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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): August 8, 2022
 
CHROMADEX CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-37752
 
26-2940963
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
10900 Wilshire Blvd. Suite 600, Los Angeles, California 90024
(Address of principal executive offices, including zip code)
 
(310) 388-6706
(Registrant's telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
CDXC
The Nasdaq Capital Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 


 
 

 
Item 2.02. Results of Operations and Financial Condition.
 
On August 10, 2022, ChromaDex Corporation (the “Company” or “ChromaDex”) issued a press release announcing its earnings for the quarter ended June 30, 2022. A copy of the press release is attached hereto as Exhibit 99.1.
 
The information in this Item 2.02 and the exhibit hereto are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
 
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
(a)  On August 10, 2022, Kevin Farr was terminated without cause as Chief Financial Officer of the Company, and as an officer, employee, and director of the Company and any subsidiaries of the Company in which he serves in any of those capacities, effective as of August 12, 2022.
 
(b) On August 10, 2022, the Board of Directors of ChromaDex (the “Board”) appointed Brianna Gerber as SVP, Finance / Interim Chief Financial Officer, effective as of August 11, 2022, to replace the vacancy created by Mr. Farr’s termination as disclosed in item (a) above.
 
Ms. Gerber, age 42, previously served as Vice President of Finance and Investor Relations of ChromaDex, Inc. since September 17, 2018, and prior to that served in multiple leadership roles at Mattel, Inc. since 2013. Ms. Gerber received her B.S. in Corporate Finance and Entrepreneurship from the University of Southern California. She is a Chartered Financial Analyst (CFA) and member of the CFA Society of Los Angeles.
 
In connection with her appointment as SVP, Finance / Interim Chief Financial Officer, the Board approved the following compensation for Ms. Gerber, contingent upon and, unless otherwise noted below, effective upon her appointment as SVP, Finance / Interim Chief Financial Officer:  (i) an annual base salary of $300,000, (ii) a discretionary annual bonus opportunity of 40% of Ms. Gerber’s annual base salary, based on the achievement of certain performance goals to be determined by the Board, (iii) on August 12, 2022 (the “Grant Date”), an option to purchase shares of the Company stock under the ChromaDex 2017 Equity Incentive Plan (the “Plan”), with the number of shares subject to the option determined by dividing (a) $113,750 by (b) the product of 0.67 and the closing sale price of the Common Stock on the Grant Date, as reported by the Nasdaq Capital Market, with one-third of the shares subject to the option vesting on the one-year anniversary of the Grant Date, and the remaining shares subject to the option vesting in 24 substantially equal monthly installments thereafter, generally subject to Ms. Gerber’s continuous employment through the applicable vesting date, and with an exercise price equal to the closing price of the Company’s common stock on the Grant Date, and (iv) on August 12, 2022, restricted stock units under the Plan, which will vest in three substantially equal annual installments beginning on the one-year anniversary of the Grant Date, generally subject to Ms. Gerber’s continuous employment through the applicable vesting date, with the number of restricted stock units determined by dividing (a) $113,750 by (b) the closing sale price of the Common Stock on the Grant Date, as reported by the Nasdaq Capital Market, and which will be settled in shares of Company stock upon the applicable vesting date.
 
ChromaDex expects to enter into an indemnification agreement with Ms. Gerber on substantially the same terms as its standard indemnification agreement for directors and executive officers, previously filed as Exhibit 10.1 to ChromaDex’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2016.
 
There are no arrangements or understandings between Ms. Gerber and any other persons pursuant to which she was selected as ChromaDex’s SVP, Finance / Interim Chief Financial Officer.
 
There are also no family relationships between Ms. Gerber and any of the Company’s directors or executive officers and other than as described herein she has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
 
(d) Appointment of Directors
 
On August 8, 2022, the Board appointed Hamed Shahbazi as a member of the Board effective as of August 9, 2022, to serve until the Company’s 2023 annual meeting of stockholders and until his successor is duly elected and qualified.  Mr. Shahbazi, 47, serves as Chief Executive Officer and Chairman of the Board at WELL Health Technologies Corp. Prior to this, he spent twenty years as Chief Executive Officer at TIO Networks Corp. where he also served as Chairman of the Board.
 
 

 
Mr. Shahbazi has been appointed to the Nominating and Corporate Governance Committee of the Board.  The Board has determined that Mr. Shahbazi is an independent director under the listing standards of the Nasdaq Stock Market LLC and is “independent” as defined in 5605(a)(2) of the Securities Exchange Act of 1934, as amended.  There are no arrangements or understandings between Mr. Shahbazi and any other person pursuant to which he was selected as a member of the Board.  In addition, there are no transactions in which Mr. Shahbazi has an interest that are required to be disclosed pursuant to Item 404(a) of Regulation S-K. 
 
Under the Company’s Amended and Restated Non-Employee Director Compensation Policy, Mr. Shahbazi will be eligible to receive an annual retainer of $40,000 for serving on the Board, and an additional $5,000, per year, respectively for service on the Nominating and Corporate Governance Committee.  Mr. Shahbazi was also granted an option to purchase 40,000 shares of the Company’s common stock on August 9, 2022, the date of his initial election to the Board, vesting in substantially equal annual installments over a three-year period, subject to Mr. Shahbazi’s continuing service on the Board.  In addition, on the date of each annual meeting, he will be granted a stock option to purchase 20,000 shares of the Company’s common stock, vesting over a one-year period, subject to Mr. Shahbazi’s continuing service on the Board.  All option grants have an exercise price per share equal to the fair market value of our common stock on the date of grant.
 
Mr. Shahbazi will enter into the Company’s standard form of indemnification agreement, which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on December 16, 2016.  The Company’s Amended and Restated Non-Employee Director Compensation Policy is filed as Exhibit 10.4 to the Company’s Quarterly Report filed with the SEC on August 9, 2018.
 
(e) In connection with Mr. Farr’s termination of employment by the Company without cause, as described above, Mr. Farr and the Company entered into a letter agreement (the “Farr Agreement”) and Mr. Farr and ChromaDex entered into a consulting agreement (the “Consultant Agreement”) which, respectively, provide for the terms of Mr. Farr’s termination of employment with the Company and Mr. Farr’s provision of limited transition services to ChromaDex for a period of 90 days following his termination of employment. Pursuant to the Farr Agreement, in consideration of Mr. Farr’s timely execution and non-revocation of a release of claims (the “Release”), compliance with restrictive covenants and other terms and conditions of the Executive Employment Agreement between Mr. Farr and the Company dated October 5, 2017 (the “Farr Employment Agreement”) and other restrictive covenants between Mr. Farr and the Company, and Mr. Farr’s performance of transition services pursuant to the Consultant Agreement, and notwithstanding anything to the contrary in the Farr Employment Agreement, Mr. Farr will be eligible to receive (i) a grant of 89,189 restricted stock units under the Plan, which will vest and be settled in shares of Company stock upon the earlier of the expiration of the Consultant Agreement or the earlier termination of the Consultant Agreement; (ii) a lump sum payment of $30,442; (iii) acceleration of vesting of those unvested time-based vesting equity awards that would have otherwise become vested had Mr. Farr remained employed through the one-year anniversary of Mr. Farr’s termination of employment (other than the restricted stock units described in subclause (i)), and continued exercisability of all vested equity awards for three years following Mr. Farr’s termination of employment (subject to any earlier expiration date pursuant to the Plan); and (iv) a pro rata bonus for the year of Mr. Farr’s termination of employment, based on actual performance and paid at the same time as bonuses are paid to active employees. Except for these payments and benefits, Mr. Farr will not be entitled to any further severance or termination payments or benefits from the Company or its affiliates, whether pursuant to the Farr Employment Agreement or the Consultant Agreement.
 
The foregoing summary of the Farr Agreement and the Consultant Agreement do not purport to be complete and are qualified in their entirety by reference to the complete Farr Agreement and Consultant Agreement, copies of which are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated herein by reference.
 
Item 7.01. Regulation FD Disclosure.
 
On August 10, 2022, the Company released a corporate presentation which it made available on its website. A copy of the corporate presentation is attached hereto as Exhibit 99.2.
 
The information in this Item 7.01 and the exhibit hereto are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
 
Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits.
 
Exhibit
Number
  Description
     
10.1   Letter Agreement with Kevin Farr.
10.2   Consultant Agreement with Kevin Farr
99.1   Press Release dated August 10, 2022
99.2   Investor Presentation of ChromaDex Corporation
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)
         
 

 
SIGNATURES
 
Pursuant 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 undersigned hereunto duly authorized.
 
CHROMADEX CORPORATION
Dated: August 10, 2022
By:
/s/ Kevin M. Farr
Kevin M. Farr
Chief Financial Officer
    (Principal Financial and Accounting Officer)  
 
 

Exhibit 10.1

 

logo.jpg

 

 

 

August 10, 2022

 

 

 

VIA ELECTRONIC MAIL ONLY

 

 

Kevin Farr

kevinf@chromadex.com

 

Dear Kevin:

 

Please be advised that the Company is terminating your employment without Cause, as that term is defined in your Executive Employment Agreement dated October 5, 2017 (the “EEA”). The “Termination Date” for the purposes of this Agreement will be August 12, 2022.

