vest 2.083% monthly thereafter.(5)On January 2, 2014, Frank L. Jaksch Jr. was awarded 250,000 shares of restricted stock. These shares vest upon the achievement of certain milestones.As of January 2, 2016, these shares have not vested.(6)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. These options expire on June 18, 2024 and 25% of the options vested on June 18, 2015 and the remaining 75% vest 2.083% monthlythereafter.(7)On July 6, 2015, Thomas C. Varvaro was granted options to purchase 125,000 shares of ChromaDex common stock at an exercise price of$1.22. These options expire on July 6, 2025 and 25% of the options vest on July 6, 2016 and the remaining 75% vest 2.083% monthly thereafter.(8)On January 2, 2014, Thomas C. Varvaro was awarded 250,000 shares of restricted stock. These shares vest upon the achievement of certain milestones.As of January 2, 2016, these shares have not vested.(9)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. These options expire on June 18, 2024 and 25% of the options vested on June 18, 2015 and the remaining 75% vest 2.083% monthlythereafter.(10)Troy A. Rhonemus became the Company’s Chief Operating Officer on March 6, 2014.(11)On July 6, 2015, Troy A. Rhonemus was granted options to purchase 100,000 shares of ChromaDex common stock at an exercise price of$1.22. These options expire on July 6, 2025 and 25% of the options vest on July 6, 2016 and the remaining 75% vest 2.083% monthly thereafter.(12)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 anexercise price of $1.25. These options expire on June 18, 2024 and 25% of the options vested on June 18, 2015 and the remaining 75% vest 2.083%monthly thereafter. -98-Table of Contents Employment 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 January 2016, the Board approved therecommendations of the Company’s Compensation Committee paying Mr. Jaksch a bonus of $55,000 for services provided to the Company during the fiscalyear ending January 2, 2016. On March 14, 2016, the Board increased the base salary of Mr. Jaksch to $320,000.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. -99-Table of Contents 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.Employment 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 January 2016, the Board approved therecommendations of the Company’s Compensation Committee paying Mr. Varvaro a bonus of $36,000 for services provided to the Company during thefiscal year ending January 2, 2016. On March 14, 2016, the Board increased the base salary of Mr. Varvaro to $250,000.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. -100-Table of Contents 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.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.On March 17, 2015, the Board increased the base salary of Mr. Rhonemus to $190,000. In addition, on April 16, 2015, the Board approved increasing thebase salary of Mr. Rhonemus to $215,000, effective upon the listing of the Company’s common stock on a national securities exchange. In January 2016, theBoard approved the recommendations of the Company’s Compensation Committee paying Mr. Rhonemus a bonus of $22,800 for services provided to theCompany during the fiscal year ending January 2, 2016. On March 14, 2016, the Board increased the base salary of Mr. Rhonemus to $210,000.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. -101-Table of ContentsIn 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. 2015 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 2, 2016 is as follows: 8.333% of the options vest monthly. The following table provides information concerning compensation of our non-employee directors who were directors during the fiscal year ended January 2,2016. The compensation reported is for services as directors for the fiscal year ended January 2, 2016.Summary Compensation Table Name FeesEarned orPaid inCash ($) StockAwards($)(1) OptionAwards($)(2) Non-EquityIncentive PlanCompensation ($) Non-QualifiedDeferredCompensationEarnings ($) All OtherCompensation($) Total($) Stephen Allen (3) - - 74,548 - - - 74,548 Stephen Block(4) - - 60,002 - - - 60,002 Reid Dabney(5) - - 58,184 - - - 58,184 Hugh Dunkerley(6) - - 49,093 - - - 49,093 Jeff Baxter(7) - - 194,552 - - - 194,552 Robert Fried(8) - - 134,384 - - - 134,384 Mark S. Germain(9) - 153,750 - - - - 153,750 Glenn L. Halpryn(10) - - 54,547 - - - 54,547 (1) The amounts in the column titled “Stock Awards” above reflect the aggregate award date fair value of 125,000 shares of fully vested Company’scommon stock awarded to Mark Germain on April 16, 2015. The fair value of the stock award was based on the trading price of the Company’scommon stock on the date of award.(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 2, 2016. See Note 9 of the ChromaDex Corporation Consolidated Financial Report included in this Form 10-K for the year ended January 2,2016 for a description of certain assumptions in the calculation of the fair value of the Company’s stock options. Except as stated below with respectto options awarded to Mr. Fried, the options have an exercise price of $1.22 and, except as stated below with respect to options held by Mr. Halpryn,vest 1/12th every month for 12 months commencing in August 2015.(3)On July 6, 2015, Stephen Allen was awarded the option to purchase 102,500 shares of the Company’s common stock. -102-Table of Contents (4)On July 6, 2015, Stephen Block was awarded the option to purchase 82,500 shares of the Company’s common stock.(5)On July 6, 2015, Reid Dabney was awarded the option to purchase 80,000 shares of the Company’s common stock.(6)On July 6, 2015, Hugh Dunkerley was awarded the option to purchase 67,500 shares of the Company’s common stock.(7)On July 6, 2015, Jeff Baxter was awarded the option to purchase 267,500 shares of the Company’s common stock.(8)On July 30, 2015, Robert Fried was awarded the option to purchase 200,000 shares of the Companny’s common stock with an exercise price of $1.10per share.(9)On April 16, 2015, Mark Germain resigned from the Board of Directors and was awarded 125,000 shares of common stock. Mr. Germain’s unvestedrestricted stock and options became fully vested upon his resignation from the Board of Directors.(10)On July 6, 2015, Glenn Halpryn was awarded the option to purchase 75,000 shares of the Company’s common stock. On July 9, 2015, Mr. Halprynresigned from the Board of Directors and his unvested restricted stock and options became fully vested upon his resignation from the Board ofDirectors.Grants of Plan-Based AwardsThe following table summarizes the stock option awards granted to our named executive officers during the year ended January 2, 2016:Name Grant Date All OtherOptionAwards:Number ofSecuritiesUnderlyingOptions Exercise orBase Price ofOption Awards($/Share)(1) Grant DateFair Valueof Stockand OptionAwards($)(2) Frank L. Jaksch Jr. 7/6/2015 150,000 $1.22 $114,857 Thomas C. Varvaro 7/6/2015 125,000 $1.22 $96,229 Troy A. Rhonemus 7/6/2015 100,000 $1.22 $76,091 (1) The exercise price of the stock options awarded was determined in accordance with our Second Amended and Restated 2007 Equity Incentive Plan,which provides that the exercise price for an option granted be the average of the highest and lowest trading prices of our common stock on the dateof grant.(2) Based upon the aggregate grant date fair value of stock option awards. See Note 9 of the ChromaDex Corporation Consolidated Financial Reportincluded in this Form 10-K for the year ended January 2, 2016 for a description of certain assumptions in the calculation of the fair value of theCompany’s stock options. Option Exercises and Stock VestedThe following table summarizes, with respect to our named executive officers, all options that were exercised and restricted stock vested during theyear ended January 2, 2016. Our named executive officers did not exercise any options and restricted stock awarded to executive officers were not vested: -103-Table of Contents Option Awards Restricted Stock Name Number of Shares Acquired onExercise(#) Value Realizedon Exercise ($) Number ofShares Vested(#) Value Realizedon Vesting ($) Frank L. Jaksch Jr. - $- - $- Thomas C. Varvaro - $- - $- Troy A. Rhonemus - $- - $- Outstanding Equity Awards at Fiscal Year EndThe following table sets forth certain information regarding stock options and restricted stock granted to our named executive officers outstanding as ofJanuary 2, 2016. Outstanding Stock Options at 2015 Fiscal Year-End Name Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable Equity IncentivePlan Awards:Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions (#) Option ExercisePrice ($) 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 125,000 — — 1.54 5/10/2021 208,333 41,667(1) — 0.64 8/28/2022 1,901,418 — — 0.945 9/15/2022 56,250 93,750 (2) — 1.25 6/18/2024 — 150,000 (3) — 1.22 7/6/2025 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 4,288 — — 1.54 5/10/2021 166,667 33,333(4) — 0.64 8/28/2022 863,511 — — 0.945 9/15/2022 46,875 78,125(5) — 1.25 6/18/2024 — 125,000(6) — 1.22 7/6/2025 Troy A. Rhonemus 291,667 108,333 (7) — 0.63 1/25/2023 152,778 97,222 (8) — 1.75 2/21/2024 28,125 46,875 (9) — 1.25 6/18/2024 — 100,000(10) — 1.22 7/6/2025 -104-Table of Contents (1)5,208 of Mr. Jaksch’s options vest on 28th of every month through August 28, 2016.