##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 27, 2008
 Commission File Number: 000-53290
 CHROMADEX CORPORATION
  Delaware
(State or other jurisdiction of incorporation or organization)
    
    26-2940963
(I.R.S. Employer Identification No.)10005 Muirlands Blvd Suite G, Irvine, California,
(Address of Principal Executive Offices)
    
    92618
(Zip Code)
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 Yes o No þ




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##### 



CHROMADEX CORPORATION
2008 QUARTERLY REPORT ON FORM 10-Q
 TABLE OF CONTENTS
 PART I    FINANCIAL INFORMATION (UNAUDITED)ITEM 1. FINANCIAL STATEMENTS:CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 27, 2008 AND
DECEMBER 29, 2007 (UNAUDITED)
    
    
    3CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007
(UNAUDITED)
    
    
    4CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007
(UNAUDITED)
    
    
    5CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AS OF
SEPTEMBER 27, 2008 (UNAUDITED)
    
    
    6CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS
ENDED SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007 (UNAUDITED)
    
    
    7NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
    
    
    8-12ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    13-17ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    18ITEM 4. CONTROLS AND PROCEDURES
    
    
    19PART II    OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    20ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    20ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    20ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    20ITEM 5. OTHER INFORMATION
    
    
    20ITEM 6. EXHIBITS
    
    
    21SIGNATURES
    
    
    22Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 32
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION (UNAUDITED)
 
 ITEM 1. FINANCIAL STATEMENTS
 ChromaDex Corporation and Subsidiaries
 
 Condensed Consolidated Balance Sheets (Unaudited)
 As of September 27, 2008 and December 29, 2007
 September 27, 2008
    
    
    December 29, 2007AssetsCurrent AssetsCash and cash equivalents
    
    $
    2,420,250
    
    
    $
    303,785Trade receivables, net
    
    
    532,351
    
    
    
    375,233Inventories
    
    
    627,214
    
    
    
    497,635Prepaid expenses and other
    
    
    158,611
    
    
    
    60,264Total current assets
    
    
    3,738,426
    
    
    
    1,236,917Property and Equipment, net
    
    
    1,289,885
    
    
    
    1,132,823Deposits and Other Noncurrent AssetsDeposits
    
    
    41,682
    
    
    
    63,976Intangible assets, Net
    
    
    478,027
    
    
    
    487,030519,709
    
    
    
    551,006$
    5,548,020
    
    
    $
    2,920,746Liabilities and Stockholders EquityCurrent LiabilitiesAccounts payable
    
    $
    388,996
    
    
    $
    500,538Accrued expenses
    
    
    313,919
    
    
    
    351,926Notes payable
    
    
    980,357
    
    
    
    Current maturities of capital lease obligations
    
    
    81,902
    
    
    
    74,571Due to officers
    
    
    1,178,206
    
    
    
    1,167,822Customer deposits and other
    
    
    24,938
    
    
    
    117,969Total current liabilities
    
    
    2,968,318
    
    
    
    2,212,826Capital Lease Obligations, less current maturities
    
    
    90,387
    
    
    
    152,766Deferred Rent
    
    
    142,330
    
    
    
    158,839Stockholders EquityCommon stock, $.001 par value; authorized 50,000,000 shares; issued and
outstanding 2008 28,830,216 shares; 2007 22,040,797 shares
    
    
    28,830
    
    
    
    220,408Additional paid-in capital
    
    
    8,868,565
    
    
    
    5,271,389Accumulated deficit
    
    
    (6,550,410
    )
    
    
    (5,095,482
    )2,346,985
    
    
    
    396,315$
    5,548,020
    
    
    $
    2,920,746
   3




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##### Table of Contents



ChromaDex Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Operations (Unaudited)
 Three Months EndedSeptember 27, 2008
    
    
    September 29, 2007Sales
    
    $
    1,069,003
    
    
    $
    1,194,575Cost of goods sold
    
    
    881,839
    
    
    
    752,390Gross profit
    
    
    187,164
    
    
    