 

The separation benefits contemplated by this Agreement are contingent upon you executing and allowing to become effective the Separation Date Release Agreement attached as Exhibit A to the EEA and appended hereto as Exhibit A for reference (the “Release”).

 

In substitution of the Severance Payments contemplated by Section 7.2.1 of the EEA and provided you agree to act as a consultant to ensure a smooth transition in accordance with the Consulting Agreement attached hereto as Exhibit B, the Company, with the approval of the Compensation Committee, agrees to grant you 89,189 Restricted Stock Units (the “RSU Grant”) once the Separation Date Release Agreement is effective. The RSU Grant shall vest and become exercisable upon the earlier of (i) the expiration of the Consultant Agreement or (ii) termination of the Consultant Agreement by the Company. By signing this Agreement, you agree that you are waiving your rights to the remuneration contemplated under Section 7.2.1 of the EEA.

 

On your Termination Date, in substitution of the Healthcare Continuation Coverage Payments contemplated by Section 7.2.2 of the EEA, the Company agrees to pay you a sum of thirty-thousand, four-hundred forty-two dollars and 00/100 (30,442.00) (USD), which is equivalent to the cost of maintaining your health insurance through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), as amended, for a period of twelve (12) months following your Termination Date (the “COBRA Payment”).

 

Please note that unless expressly modified by this Agreement, all other terms, benefits and conditions of the EEA shall remain unchanged and in full force and effect. Capitalized terms not otherwise defined by this Agreement shall have the meaning(s) ascribed to them in the EEA. In the event of any conflict between the terms of this Agreement and the EEA, this Agreement shall control in each instance.

 

 

 

Provided the terms of this Agreement are acceptable, please sign below indicating your acceptance.

 

Sincerely,

 

 

/s/ Robert N. Fried

Robert N. Fried

Chief Executive Officer

ChromaDex Corporation

 

 

 

I HAVE READ, UNDERSTAND AND VOLUNTARILY AGREE FULLY TO THE FOREGOING

AGREEMENT:

 

 

/s/ Kevin M. Farr

Kevin M. Farr

 

August 10, 2022
Date Signed

 

 

 

 

EXHIBIT A

SEPARATION DATE RELEASE AGREEMENT

(To be signed on or after the Separation Date)

 

1.    Consideration. I understand that my employment with and services for ChromaDex Corporation (the "Company") terminated effective August 12, 2022 (the "Separation Date"). The Company has agreed that if I timely sign, date and return this Release Agreement ("Release Agreement"), I do not revoke it, and I comply in all material respects with the terms of the Proprietary Information Agreement (as defined below), I comply with all restrictive covenants and other terms and conditions of the Executive Employment Agreement between myself and the Company dated October 5, 2017 (the “Employment Agreement”), as amended by the letter agreement by and between myself and the Company dated August 12, 2022 (the “Letter Agreement”), and my executing and complying with the terms of the Consultant Agreement between myself and ChromaDex, Inc., dated August 13, 2022, the Company will provide me with the payments and benefits (the “Termination Benefits”) set forth in the Letter Agreement. I understand that I am not entitled to such payments or benefits unless I timely sign this Release Agreement and allow it to become effective pursuant to Section 4 below.

 

2.    General Release. In exchange for the consideration to be provided to me under the Letter Agreement that I am not otherwise entitled to receive, I hereby generally and completely release, acquit and forever discharge the Company, and its parent, subsidiary, and affiliated entities, along with its predecessors and successors and, in their capacity in such roles, its directors, officers, members, managers, employees, shareholders, stockholders, partners, agents, attorneys, insurers, affiliates and assigns (collectively, the "Released Parties"), of and from any and all claims, liabilities and obligations, both known and unknown, that arise from or are in any way related to events, acts, conduct, or omissions occurring at any time prior to and including the date that I sign this Release Agreement (collectively, the "Released Claims"). The Released Claims include, but are not limited to: (a) all claims arising out of or in any way related to my employment with or services for the Company or its affiliates, or the termination of my employment or services; (b) all claims related to my compensation or benefits from the Company or its affiliates, including salary, bonuses, commissions, other incentive compensation, vacation pay and the redemption thereof, expense reimbursements, fringe benefits, stock, stock options, or any other ownership or equity interests in the Company or its affiliates, including but not limited to all claims for severance payments and/or benefits pursuant to Section 7.2.1 and Section 7.2.2 of the Employment Agreement, but excluding any claims for Termination Benefits set forth in the Letter Agreement (including severance payments and/or benefits pursuant to Section 7.2.3 and Section 7.2.4 of the Employment Agreement); (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including but not limited to claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including but not limited to claims for discrimination, harassment, retaliation, attorneys' fees, penalties, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment Act of 1967 (as amended) (the "ADEA"), the federal Family and Medical Leave Act ("FMLA"); the California Fair Employment and Housing Act (as amended), and the California Labor Code.

 

3.   Excluded Claims. The Released Claims do not include (the "Excluded Claims"): (a) any rights or claims for indemnification or directors and officers liability insurance I may otherwise have; (b) any rights which cannot be waived as a matter of law; (c) any claims arising from breach of this Release Agreement; (d) any claims for Termination Benefits set forth in the Letter Agreement (including severance payments and/or benefits pursuant to Section 7.2.3 and Section 7.2.4 of the Employment Agreement); (e) any claims for accrued, vested benefits under any employee benefit plan of the Company or its affiliates subject to the terms and conditions of such plan or pursuant to applicable law; and (f) any rights I have in connection with my interest as a stockholder or option holder of the Company. In addition, nothing in this Release Agreement prevents me from filing a charge or complaint with the Equal Employment Opportunity Commission or any similar state or local fair employment law agency, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (collectively, the "Government Agencies"). This Release Agreement does not limit my ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies. While this Release Agreement does not limit my right to receive an award for information provided to the Securities and Exchange Commission, I understand and agree that, to maximum extent permitted by law, I am otherwise waiving any and all rights I may have to individual relief based on any claims that I have released and any rights I have waived by signing this Release Agreement. I represent and warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

 

 

 

4.    ADEA Waiver. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA ("ADEA Waiver"). I also acknowledge that the consideration given for the ADEA Waiver is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that:(a) my ADEA Waiver does not apply to any rights or claims that arise after the date I sign this Release Agreement; (b) I should consult with an attorney prior to signing this Release Agreement; (c) I have twenty-one (21) calendar days to consider this Release Agreement (although I may choose to voluntarily sign it sooner); (d) I have seven (7) calendar days following the date I sign this Release Agreement to revoke it; and (e) the Release Agreement will not be effective until the date upon which the revocation period has expired unexercised, which will be the eighth (8th) calendar day after I sign this Release Agreement (the "Release Effective Date").

 

5.    Waiver of Unknown Claims. In releasing claims unknown to me at present, I am waiving all rights and benefits under the following provision of Section 1542 of the California Civil Code, and any law or legal principle of similar effect in any domestic or international jurisdiction: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor."

 

6.    Other Agreements and Representations. I further represent and agree: (a) that I will comply with my continuing obligations pursuant to the terms of my executed Employee Confidential Information and Invention Assignment Agreement (the "Proprietary Information Agreement"), and (b) that I have been paid all wages earned owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, pursuant to FMLA, California law, or any applicable law or Company policy, and I have not suffered any on-the-job injury for which I have not already filed a workers' compensation claim.

 

This Release Agreement, together with the Employment Agreement and the Proprietary Information Agreement, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company and me with regard to the subject matter hereof. I am not relying on any promise or representation by the Company that is not expressly stated herein. This Release Agreement may only be modified by a writing signed by both me and a duly authorized officer of the Company.

 

UNDERSTOOD AND AGREED:

 

/s/ Kevin M. Farr
Signature

Kevin M. Farr
Name

August 10, 2022

Date

 

 

 

 

 

 

EXHIBIT B

 

CONSULTANT AGREEMENT

 

This Consultant Agreement (the “Agreement”) is entered into this August 13, 2022 (“Effective Date”) by and between ChromaDex, Inc., having its principal offices located 10900 Wilshire Blvd., Suite 600, Los Angeles, California 90024, U.S.A. (“ChromaDex”), and Kevin M. Farr, with an address of 412 Via Almar, Palos Verdes Estates, California 90274, U.S.A. (“Consultant”). ChromaDex and Consultant are sometimes collectively referred to hereunder as “the Parties.”

 

WITNESSETH:

 

WHEREAS: ChromaDex desires to have Consultant perform services sufficient to transition a new Chief Financial Officer, and such other services as reasonably required by ChromaDex in writing (“Services”), and Consultant desires to perform such services.

 

NOW THEREFORE, for good and valuable consideration, the value and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.         Period of Performance. This Agreement shall commence upon the Effective Date and shall continue in full force and effect for a period of ninety (90) calendar days, unless terminated earlier in accordance herewith (the “Term”). This Agreement may be renewed upon the mutual, written agreement of the Parties.

 

2.         Consideration and Payment. Consultant acknowledges the Letter Agreement executed upon his termination of employment constitutes fair and reasonable consideration for the Services.