(2)3,125 of Mr. Jaksch’s options vest on 18th of every month through June 18, 2018.(3)37,500 of Mr. Jaksch’s options vest on July 6, 2016 and 3,125 of his options vest on 6th of every month thereafter through July 6, 2019.(4)4,167 of Mr. Varvaro’s options vest on 28th of every month through August 28, 2016.(5)2,604 of Mr. Varvaro’s options vest on 18th of every month through June 18, 2018.(6)31,250 of Mr. Varvaro’s options vest on July 6, 2016 and 2,604 of his options vest on 6th of every month thereafter through July 6, 2019.(7)8,333 of Mr. Rhonemus’ options vest on 25th of every month through January 25, 2017.(8)6,944 of Mr. Rhonemus’ options vest on 21st of every month through February 21, 2017.(9)1,563 of Mr. Rhonemus’ options vest on 18th of every month through June 18, 2018.(10)25,000 of Mr. Rhonemus’ options vest on July 6, 2016 and 2,083 of his options vest on 6th of every month thereafter through July 6, 2019. Outstanding Restricted Stock at 2015 Fiscal Year-End Name Number of Shares orUnits of StockThat Have Not Vested (#) Market Value ofSharesof Units of StockThatHave Not Vested($) Equityincentive planawards:Number ofunearnedshares, unitsor other rightsthathave notvested (#) (1 Equityincentive planawards:Market orpayout valueofunearnedshares, unitsor other rightsthathave notvested ($) (2 Frank L. Jaksch Jr. - - 500,000 $610,000 Thomas C. Varvaro - - 500,000 $610,000 Troy A. Rhonemus - - - $- (1) On June 6, 2012, Frank L. Jaksch Jr. and Thomas C. Varvaro were each awarded 250,000 shares of restricted stock. In addition, on January 2, 2014, Mr.Jaksch and Mr. Varvaro were each awarded 250,000 shares each of restricted stock. These shares were to originally vest upon the earlier to occur of thefollowing: (i) the market price of the Company’s stock exceeds a certain price, or (ii) one of other certain triggering events, including the termination ofthe officers and members of the board of directors without cause for any reason. On March 7, 2016, the Company and each of the executives amendedthe restricted stock awards to provide that the awards shall not vest upon the market price of the Company’s stock exceeding a certain price or listing ofthe Company’s stock on a national securities exchange. (2)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 2, 2016. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersAs of March 14, 2016, there were approximately 109,527,401 shares of our common stock outstanding. The following table sets forth certain informationregarding our common stock, beneficially owned as of March 14, 2016, 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 14, 2016 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. -105-Table of ContentsName of Beneficial Owner (1) Shares ofCommonStockBeneficiallyOwned (2) AggregatePercentageOwnership Dr. Phillip Frost (3) 16,052,941 14.62%Michael Brauser (4) 9,166,388 8.34%Barry Honig (5) 8,817,832 8.04%Black Sheep, FLP (6) 6,225,155 5.68%Directors Stephen Allen (7) 367,917 * Stephen Block (8) 646,231 * Reid Dabney (9) 706,867 * Hugh Dunkerley (10) 552,025 * Jeff Baxter (11) 222,917 * Robert Fried (12) 344,169 * Frank L. Jaksch Jr. (13) 11,922,655 10.53%Named Executive Officers Frank L. Jaksch Jr., Chief Executive Officer (See above) Thomas C. Varvaro, Chief Financial Officer (14) 2,452,124 2.20%Troy Rhonemus, Chief Operating Officer (15) 554,931 * All directors and executive officers as a group (7 Directors plus Chief Financial Officer and Chief Operating Officer) (16) 17,769,834 15.03% *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. (3)Includes 6,386,273 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. -106-Table of Contents (4)Direct ownership of (i) 1,209,098 shares of common stock; and (ii) through Michael & Betsy Brauser TBE, 3,626,428 shares of commonstock. Indirect ownership through (i) 871,270 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 held by Mr. Brauser and 120,000 warrants held by Grander Holdings, Inc. 401KProfit Sharing Plan.(5)Direct ownership of 4,832,059 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) 943,966 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; (iv) 413,336 shares owned by GRQ Consultants Inc. Roth 401K FBO Barry Honig, of which Mr. Honighas voting and investment power; and (v) 89,900 shares owned by GRQ Consultants, Inc., of which Mr. Honig is the President. Includes 205,000stock options held by Mr. Honig exercisable within 60 days. Excludes (i) 206,664 shares of common stock underlying warrants held by GRQConsultants, Inc. 401K and (ii) 206,668 shares of common stock underlying warrants held by GRQ Consultants, Inc. Roth 401K FBO Barry Honig,both of which contain a 4.99% beneficial ownership blocker. (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 367,917 stock options exercisable within 60 days. (8) Includes 596,231 stock options exercisable within 60 days. (9) Includes 696,867 stock options exercisable within 60 days. (10) Includes 542,025 stock options exercisable within 60 days. (11)Includes 222,917 stock options exercisable within 60 days. (12)Direct ownership of 155,937 shares of common stock. Indirect ownership through 20,232 shares held by Jeremy Fried and 18,000 shares held byBenjamin Fried, who are both sons of Robert Fried. Includes 150,000 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 3,674,335 stockoptions exercisable within 60 days. (14) Includes 1,945,124 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 539,931 stock options exercisable within 60 days. (16) Includes 8,735,345 stock options exercisable within 60 days. Equity Compensation Plan InformationThe following table provides information about our equity compensation plans as of January 2, 2016: -107-Table of Contents 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 15,734,755 $1.15 3,321,226(1) Equity compensation plans not approved by security holders - - - Total 15,734,755 $1.15 3,321,226(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 PersonsOn August 28, 2015, the Company entered into an Exclusive Supply Agreement (the “Supply Agreement”) with Healthspan Research, LLC(“Healthspan”). Under the terms of the Supply Agreement, Healthspan agreed to purchase NIAGEN® from the Company and the Company granted toHealthspan worldwide rights for resale of specific dietary supplements containing NIAGEN® in certain markets. Pursuant to the terms of the Supply Agreement, in exchange for a 4% equity interest in Healthspan, the Company agreed to initially supply NIAGEN® toHealthspan free of charge and thereafter at a fixed price and, in exchange for an additional 5% equity interest in Healthspan, the Company will grant toHealthspan certain exclusive rights to resell NIAGEN® in certain direct response channels. Healthspan will pay the Company royalties on the cumulativeworldwide net sales of its finished products containing NIAGEN®. The exclusivity rights will remain for so long as Healthspan meets certain minimumpurchase requirements. In the event that, during the initial term, the Company terminates the exclusivity rights due to failure to meet the minimum purchaserequirements or for any reason other than a material breach of the Supply Agreement by Healthspan, then the 5% equity interest shall be automaticallyredeemed for a purchase price of $1.00 effective upon the date of termination of the exclusivity rights. In connection with the foregoing, also on August 28, 2015, the Company and Healthspan entered into an interest purchase agreement and limited liabilitycompany agreement pursuant to which the Company was issued 9% of the outstanding equity interests of Healthspan. Robert Fried, a director of theCompany, is the manager of