    442,185Operating expenses:Selling
    
    
    178,439
    
    
    
    100,986General and administrative
    
    
    707,095
    
    
    
    332,589885,534
    
    
    
    433,575Operating (loss) income
    
    
    (698,370
    )
    
    
    8,610Nonoperating (income) expenses:Interest expense
    
    
    27,208
    
    
    
    6,338Interest income
    
    
    (12,154
    )
    
    
    (423
    )Other
    
    
    (3,077
    )
    
    
    (1,274
    )11,977
    
    
    
    4,641Net (loss) income
    
    $
    (710,347
    )
    
    $
    3,969Basic and Diluted loss per common share
    
    $
    (0.02
    )
    
    $
    0.00Basic and Diluted average common shares outstanding
    
    
    28,600,943
    
    
    
    22,039,664
   4




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##### Table of Contents



ChromaDex Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Operations (Unaudited)
 Nine Months EndedSeptember 27, 2008
    
    
    September 29, 2007Sales
    
    $
    3,327,605
    
    
    $
    3,398,555Cost of goods sold
    
    
    2,375,017
    
    
    
    2,157,904Gross profit
    
    
    952,588
    
    
    
    1,240,651Operating expenses:Selling
    
    
    509,980
    
    
    
    275,557General and administrative
    
    
    1,882,207
    
    
    
    956,8112,392,187
    
    
    
    1,232,368Operating (loss) income
    
    
    (1,439,599
    )
    
    
    8,283Nonoperating (income) expenses:Interest expense
    
    
    41,877
    
    
    
    23,128Interest income
    
    
    (24,108
    )
    
    
    (17,298
    )Other
    
    
    (2,439
    )
    
    
    (1,381
    )15,330
    
    
    
    4,449Income taxes
    
    
    
    
    
    
    800Net (loss) income
    
    $
    (1,454,929
    )
    
    $
    3,034Basic and Diluted loss per common share
    
    $
    (0.06
    )
    
    $
    0.00Basic and Diluted average common shares outstanding
    
    
    25,274,884
    
    
    
    22,005,694
   5




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##### Table of Contents



ChromaDex Corporation and Subsidiaries
 
 Statement of Stockholder Equity (Unaudited)
 Nine months ended September 27, 2008
 Additional
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Accumulated
    
    
    StockholderShares
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    EquityAs of December 30, 2007
    
    
    22,040,797
    
    
    $
    220,408
    
    
    $
    5,271,389
    
    
    $
    (5,095,481
    )
    
    $
    396,315Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    184
    
    
    
    
    
    
    
    184Issuance of common stock
    
    
    1,612,481
    
    
    
    16,125
    
    
    
    1,946,377
    
    
    
    
    
    
    
    1,962,502Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (122,906
    )
    
    
    (122,906
    )Balance, March 29, 2008
    
    
    23,653,278
    
    
    $
    236,533
    
    
    $
    7,217,952
    
    
    $
    (5,218,387
    )
    
    $
    2,236,097Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    33,590
    
    
    
    
    
    
    
    33,590Issuance of common stock
    
    
    1,091,638
    
    
    
    10,916
    
    
    
    1,315,335
    
    
    
    
    
    
    
    1,326,252Effect of reverse merger with Cody
Resources Inc.
    
    
    4,500,013
    
    
    
    (207,200
    )
    
    
    207,200
    
    
    
    
    
    
    
    Repurchase and cancellation of Bayer Shares
    
    
    (1,222,795
    )
    
    
    (12,228
    )
    
    
    (947,390
    )
    
    
    
    
    
    
    (959,617
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (621,676
    )
    
    
    (621,676
    )Balance, June 28, 2008
    
    
    28,022,134
    
    
    $
    28,022
    
    
    $
    7,826,688
    
    
    $
    (5,840,062
    )
    
    $
    2,014,646Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    43,685
    
    
    
    
    
    
    
    43,685Issuance of common stock
    
    
    808,082
    
    
    
    808
    
    
    
    998,192
    
    
    
    
    
    
    
    999,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (710,347
    )
    