 

3.         Reimbursement of Expenses. Consultant shall be responsible for all routine expenses incurred by the Consultant, or its employees, under this Agreement, such as cell phone and printer expenses, license fees, insurance premiums, unless otherwise agreed to in writing. ChromaDex shall reimburse Consultant for reasonable travel expenses incurred while performing services under this Agreement if approved in advance. Consultant recognizes that the services to be provided hereunder are discreet and finite in nature and are not intended to create and the parties do not contemplate a continuing relationship beyond completion of the specified services.

 

4.         Tool and Supplies. Unless otherwise agreed to in writing, Consultant shall be solely responsible for procuring, paying for and maintaining any computer equipment, software, paper, tools or other supplies necessary or appropriate for the performance of the Consultant’s services/work hereunder.

 

5.         Technical Guidance. Generally, Consultant is expected to utilize his/her skills and expertise independently to complete the services/work hereunder. To the extent technical guidance from ChromaDex may be necessary for the Consultant to complete the services/work hereunder, the Consultant shall receive technical guidance from Robert Fried or his designees. The ChromaDex representative responsible for approval of Consultant’s work shall be Robert Fried.

 

6.         Time of Performance. Consultants daily schedule and hours worked under this Agreement shall generally be subject to the Consultant’s discretion. This Agreement is not intended to restrict or limit the right of the Consultant to perform services/work for or on behalf of individuals or entities other than ChromaDex and that Consultant is free to do so. However, Consultant agrees to devote sufficient time as necessary to fulfill the purposes of this Agreement within the term of this Agreement.

 

7.         Place of Work. Consultant shall render services primarily from Consultant’s place of business. ChromaDex shall not designate nor set aside any workspace at ChromaDex’s place of business for Consultant unless otherwise agreed to in writing. In the event Consultant performs any of the services/work at ChromaDex’s place of business, Consultant agrees to comply with all applicable security and workplace regulations in effect at ChromaDex’s place of business for the duration of Consultant’s services/work there.

 

 

 

8.         Independent Contractor. Consultant is, and throughout the term of this Agreement shall be, an independent contractor and not an employee or agent of ChromaDex. The Consultant shall not be entitled to nor receive any of the benefits normally provided to employees including, but not limited to, vacation, retirement benefits or benefits under any other ERISA qualified plan, health care benefits, sick time, unemployment or workers compensation benefits. By executing this Agreement, Consultant hereby waives his/her right to all such benefits including the right to file a claim for any employee benefits under the Employee Retirement Income Security Act, other applicable federal, state or local law, rules or regulations, or any ChromaDex policy, practice, procedure or program. Except as set forth herein, ChromaDex shall neither have nor exercise control or direction whatsoever over the operations of Consultant, and Consultant shall neither have nor exercise any control or direction whatsoever over the employees, agents or subcontractors hired by ChromaDex.

 

9.        Taxes. As an independent contractor, Consultant shall be responsible to pay, according to all applicable state, federal and local laws, his or her own income taxes or other taxes levied on payments made to the Consultant pursuant to this Agreement. If the Consultant is not a corporation, he or she understands that he may be liable for self-employment taxes. ChromaDex shall neither pay nor withhold federal, state or local income tax or payroll tax of any kind on behalf of the Consultant.

 

10.       Warranty; Care of ChromaDexs Intellectual Property and Confidential Information. Consultant represents and warrants that the execution, delivery and performance of this Agreement will not violate and/or conflict with any other agreement that the Consultant is a party to and that the Services to be performed by Consultant hereunder will be performed competently and in accordance with the standard of care usually and reasonably expected in performance of the Services. For the avoidance of doubt, Consultant warrants and represents that the execution, delivery, and performance of the Services under this Agreement does not and will not violate any existing contract, agreement, promise, or other obligation of the Consultant and/or any third party, nor violate the rights of any third party. Consultant warrants he is free to enter into this Agreement without any restrictions whatsoever. Consultant covenants to protect all property of ChromaDex including ChromaDex’s Confidential Information (as defined below) and its customers, vendors, and other affiliates and partners to which such Consultant has access, as a result of Consultant’s consulting under this Agreement, with the same level of care he would provide to his own property and confidential information, and in no event less than an objectively reasonable standard of care. This Section applies during and after termination of this Agreement based on obligations further set forth herein.

 

11.         Termination. ChromaDex may terminate this Agreement, with or without cause, upon written notice. Upon termination, ChromaDex shall be solely responsible for the pro rata value of Services rendered as of the date of termination.

 

12.         Hold Harmless. Each party shall indemnify, defend and hold harmless the other, its agents, servants, affiliates, and employees from and against any claim, demand or cause of action of every name or nature arising out of this Agreement, including without limitation claims which arise from a failure to indemnify (individually and collectively, “a Claim”). Notwithstanding the above, neither party shall have an obligation to indemnify the other from any Claim which arises from the gross negligence, fraud, or intentional misconduct of the other party. The indemnifying party shall not settle or resolve any Claim without the prior, written consent of the indemnified party.

 

13.       Insurance and Taxes. ChromaDex and Consultant will be responsible for maintaining their own separate insurance policies including, without limitation, Comprehensive General and Automobile Liability, Workmen’s Compensation and other necessary insurance coverage. The Consultant, as an independent agent, agrees that he will not to be entitled to file any claim for Workmen’s Compensation or any other claim under ChromaDex’s insurance policies and will be responsible for his/her own Workmen’s Compensation Insurance Coverage. The Consultant will also be responsible for payment of any State, local, or federal taxes resulting from work under this Agreement.

 

 

 

PLEASE NOTE: CHROMADEX IS REQUIRED TO SUBMIT TO THE INTERNAL REVENUE SERVICE AN ANNUAL FORM 1099 STATEMENT OF INCOME FOR ALL PAYMENTS TO CONSULTANTS, AND AS SUCH CONSULTANT MUST PROVIDE A TAX IDENTIFICATION NUMBER TO CHROMADEX.

 

14.         Non-Disclosure of Trade Secrets and Confidential Information. During the Term, ChromaDex may disclose to the Consultant materials and communications which upon a reasonable inspection would appear confidential “Confidential Information”. Consultant agrees, except as specifically required in the performance of Consultant’s duties for ChromaDex, that Consultant will not, during the course of the Agreement, or at any time thereafter, directly or indirectly use, disclose or disseminate to any other person, organization or entity or otherwise employ any Confidential Information. Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by ChromaDex (except where such public disclosure has been made by Consultant or others without authorization) or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means. Consultant agrees to keep all Confidential Information in a secure place and agrees not to publish, communicate, use or disclose any such Confidential Information, directly or indirectly, for his or her own benefit or for the benefit of another, either during or after the Term of this Agreement without ChromaDex’s express written consent. Upon termination of this Agreement, the Consultant shall deliver all documents, records, data, information and all other materials, whether on paper or electronically recorded, produced or acquired during the performance of this Agreement, and all copies thereof, to ChromaDex. The obligation not to disclose Confidential Information shall survive the termination or expiration of this Agreement for three (3) years, whichever is earlier, provided, however, that the obligation not to disclose trade secrets shall survive the termination or expiration of this Agreement indefinitely.

 

15.         Rights in Inventions.

 

a.         Assignment of IP Rights to ChromaDex. In performing the Services, Consultant hereby assigns to ChromaDex all rights in all inventions, developments and discoveries, including derivatives and improvements thereto, whether or not patentable, and all patent rights related to the foregoing including rights to make priority claims in any country (“Inventions”), and all suggestions, proposals, written works of authorship, and computer programs, and all copyrights whether or not registered related to the foregoing (collectively with Inventions, the “Work Product”), which Consultant authors, invents, discovers, develops, conceives or makes, either solely or jointly with others, while consulting with ChromaDex, or which involve Confidential Information or equipment, supplies, facilities, direct or indirect funding, or materials owned or provided by or on behalf of ChromaDex. The rights granted to ChromaDex in the Work Product include the right to disclose or publish, or not to do so, and to pursue patents and assert other intellectual property rights related thereto. Consultant will execute all documents and take all other actions as may be necessary (at no out-of-pocket expense to Consultant) to assign all rights to or otherwise vest good title to ChromaDex in all Work Product, and Consultant will not use any Confidential Information for Consultant’s own benefit or for that of any other business entity or person except as permitted in writing by ChromaDex.

 

b.         Work-Made-For-Hire. Additionally, any work of authorship prepared by Consultant in connection with efforts under this Agreement or related to or arising from Confidential Information that Consultant has access to in connection with this Agreement, will be considered a work made for hire pursuant to this Agreement and be the sole and exclusive property of ChromaDex, free and clear of any claims by Consultant.

 

c.         Disclosure Obligation of Consultant. Consultant will disclose promptly in writing (which writing may take the form of a patent application or similar document prepared by ChromaDex’s counsel with Consultant’s cooperation and assistance) to ChromaDex all Inventions and other Work Product developed, made, or conceived either solely or in collaboration with others under, or arising from or related to, this Agreement. Consultant hereby assigns to ChromaDex its, his, or her entire right, title, and interest in and to any and all such Inventions and other Work Product. Consultant hereby agrees to execute all such documents, testify in all legal or quasi-legal proceedings requested, and otherwise take all such action as may be required to effectuate or evidence such assignment and/or to cooperate with ChromaDex in filing applications, and pursuing and enforcing patents and copyright registrations in any and all countries. As such, Consultant hereby irrevocably appoints ChromaDex, and its duly authorized officers and agents, as Consultant’s attorney to execute and deliver any documents needed and to do all other lawfully permitted acts to secure such intellectual property rights with the same legal force and effect as if executed by Consultant.