Healthspan and owns 91% of the outstanding equity interests of Healthspan. The Supply Agreement, interest purchaseagreement and limited liability company agreement were unanimously approved by the independent directors of the Company. -108-Table of Contents As of January 2, 2016, the Company had not shipped any NIAGEN® to Healthspan and Healthspan did not issue any equity interests to theCompany. Accordingly, there is no accounting recognition of this arrangement for the twelve-month period ended on January 2, 2016.On November 4, 2015, the Company entered into securities purchase agreements with Barry Honig, Michael Brauser and Frost Gamma Investments Trust,each beneficial owners of over 5% of our common stock, to raise an aggregate of $2,000,000 in a registered direct offering. Pursuant to the purchaseagreements, the Company sold a total of 200,000 Units at a purchase price of $10.00 per Unit, with each Unit consisting of eight shares of the Company’scommon stock and a warrant to purchase four shares of common stock at an exercise price of $1.50 and a term of 3 years. The offering was made pursuant to aprospectus supplement dated November 4, 2015 and an accompanying prospectus dated May 8, 2015 pursuant to the Company’s shelf registration statementon Form S-3 that was filed with the Securities and Exchange Commission on May 8, 2015 and became effective on June 5, 2015 (File No. 333-203204). Theprospectus supplement registered the shares of common stock issued in the offering and the common stock underlying the warrants.The Company did not have any transactions with related persons during the years ended January 2, 2016, 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.Director 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, Jeff Baxter and Robert Fried has no material relationship with ourCompany 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 The following table sets forth fees billed to us by Marcum LLP, our independent registered public accounting firm during the fiscal years ended January 2,2016 and January 3, 2015. 2015 2014 Audit Fees (1) $271,000 $229,000 Audit-Related Fees (2) $15,000 $5,000 Tax Fees (3) $— $— All Other Fees $— $— -109-Table of Contents (1)Audit fees relate to professional services rendered in connection with the audit of the Company’s annual financial statements and internal control overfinancial reporting and quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q.(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. Policy 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. -110-Table of ContentsPART IVItem 15. Exhibitsand 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. -111-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 17th day of March 2016. 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 17, 2016Frank L. Jaksch Jr. (Principal Executive Officer) /s/ THOMAS C. VARVARO Chief Financial Officer and Secretary March 17, 2016Thomas C. Varvaro (Principal Financial and Accounting Officer) /s/ STEPHEN ALLEN Chairman of the Board and Director March 17, 2016Stephen Allen /s/ STEPHEN BLOCK Director March 17, 2016Stephen Block /s/ REID DABNEY Director March 17, 2016Reid Dabney /s/ HUGH DUNKERLEY Director March 17, 2016Hugh Dunkerley /s/ JEFF BAXTER Director March 17, 2016Jeff Baxter /s/ ROBERT FRIED Director March 17, 2016Robert Fried -112-Table of Contents EXHIBIT 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)4.4 Form of Stock Certificate representing shares of ChromaDex Corporation Common Stock (New design effective as of January 1, 2016)v10.1 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) -113-Table of Contents 10.10 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 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)10.25 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)*10.26 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)* -114-Table of Contents 10.27 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)*10.28 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)+10.29 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)*10.30 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)*10.31 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, 2014 (incorporated by reference from, and filed as Exhibit 10.39 to theCompany’s Annual report on Form 10-K filed with the Commission on March 19, 2015)10.32 License Agreement, effective as of October 15, 2014 between University of Mississippi and ChromaDex, Inc. (incorporated by referencefrom, and filed as Exhibit 10.40 to the Company’s Annual report on Form 10-K filed with the Commission on March 19, 2015)*10.33 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, 2014 (incorporated by reference from, and filed as Exhibit10.41 to the Company’s Annual report on Form 10-K filed with the Commission on March 19, 2015)10.34 Share Transfer Agreement by and between ChromaDex Corporation and Emprise Capital Corporation dated November 25, 2014(incorporated by reference from, and filed as Exhibit 10.42 to the Company’s Annual report on Form 10-K filed with the Commission onMarch 19, 2015)10.35 Exclusive License and Supply Agreement, effective as of May 12, 2015 between Suntava, Inc. and ChromaDex, Inc. (incorporated byreference from, and filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 13, 2015)*10.36 Restated and Amended License Agreement, effective as of June 3, 2015 between the University of Mississippi 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 onAugust 13, 2015)*10.37 Amendment No. 1 to Loan and Security Agreement by and between ChromaDex Corporation and Hercules Technology II, L.P., as Lenderand Hercules Technology Growth Capital, Inc., as agent dated June 17, 2015 (incorporated by reference from and filed as Exhibit 10.1 to theCompany’s Current Report on Form 8-K filed with the Commission on June 19, 2015)10.38 Exclusive Supply Agreement, effective as of August 27, 2015 between Healthspan Research, LLC and ChromaDex, Inc. (incorporated byreference from, and filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 12,2015)*10.39 Limited Liability Company Agreement, effective as of August 27, 2015 between Healthspan Research LLC 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 12, 2015)* Interest Purchase Agreement, effective as of August 27, 2015 between Healthspan Research LLC and ChromaDex, Inc. (incorporated byreference from, and filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 12,2015)*10.40 Take or Pay Purchase Agreement for nicotinamide riboside chloride, effective as of September 21, 2015, between W.R. Grace & Co. Conn.And ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed withthe Commission on November 12, 2015)*10.41 Supply Agreement, effective as of August 28, 2015 and First Addendum to Supply Agreement, effective as of September 30, 2015 betweenNectar7 LLC and ChromaDex, Inc. (incorporated by reference from, and filed as Exhibit 10.5 to the Company’s Quarterly Report on Form10-Q filed with the Commission on November 12, 2015)* -115-Table of Contents 10.42 Form of Securities Purchase Agreement, dated as of November 4, 2015, between existing stockholders and ChromaDexCorporation. (incorporated by reference from and filed as Exhibit 10.01 to the Company’s Current Report on Form 8-K filed with theCommission on November 5, 2015)10.43 Form of Warrant under the Securities Purchase Agreement, dated as of November 4, 2015, between existing stockholders and ChromaDexCorporation (incorporated by reference from and filed as Exhibit 10.02 to the Company’s Current Report on Form 8-K filed with theCommission on November 5, 2015)10.44 Joint Development Agreement, effective as of October 30, 2015, between the Procter & Gamble Company and ChromaDex, Inc.v **10.45 Form of Securities Purchase Agreement, dated as of March 11, 2016, between an existing stockholder and ChromaDexCorporation (incorporated by reference from and filed as Exhibit 10.01 to the Company’s Current Report on Form 8-K filed with theCommission on March 11, 2016)10.46 Form of Warrant under the Securities Purchase Agreement, dated as of March 11, 2016, between an existing stockholder and ChromaDexCorporation (incorporated by reference from and filed as Exhibit 10.02 to the Company’s Current Report on Form 8-K filed with theCommission on March 11, 2016)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. -116-Exhibit 4.4Form of Stock Certificate Representing Shares of ChromaDex Corporation Common Stock(New design effective January 1, 2016) Exhibit 10.44JOINT DEVELOPMENT AGREEMENT BETWEEN THE PROCTER & GAMBLE COMPANY AND CHROMADEX, INC.  