    
    (710,347
    )Balance, September 27, 2008
    
    
    28,830,216
    
    
    $
    28,830
    
    
    $
    8,868,565
    
    
    $
    (6,550,410
    )
    
    $
    2,436,985
   6




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##### Table of Contents



ChromaDex Corporation and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 Nine Months EndedSeptember 27, 2008
    
    
    September 29, 2007Cash Flows from Operating ActivitiesNet (loss) income
    
    $
    (1,454,929
    )
    
    $
    3,034Adjustments to reconcile net loss to net cash
used in operating activitiesDepreciation
    
    
    187,856
    
    
    
    180,293Amortization of intangibles
    
    
    87,279
    
    
    
    87,000Stock-based compensation expense
    
    
    77,459
    
    
    
    22Due to Officers
    
    
    10,384
    
    
    
    119,096Interest added to note payable
    
    
    20,740
    
    
    
    (Increase) decrease inTrade receivables
    
    
    (157,118
    )
    
    
    (134,875
    )Inventories
    
    
    (129,579
    )
    
    
    (193,366
    )Prepaid and other expenses
    
    
    (98,346
    )
    
    
    20,596Deposits
    
    
    22,294
    
    
    
    (28,872
    )Increase (decrease) inAccounts payable
    
    
    (111,542
    )
    
    
    77,803Accrued expenses
    
    
    (38,006
    )
    
    
    (248,713
    )Customer deposits and other liabilities
    
    
    (93,031
    )
    
    
    12,560Deferred rent
    
    
    (16,509
    )
    
    
    68,743Net cash (used in) operating activities
    
    
    (1,693,048
    )
    
    
    (36,679
    )Cash Flows From Investing ActivitiesPurchases of property and equipment
    
    
    (344,918
    )
    
    
    (90,134
    )Purchase of patents
    
    
    (78,275
    )
    
    
    Net cash (used in) investing activities
    
    
    (423,193
    )
    
    
    (90,134
    )Cash Flows From Financing ActivitiesPrincipal payments on capital leases
    
    
    (55,048
    )
    
    
    (48,768
    )Principal payments on long-term debt
    
    
    
    
    
    
    (112,500
    )Proceeds from issuance of common stock
    
    
    4,287,754
    
    
    
    3,400Net cash provided by (used in) financing activities
    
    
    4,232,706
    
    
    
    (157,868
    )Net increase (decrease) in cash
    
    
    2,116,465
    
    
    
    (284,681
    )Cash:Beginning
    
    
    303,785
    
    
    
    424,965Ending
    
    $
    2,420,250
    
    
    $
    140,284Supplemental Disclosures of Cash Flow InformationCash payments for interest
    
    $
    21,137
    
    
    $
    23,128Supplemental Schedules of Noncash Investing and Financing ActivitiesCapital lease obligation incurred for the purchase of equipment
    
    $
    
    
    
    $
    132,920Note payable incurred for repurchase of common stock
    
    $
    959,617
    
    
    
    
   7




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##### Table of Contents



Note 1. Interim Financial Statements
  Accounting Treatment of the Merger; Financial Statement Presentation
  Note 2. Nature of Business and Significant Accounting Policies
 Nature of business
 Basis of presentation
  8




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##### Table of Contents



Change in fiscal year ending
 Earnings per share
 Three Months Ended
    
    
    Nine Months EndedSeptember 27, 2008
    
    
    September 29, 2007
    
    
    September 27, 2008
    
    
    September 29, 2007Basic average common shares outstanding
    
    
    28,600,943
    
    
    
    22,039,664
    
    
    
    25,274,884
    
    
    
    22,005,694Dilutive potential sharesWarrants and options in the money, net
    
    
    532,336
    
    
    
    
    
    
    
    532,336
    
    
    
    Weighted average common shares outstanding
assuming dilution
    
    
    29,133,279
    
    
    
    22,039,664
    
    
    
    25,807,220
    
    
    