 

 

 

16.         Reasonable Restrictions. Consultant acknowledges that the restrictions imposed by this Agreement are reasonable and necessary to protect ChromaDex’s Confidential Information and intellectual property assets. When for any reason this Agreement terminates, Consultant hereby represents to ChromaDex that Consultant has the ability to earn a livelihood without violating such restrictions.

 

17.         Injunctive Relief; Other Remedies. Consultant recognizes that the remedy at law for any breach or violation, or threatened breach or violation, by Consultant of this Agreement will be inadequate and ChromaDex would suffer continuing and irreparable injury to its business as a direct result of such violations. If Consultant breaches, or threatens to breach, any material obligation contained herein, then ChromaDex at its sole discretion will be entitled to institute and prosecute proceedings in any court of competent jurisdiction or in a binding arbitration, either in law or in equity, to obtain the specific performance thereof by Consultant or to enjoin Consultant from violating the provisions hereof. If court proceedings or an arbitration are instituted by reason of a breach or violation hereof the prevailing party will receive, in addition to any damages awarded, its reasonable attorney’s fees, court costs and related expenses.

 

18.         Representation. Consultant represents that there is no conflict of interest between its performance of this Agreement and any other agreement Consultant has with others. In the event Consultant believes that there is presently any such conflict, or any such conflict arises during this Agreement or extensions thereof, it will advise ChromaDex immediately in writing.

 

19.         Non-Assignment. Neither party may assign this Agreement, or any rights and duties hereunder, without written consent of the other; provided that ChromaDex may assign or otherwise transfer this Agreement to its affiliates and otherwise incident to the transfer, sale, acquisition, or merger of substantially all the assets of ChromaDex, or by operation of law.

 

20.         Integration. This Agreement sets forth the entire and only agreement and understanding between ChromaDex and the Consultant relative to the subject matter hereof. Any representation, promise, or condition, whether oral or written, that is not incorporated herein shall not be binding upon either party. Thus, this Agreement supersedes any prior agreements between the parties regarding the subject matter hereof, oral or written. No waiver, modification, or amendment of the terms of this Agreement shall be effective unless made in writing and signed by an authorized representative of the party sought to be bound hereby.

 

21.         Severability. The sections of this Agreement will be enforceable to the fullest extent permissible under applicable law, but the unenforceability (or modification to conform to such law) of any provision(s) hereof will not render unenforceable or impair the remainder thereof. If any provision(s) hereof are deemed invalid, illegal, or unenforceable, the offending provision(s) should be deleted or modified, as minimally as possible and as necessary, to retain as much of the provision and this Agreement valid and enforceable as possible.

 

22.         Ethics. Consultant shall be responsible for knowing and shall comply, in all material respects, with all applicable laws, rules, and regulations governing the ethics and operations of organizations affected by Consultant's activities.

 

a.        Anti-Corruption Compliance

 

i.         Consultant and its affiliates, subsidiaries, directors, officers, employees, agents, consultants, and all other persons acting on its behalf shall at all times comply with (1) ChromaDex’s Corporate Code of Business conduct and Ethics, (2) the U.S. Foreign Corrupt Practices Act, as amended, and the rules and regulations thereunder, and (3) any other applicable anti-corruption laws (collectively, the “Anti-Corruption Laws”).

 

 

 

ii.         In connection with any aspect of this Agreement or any other transaction involving ChromaDex, neither Consultant nor any of its affiliates, subsidiaries, directors, officers, employees, agents, consultants, or other persons acting on its behalf shall take any action, directly or indirectly, that may result in a violation of the Anti-Corruption Laws by Consultant or ChromaDex, including, without limitation, by making, offering, authorizing, or promising any payment, contribution, gift, business courtesy, bribe, rebate, kickback, or any other thing of value, regardless of form or amount, to any (a) foreign or domestic government official or employee, (b) employee of a foreign or domestic government owned or government-controlled entity, (c) foreign or domestic political party, political official, or candidate for political office, or (d) any officer or employee of a public international organization, to obtain a competitive advantage for any party or to receive favorable treatment in obtaining or retaining business. Should Consultant learn or have reason to know that conduct has or may have occurred in violation of this provision, it will immediately notify ChromaDex.         

 

iii.          At ChromaDex’s request, Consultant and any of its affiliates, subsidiaries, directors, officers, or employees that perform tasks pursuant to this Agreement will certify in writing that they have not engaged in conduct in violation of parts i or ii of this Section.

 

iv.          No rights or obligations of, or services to be rendered by, Consultant under this Agreement shall be assigned, transferred, or subcontracted to any third party without the prior written consent of ChromaDex. In no event shall ChromaDex be obligated under this Agreement to take any action or omit to take any action that it believes, in good faith, would cause it to violate the Anti-Corruption Laws.

 

v.          ChromaDex or a third party of its choosing shall have the right to access, review, and audit the books, records, and accounts of Consultant and any of its affiliates and subsidiaries, to the extent that they are relevant to this Agreement or any other transaction involving ChromaDex. Such access, audit, and review shall be reasonable as to scope, place, date, and time.

 

vi.         If Consultant breaches any of the parts of this Agreement, ChromaDex may terminate this Agreement without penalty upon service of written notice upon Consultant.

 

23.         Authority. Consultant acknowledges that he is neither an Officer nor a Director of ChromaDex and does not have the authority to bind ChromaDex or its affiliates to any contract, lease, or agreement in any form. Consultant also agrees that he will inform any entity or individual who wishes to enter into any contract or other binding agreement with ChromaDex that he does not have the authority to execute documents or bind ChromaDex or its affiliates without specific written authorization.

 

24.         Independent Counsel and Joint Drafting. Each party acknowledges and agrees that it: (a) is aware that this Agreement affects its legal rights; (b) has had the opportunity to seek advice regarding this Agreement from independent counsel of its own choosing; and (c) understands and voluntarily enters this Agreement of its own free will and choice. Thus, this Agreement should be construed to have been drafted jointly and will not be strictly construed against either party.

 

25.         Action on Termination. Upon termination of this Agreement for any reason, with or without cause: (a) at the request of ChromaDex, Consultant must deliver immediately to ChromaDex all work product, images, writings, lists, samples, experimental results, data, quotations, books, records, files, computer software, drawings, other tangible manifestations of ChromaDex’s Confidential Information, keys, access codes, and other property of ChromaDex and its vendors, customers, and affiliates that Consultant had access to as a result of consulting under this Agreement, that are in Consultant’s possession, custody or control; and (b) at the request of ChromaDex, Consultant will execute such documents and take such other actions as necessary in order to reaffirm the covenants and obligations set forth in this Agreement; provided, however that failure to request such reaffirmation will not waive any requirements of this Agreement. Consultant understands that failure to perform these obligations may result in ChromaDex, at its sole discretion, withholding payment of any remaining compensation or taking any other legal action necessary to protect its rights.

 

 

 

26.         Notices. All notices, requests, demands and other communications required or permitted hereunder shall be given in writing via electronic mail. Notice shall be deemed effective upon confirmed receipt. ChromaDex and Consultant shall use their best efforts, and act in good faith, to acknowledge the receipt of notices that are sent by email. Neither ChromaDex nor Consultant shall intentionally fail to acknowledge the receipt of notice sent by email that has been actually received by them and shall not refuse to acknowledge receipt of notice sent by email in an effort to prevent the other party from timely or properly serving such notice. Notice shall be given to the following addresses:

 

If to ChromaDex: ChromaDex, Inc.
  legal@chromadex.com
   
If to Consultant:

Kevin M. Farr

kevinmf7777@gmail.com

 

27.         No Agency Created. No agency, employment, partnership or joint venture shall be created by this Agreement, as Consultant is an independent contractor. Consultant shall have no authority as an agent of ChromaDex or to otherwise bind ChromaDex to any agreement, commitment, obligation, contract, instrument, undertaking, arrangement, certificate or other matter. Each party hereto shall refrain from making any representation intended to create an apparent agency, employment, partnership or joint venture relationship between the parties.

 

28.         Counterparts. This Agreement may be executed in counterparts, each of shall constitute an original, whether actual original or a copy, and all of which shall constitute one and the same instrument.