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION Table of Contents Preamble 2Background 2 Articles 1Definitions22Collaborative Project23Confidentiality34INVENTION Rights45Work With THIRD PARTIES66Sampling of NR67Term and Termination68Arbitration79Limited Scope of This Collaboration810Supply811Miscellaneous8 Schedules Schedule 1.1 –Definitions 13Schedule 2.1 –PROJECT 16  [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION Preamble This Joint Development Agreement (“JDA”), effective and binding as of the last date of signing of this JDA (“EFFECTIVE DATE”), is betweenChromaDex, Inc. Corporation (“COLLABORATION PARTNER”), a California corporation having its principle office at 10005 Muirlands Blvd., Irvine,CA 92618 and The Procter & Gamble Company (“P&G”) an Ohio corporation having its principle office at One Procter & Gamble Plaza, Cincinnati, Ohio45202. Background P&G has unique skills, technology and know-how specific to the development and use of consumer product formulations desired by consumers andinstitutional users, and has the ability to manufacture and sell such products globally. COLLABORATION PARTNER has unique skills, technology and know-how specific to the research, development, production, and applications with respectto nicotinamide riboside, including, but not limited to the salts, analogs, precursors, and intermediates thereof (“NR”), and has the ability to commerciallysupply such materials in industrial quantities for incorporation into consumer products. The PARTIES want to enter into a joint research type collaborative project, which utilizes each PARTY’s unique abilities. The project is intended to focus onthe challenging goal of identifying and/or developing stable forms of NR that can be formulated into aqueous consumer product formulations sold by P&Gto provide breakthrough levels of consumer noticeable benefits. The PARTIES recognize the highly uncertain nature of such a collaborative project, including the uncertainty regarding whether one or both PARTIES maydevelop new technologies and/or know-how of value to one or both of the PARTIES. In consideration of the mutual promises contained in this JDA, and in consideration of the time, money and effort which will be expended by the respectivePARTIES under this JDA, and in consideration for the specific know-how possessed by each PARTY, which they individually bring to the project to beconducted, the PARTIES agree that the project be undertaken in conjunction with one another under the following terms and conditions: Agreement 1. Definitions 1.1. General. The capitalized terms defined in this JDA will have the meanings indicated for purposes of this JDA; non-capitalized terms have theirordinary meaning as determined by context, subject matter, and/or scope, except as noted in Paragraph 11.2(Construction). A list of definedterms with definitions or a cross-reference to the location of their respective definition within the JDA is set forth in Schedule 1.1. 2. Collaborative Project 2.1. PROJECT. The PARTIES will collaborate on the project, including key milestones and success criteria, set forth in Schedule 2.1(“PROJECT”), which is expected to result in the development of STABLE NR and/or PRODUCTs intended for application in theCOLLABORATION FIELD. The PARTIES may amend Schedule 2.1 by mutual agreement from time to time pursuant to Paragraph 11.4 (EntireAgreement / Amendment). 2.1.1. Summary of the PROJECT. The PROJECT generally relates to the identification and use of STABLE NR in P&G’s consumerproducts for the [*]. 2.1.2. Work Outside the Scope of the PROJECT. Notwithstanding anything to contrary in this JDA, the following work is independentfrom the PROJECT: 2.1.2.1. methods of synthesizing NR; and 2.1.2.2. physically isolating NR from the external environment via particle coating or microencapsulation. 2.2. Funding. Except as specifically provided to the contrary in this JDA, all costs, fees, and/or expenses incurred in connection with this JDA willbe paid by the PARTY incurring such costs, fees and/or expenses. -2- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 3. Confidentiality 3.1. Disclosure of INFORMATION. In connection with discussions under this JDA, it might be necessary for one or both PARTIES to discloseproprietary information to the other PARTY relating to the PROJECT. Such proprietary information may include product specifications, productsamples and/or business plans. The PARTY disclosing (“DISCLOSER”) its proprietary information (“INFORMATION”) to the other PARTY(“RECEIVER”) will disclose INFORMATION under the following conditions, which are understood to be acceptable to the RECEIVER. 3.1.1. Held in Confidence. INFORMATION disclosed to the RECEIVER will be held in confidence by the RECEIVER. 3.1.2. Reasonable Steps. The RECEIVER will take such steps as may be reasonably necessary to prevent the disclosure ofINFORMATION to THIRD PARTIES. 3.1.3. Limited Use. The RECEIVER will not disclose or utilize INFORMATION other than for the PROJECT; without first havingobtained the written consent of the DISCLOSER to such disclosure or utilization. 3.2. Limits to Obligations of Confidentiality. The commitments set forth in Paragraph 3.1 (Disclosure of INFORMATION) will not extend to anyportion of INFORMATION which the RECEIVER can prove: 3.2.1. is known to the RECEIVER prior to the receipt from the DISCLOSER under this JDA or is information generally available to thepublic; 3.2.2. hereafter, through no act of the RECEIVER, becomes information generally available to the public; 3.2.3. corresponds to information furnished to the RECEIVER by a THIRD PARTY having a bona fide right to do so and not having anyconfidential obligation, direct or indirect, to the DISCLOSER with respect to the same; 3.2.4. corresponds to information furnished by the DISCLOSER to any THIRD PARTY on a non-confidential basis; or 3.2.5. was developed by the RECEIVER independently of the disclosure of INFORMATION by the DISCLOSER as established bycompetent documentary evidence. 3.3. Required Disclosure by Law / Regulation. If RECEIVER is required by law or government regulation to disclose DISCLOSERINFORMATION (“COMPELLED DISCLOSURE”), then RECEIVER will: (a) provide prompt reasonable prior notice to the DISCLOSER ofthe COMPELLED DISCLOSURE so that DISCLOSER may take steps to protect DISCLOSER’s confidential information, and (b) providereasonable cooperation to DISCLOSER in DISCLOSER’s protecting against the COMPELLED DISCLOSURE and/or obtaining a protectiveorder narrowing the scope of the COMPELLED DISCLOSURE or use of the INFORMATION. If DISCLOSER is unable to obtain suchprotection against the COMPELLED DISCLOSURE, then despite the commitments set forth in Paragraph 3.1 (Disclosure of INFORMATION)RECIPIENT will be entitled to disclose the DISCLOSER’s INFORMATION (aa) only as and to the extent necessary to legally comply with theCOMPELLED DISCLOSURE and (bb) on condition that RECIPIENT exercises reasonable efforts to obtain reliable assurance that theDISCLOSER’s INFORMATION is treated as confidential to the extent allowable by the law or government regulation requiring theCOMPELLED DISCLOSURE. Such COMPELLED DISCLOSURE does not otherwise waive the non-use and confidentiality obligations setforth in Paragraph 3.1 (Disclosure of INFORMATION) with respect to other uses and/or other disclosures of such INFORMATION. -3- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 3.4. INVENTIONs Considered INFORMATION. INVENTIONs will be considered INFORMATION of the owning PARTY(IES), as ownership is setforth in Article 4 (INVENTION Rights). If one PARTY is relieved of its obligations of confidentiality pursuant to any subparagraphs ofParagraph 3.2 (Limits to Obligations of Confidentiality), then the other PARTY will also be considered so relieved of its obligations ofconfidentiality with respect to the subject INFORMATION. 3.5. Form of Disclosure. INFORMATION will be subject to obligations of confidentiality and restrictions on use or disclosure under this JDA onlyif it is either: 3.5.1. in writing or other tangible form bearing the date of disclosure and clearly marked as “confidential” when disclosed; or 3.5.2. if not in tangible form (e.g., disclosed orally or observed), then identified as confidential when revealed and summarized in awriting clearly marked as “confidential” and delivered to the RECEIVER within 30 days of such disclosure. 