Delaware | 26-2940963 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
10005 Muirlands Blvd. Suite G, Irvine, California | 92618 | |
(Address of Principal Executive Offices) | (Zip Code) |
PART I –
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FINANCIAL INFORMATION (UNAUDITED)
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ITEM 1.FINANCIAL STATEMENTS: | ||
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 29, 2014 AND DECEMBER 28, 2013 (UNAUDITED) | 1 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 29, 2014 AND MARCH 30, 2013 (UNAUDITED) | 2 | |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY FOR THE THREE MONTHS ENDED MARCH 29, 2014 (UNAUDITED) | 3 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 29, 2014 AND MARCH 30, 2013 (UNAUDITED) | 4 | |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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5 | |
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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14 | |
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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20 | |
ITEM 4.CONTROLS AND PROCEDURES
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20 | |
PART II –
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OTHER INFORMATION
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ITEM 1.LEGAL PROCEEDINGS
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21 | |
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND
USE OF PROCEEDS
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21 | |
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
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21 | |
ITEM 4.MINE SAFETY DISCLOSURES
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21 | |
ITEM 5.OTHER INFORMATION
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21 | |
ITEM 6.EXHIBITS
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22 | |
SIGNATURES
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23 |
March 29, 2014
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December 28, 2013
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|||||||
Reference standards
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$ | 1,772,865 | $ | 1,769,160 | ||||
Bulk ingredients
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980,912 | 694,965 | ||||||
2,753,777 | 2,464,125 | |||||||
Less valuation allowance
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261,000 | 260,000 | ||||||
$ | 2,492,777 | $ | 2,204,125 |
Three Months Ended
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||||||||
March 29, 2014
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March 30, 2013
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|||||||
Basic weighted average common shares outstanding
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106,076,361 | 94,626,120 | ||||||
Warrants and options in the money, net
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4,855,625 | 3,298,337 | ||||||
Weighted average common shares outstanding assuming dilution
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110,931,986 | 97,924,457 | ||||||
December 31, 2013
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||||||||
Sales
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$ | 60,575 | ||||||
Gross profit
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33,619 | |||||||
Net loss
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$ | (435,208 | ) | |||||
Changes in Carrying Value and Ownership Percentage for ChromaDex Corporation
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||||||||
Carrying Value
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Ownership
Percentage
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|||||||
At December 28, 2013
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$ | 1,887,844 | 4.9 | % | ||||
Company's share of NeutriSci's loss
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||||||||
for the three-month period ended December 31, 2013;
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||||||||
previously not recognized due to a three-month lag
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(21,543 | ) | - | |||||
Proceeds from assignment of the Senior Note
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(1,092,500 | ) | - | |||||
At December 30, 2013
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$ | 773,801 | 4.9 | % |
Three Months Ended March 29, 2014
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Expected volatility
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69.64%
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Expected dividends
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0.00%
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Expected term
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5.6 years
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Risk-free rate
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1.75%
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Weighted Average
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||||||||||||||||
Remaining
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Aggregate
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|||||||||||||||
Number of
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Exercise
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Contractual
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Intrinsic
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|||||||||||||
Shares
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Price
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Term
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Value
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|||||||||||||
Outstanding at December 28, 2013
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12,113,655 | $ | 1.06 | |||||||||||||
Options Granted
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485,000 | 1.76 | ||||||||||||||
Options Classification from Employee
to Non-Employee
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(113,151 | ) | 0.76 | |||||||||||||
Options Exercised
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(34,363 | ) | 0.79 | |||||||||||||
Options Expired
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(253,900 | ) | 1.00 | |||||||||||||
Options Forfeited
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(31,037 | ) | 0.96 | |||||||||||||
Outstanding at March 29, 2014
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12,166,204 | $ | 1.10 | 7.43 | $ | 9,163,000 | ||||||||||
Exercisable at March 29, 2014
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8,382,357 | $ | 1.14 | 6.84 | $ | 5,977,000 |
Weighted Average
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||||||||
Award-Date
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||||||||
Shares
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Fair Value
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|||||||
Unvested shares at December 28, 2013
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500,000 | $ | 0.69 | |||||
Granted
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1,090,000 | 1.41 | ||||||
Vested
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- | - | ||||||
Forfeited
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- | - | ||||||
Unvested shares at March 29, 2014
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1,590,000 | $ | 1.18 | |||||
Expected to Vest as of March 29, 2014
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1,590,000 | $ | 1.18 |
Weighted Average
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||||||||||||||||
Remaining
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Aggregate
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|||||||||||||||
Number of
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Exercise
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Contractual
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Intrinsic
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|||||||||||||
Shares
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Price
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Term
|
Value
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|||||||||||||
Outstanding at December 28, 2013
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847,300 | $ | 1.44 | |||||||||||||
Options Granted
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- | - | ||||||||||||||
Options Classification from Employee
to Non-Employee
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113,151 | 0.76 | ||||||||||||||
Options Exercised
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- | - | ||||||||||||||
Options Forfeited
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- | - | ||||||||||||||
Outstanding at March 29, 2014
|
960,451 | $ | 1.36 | 5.83 | $ | 466,441 | ||||||||||
Exercisable at March 29, 2014
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960,451 | $ | 1.36 | 5.83 | $ | 466,441 | ||||||||||
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·
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Core standards, and contract services segment includes supply of phytochemical reference standards, which are small quantities of plant-based compounds typically used to research an array of potential attributes, reference materials, and related contract services.