 

29.         Dispute Resolution. The laws of the State of California (without giving effect to conflict of law principles) shall govern all matters arising out of or relating to this Agreement, including interpretation and performance, together with the provisions of the Federal Arbitration Act. Each party submits to the exclusive jurisdiction of, and consents to personal jurisdiction of and venue in, the state or federal courts of Los Angeles County, California (“Forum Courts”) for the proceedings arising out of or relating to this Agreement. ChromaDex and Consultant both consent that any dispute or any claim relating in any way to this Agreement will be resolved by binding arbitration as described in this paragraph, rather than in court, except that any party may bring suit in Forum Courts, submitting to the jurisdiction of the Forum Courts and waiving their respective rights to any other jurisdiction, for any preliminary injunction or temporary restraining order, or to enjoin infringement or other misuse of intellectual property rights. Before Consultant may begin an arbitration proceeding, Consultant must send a letter requesting arbitration and describing Consultant’s claim to ChromaDex at its address, 10900 Wilshire Blvd., Suite 600, Los Angeles, CA 90024. The arbitration will be conducted by the American Arbitration Association (AAA) under its commercial rules at AAA’s offices in Los Angeles County, California. Payment of all filing, administration and arbitrator fees will be governed by the AAA's rules. The expedited procedures of the AAA’s rules will apply only in cases seeking exclusively monetary relief under $50,000, and in such cases the hearing will be scheduled to take place within 90 days of the arbitrator’s appointment. Any dispute regarding whether a claim is subject to arbitration shall be resolved by the arbitrator. Should the arbitrator determine that claims filed are frivolous, the prevailing party shall be entitled to reasonable attorneys’ fees and costs. ChromaDex and Consultant each agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action. If for any reason a claim proceeds in court rather than in arbitration ChromaDex and Consultant each waive any right to a jury trial.

 

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the date indicated below their respective signatures.

 

ChromaDex, Inc.  

 

Kevin M. Farr

 
           
           

BY:

/s/ Robert N. Fried

 

BY:

/s/ Kevin M. Farr

 
           

NAME:

Robert N. Fried

 

NAME:

Kevin M. Farr

 
           

TITLE:

Chief Executive Officer

 

DATE:

August 10, 2022

 
           

DATE:

August 10, 2022

       

 

 

 

 

Exhibit 10.2

 

 

CONSULTANT AGREEMENT

 

This Consultant Agreement (the “Agreement”) is entered into this August 13, 2022 (“Effective Date”) by and between ChromaDex, Inc., having its principal offices located 10900 Wilshire Blvd., Suite 600, Los Angeles, California 90024, U.S.A. (“ChromaDex”), and Kevin M. Farr, with an address of 412 Via Almar, Palos Verdes Estates, California 90274, U.S.A. (“Consultant”). ChromaDex and Consultant are sometimes collectively referred to hereunder as “the Parties.”

 

WITNESSETH:

 

WHEREAS: ChromaDex desires to have Consultant perform services sufficient to transition a new Chief Financial Officer, and such other services as reasonably required by ChromaDex in writing (“Services”), and Consultant desires to perform such services.

 

NOW THEREFORE, for good and valuable consideration, the value and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.         Period of Performance. This Agreement shall commence upon the Effective Date and shall continue in full force and effect for a period of ninety (90) calendar days, unless terminated earlier in accordance herewith (the “Term”). This Agreement may be renewed upon the mutual, written agreement of the Parties.

 

2.         Consideration and Payment. Consultant acknowledges the Letter Agreement executed upon his termination of employment constitutes fair and reasonable consideration for the Services.

 

3.         Reimbursement of Expenses. Consultant shall be responsible for all routine expenses incurred by the Consultant, or its employees, under this Agreement, such as cell phone and printer expenses, license fees, insurance premiums, unless otherwise agreed to in writing. ChromaDex shall reimburse Consultant for reasonable travel expenses incurred while performing services under this Agreement if approved in advance. Consultant recognizes that the services to be provided hereunder are discreet and finite in nature and are not intended to create and the parties do not contemplate a continuing relationship beyond completion of the specified services.

 

4.         Tool and Supplies. Unless otherwise agreed to in writing, Consultant shall be solely responsible for procuring, paying for and maintaining any computer equipment, software, paper, tools or other supplies necessary or appropriate for the performance of the Consultant’s services/work hereunder.

 

5.         Technical Guidance. Generally, Consultant is expected to utilize his/her skills and expertise independently to complete the services/work hereunder. To the extent technical guidance from ChromaDex may be necessary for the Consultant to complete the services/work hereunder, the Consultant shall receive technical guidance from Robert Fried or his designees. The ChromaDex representative responsible for approval of Consultant’s work shall be Robert Fried.

 

6.         Time of Performance. Consultants daily schedule and hours worked under this Agreement shall generally be subject to the Consultant’s discretion. This Agreement is not intended to restrict or limit the right of the Consultant to perform services/work for or on behalf of individuals or entities other than ChromaDex and that Consultant is free to do so. However, Consultant agrees to devote sufficient time as necessary to fulfill the purposes of this Agreement within the term of this Agreement.

 

7.         Place of Work. Consultant shall render services primarily from Consultant’s place of business. ChromaDex shall not designate nor set aside any workspace at ChromaDex’s place of business for Consultant unless otherwise agreed to in writing. In the event Consultant performs any of the services/work at ChromaDex’s place of business, Consultant agrees to comply with all applicable security and workplace regulations in effect at ChromaDex’s place of business for the duration of Consultant’s services/work there.

 

 

 

8.         Independent Contractor. Consultant is, and throughout the term of this Agreement shall be, an independent contractor and not an employee or agent of ChromaDex. The Consultant shall not be entitled to nor receive any of the benefits normally provided to employees including, but not limited to, vacation, retirement benefits or benefits under any other ERISA qualified plan, health care benefits, sick time, unemployment or workers compensation benefits. By executing this Agreement, Consultant hereby waives his/her right to all such benefits including the right to file a claim for any employee benefits under the Employee Retirement Income Security Act, other applicable federal, state or local law, rules or regulations, or any ChromaDex policy, practice, procedure or program. Except as set forth herein, ChromaDex shall neither have nor exercise control or direction whatsoever over the operations of Consultant, and Consultant shall neither have nor exercise any control or direction whatsoever over the employees, agents or subcontractors hired by ChromaDex.

 

9.         Taxes. As an independent contractor, Consultant shall be responsible to pay, according to all applicable state, federal and local laws, his or her own income taxes or other taxes levied on payments made to the Consultant pursuant to this Agreement. If the Consultant is not a corporation, he or she understands that he may be liable for self-employment taxes. ChromaDex shall neither pay nor withhold federal, state or local income tax or payroll tax of any kind on behalf of the Consultant.

 

10.         Warranty; Care of ChromaDexs Intellectual Property and Confidential Information. Consultant represents and warrants that the execution, delivery and performance of this Agreement will not violate and/or conflict with any other agreement that the Consultant is a party to and that the Services to be performed by Consultant hereunder will be performed competently and in accordance with the standard of care usually and reasonably expected in performance of the Services. For the avoidance of doubt, Consultant warrants and represents that the execution, delivery, and performance of the Services under this Agreement does not and will not violate any existing contract, agreement, promise, or other obligation of the Consultant and/or any third party, nor violate the rights of any third party. Consultant warrants he is free to enter into this Agreement without any restrictions whatsoever. Consultant covenants to protect all property of ChromaDex including ChromaDex’s Confidential Information (as defined below) and its customers, vendors, and other affiliates and partners to which such Consultant has access, as a result of Consultant’s consulting under this Agreement, with the same level of care he would provide to his own property and confidential information, and in no event less than an objectively reasonable standard of care. This Section applies during and after termination of this Agreement based on obligations further set forth herein.

 

11.         Termination. ChromaDex may terminate this Agreement, with or without cause, upon written notice. Upon termination, ChromaDex shall be solely responsible for the pro rata value of Services rendered as of the date of termination.

 

12.         Hold Harmless. Each party shall indemnify, defend and hold harmless the other, its agents, servants, affiliates, and employees from and against any claim, demand or cause of action of every name or nature arising out of this Agreement, including without limitation claims which arise from a failure to indemnify (individually and collectively, “a Claim”). Notwithstanding the above, neither party shall have an obligation to indemnify the other from any Claim which arises from the gross negligence, fraud, or intentional misconduct of the other party. The indemnifying party shall not settle or resolve any Claim without the prior, written consent of the indemnified party.

 

13.         Insurance and Taxes. ChromaDex and Consultant will be responsible for maintaining their own separate insurance policies including, without limitation, Comprehensive General and Automobile Liability, Workmen’s Compensation and other necessary insurance coverage. The Consultant, as an independent agent, agrees that he will not to be entitled to file any claim for Workmen’s Compensation or any other claim under ChromaDex’s insurance policies and will be responsible for his/her own Workmen’s Compensation Insurance Coverage. The Consultant will also be responsible for payment of any State, local, or federal taxes resulting from work under this Agreement.

 

 

 

PLEASE NOTE: CHROMADEX IS REQUIRED TO SUBMIT TO THE INTERNAL REVENUE SERVICE AN ANNUAL FORM 1099 STATEMENT OF INCOME FOR ALL PAYMENTS TO CONSULTANTS, AND AS SUCH CONSULTANT MUST PROVIDE A TAX IDENTIFICATION NUMBER TO CHROMADEX.