3.6. Termination of Confidentiality Obligations. The obligations of confidentiality and restrictions on use under this Article 3 will cease 5 yearsfrom the end of the TERM. 4. INVENTION Rights 4.1. INVENTION Rights. P&G will own all INVENTIONs. 4.2. Licenses to INVENTIONS. 4.2.1. INVENTIONS in the COLLABORATION FIELD. Upon termination or expiry of this JDA, if there is no commercial agreementbetween the PARTIES for the purchase of NR by P&G from COLLABORATION PARTNER then P&G will grant toCOLLABORATION PARTNER a reasonable-royalty bearing, exclusive, perpetual, irrevocable, worldwide license to PATENTRIGHTS for INVENTIONS in the COLLABORATION FIELD. -4- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 4.2.2. OUTSIDE-THE-COLLABORATION FIELD INVENTIONS. P&G hereby grants COLLABORATION PARTNER an exclusiveroyalty-free, perpetual, irrevocable, worldwide license to PATENT RIGHTS for OUTSIDE-THE-COLLABORATION FIELDINVENTIONS. 4.2.3. License Term. The licenses in Paragraph 4.2.1 (INVENTIONS in the COLLABORATION FIELD) and 4.2.2 (OUTSIDE-THE-COLLABORATION FIELD INVENTIONS) will terminate upon expiration of the last of the relevant PATENT RIGHTS. 4.2.4. Licenses Subject to Confidentiality Obligation. The licenses granted pursuant to this Article 4 are subject to the confidentialityobligations set forth in Article 3 (Confidentiality). 4.3. Cooperation in Transferring Title. The PARTIES will cooperate fully with each other and/or the other PARTY's attorneys in vesting title asprovided in Paragraph 4.1 (INVENTION Rights). 4.4. Notification of INVENTIONs. Each PARTY will provide the other PARTY with timely notification in writing of all INVENTIONs. 4.5. PROSECUTION of Patent Applications. P&G will conduct PROSECUTION of any patent applications filed on INVENTIONS at its solediscretion and will be responsible for costs associated with such PROSECUTION. 4.6. Statutory Inventor Payments. Despite Paragraph 4.5 (PROSECUTION of Patent Applications), any payments, other obligations, and/or actsdue to an inventor under statutory national laws will be the responsibility of the inventor’s employer. Neither PARTY will be obligated toindemnify, support, and/or remind the inventor’s employer of any such payments, other obligations, and/or acts. 4.7. Review of Patent Applications Prior to Filing. A PARTY will not file any patent application that discloses INFORMATION of the otherPARTY and/or claims an INVENTION without prior notice to, and review by, the other PARTY. The reviewing PARTY will be given at least 20BUSINESS DAYs in which to review and comment on the patent application, unless the reviewing PARTY agrees on a term which is shorterthan 20 BUSINESS DAYs. The reviewing PARTY will have the right to require that any INFORMATION of the reviewing PARTY be removedfrom the patent application, in accordance with Article 3 (Confidentiality); with the limited exception that those portions of INFORMATIONthat are INVENTIONs and are required to be disclosed by the filing PARTY in the subject patent application to secure patent rights toPRODUCT INVENTIONs and/or STABLE NR INVENTIONs entitled to the filing PARTY under this JDA, may remain in the patent application. -5- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 5. Work With THIRD PARTIES 5.1. Work with THIRD PARTIES. Neither PARTY will, during the TERM, conduct collaborative work with any THIRD PARTY for a projectwithin the COLLABORATION FIELD. Either PARTY is otherwise free to enter into other collaborative and/or service projects with any THIRDPARTY. 6. Sampling of NR 6.1. Sampling. COLLABORATION PARTNER grants P&G the right to sample NR within P&G to explore physically isolating NR from the externalenvironment via particle coating or microencapsulation and methods for synthesizing NR, as set forth in Paragraph 2.1.2. 6.2. Sampling Inventions. For purposes of clarification, any work result, creative idea, development, or invention, whether or not patentable,conceived as a direct result of the sampling pursuant to Paragraph 6.1 (Sampling) will not be considered “a direct result of work conductedunder this JDA” and therefore not subject to any INVENTION rights obligations under this JDA. In the absence of a separate invention rightsagreement governing such sampling, common law inventorship rights will apply. 6.3. Purchase Requirements. In the event a) sampling in Paragraph 6.1 (Sampling) and Paragraph 6.2 (Sampling Inventions) results in any creativeidea, design development, invention, know-how, or work result (whether patentable or not patentable); b) there is no commercial agreementbetween the PARTIES for the purchase of NR or STABLE NR by P&G from COLLABORATION PARTNER; and c) if P&G launches a [*]product containing NR or STABLE NR within 2 years from the date of Termination of this JDA; P&G will purchase its requirements for NR foruse either by itself or in the preparation of STABLE NR in connection with [*] from COLLABORATION PARTNER at COLLABORATIONPARTNER’S MFN PRICING for a period of or 3 years from the date of the first retail sale of any such PRODUCT. 6.4. Confidentiality of Sampled Materials. P&G will treat sampled NR and related COLLABORATION PARTNER INFORMATION asINFORMATION pursuant to Article 3 (Confidentiality). 7. Term and Termination 7.1. Term. This JDA is effective from the EFFECTIVE DATE and terminates 2 years from the EFFECTIVE DATE unless terminated earlier underParagraph 7.2 (Termination of JDA) or Paragraph 10.1 (Resulting Supply Agreement) (“TERM”). 7.2. Expiration / Termination of JDA. Either PARTY may terminate this JDA at any time by giving written notice to the other PARTY at least 90days before such termination becomes effective. 7.3. Surviving Rights & Obligations. Termination or expiration of this JDA will not relieve either PARTY of any obligations accruing prior to suchtermination or expiration, including those set forth in Articles 3 (Confidentiality), 4 (INVENTION Rights), 6 (Sampling of NR), 7.4 (Non-circumvent); 8 (Arbitration), and 10 (Supply); and Paragraph 11.6 (Negotiations on Royalties). -6- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 7.4. Non- Circumvent. In the event there is no commercial agreement between the PARTIES for the purchase of NR or STABLE NR by P&G fromCOLLABORATION PARTNER and if P&G launches a [*] product containing NR or STABLE NR within 2 years from the date of Termination ofthis JDA, P&G will purchase it’s requirements for NR for use either by itself or in the preparation of STABLE NR in connection with [*] fromCOLLABORATION PARTNER at COLLABORATION PARTNER’S MFN PRICING for a period of 3 years from the date of the first retail sale ofany such PRODUCT. 7.5. Covenant Not to Circumvent. In the event there is no commercial agreement between the PARTIES for the purchase of NR or STABLE NR byP&G from COLLABORATION PARTNER, P&G agrees not to submit for any new PATENT RIGHTS or acquire any PATENT RIGHTS fromTHIRD PARTIES for NR within 2 years after the date of Termination of this JDA. The PARTIES further agree not to challenge or knowinglyinfringe each other’s NR PATENT RIGHTS. 8. Arbitration 8.1. Binding Arbitration of Disputes. As the exclusive means of initiating adversarial proceedings to resolve any dispute arising out of thisJDA (“DISPUTE”) that the PARTIES are unable to resolve within 90 days after written notice by one PARTY to the other of the existence ofsuch DISPUTE, either PARTY may demand that any such DISPUTE be resolved by arbitration administered by the American ArbitrationAssociation (“AAA”) in accordance with the AAA’s commercial arbitration rules. Each PARTY hereby consents to any such DISPUTE being soresolved. The arbitration will be conducted in New York, U.S.A. except as may otherwise be agreed by the PARTIES. Each DISPUTE will besubmitted to a single impartial arbitrator mutually selected by the PARTIES. No discovery by either PARTY will be permitted unless thearbitrator determines that the PARTY requesting such discovery has a substantial, demonstrable need. The arbitrator will make finaldeterminations as to any discovery disputes and all other procedural matters. If any PARTY fails to comply with the procedures in anyarbitration in a manner deemed material by the arbitrator, then the arbitrator will fix a reasonable time for compliance, and if the PARTY doesnot comply within such period, then a remedy deemed just by the arbitrator, including an award of default, may be imposed. The decision of thearbitrator will be rendered no later than 120 days after commencement of the arbitration period. The costs of arbitration will be borne by thePARTY against whom the arbitral decision is made. Judgment on any award rendered in any such arbitration will be binding upon the PARTIESand will be enforceable by any court of competent jurisdiction. -7- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 9. Limited Scope of This Collaboration 9.1. Other Agreements Not Precluded. This JDA will not prevent the PARTIES from entering into other agreements between each other (including,e.g., joint development agreements, confidentiality agreements, material transfer / non-analysis agreements), or terminate existing agreementswith each other, which have terms and conditions that do not conform to this JDA, so long as such agreements are (or have been) executed byauthorized officers of the PARTIES. 