    22,005,694
 Note 3. Financial Instruments
 Fair Value Measurements
      9




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##### Table of Contents



Financial Assets
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Cash
    
    $
    2,420,000
    
    
    $
    2,420,000
    
    
    $
    
    
    
    $
    Total financial assets as fair value
    
    $
    2,420,000
    
    
    $
    2,420,000
    
    
    $
    
    
    
    $
    
 Financial Liabilities
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Notes Payable(a)
    
    $
    980,000
    
    
    $
    
    
    
    $
    980,000
    
    
    $
    Capital Lease Obligations(b)
    
    
    172,000
    
    
    
    
    
    
    
    172,000
    
    
    
    Total financial liabilities as fair
value
    
    $
    1,152,000
    
    
    $
    
    
    
    $
    1,152,000
    
    
    $
    
 (a)
    
    Based on the bank prime rate plus a margin of 2%(b)
    
    Incremental interest rates range from 9.7% to 22.5% Note 4. Notes Payable
  Note 5. Capital Stock
  Summary of Significant Assumptions
    
    September 27, 2008Expected Term
    
    
    5.00Expected Volatility
    
    
    22.02
    %Expected Dividends
    
    
    0.00
    %Risk Free Rate of Return
    
    
    2.84
    %
   10




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##### Table of Contents



Note 6. Stock Options and Unearned Stock-Based Compensation
   For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 27, 2008
    
    
    September 29, 2007
    
    
    September 27, 2008
    
    
    September 29, 2007Total share-based compensation expense
    
    $
    43,685
    
    
    $
    22
    
    
    $
    77,459
    
    
    $
    22Weighted average grant date fair value, options
    
    $
    
    
    
    $
    0.03
    
    
    $
    0.40
    
    
    $
    0.03Total unrecognized compensation cost
    
    $
    624,743
    
    
    $
    302
    
    
    $
    624,743
    
    
    $
    302Remaining weighted average period cost will be recognized over
    
    
    3.50
    
    
    
    4.04
    
    
    
    3.50
    
    
    
    4.04
 Note 7. Related Party Transactions
   11




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##### Table of Contents



Note 8. Managements Plans for Continuing Operations
    12




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 GENERAL
 This Quarterly Report on Form 10-Q (theForm 10-Q) contains forward-looking statements, as
defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect
the Companys current expectations of the future results of its operations, performance and
achievements. Forward-looking statements are covered under the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The Company has tried, wherever possible, to
identify these statements by using words such as anticipates, believes, estimates, expects,
plans, intends and similar expressions. These statements reflect managements current beliefs
and are based on information now available to it. Accordingly, these statements are subject to
certain risks, uncertainties and contingencies that could cause the Companys actual results,
performance or achievements in 2008 and beyond to differ materially from those expressed in, or
implied by, such statements. These risks, uncertainties, factors and other risks are set forth
under the caption Risk Factors in the Companys Current Report on Form 8-K filed with the
Commission on June 24, 2008 and other periodic reports filed since such date. Readers of this
Quarterly Report on Form 10-Q should not place undue reliance on any forward-looking statements.
Except as required by federal securities laws, the Company undertakes no obligation to update or
revise these forward-looking statements to reflect new events or uncertainties.
  Overview
    13




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14




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##### Table of Contents



Results of Operations
   Net Sales
 Net sales consist of Reference Standards and Contract Service sales less returns, discounts
and freight costs.
 Cost of Goods Sold
 Costs of goods sold include Raw Materials, Labor, and Overhead.
  15




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##### Table of Contents



Gross Profit
 Gross profit is net sales less the cost of sales and is affected by a number of factors
including product mix, competitive pricing and costs of products and services.
 Operating Expenses-Sales and Marketing
 Sales and Marketing Expenses consist of salaries, commissions to employees and advertising and
marketing.
 Operating Expenses-General and Administrative
 General and Administrative Expenses consist of research and development, general company
administration, IT, accounting and executive management.
 Non-operating Expenses- Interest Expense
 Interest expense consists of interest on notes payable and capital leases.
 Non-operating Expenses- Interest Income
 Interest Income consists of interest earned on short term investment and notes receivable.
  16




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##### Table of Contents



Depreciation and Amortization
  Liquidity and Capital Resources
  Net cash used in operating activities
   Net cash used in investing activities
  Net cash provided by financing activities
    17




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Dividend policy
  Off-Balance Sheet Arrangements
  Contractual Obligations
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   18




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
   19




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2.