 

14.         Non-Disclosure of Trade Secrets and Confidential Information. During the Term, ChromaDex may disclose to the Consultant materials and communications which upon a reasonable inspection would appear confidential “Confidential Information”. Consultant agrees, except as specifically required in the performance of Consultant’s duties for ChromaDex, that Consultant will not, during the course of the Agreement, or at any time thereafter, directly or indirectly use, disclose or disseminate to any other person, organization or entity or otherwise employ any Confidential Information. Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by ChromaDex (except where such public disclosure has been made by Consultant or others without authorization) or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means. Consultant agrees to keep all Confidential Information in a secure place and agrees not to publish, communicate, use or disclose any such Confidential Information, directly or indirectly, for his or her own benefit or for the benefit of another, either during or after the Term of this Agreement without ChromaDex’s express written consent. Upon termination of this Agreement, the Consultant shall deliver all documents, records, data, information and all other materials, whether on paper or electronically recorded, produced or acquired during the performance of this Agreement, and all copies thereof, to ChromaDex. The obligation not to disclose Confidential Information shall survive the termination or expiration of this Agreement for three (3) years, whichever is earlier, provided, however, that the obligation not to disclose trade secrets shall survive the termination or expiration of this Agreement indefinitely. 

 

15.         Rights in Inventions.

 

a.         Assignment of IP Rights to ChromaDex. In performing the Services, Consultant hereby assigns to ChromaDex all rights in all inventions, developments and discoveries, including derivatives and improvements thereto, whether or not patentable, and all patent rights related to the foregoing including rights to make priority claims in any country (“Inventions”), and all suggestions, proposals, written works of authorship, and computer programs, and all copyrights whether or not registered related to the foregoing (collectively with Inventions, the “Work Product”), which Consultant authors, invents, discovers, develops, conceives or makes, either solely or jointly with others, while consulting with ChromaDex, or which involve Confidential Information or equipment, supplies, facilities, direct or indirect funding, or materials owned or provided by or on behalf of ChromaDex. The rights granted to ChromaDex in the Work Product include the right to disclose or publish, or not to do so, and to pursue patents and assert other intellectual property rights related thereto. Consultant will execute all documents and take all other actions as may be necessary (at no out-of-pocket expense to Consultant) to assign all rights to or otherwise vest good title to ChromaDex in all Work Product, and Consultant will not use any Confidential Information for Consultant’s own benefit or for that of any other business entity or person except as permitted in writing by ChromaDex.

 

b.         Work-Made-For-Hire. Additionally, any work of authorship prepared by Consultant in connection with efforts under this Agreement or related to or arising from Confidential Information that Consultant has access to in connection with this Agreement, will be considered a work made for hire pursuant to this Agreement and be the sole and exclusive property of ChromaDex, free and clear of any claims by Consultant.

 

c.         Disclosure Obligation of Consultant. Consultant will disclose promptly in writing (which writing may take the form of a patent application or similar document prepared by ChromaDex’s counsel with Consultant’s cooperation and assistance) to ChromaDex all Inventions and other Work Product developed, made, or conceived either solely or in collaboration with others under, or arising from or related to, this Agreement. Consultant hereby assigns to ChromaDex its, his, or her entire right, title, and interest in and to any and all such Inventions and other Work Product. Consultant hereby agrees to execute all such documents, testify in all legal or quasi-legal proceedings requested, and otherwise take all such action as may be required to effectuate or evidence such assignment and/or to cooperate with ChromaDex in filing applications, and pursuing and enforcing patents and copyright registrations in any and all countries. As such, Consultant hereby irrevocably appoints ChromaDex, and its duly authorized officers and agents, as Consultant’s attorney to execute and deliver any documents needed and to do all other lawfully permitted acts to secure such intellectual property rights with the same legal force and effect as if executed by Consultant.

 

 

 

16.         Reasonable Restrictions. Consultant acknowledges that the restrictions imposed by this Agreement are reasonable and necessary to protect ChromaDex’s Confidential Information and intellectual property assets. When for any reason this Agreement terminates, Consultant hereby represents to ChromaDex that Consultant has the ability to earn a livelihood without violating such restrictions.

 

17.         Injunctive Relief; Other Remedies. Consultant recognizes that the remedy at law for any breach or violation, or threatened breach or violation, by Consultant of this Agreement will be inadequate and ChromaDex would suffer continuing and irreparable injury to its business as a direct result of such violations. If Consultant breaches, or threatens to breach, any material obligation contained herein, then ChromaDex at its sole discretion will be entitled to institute and prosecute proceedings in any court of competent jurisdiction or in a binding arbitration, either in law or in equity, to obtain the specific performance thereof by Consultant or to enjoin Consultant from violating the provisions hereof. If court proceedings or an arbitration are instituted by reason of a breach or violation hereof the prevailing party will receive, in addition to any damages awarded, its reasonable attorney’s fees, court costs and related expenses.

 

18.         Representation. Consultant represents that there is no conflict of interest between its performance of this Agreement and any other agreement Consultant has with others. In the event Consultant believes that there is presently any such conflict, or any such conflict arises during this Agreement or extensions thereof, it will advise ChromaDex immediately in writing.

 

19.         Non-Assignment. Neither party may assign this Agreement, or any rights and duties hereunder, without written consent of the other; provided that ChromaDex may assign or otherwise transfer this Agreement to its affiliates and otherwise incident to the transfer, sale, acquisition, or merger of substantially all the assets of ChromaDex, or by operation of law.

 

20.         Integration. This Agreement sets forth the entire and only agreement and understanding between ChromaDex and the Consultant relative to the subject matter hereof. Any representation, promise, or condition, whether oral or written, that is not incorporated herein shall not be binding upon either party. Thus, this Agreement supersedes any prior agreements between the parties regarding the subject matter hereof, oral or written. No waiver, modification, or amendment of the terms of this Agreement shall be effective unless made in writing and signed by an authorized representative of the party sought to be bound hereby.

 

21.         Severability. The sections of this Agreement will be enforceable to the fullest extent permissible under applicable law, but the unenforceability (or modification to conform to such law) of any provision(s) hereof will not render unenforceable or impair the remainder thereof. If any provision(s) hereof are deemed invalid, illegal, or unenforceable, the offending provision(s) should be deleted or modified, as minimally as possible and as necessary, to retain as much of the provision and this Agreement valid and enforceable as possible.

 

22.         Ethics. Consultant shall be responsible for knowing and shall comply, in all material respects, with all applicable laws, rules, and regulations governing the ethics and operations of organizations affected by Consultant's activities.

 

 a.         Anti-Corruption Compliance

 

i.         Consultant and its affiliates, subsidiaries, directors, officers, employees, agents, consultants, and all other persons acting on its behalf shall at all times comply with (1) ChromaDex’s Corporate Code of Business conduct and Ethics, (2) the U.S. Foreign Corrupt Practices Act, as amended, and the rules and regulations thereunder, and (3) any other applicable anti-corruption laws (collectively, the “Anti-Corruption Laws”).

 

 

 

ii.         In connection with any aspect of this Agreement or any other transaction involving ChromaDex, neither Consultant nor any of its affiliates, subsidiaries, directors, officers, employees, agents, consultants, or other persons acting on its behalf shall take any action, directly or indirectly, that may result in a violation of the Anti-Corruption Laws by Consultant or ChromaDex, including, without limitation, by making, offering, authorizing, or promising any payment, contribution, gift, business courtesy, bribe, rebate, kickback, or any other thing of value, regardless of form or amount, to any (a) foreign or domestic government official or employee, (b) employee of a foreign or domestic government owned or government-controlled entity, (c) foreign or domestic political party, political official, or candidate for political office, or (d) any officer or employee of a public international organization, to obtain a competitive advantage for any party or to receive favorable treatment in obtaining or retaining business. Should Consultant learn or have reason to know that conduct has or may have occurred in violation of this provision, it will immediately notify ChromaDex.         

 

iii.          At ChromaDex’s request, Consultant and any of its affiliates, subsidiaries, directors, officers, or employees that perform tasks pursuant to this Agreement will certify in writing that they have not engaged in conduct in violation of parts i or ii of this Section.

 

iv.          No rights or obligations of, or services to be rendered by, Consultant under this Agreement shall be assigned, transferred, or subcontracted to any third party without the prior written consent of ChromaDex. In no event shall ChromaDex be obligated under this Agreement to take any action or omit to take any action that it believes, in good faith, would cause it to violate the Anti-Corruption Laws.

 

v.          ChromaDex or a third party of its choosing shall have the right to access, review, and audit the books, records, and accounts of Consultant and any of its affiliates and subsidiaries, to the extent that they are relevant to this Agreement or any other transaction involving ChromaDex. Such access, audit, and review shall be reasonable as to scope, place, date, and time.

 

vi.         If Consultant breaches any of the parts of this Agreement, ChromaDex may terminate this Agreement without penalty upon service of written notice upon Consultant.

 

23.         Authority. Consultant acknowledges that he is neither an Officer nor a Director of ChromaDex and does not have the authority to bind ChromaDex or its affiliates to any contract, lease, or agreement in any form. Consultant also agrees that he will inform any entity or individual who wishes to enter into any contract or other binding agreement with ChromaDex that he does not have the authority to execute documents or bind ChromaDex or its affiliates without specific written authorization.

 

24.         Independent Counsel and Joint Drafting. Each party acknowledges and agrees that it: (a) is aware that this Agreement affects its legal rights; (b) has had the opportunity to seek advice regarding this Agreement from independent counsel of its own choosing; and (c) understands and voluntarily enters this Agreement of its own free will and choice. Thus, this Agreement should be construed to have been drafted jointly and will not be strictly construed against either party.

