Significant Accounting Policies

9 Months Ended

Oct. 01, 2016

Accounting Policies [Abstract]

Significant Accounting Policies

Basis of presentation: The financial statements and accompanying notes have been prepared on a consolidated basis and reflect the consolidated financial position of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated from these financial statements. The Company’s fiscal year ends on the Saturday closest to December 31. Every fifth or sixth fiscal year, the inclusion of an extra week occurs due to the Company’s floating year-end date. The fiscal year 2015 ended on January 2, 2016 consisted of normal 52 weeks. The fiscal year 2016 ending on December 31, 2016 will also include the normal 52 weeks.

Changes in accounting principle: In September 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. The ASU is issued to clarify whether certain items, including debt prepayments and extinguishment costs, should be categorized as operating, investing or financing in the statement of cash flows, The amendments in this ASU clarify that debt extinguishment costs should be classified as financing cash outflows.

The Company early adopted the amendments in this ASU effective as of October 1, 2016. For the nine-month period ended October 1, 2016, the Company incurred loss of approximately $313,000 on debt extinguishment and approximately $281,000 were paid in cash. The Company had previously presented these cash paid costs as operating cash outflows in its consolidated statement of cash flows for the six-month period ended July 2, 2016 in the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 11, 2016. The early adoption has resulted in adjustments to the Company’s consolidated statement of cash flows for the six-month period ended July 2, 2016, by reclassifying the cash paid for debt extinguishment costs as financing cash outflows.

Below are the effects of the change on the consolidated statement of cash flows for the six-month period ended July 2, 2016.

ChromaDex Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Six Month Period Ended July 2, 2016
	Previously Reported			Adjustments			As Adjusted
Cash Flows From Operating Activities
Net income	$	172,958		$	—		$	172,958
Adjustments to reconcile net income to net cash used in operating activities:		1,011,158			281,092			1,292,250
Changes in operating assets and liabilities:		(4,171,503	)		—			(4,171,503	)
Net cash used in operating activities		(2,987,387	)		281,092			(2,706,295	)
Cash Flows From Investing Activities
Purchases of leasehold improvements and equipment		(231,201	)		—			(231,201	)
Purchases of intangible assets		(195,000	)		—			(195,000	)
Net cash used in investing activities		(426,201	)		—			(426,201	)
Cash Flows From Financing Activities
Proceeds from issuance of common stock, net of issuance costs		5,720,000			—			5,720,000
Proceeds from exercise of stock options		622,384			—			622,384
Principal payments on loan payable		(5,000,000	)		—			(5,000,000	)
Cash paid for debt extinguishment costs		—			(281,092	)		(281,092	)
Principal payments on capital leases		(108,249	)		—			(108,249	)
Net cash provided by financing activities		1,234,135			(281,092	)		953,043
Net decrease in cash		(2,179,453	)		—			(2,179,453	)
Cash Beginning of Period		5,549,672			—			5,549,672
Cash Ending of Period	$	3,370,219		$	—		$	3,370,219

Inventories: Inventories are comprised of raw materials, work-in-process and finished goods. They are stated at the lower of cost, determined by the first-in, first-out method (“FIFO”) method, or market. Labor and overhead has been added to inventory that was manufactured or characterized by the Company. The amounts of major classes of inventory as of October 1, 2016 and January 2, 2016 are as follows:

	October 1, 2016			January 2, 2016
Natural product fine chemicals	$	1,024,213		$	1,239,338
Bulk ingredients		5,388,696			7,195,461
		6,412,909			8,434,799
Less valuation allowance		(100,000	)		(261,000	)
	$	6,312,909		$	8,173,799