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·
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Ingredients segment develops and commercializes proprietary-based ingredient technologies and supplies these ingredients to the manufacturers of consumer products in various industries including the nutritional supplement, food and beverage and animal health industries.
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·
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Scientific and regulatory consulting segment which consist of providing scientific and regulatory consulting to the clients in the food, supplement and pharmaceutical industries to manage potential health and regulatory risks.
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Core Standards and
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Scientific and
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|||||||||||||||||||
Three months ended
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Contract Services
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Ingredients
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Regulatory
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|||||||||||||||||
March 29, 2014 |
segment
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segment
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Consulting segment
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Other
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Total
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|||||||||||||||
Net sales
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$ | 1,735,883 | $ | 1,136,309 | $ | 201,946 | $ | - | $ | 3,074,138 | ||||||||||
Cost of sales
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1,193,635 | 718,177 | 177,318 | - | 2,089,130 | |||||||||||||||
Gross profit
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542,248 | 418,132 | 24,628 | - | 985,008 | |||||||||||||||
Operating expenses:
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||||||||||||||||||||
Sales and marketing
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212,775 | 239,960 | 11,832 | - | 464,567 | |||||||||||||||
General and administrative
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- | - | - | 2,337,663 | 2,337,663 | |||||||||||||||
Loss from investment in affiliate
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- | - | - | 21,543 | 21,543 | |||||||||||||||
Operating expenses
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212,775 | 239,960 | 11,832 | 2,359,206 | 2,823,773 | |||||||||||||||
Operating income (loss)
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$ | 329,473 | $ | 178,172 | $ | 12,796 | $ | (2,359,206 | ) | $ | (1,838,765 | ) |
Core Standards
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Scientific and
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|||||||||||||||||||
Three months ended
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and Contract Services
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Ingredients
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Regulatory Consulting
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|||||||||||||||||
March 30, 2013 |
segment
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segment
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segment
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Other
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Total
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|||||||||||||||
Net sales
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$ | 1,573,561 | $ | 577,953 | $ | 243,338 | $ | (60,285 | ) | $ | 2,334,566 | |||||||||
Cost of sales
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1,151,540 | 362,443 | 146,788 | 955 | 1,661,726 | |||||||||||||||
Gross profit (loss)
|
422,020 | 215,510 | 96,550 | (61,240 | ) | 672,840 | ||||||||||||||
Operating expenses:
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||||||||||||||||||||
Sales and marketing
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384,943 | 211,834 | 1,488 | 131,159 | 729,424 | |||||||||||||||
General and administrative
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- | - | - | 1,359,901 | 1,359,901 | |||||||||||||||
Operating expenses
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384,943 | 211,834 | 1,488 | 1,491,060 | 2,089,325 | |||||||||||||||
Operating income (loss)
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$ | 37,077 | $ | 3,676 | $ | 95,062 | $ | (1,552,300 | ) | $ | (1,416,485 | ) |
Core Standards and
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Scientific and
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|||||||||||||||||||
Contract Services
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Ingredients
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Regulatory
|
||||||||||||||||||
At March 29, 2014 |
segment
|
segment
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Consulting segment
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Other
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Total
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|||||||||||||||
Total assets
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$ | 2,934,128 | $ | 2,253,549 | $ | 147,448 | $ | 3,136,693 | $ | 8,471,818 |
Core Standards and
|
Scientific and
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|||||||||||||||||||
