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Significant Accounting Policies
6 Months Ended
Jun. 30, 2019
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. In January 2019, the Company began its operations under its wholly owned subsidiary ChromaDex Asia Limited and began consolidating its operations into its financial statements. ChromaDex Asia Limited is based in Hong Kong and the Company plans to expand its operations in Asia through this subsidiary. The Company’s fiscal year ends on December 31.

 

Recently adopted accounting standards: Effective the first day of our fiscal year 2019, the Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The Company adopted ASU 2016-02 applying the modified retrospective approach. For leases with a term of 12 months or less, the Company made an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The Company’s leased assets and corresponding liabilities exclude non-lease components.

 

Within the opening balances for the fiscal year beginning January 1, 2019, the Company recognized right of use assets of approximately $1.5 million and corresponding operating lease obligations liabilities of approximately $2.1 million which includes approximately $0.6 million deferred rent liability the Company previously recognized as of December 31, 2018. The Company determines if an arrangement is a lease at inception and classifies it as finance or operating. Leased assets and corresponding liabilities are recognized based on the present value of the lease payments over the lease term utilizing an estimated borrowing rate for a secured loan with a maturity corresponding to the remaining lease term. Leases primarily consist of real property and laboratory equipment.

 

Effective the first day of our fiscal year 2019, the Company adopted Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480);Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Among others, Part I of ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company recognizes the value of a down round feature only when it is triggered and the strike price has been adjusted downward.