 

25.         Action on Termination. Upon termination of this Agreement for any reason, with or without cause: (a) at the request of ChromaDex, Consultant must deliver immediately to ChromaDex all work product, images, writings, lists, samples, experimental results, data, quotations, books, records, files, computer software, drawings, other tangible manifestations of ChromaDex’s Confidential Information, keys, access codes, and other property of ChromaDex and its vendors, customers, and affiliates that Consultant had access to as a result of consulting under this Agreement, that are in Consultant’s possession, custody or control; and (b) at the request of ChromaDex, Consultant will execute such documents and take such other actions as necessary in order to reaffirm the covenants and obligations set forth in this Agreement; provided, however that failure to request such reaffirmation will not waive any requirements of this Agreement. Consultant understands that failure to perform these obligations may result in ChromaDex, at its sole discretion, withholding payment of any remaining compensation or taking any other legal action necessary to protect its rights.

 

 

 

26.         Notices. All notices, requests, demands and other communications required or permitted hereunder shall be given in writing via electronic mail. Notice shall be deemed effective upon confirmed receipt. ChromaDex and Consultant shall use their best efforts, and act in good faith, to acknowledge the receipt of notices that are sent by email. Neither ChromaDex nor Consultant shall intentionally fail to acknowledge the receipt of notice sent by email that has been actually received by them and shall not refuse to acknowledge receipt of notice sent by email in an effort to prevent the other party from timely or properly serving such notice. Notice shall be given to the following addresses:

 

If to ChromaDex:

ChromaDex, Inc.

 

legal@chromadex.com

   

If to Consultant:   

Kevin M. Farr

  kevinmf7777@gmail.com 

 

27.         No Agency Created. No agency, employment, partnership or joint venture shall be created by this Agreement, as Consultant is an independent contractor. Consultant shall have no authority as an agent of ChromaDex or to otherwise bind ChromaDex to any agreement, commitment, obligation, contract, instrument, undertaking, arrangement, certificate or other matter. Each party hereto shall refrain from making any representation intended to create an apparent agency, employment, partnership or joint venture relationship between the parties.

 

28.         Counterparts. This Agreement may be executed in counterparts, each of shall constitute an original, whether actual original or a copy, and all of which shall constitute one and the same instrument.

 

29.         Dispute Resolution. The laws of the State of California (without giving effect to conflict of law principles) shall govern all matters arising out of or relating to this Agreement, including interpretation and performance, together with the provisions of the Federal Arbitration Act. Each party submits to the exclusive jurisdiction of, and consents to personal jurisdiction of and venue in, the state or federal courts of Los Angeles County, California (“Forum Courts”) for the proceedings arising out of or relating to this Agreement. ChromaDex and Consultant both consent that any dispute or any claim relating in any way to this Agreement will be resolved by binding arbitration as described in this paragraph, rather than in court, except that any party may bring suit in Forum Courts, submitting to the jurisdiction of the Forum Courts and waiving their respective rights to any other jurisdiction, for any preliminary injunction or temporary restraining order, or to enjoin infringement or other misuse of intellectual property rights. Before Consultant may begin an arbitration proceeding, Consultant must send a letter requesting arbitration and describing Consultant’s claim to ChromaDex at its address, 10900 Wilshire Blvd., Suite 600, Los Angeles, CA 90024. The arbitration will be conducted by the American Arbitration Association (AAA) under its commercial rules at AAA’s offices in Los Angeles County, California. Payment of all filing, administration and arbitrator fees will be governed by the AAA's rules. The expedited procedures of the AAA’s rules will apply only in cases seeking exclusively monetary relief under $50,000, and in such cases the hearing will be scheduled to take place within 90 days of the arbitrator’s appointment. Any dispute regarding whether a claim is subject to arbitration shall be resolved by the arbitrator. Should the arbitrator determine that claims filed are frivolous, the prevailing party shall be entitled to reasonable attorneys’ fees and costs. ChromaDex and Consultant each agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action. If for any reason a claim proceeds in court rather than in arbitration ChromaDex and Consultant each waive any right to a jury trial.

 

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the date indicated below their respective signatures.

 

 

ChromaDex, Inc.

 

Kevin M. Farr

 
           
           

BY:

/s/ Robert N. Fried

 

BY: 

/s/ Kevin M. Farr

 
           

NAME:

Robert N. Fried

 

NAME:

Kevin M. Farr

 
           

TITLE:      

Chief Executive Officer

 

DATE: 

August 10, 2022

 
           

DATE:

August 10, 2022

       

 

 

 

 

 

Exhibit 99.1

 

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ChromaDex Corporation Reports Second Quarter 2022 Financial Results

 

Total net sales of $16.7 million for the three months ended June 30, 2022 with $14.5 million from Tru Niagen® and gross margin of 60.0% for the quarter.

 

LOS ANGELES, CA - August 10, 2022 - ChromaDex Corp. (NASDAQ:CDXC) today announced financial results for the second quarter of 2022.

 

Second Quarter 2022 and Recent Highlights

 

Total net sales were $16.7 million, with $14.5 million from Tru Niagen®, down 5% and 6% from the prior year period, respectively.

 

Total net sales and Tru Niagen® net sales remained relatively flat year over year excluding the initial shelf stocking sales to Wal-Mart in the second quarter of 2021. Sales were also impacted by the timing of shipments to Watson's due to COVID-19 ($1.5 million versus $2.9 million in the prior year period).

 

Strong gross margin of 60% despite lower sales and inflationary pressures in global supply chains.

 

General and administrative expense decreased $2.0 million from the prior year quarter driven by lower legal expense.

 

Announced agreement to launch commercial joint venture in Mainland China, marking an expansion milestone for the brand in a strategic market. Signed agreement with Sinopharm Xingsha to accelerate cross-border sales of Tru Niagen®.

 

Partnered with Juvenis for cross-border sales of Tru Niagen® into South Korea, furthering Asia expansion strategy.

 

In May 2022, the ChromaDex External Research Program (CERP) was honored in the “Nutrition Research Project” category for pioneering research behind Niagen®.

 

“Our team is doing great work in a challenging environment,” said CEO Rob Fried. “The e-commerce business continues to grow, and we are excited about our new partnerships in China and South Korea. We are placing greater emphasis on operating efficiency and profitable growth in the second half of the year.”

 

Results of operations for the three months ended June 30, 2022 compared to the prior year quarter

 

For the three months ended June 30, 2022 (“Q2 2022”), ChromaDex reported net sales of $16.7 million, a decrease $1.0 million or (5)% compared to the second quarter of 2021 (“Q2 2021”). The decline in Q2 2022 revenues compared to Q2 2021 was related to the initial shelf stocking in Wal-Mart to support our launch in the prior quarter driving increased sales in Q2 2021, paired with lower sales to A.S. Watson, a related party, during Q2 2022, which was impacted by timing of shipments due to COVID-19. These declines were largely offset by growth in e-commerce sales of Tru Niagen®.

 

Gross margin percentage declined to 60.0% in Q2 2022 compared to 61.1% in Q2 2021 primarily due to business mix and increases in supply chain headcount to scale the business.

 

Operating expense was flat at $16.4 million in Q2 2022, compared to $16.4 million in Q2 2021. For operating expense, there was a $2.0 million decrease in general and administrative expense which was largely offset by $1.8 million of higher selling and marketing expense. The increase in selling and marketing expense was related to brand building activities, including the new Tru Niagen® television campaign. We expect to scale back our larger brand campaigns in the second half of 2022, as we shift our focus to more efficient distribution channels, primarily e-commerce, coupled with overall expense management.

 

The net loss for Q2 2022 was $6.4 million or $(0.09) per share compared to a net loss of $5.6 million or $(0.08) per share for Q2 2021. Adjusted EBITDA including legal expense, a non-GAAP measure, delivered a loss of $4.6 million for Q2 2022, a $1.1 million decline from Q2 2021. Adjusted EBITDA excluding legal expense, a non-GAAP measure, was a loss of $2.9 million for Q2 2022. See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of non-GAAP measures to net loss, the most directly comparable GAAP measure.

 

For Q2 2022, net cash outflow from operating activities was $3.8 million, compared to $7.9 million in Q2 2021 largely due to changes in working capital including improvements in the collections of trade receivables.

 

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2022 Full Year Outlook

 

Looking forward, for the full year, the Company expects high single digit revenue growth, driven by its global e-commerce business, offset by slower growth with new, and existing, partners. For the full year, the Company expects approximately 60% gross margin, selling and marketing expense will be down as a percentage of net sales, approximately $1 million increase in R&D, and approximately $6 to 7 million decrease in general and administrative expense, as reported, driven by lower legal expense. The Company expects to approach cash flow break-even in the third quarter and be cash flow break-even or better in the fourth quarter of 2022.  The Company considers Adjusted EBITDA including legal expense, a non-GAAP metric, to be a proxy for cash flow before working capital investments, and is targeting cash flow break-even on that basis.

 

Investor Conference Call

 

A live webcast will be held Wednesday, August 10, 2022 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss ChromaDex’s second-quarter financial results and provide a general business update.