Contract Services
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Ingredients
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Regulatory
|
||||||||||||||||||
At December 28, 2013 |
segment
|
segment
|
Consulting segment
|
Other
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Total
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|||||||||||||||
Total assets
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$ | 2,952,270 | $ | 1,083,856 | $ | 139,765 | $ | 4,811,001 | $ | 8,986,892 |
Exhibit No . | Description of Exhibits | |
10.1
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Assignment and Escrow Agreement by and among ChromaDex Corporation, Alpha Capital Anstalt, NeutriSci International Inc., Britlor Health and Wellness, Inc. and Grushko & Mittman, P.C. effective as of December 27, 2013. (1)
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10.2
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Niagen Supply Agreement by and between ChromaDex Inc. and 5Linx Enterprises, Inc. effective as of January 3, 2014. (2)
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10.3
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Purenergy Supply Agreement by and between ChromaDex Inc. and 5Linx Enterprises, Inc. effective as of January 3, 2014. (2)
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10.4
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Employment Agreement by and between ChromaDex Corp. and Troy Rhonemus dated March 6, 2014. (3)
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31.1
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Certification of the Chief Executive Officer pursuant to §240.13a−14 or §240.15d−14 of the Securities Exchange Act of 1934, as amended
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31.2
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Certification of the Chief Financial Officer pursuant to §240.13a−14 or §240.15d−14 of the Securities Exchange Act of 1934, as amended
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32.1
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Certification pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes−Oxley Act of 2002)
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(1)
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Incorporated by reference to Exhibit 10.1 from the Current Report on Form 8-K filed with the SEC on January 3, 2014
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(2)
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A redacted version of this Exhibit is filed herewith. An un-redacted version of this Exhibit has been separately filed with the Commission pursuant to an application for confidential treatment. The confidential portions of the Exhibit have been omitted and are marked by an asterisk.
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(3)
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Incorporated by reference to Exhibit 10.1 from the Current Report on Form 8-K filed with the SEC on March 10, 2014
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1.
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Definitions
.
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2.
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Ordering and Payment.
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2.2.1
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Year 1: Payment shall be made via wire to Seller within [*] days of date of invoice for 50% of the invoice. Payment shall be made via wire to Seller for the remaining 50% of the invoice within [*] day of invoice.
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2.2.2
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Year 2: through the term of the Agreement: Payment shall be made via wire to Seller within [*] days of date of invoice. Failure to make prompt and full payment hereunder constitutes a material breach of the Agreement and may impact Seller’s exclusivity rights.
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4.
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Minimum Purchase Requirements
.
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Buyer
|
Seller
|
___
/s/ Craig Jerabeck
____
_
Name: Craig Jerabeck
Title: President & CEO
Date: January 3, 2014
|
___
/s/ Frank Jaksch
___
Name: Frank Jaksch
Title: CEO
Date: January 3, 2014
|
1.
|
Definitions
.
|
2.
|
Ordering and Payment.
|
|
2.2.1
|
Year 1: Payment shall be made via wire to Seller within [*] days of date of invoice for 50% of the invoice. Payment shall be made via wire to Seller for the remaining 50% of the invoice within [*] day of invoice.
|
|
2.2.2
|
Year 2: through the term of the Agreement: Payment shall be made via wire to Seller within [*] days of date of invoice. Failure to make prompt and full payment hereunder constitutes a material breach of the Agreement and may impact Seller’s exclusivity rights.
|
4.
|
Minimum Purchase Requirements
.
|
Buyer
|
Seller
|
____
/s/ Craig Jerabeck
____
Name: Craig Jerabeck
Title: President & CEO
Date: January 3, 2014
|
____
/s/ Frank Jaksch
_____
Name: Frank Jaksch
Title: CEO
Date: January 3, 2014
|
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1.
|
Avon Products Inc.
|
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2.
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Herbalife Ltd.
|
|
3.
|
Nature’s Sunshine Products Inc.
|