9.2. No Patent or Product Warranties Created. No patent or product warranties are granted or implied under this JDA. No obligation to conductinfringement clearances on products utilizing STABLE NR or PATENT RIGHTS is granted or implied under this JDA. 10. Supply 10.1. Resulting Supply Agreement. The PARTIES mutually agree that within the later of twelve (12) months from the Effective Date or six (6)months from the development of STABLE NR, they will begin good faith negotiations for an Exclusive Supply Agreement for STABLE NR foruse within the COLLABORATION FIELD. For purposes of clarification, it is understood that it is not the intent of the PARTIES, and thePARTIES will not include any terms in such subsequently negotiated Exclusive Supply Agreement that would be considered illegal underrelevant competition laws. If the PARTIES fail to execute a mutually beneficial definitive Exclusive Supply Agreement within six (6) months ofbeginning negotiations, this JDA may be terminated immediately by COLLABORATION PARTNER upon written notice. 11. Miscellaneous 11.1. Applicable Law. All matters arising under or relating to this JDA are governed by the laws of the State of New York applicable to contractsmade and performed entirely in such state, without regard to any principle of conflict or choice of laws that would cause the application of thelaws of any other jurisdiction. 11.2. Construction. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this JDA will refer to this JDA as a wholeand not to any particular provision of this JDA. The use of the words “include” or “including” in this AGREEMENT will be by way of examplerather than by limitation. The phrase “and/or” will be deemed to mean, e.g., X or Y or both. The meanings given to terms defined in this JDAwill be equally applicable to both the singular and plural forms of these terms. Unless stated specifically to the contrary, all amounts referencedin this JDA are stated in, and must be paid in, United States dollars, and the symbol “$” means United States dollars. 11.2.1. Agreement Negotiated. The PARTIES have participated jointly in the negotiation and drafting of this JDA. If any ambiguity orquestion of intent or interpretation arises, this JDA will be construed as if drafted jointly by the PARTIES, and no presumption orburden of proof will arise favoring or disfavoring any PARTY by virtue of the authorship of any of the provisions of this JDA. -8- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 11.2.2. Headings. Headings or titles to sections or attachments of this JDA are provided for convenience and are not to be used in theconstruction or interpretation of this JDA. All references to sections and attachments will be to the sections and attachments of thisJDA, unless specifically noted otherwise. Reference to a section includes the referenced section, and all sub-sections includedwithin the referenced section. 11.3. Counterparts. This JDA may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which willconstitute one and the same instrument. A facsimile or .pdf copy of a signature of a PARTY will have the same effect and validity as an originalsignature. 11.4. Entire Agreement / Amendments. This JDA, including any attached Schedules and Exhibits, constitutes the entire understanding between thePARTIES with respect to the subject matter contained herein and supersedes all prior agreements, understandings and arrangements whether oralor written between the PARTIES relating to the subject matter hereof, except as expressly set forth herein. No amendment to this JDA will beeffective unless it is in a subsequent writing executed with the same formalities as this JDA. 11.5. Force Majeure. No PARTY will be responsible for delays or failures to perform resulting from events beyond its control but will have aresponsibility to mitigate any damage that might arise as a result of any such event. Such events include: acts of nature, epidemics; fire;government restrictions or other government acts; insurrection; power failures; strike, union disturbance, or other labor problems; riots;terrorism or threats of terrorism; or war (whether or not declared); earthquakes, floods, or other disasters. Upon the occurrence of any event of thetype referred to in this Paragraph 11.5, the affected PARTY will give prompt notice to the other PARTY, together with a description of the eventand the duration for which the affected PARTY expects its ability to comply with the provisions of this JDA to be affected. The affected PARTYwill devote reasonable efforts to remedy to the extent possible the condition giving rise to the failure event and to resume performance of itsobligations under this JDA as promptly as possible. 11.6. Negotiations on Royalties. Where this JDA provides for a reasonable royalty rate, the PARTIES will endeavor to agree on the royalty. Shouldan agreement not be reached within 90 days from the start of negotiations, upon one PARTY’s written request, the PARTIES will first seekagreement by non-binding mediation and only thereafter will the PARTIES resort to arbitration pursuant to Article 8 (Arbitration). For sucharbitration where the issue is limited to agreement on the royalty, the arbitration pursuant to Article 8 (Arbitration) will further require that eachPARTY submit to the arbitrator and exchange with the other, in accordance with a procedure to be established by the arbitrator, its bestoffer. The arbitrator will be limited to awarding only one or the other of the two positions submitted. -9- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 11.7. Joint Research Agreement Statement for US Patent Prosecution. A PARTY desiring to invoke 35 USC §103(c)(2) and post American InventsAct 35 USC §102(c) during the PROSECUTION of PATENT RIGHTS, will be permitted to disclose the existence of this JDA and the names ofthe PARTIES thereto, and to make the statement required by 37 CFR §1.104(c)(4)(iii) on the record during PROSECUTION. Despite theforegoing, neither PARTY will be obligated to execute documents necessary for invoking 35 USC §103(c)(2) and post American Invents Act 35USC §102(c). 11.8. Management of Interactions. The PARTIES will respectively identify one or more appropriate business and/or R&D employees to act asrepresentatives on a leadership/steering team(s) to manage the interactions of the PARTIES under this JDA. 11.9. No Other Rights Granted. Unless expressly provided for in this JDA, neither PARTY will obtain rights (by assignment or license or otherwise)under patent rights (including PATENT RIGHTS), INFORMATION, or INVENTIONs, owned by or licensed to the other PARTY. 11.10. No Third Party Beneficiaries. Despite anything in this JDA to the contrary, nothing in this JDA, expressed or implied, is intended to confer onany PERSON other than the PARTIES or their respective permitted successors and assignees, any rights, remedies, obligations or liabilitiesunder or by reason of this JDA. 11.11. No Waiver. No omission or delay by either PARTY at any time to enforce any right or remedy reserved to it, or to require performance of any ofthe obligations of this JDA by another PARTY at any time designated, will be a waiver of any such right or remedy to which such PARTY isentitled, nor will it in any way affect the right of such PARTY to enforce such provisions thereafter. 11.12. Non-assignability. This JDA will be binding upon and benefit the respective PARTIES and successors or assignees of all or substantially all ofthe relevant business assets of either PARTY, and will otherwise be nontransferable and non-assignable to THIRD PARTIES without the priorexpress written consent of the other PARTY. 