    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
   20




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ITEM 6. EXHIBITS
 Exhibit No.
    
    Description of Exhibits3.1
    
    
    Amended and Restated Certificate of Incorporation of ChromaDex
Corporations, a Delaware corporation (incorporated by reference from,
and filed as Exhibit 3.1 to the Companys Current Report on Form 8-K
filed with the Commission on June 24, 2008).3.2
    
    
    Bylaws of ChromaDex Corporation, a Delaware corporation (incorporated
by reference from, and filed as Exhibit 3.2 to the Companys Current
Report on Form 8-K filed with the Commission on June 24, 2008).10.1
    
    
    Amended Employment Agreement dated April 14, 2008, by and between
Frank L. Jaksch, Jr. and ChromaDex, Inc. Amended August 21, 2008.10.2
    
    
    Amended Employment Agreement dated April 14, 2008, by and between
Thomas C. Varvaro and the ChromaDex, Inc. Amended August 21, 2008.10.3
    
    
    First Amendment to Standard Industrial/Commercial Multi-Tenant Lease
dated July 18, 2008, between the ChromaDex, Inc. and SCIF Portfolio
II, LLC.10.4
    
    
    Letter Agreement regarding termination of placement agency, dated
August 12, 2008 between ChromaDex Corporation and New Castle
Financial Services.31.1
    
    
    Certification of the Chief Executive Officer pursuant to §240.13a-14
or §240.15d-14 of the Securities Exchange Act of 1934, as amended.31.2
    
    
    Certification of the Chief Financial Officer pursuant to §240.13a-14
or §240.15d-14 of the Securities Exchange Act of 1934, as amended.32
    
    
    Certification pursuant to 18 U.S.C. Section 1350 (as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002).
  21




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##### Table of Contents



SIGNATURES
  Date: November 10, 2008
    ChromaDex Corporation.
           (Registrant)/s/ THOMAS C. VARVAROThomas C. VarvaroChief Financial Officer  22




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description of Exhibits3.1
    
    
    Amended and Restated Certificate of Incorporation of ChromaDex
Corporations, a Delaware corporation (incorporated by reference from,
and filed as Exhibit 3.1 to the Companys Current Report on Form 8-K
filed with the Commission on June 24, 2008).3.2
    
    
    Bylaws of ChromaDex Corporation, a Delaware corporation (incorporated
by reference from, and filed as Exhibit 3.2 to the Companys Current
Report on Form 8-K filed with the Commission on June 24, 2008).10.1
    
    
    Amended Employment Agreement dated April 14, 2008, by and between
Frank L. Jaksch, Jr. and ChromaDex, Inc. Amended August 21, 2008.10.2
    
    
    Amended Employment Agreement dated April 14, 2008, by and between
Thomas C. Varvaro and the ChromaDex, Inc. Amended August 21, 2008.10.3
    
    
    First Amendment to Standard Industrial/Commercial Multi-Tenant Lease
dated July 18, 2008, between the ChromaDex, Inc. and SCIF Portfolio
II, LLC.10.4
    
    
    Letter Agreement regarding termination of placement agency, dated
August 12, 2008 between ChromaDex Corporation and New Castle
Financial Services.31.1
    
    
    Certification of the Chief Executive Officer pursuant to §240.13a-14
or §240.15d-14 of the Securities Exchange Act of 1934, as amended.31.2
    
    
    Certification of the Chief Financial Officer pursuant to §240.13a-14
or §240.15d-14 of the Securities Exchange Act of 1934, as amended.32
    
    
    Certification pursuant to 18 U.S.C. Section 1350 (as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002).
  23