 

To listen to the webcast, or to view the earnings press release and its accompanying financial exhibits, please visit the Investors Relations section of ChromaDex’s website at http://chromadex.com. The toll-free dial-in information for this call is 1-888-330-2446 with Conference ID: 4126168.

 

The webcast will be recorded, and will be available for replay via the website from 7:30 p.m. Eastern time on August 10, 2022 to 11:59 p.m. Eastern time on August 17, 2022. The replay of the call can also be accessed by dialing 800-770-2030, using the Replay ID: 4126168.

 

Important Note on Forward Looking Statements:

 

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Statements that are not a description of historical facts constitute forward-looking statements and may often, but not always, be identified by the use of such words as “expects,” “anticipates,” “intends” “estimates,” “plans,” “potential,” “possible,” “probable,” “believes” “seeks,” “may,” “will,” “should,” “could,” “predicts,” “projects,” “continue,” “would” or the negative of such terms or other similar expressions. Forward-looking statements include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the quotation from ChromaDex’s Chief Executive Officer, and statements related to the Company’s 2022 financial outlook including but not limited to revenue growth, gross margin, expenses, and investment plans. Risks that contribute to the uncertain nature of the forward-looking statements include: the impact of the COVID-19 pandemic on our business and the global economy; inflationary conditions and adverse economic conditions; our history of operating losses and need to obtain additional financing; the growth and profitability of our product sales; our ability to maintain sales, marketing and distribution capabilities; changing consumer perceptions of our products; our reliance on a single or limited number of third-party suppliers; risks of conducting business in China; and the risks and uncertainties associated with our business and financial condition in general, described in our filings with the Securities and Exchange Commission (SEC), including, without limitation, our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q as filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and actual results may differ materially from those suggested by these forward-looking statements. All forward-looking statements are qualified in their entirety by this cautionary statement and ChromaDex undertakes no obligation to revise or update this release to reflect events or circumstances after the date hereof.

 

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About ChromaDex:

 

ChromaDex Corporation is a global bioscience company dedicated to healthy aging. The ChromaDex team, which includes world-renowned scientists, is pioneering research on nicotinamide adenine dinucleotide (NAD+), an essential coenzyme that is a key regulator of cellular metabolism and is found in every cell of the human body. NAD+ levels in humans have been shown to decline with age, among other factors, and may be increased through supplementation with NAD+ precursors. ChromaDex is the innovator behind the NAD+ precursor nicotinamide riboside (NR), commercialized as the flagship ingredient Niagen®. Nicotinamide riboside and other NAD+ precursors are protected by ChromaDex’s patent portfolio.

 

The Company delivers Niagen® as the sole active ingredient in its consumer product Tru Niagen® available at www.truniagen.com and through partnerships with global retailers and distributors. The Company also develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw materials to the manufacturers of consumer products. The Company further offers natural product fine chemicals, known as phytochemicals, and related research and development services. Follow us on Twitter @ChromaDex and Instagram @TruNiagen and subscribe to our latest news via our website accessible at www.chromadex.com to which ChromaDex regularly posts copies of its press releases as well as additional updates and financial information about the Company.

 

 

Contacts:

 

Investor Relations

Media Relations

Brianna Gerber

Kendall Knysch

SVP, Finance/Interim Chief Financial Officer

Director of Media Relations

949-419-0288 ext. 127

310-388-6706 ext. 689

briannag@chromadex.com

kendall.knysch@chromadex.com

 

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ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2022

   

2021

   

2022

   

2021

 
                                 

Sales, net

  $ 16,732     $ 17,699     $ 33,991     $ 32,382  

Cost of sales

    6,690       6,889       13,417       12,338  

Gross profit

    10,042       10,810       20,574       20,044  

Operating expenses:

                               

Sales and marketing

    8,021       6,232       16,258       12,490  

Research and development

    1,245       1,004       2,323       1,791  

General and administrative

    7,163       9,128       16,112       18,679  

Total operating expenses

    16,429       16,364       34,693       32,960  

Operating loss

    (6,387 )     (5,554 )     (14,119 )     (12,916 )
                                 

Interest expense, net

    (10 )     (12 )     (18 )     (31 )

Net loss

  $ (6,397 )   $ (5,566 )   $ (14,137 )   $ (12,947 )
                                 

Basic and diluted loss per share attributable to common stockholders:

  $ (0.09 )   $ (0.08 )   $ (0.21 )   $ (0.20 )
                                 

Basic and diluted weighted average common shares outstanding

    68,336       67,986       68,325       66,086  

 

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ChromaDex Corporation and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(In thousands except par values, unless otherwise indicated)

 

   

Jun 30, 2022

   

Dec 31, 2021

 
                 

Assets

 

Current assets:

               

Cash and cash equivalents, including restricted cash of $0.2 million as of both dates

  $ 17,072     $ 28,219  

Trade receivables, net of allowances of $54 and $65, respectively; Including receivables from Related Party of: $1.3 million and $2.1 million, respectively

    4,228       5,226  

Inventories

    15,753       13,601  

Prepaid expenses and other assets

    1,455       1,859  

Total current assets

    38,508       48,905  
                 

Leasehold improvements and equipment, net

    2,899       3,003  

Intangible assets, net

    758       857  

Right-of-use assets

    3,884       4,352  

Other long-term assets

    564       723  

Total assets

  $ 46,613     $ 57,840  

Liabilities and Stockholders' Equity

               

Current liabilities:

               

Accounts payable

  $ 10,197     $ 10,423  

Accrued expenses

    6,696       6,481  

Current maturities of operating lease obligations

    646       528  

Current maturities of finance lease obligations

    13       20  

Customer deposits

    173       161  

Total current liabilities

    17,725       17,613  

Deferred revenue

    4,228       4,346  

Operating lease obligations, less current maturities

    3,882       4,154  

Total liabilities

    25,835       26,113  
                 

Commitments and Contingencies

               
                 

Equity

               

ChromaDex Corporation and subsidiaries stockholders' equity:

               

Common stock, $0.001 par value; authorized 150,000 shares; 68,155 shares and 68,126 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

    68       68  

Additional paid-in capital

    203,798       200,614  

Accumulated deficit

    (183,090 )     (168,953 )

Cumulative translation adjustments

    2       (2 )

Total stockholders’ equity

    20,778       31,727  

Total liabilities and stockholders’ equity

  $ 46,613     $ 57,840  

 

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ChromaDex Corporation and Subsidiaries

Unaudited Reconciliation of Non-GAAP Financial Measures

(In thousands)

 

Reconciliation of Net Loss to Adjusted EBITDA including legal expense and Adjusted EBITDA excluding legal expense

 

   

Q2 2022

   

Q1 2022

   

Q4 2021

   

Q3 2021

   

Q2 2021

 
                                         

Net loss, as reported

  $ (6,397 )   $ (7,740 )   $ (5,325 )   $ (8,856 )   $ (5,566 )

Adjustments:

                                       

Interest expense, net

    10       8       9       15       12  

Depreciation

    212       201       211       232       226  

Amortization of intangibles

    50       49       51       53       61  

Amortization of right of use assets

    169       299       126       131       128  

Share-based compensation

    1,296       1,888       1,473       1,822       1,616  

Severance and restructuring

    17       821       6       342       13  

Adjusted EBITDA including legal expense

  $ (4,643 )   $ (4,474 )   $ (3,449 )   $ (6,261 )   $ (3,510 )
                                         

Legal expense

    1,727       2,341       1,626       5,640       4,150  
                                         

Adjusted EBITDA excluding legal expense

  $ (2,916 )   $ (2,133 )   $ (1,823 )   $ (621 )   $ 640  

 

Non-GAAP Financial Information:

 

To supplement ChromaDex’s unaudited financial data presented in accordance with generally accepted accounting principles (GAAP), the Company has presented Adjusted EBITDA including legal expense and Adjusted EBITDA excluding legal expense, both non-GAAP financial measures. ChromaDex believes the presentation of these non-GAAP financial measures provides important supplemental information to management and investors and enhances the overall understanding of the Company’s historical and current financial operating performance. The Company believes disclosure of non-GAAP financial measures has substance because the excluded expenses are infrequent in nature, are variable in nature or do not represent current cash expenditures. Further, these non-GAAP financial measures are among the indicators the Company uses as a basis for evaluating the Company’s financial performance as well as for planning and forecasting purposes. Accordingly, disclosure of these non-GAAP financial measures provides investors with the same information that management uses to understand the Company’s economic performance year-over-year.

 

Adjusted EBITDA including legal expense and Adjusted EBITDA excluding legal expense are defined as net income before (a) interest, (b) depreciation, (c) amortization, (d) non-cash share-based compensation costs, (e) severance and restructuring expense and (f) legal expense (in the case of Adjusted EBITDA excluding legal expenses only). While ChromaDex believes that these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these measures. These measures are not prepared in accordance with GAAP and may not be directly comparable to similarly titled measures of other companies due to potential differences in the method of calculation. Management compensates for these limitations by relying primarily on the Company’s GAAP results and by using Adjusted EBITDA including legal expense and Adjusted EBITDA excluding expense only supplementally and by reviewing the reconciliation of the non-GAAP financial measure to its most comparable GAAP financial measure.

 

Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The Company’s non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP.

 

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Exhibit 99.2

 

 

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