11.13. Notices. All notices under this AGREEMENT will be sent to the respective PARTIES at the following addresses (or such other addresses as aPARTY designates to the other PARTY by written notice) by certified or registered mail, or sent by a nationally recognized overnight courierservice; and will be deemed to have been given one day after being sent: If to COLLABORATION PARTNER: ChromaDex, Inc.10005 Muirlands Blvd.Irvine, CA 92618USAAttention: Tom Varvaro -10- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION If to P&G: The Procter and Gamble CompanyGlobal Business DevelopmentTwo P&G Plaza, TE-13Cincinnati, OH 45202USAAttention: Debbie Grossblatt And copy to:The Procter & Gamble CompanyGlobal Intellectual Property DivisionOne P&G PlazaCincinnati, OH 45202USAAttention: V.P. & General Counsel, Intellectual Property Division 11.14. Partial Invalidity. If any obligation, condition or other provision of this JDA is held invalid, void or illegal by any court of competentjurisdiction, then the same will be deemed severable from the remainder of the subject agreement and will in no way affect, impair or invalidateany other obligation, condition or provision, and will be deemed replaced by a provision which comes closest to such unenforceable provisionin language and intent, without being invalid, void or illegal. 11.15. Press Release. Neither PARTY will issue a press release regarding any aspect of this JDA, including any general statements as to the existenceof a relationship between the PARTIES, without the prior written consent of the other PARTY, which consent shall not be unreasonablywithheld, unless otherwise required by law, in which case, the issuing PARTY will provide the other PARTY reasonable prior written notice ofsuch required disclosure. 11.16. Relationship Between the PARTIES. This AGREEMENT does not constitute making either PARTY the agent or legal representative of theother PARTY, for any purpose. Neither PARTY is granted any right or authority to assume or to create any obligation or responsibility,expressed or implied, on behalf of or in the name of the other PARTY or to bind the other PARTY in any manner or thing. Neither PARTY’semployees will represent themselves as being representatives of or otherwise employed by the other PARTY. Nothing in this AGREEMENT willbe construed as creating the relationship of employer and employee, joint venture, partnership, distributorship, franchise, agency orconsignment between P&G and COLLABORATION PARTNER. 11.17. Schedules & Exhibits. Schedules and Exhibits to this JDA and conditions contained in the Schedules and Exhibits will have the same effect asif set out in the body of this JDA, subject to any express statement in the body of the JDA to the contrary. Despite anything to the contrary inthe attached Schedules and Exhibits, if there is a conflict between a Schedule or Exhibit and the terms set forth in the body of this JDA, then theterms of the JDA will control. -11- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 11.18. Severability. If and to the extent that any court or tribunal of competent jurisdiction holds any of the terms or provisions of this JDA, or theapplication thereof to any circumstances, to be invalid or unenforceable in a final non-appealable order, the PARTIES will use reasonable effortsto reform the portions of this JDA declared invalid to realize the intent of the PARTIES as fully as practicable, and the remainder of this JDA andthe application of the invalid term or provision to circumstances other than those as to which it is held invalid or unenforceable will not beaffected thereby, and each of the remaining terms and provisions of this JDA will remain valid and enforceable to the fullest extent of the law. The PARTIES by their authorized representatives execute this JDA in duplicate; with each PARTY receiving one of the executed originals hereof. For: CHROMADEX, INC. For: The Procter & Gamble Company /s/Frank Jaksch /s/ Dawn French Frank Jaksch Dawn French CEO V.P. R&D Beauty Care Date: October 30, 2015 Date: October 23, 2015 -12- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION Schedule 1.1 - Definitions 1.1.1. “AAA” is defined in Paragraph 8.1. 1.1.2. “AFFILIATE” means, with respect to any PERSON as of the date on which, or at any time during the period for which, the determination ofaffiliation is being made, any other PERSON: (a) directly or indirectly controlling the party in question, (b) directly or indirectly beingcontrolled by the party in question, or (c) being controlled by another PARTY that also controls the party in question. As used in the precedingsentence, “control”, “controlled,” and “control” as used with respect to any PARTY mean, through direct or indirect beneficial ownership ofmore than 50% of the voting or equity interest in another PARTY, the power to direct or cause the direction of the management and policies ofsuch other PARTY. 1.1.3. “[*]” means products and/or methods relating to [*] and/or [*] articles including [*], [*], [*], [*], [*]; and [*], including [*], [*], [*], and [*]. 1.1.4. “BACKGROUND IP” means any intellectual property owned by a PARTY before the EFFECTIVE DATE or any intellectual propertydeveloped as a result of work that is independent from the PROJECT. 1.1.5. “BUSINESS DAY” means any day other than Saturday, Sunday, US federal holiday, or an Ohio holiday. Any other reference to day or days willinclude Saturday, Sunday, US federal holiday, or an Ohio holiday. 1.1.6. “CLINICAL TRIAL” means human in vivo testing of the PRODUCT with NR that has acceptable rheology, stability, active solubility, activebioavailability, and safety clearance, as determined by P&G. 1.1.7. “COLLABORATION FIELD” means identification and use of STABLE NR (e.g., hydrolytically stable) for [*], [*], [*], excludingpharmaceuticals, medical devices, and OVER-THE-COUNTER (OTC) drugs except for the following FDA therapeutic category subtopics: [*];[*]; [*]; [*]; [*]; [*]. 1.1.8. “COLLABORATION PARTNER” is defined in the Preamble. 1.1.9. “COMPELLED DISCLOSURE” is defined in Paragraph 3.3. 1.1.10. “DISCLOSER” is defined in Paragraph 3.1. 1.1.11. “DISPUTE” is defined in Paragraph 8.1. 1.1.12. “EFFECTIVE DATE” is defined in the first paragraph. 1.1.13. “[*]” means products such as [*], [*], [*], [*], and/or [*], as well as methods and equipment for making such products. 1.1.14. “[*]” means products and/or methods relating to [*], [*], [*], [*], [*], [*], [*] and [*], and/or [*]. -13- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 1.1.15. “INFORMATION” is defined in Paragraph 3.1. 1.1.16. “INVENTION” means any creative idea, design, development, invention, know-how, or work result (whether or not patentable) developed as adirect result of the PROJECT. 1.1.17. “JDA” is defined in the Preamble. 1.1.18. “MFN PRICING” For each calendar quarter, COLLABORATION PARTNER will not sell NR or STABLE NR to any THIRD PARTY for lessthan the price COLLABORATION PARTNER offers to P&G for the same calendar quarter. 1.1.19. “NR” is defined in the Background. 1.1.20. “OUTSIDE-THE-COLLABORATION-FIELD INVENTIONs” means INVENTIONs that are PRODUCTs outside the COLLABORATIONFIELD employing NR, INVENTIONs that are methods of making such PRODUCTs, and INVENTIONs that are methods of using NR outside thesubject COLLABORATION FIELD. 1.1.21. “OVER-THE-COUNTER” means products whose use does not require the supervision or authorization of a health care professional. 1.1.22. “P&G” is defined in the Preamble. 1.1.23. “PARTY” means either the COLLABORATION PARTNER or P&G, and “PARTIES” means the two collectively. 1.1.24. “PATENT RIGHTS” means foreign and domestic patent and/or design application(s), including continuations, continuations-in-part,divisionals, reissues, and reexaminations thereof, and patents/registrations issuing therefrom; that are filed as a direct result of work under thisJDA and have one or more claims that encompass one or more INVENTIONs. 1.1.25. "PERSON" means (as the context requires) an individual, a corporation, a partnership, an association, a trust, a limited liability company, orother entity or organization, including a governmental entity. 1.1.26. “PRODUCT” means a material intended to be used or consumed in the form in which it is sold, and is not intended for subsequent commercialmanufacture or modification. PRODUCT may take the form of a formula, device, or packaging. 1.1.27. “PROJECT” is defined in Paragraph 2.1. 