Restatement of Previously Issued Financial Statements

3 Months Ended

Mar. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Note 2. Restatement of Previously Issued Financial Statements

On November 18, 2013, during the review of the interim financial statements, the Company determined that the previously issued financial statements for the three month period and the six month period ending March 30, 2013 and June 29, 2013, respectively, contained in the Company’s Quarterly Reports on Form 10-Q (“ Quarterly Reports”) for the period ended March 30, 2013 (as filed with the Securities and Exchange Commission on May 10, 2013) and June 29, 2013 (as filed with the Securities and Exchange Commission on August 13, 2013), respectively, should no longer be relied upon because of certain non-cash errors in the Quarterly Reports and that those financial statements (the “Financial Statements”) would be restated to make the necessary accounting adjustments.

The financial statements filed for the three month period ended March 30, 2013 and the six month period ended June 29, 2013 contained a misstatement pertaining to the accounting treatment of the sale of the BluScience assets to NeutriSci International, Inc. (“NeutriSci”) (See Note 4). The value of the equity and the senior secured convertible note that the Company received from NeutriSci as part of the purchase price were originally accounted for at their stated values which resulted in the Company recognizing a gain on the sale of the BluScience assets. Due to the inability to make a reliably determinable estimate of the fair value of the NeutriSci equity securities and the ultimate collectability of the note received as consideration, management has determined that the proper accounting for the sale transaction is the cost recovery method. Under the cost recovery method, no gain on the sale will be recognized until the Company’s cost basis in the net assets sold has been recovered. In addition, the Company originally accounted for its investment in NeutriSci under the cost method where it has now been determined that the equity method should have been used. The Company expects all amendments and restatements to the Financial Statements affected to be non-cash in nature.

The Company has determined that the restatements of its Financial Statements resulted from a material weakness in its internal control over financial reporting, specifically related to its process and procedures related to the accounting for sale of assets in exchange for non-cash consideration. More information regarding the Company’s controls and procedures is set forth in Part I, Item 4 of this Form 10-Q/A.

The restatement adjustments to the previously issued financial statements for the three month period ended March 30, 2013 are as follows:

ChromaDex Corporation and Subsidiaries
Condensed Consolidated Balance Sheet (Unaudited)
March 30, 2013
	Previously Reported			Restatement Adjustments			As Restated
Assets
Current Assets
Cash	$	966,576		$	—		$	966,576
Trade receivables		986,370			—			986,370
Non-trade receivable		500,000			—			500,000
Note receivable, current		1,210,407			(1,210,407	)		—
Inventories		1,573,452			—			1,573,452
Prepaid expenses and other assets		453,198			—			453,198
Total current assets		5,690,003			(1,210,407	)		4,479,596
Leasehold Improvements and Equipment, net		980,792			—			980,792
Other Noncurrent Assets
Deposits		35,424			—			35,424
Note receivable, less current		1,161,162			(1,161,162	)		—
Long-term equity investment		2,678,832			(2,678,832	)		—
Long-term investment in affiliate		—			2,157,804			2,157,804
Intangible assets, net		171,218			—			171,218
Total other noncurrent assets		4,046,636			(1,682,190	)		2,364,446
Total assets	$	10,717,431		$	(2,892,597	)	$	7,824,834
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	2,376,208		$	—		$	2,376,208
Accrued expenses		789,408			—			789,408
Current maturities of capital lease obligations		98,841			—			98,841
Customer deposits and other		314,468			—			314,468
Deferred rent, current		66,772			—			66,772
Total current liabilities		3,645,697			—			3,645,697
Capital lease obligations, less current maturities		218,952			—			218,952
Deferred rent, less current		118,508			—			118,508
Stockholders' Equity
Common stock		96,008			—			96,008
Additional paid-in capital		34,886,353			—			34,886,353
Accumulated deficit		(28,248,087	)		(2,892,597	)		(31,140,684	)
Total stockholders' equity		6,734,274			(2,892,597	)		3,841,677
Total liabilities and stockholders' equity	$	10,717,431		$	(2,892,597	)	$	7,824,834

ChromaDex Corporation and Subsidiaries
Condensed Consolidated Statement of Operations (Unaudited)
For the Three Month Period Ended March 30, 2013
	Previously Reported			Restatement Adjustments			As Restated
Sales	$	2,334,566		$	—		$	2,334,566
Cost of sales		1,661,726			—			1,661,726
Gross profit		672,840			—			672,840
Operating expenses:
Sales and marketing		729,424			—			729,424
General and administrative		1,359,901			—			1,359,901
Gain on sale of assets		(2,891,917	)		2,891,917			—
Operating expenses		(802,592	)		2,891,917			2,089,325
Operating income (loss)		1,475,432			(2,891,917	)		(1,416,485	)
Nonoperating income (expense):
Interest income		884			(680	)		204
Interest expense		(7,791	)		—			(7,791	)
Nonoperating expenses		(6,907	)		(680	)		(7,587	)
Net income (loss)	$	1,468,525		$	(2,892,597	)	$	(1,424,072	)
Basic net income (loss) per common share	$	0.02		$	(0.03	)	$	(0.02	)
Diluted net income (loss) per common share	$	0.01		$	(0.03	)	$	(0.02	)
Basic weighted average common shares outstanding		94,626,120			—			94,626,120
Diluted weighted average common shares outstanding		97,924,457			(3,298,337	)		94,626,120

ChromaDex Corporation and Subsidiaries
Condensed Consolidated Statement of Cash Flows (Unaudited)
For the Three Month Period Ended March 30, 2013
	Previously Reported			Restatement Adjustments			As Restated
Cash Flows From Operating Activities
Net income (loss)	$	1,468,525		$	(2,892,597	)	$	(1,424,072	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation of leasehold improvements and equipment		79,184			—			79,184
Amortization of intangibles		4,964			—			4,964
Share-based compensation expense		351,590			—			351,590
Gain on sale of assets		(2,891,917	)		2,891,917			—
Interest added to note receivable		(680	)		680			—
Changes in operating assets and liabilities:
Trade receivables		971,153			—			971,153
Inventories		164,322			—			164,322
Prepaid expenses and other assets		(86,181	)		—			(86,181	)
Accounts payable		(683,152	)		—			(683,152	)
Accrued expenses		(72,190	)		—			(72,190	)
Customer deposits and other		4,201			—			4,201
Deferred rent		(15,621	)		—			(15,621	)
Net cash used in operating activities		(705,802	)		—			(705,802	)
Cash Flows From Investing Activities
Purchases of leasehold improvements and equipment		(7,428	)		—			(7,428	)
Purchase of intangible assets		(40,000	)		—			(40,000	)
Proceeds from sale of assets		500,000			—			500,000
Net cash provided by investing activities		452,572			—			452,572
Cash Flows From Financing Activities
Proceeds from exercise of stock options		6,769			—			6,769
Proceeds from exercise of warrants		716,999			—			716,999
Principal payments on capital leases		(23,962	)		—			(23,962	)
Net cash provided by financing activities		699,806			—			699,806
Net increase in cash		446,576			—			446,576
Cash Beginning of Period		520,000			—			520,000
Cash Ending of Period	$	966,576		$	—		$	966,576