1.1.28. “PROSECUTION” means preparing, filing, prosecuting and/or maintaining a subject patent application(s) and/or patent(s). 1.1.29. “RECEIVER” is defined in Paragraph 3.1. 1.1.30. “REGION” means North America, Latin America, Western Europe, Central and Eastern Europe, Northeast Asia, and Asian Southeast EconomicAssociation, as those terms are specifically defined in a subject supply agreement. -14- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION 1.1.31. “RELEVANT” in reference to INVENTIONs or PATENT RIGHTS, means those INVENTIONs and/or PATENT RIGHTS necessary to practiceSTABLE NR and/or PRODUCTs employing STABLE NR within the COLLABORATION FIELD. 1.1.32. “[*]” means [*] products for and/or methods relating to: (a) [*], including application of [*]; (b) [*]; (c) [*], including the [*], [*], [*], and/or [*],including the [*], [*], and [*], optionally in concert with a [*], including a [*], [*], or [*]; and (d) treating [*]. 1.1.33. “STABLE NR” means NR capable of demonstrating the following properties after a 1 month stability test at 40°C within a PRODUCT: (a) nosignificant PRODUCT appearance change, including no separation or discoloration; (b) no off odor or change in odor of the PRODUCT (c) noPRODUCT pH change greater than ± 0.5; (d) no PRODUCT viscosity change greater than 20% (e) remaining NR concentration in PRODUCTgreater than 80%, as determined quantitatively (e.g., liquid chromatography, nuclear magnetic resonance spectroscopy). 1.1.1. “TERM” is defined in Paragraph 7.1. 1.1.2. “THIRD PARTY” or “THIRD PARTIES” means any individual(s), corporation(s), association(s), government agencies, or other entity(ies)that is/are not a PARTY. [Remainder of page intentionally left blank.] -15-[*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION Schedule 2.1 – PROJECTEffort for Feasibility/Efficacy ConfirmationKey Milestones, Success Criteria, Measures, and Milestone Success PaymentMilestoneOwner(Who does the work)AnticipatedTimeSuccess CriteriaMeasuresMilestone Payment*#1. STABLE NRCOLLABORATIONPARTNER supplies NRwith a chemical structurethat is stable and doesn’thydrolyze which meets therequirements set out inSuccess Criteria. P&G to do formulation &stability testing/understanding6 – 12months Approved safe levels of theTECHNOLOGY can bestably formulated into [*].· Achieve up to [*]. Specifically, [*]for the specification items below.[*]COLLABORATIONPARTNER NEEDSto deliver [*] whichmeets therequirements set outin Success Criteria. If not, NO milestonepayment. If after 12 months #1has not been metthen at P&G’s optionthey can extend workon this phase for 6additional monthswith a $[*] paymentand no otheramounts will be duefor #1. At any timebefore 12 months ifP&G starts any workunder #3 thismilestone will be duein full.$[*]#2. Safety forHumanCLINICALTRIALP&G conducted the safetyassessment COLLABORATIONPARTNER generated andprovided the safety dataneededPreviouslycompleted byP&G· Satisfactory safetyassessment for humanexposure tests(technical performancetests listed below)completed by P&G.Issues addressed to P&G’s subjectivesatisfactionP&G included thisMilestone to bethorough; safetyassessment forclinical testinganticipated to bealready in placegiven scope of NRderivatives in thisJDA.[*] -16- [*] INDICATES CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEENFILED SEPARATELY WITH THE COMMISSION #3a. TechnicalPerformance [*] HealthP&G to conductCLINICAL TRIAL COLLABORATIONPARTNER to supply NR Upon success of #1Milestone, #3a and 3bwill run concurrently andtake 12-18 months· Provide [*]integrityimprovement, bothon [*] in a vehiclecontrolled, singlevariable humanclinical study.Ensure acceptable levelsof any [*].· A statistically significant [*]improvement in [*] as well as [*]and [*] improvement vs. productwith equal level of [*]· [*] equivalent or less than[*].CLINICAL TRIAL data shall be usedto assess success/failure of thisMilestone. P&G shall conduct thedata analysis, and success/failure ofthis Milestone shall be at P&G’sdiscretion based upon an objectiveanalysis of the data consistent withP&G’s practices.Either or both3a and 3bMilestonesneed to be metin order for anypaymentsmade for 3c,3d, and / or 3e.$[*]#3b. TechnicalPerformance [*] & [*] & [*]· Provide superior[*] benefit, [*]benefit, [*] benefitand [*] for [*] in avehicle controlled,single variablehuman clinical study. Ensure acceptable levelsof any [*].· A statistically significant([*] equal to or less than [*])improvement in [*] as measuredby [*]· [*] equivalent or less than[*].CLINICAL TRIAL data shall be usedto assess success/failure of thisMilestone. P&G shall conduct thedata analysis, and success/failure ofthis Milestone shall be at P&G’sdiscretion based upon an objectiveanalysis of the data consistent withP&G’s practices.$[*]#3c.OPTIONAL [*] / [*]18-24 months· Provide [*] in avehicle controlled,single variablehuman clinical study. Ensure acceptable levelsof any [*].· Similar or statisticallysignificant ([*] equal to or lessthan [*]) improvement in [*] asmeasured by [*] and/or [*].· [*] equivalent or less than[*].CLINICAL TRIAL data shall be usedto assess success/failure of thisMilestone. P&G shall conduct thedata analysis, and success/failure ofthis Milestone shall be at P&G’sdiscretion based upon an objectiveanalysis of the data consistent withP&G’s practices. $[*]#3d.OPTIONAL [*]18-24 months· Provide [*]benefit in a vehiclecontrolled, singlevariable humanclinical study. Ensure acceptable levelsof any [*].· Similar or statisticallysignificant ([*] equal to or lessthan [*]) improvement in [*].CLINICAL TRIAL data shall be usedto assess success/failure of thisMilestone. P&G shall conduct thedata analysis, and success/failure ofthis Milestone shall be at P&G’sdiscretion based upon an objectiveanalysis of the data consistent withP&G’s practices. $[*]#3e.OPTIONAL [*]18-24 months· Provide [*]benefit in a vehiclecontrolled, singlevariable humanclinical study. Ensure acceptable levelsof any [*].· Similar or statisticallysignificant ([*] equal to or lessthan [*]) [*] as measured by [*]followed by [*].CLINICAL TRIAL data shall be usedto assess success/failure of thisMilestone. P&G shall conduct thedata analysis, and success/failure ofthis Milestone shall be at P&G’sdiscretion based upon an objectiveanalysis of the data consistent withP&G’s practices. $[*]#3f. [*] Testing P&G to conduct [*]testing 18-24 monthsTesting lead prototypesamong appropriate [*] inlarge base studies.Demonstration of statisticallysignificant [*] as measured by [*],with no [*] for [*]. No [*] for the [*]specifically means [*].If either orboth 3a and 3bmilestoneshave been met,P&G, at its solediscretion, mayconduct [*]Research, andif the resultsare positive,will pay $[*]$[*]MTA / JDAexecutionPayments $[*]alreadypaiduponexecutionof MTA;$[*] to bepaiduponexecutionof thisJDABy the end ofJDA 2 YearTerm if allsuccess criteriamet, asdetermined byP&G $[*]*Milestone Payment to be paid within 45 days from written confirmation by P&G -17-Exhibit 23.1INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENTWe consent to the incorporation by reference in the Registration Statements of ChromaDex Corporation and Subsidiaries on Form S-3 and as amended [FileNo. 333-203204] and 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 17,2016, with respect to our audits of the consolidated financial statements of ChromaDex Corporation and Subsidiaries as of January 2, 2016 and January 3,2015 and for the years ended January 2, 2016, January 3, 2015 and December 28, 2013 and our report dated March 17, 2016 with respect to our audit of theeffectiveness of internal control over financial reporting of ChromaDex Corporation and Subsidiaries as of January 2, 2016, which reports are included in thisAnnual Report on Form 10-K of ChromaDex Corporation and Subsidiaries for the year ended January 2, 2016./s/ Marcum llpMarcum llpNew York, NYMarch 17, 2016Exhibit 31.1 Certification 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 17, 2016/s/ FRANK L. JAKSCH JR.Frank L. Jaksch Jr.Chief Executive Officer(Principal Executive Officer)Exhibit 31.2 Certification 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 17, 2016/s/ THOMAS C. VARVAROThomas C. VarvaroChief Financial Officer(Principal Accounting Officer)Exhibit 32.1 Certification 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 2, 2016 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 17, 2016/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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