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8-K
CHROMADEX CORP. filed this Form 8-K on 03/07/2019
Entire Document
 
exhibit 99.1
 
Exhibit 99.1
 
CHROMADEX CORPORATION REPORTS 2018 FINANCIAL RESULTS
 
- Full Year 2018 Net Revenues Increased by 49% to $31.6 Million and Fourth Quarter 2018 Net Revenues Increased by 20% to $9.1 Million -
 
Fourth Quarter 2018 Highlights vs. Fourth Quarter 2017
 
Entered into a global license and supply agreement with Nestlé Health Science (“NHSc”), which provides NHSc with the exclusive right to include TRU NIAGEN® in its branded medical nutrition products and co-exclusive rights to include TRU NIAGEN in its protein based ready to drink or loose powder beverages;
Received regulatory approval to sell TRU NIAGEN across all channels in Canada, with initial launch on www.truniagen.ca and to healthcare practitioners at Fullscript Canada; and
Net sales for the fourth quarter of 2018 were $9.1 million, an increase of 20% compared to $7.5 million in the fourth quarter of 2017.
 
Full Year 2018 Highlights vs. Full Year 2017
 
Net sales for the full year 2018 were a record $31.6 million, an increase of 49% compared to $21.2 million for the full year 2017;
TRU NIAGEN net sales for the full year 2018 were $18.5 million, an increase of 238% compared to $5.5 million for the full year 2017; and
United States Patent Trademark Office confirmed the validity of the patents company exclusively licenses for NIAGEN®, and company is prepared to vigorously prosecute its pending infringement action.
 
LOS ANGELES, March 7, 2019 (GLOBE NEWSWIRE) - ChromaDex Corp. (NASDAQ:CDXC) today reported fourth quarter and full year 2018 financial results.
 
“Our momentum continues with another strong quarter, and a strong year overall. In 2018, we successfully focused on the fundamentals, continuing to grow our business and strengthen our patents, while assembling a visionary leadership team, enhancing brand awareness, expanding our global reach, and securing a supply and license agreement with another great global partner, Nestlé Health Science,” said Rob Fried, ChromaDex Chief Executive Officer.
 
Results of operations for the three months ended December 31, 2018
 
For the three months ended December 31, 2018 (“Q4 2018”), ChromaDex reported net sales of $9.1 million, up 20% compared to $7.5 million in the fourth quarter of 2017 ("Q4 2017"). The increase in Q4 2018 revenues was driven by growth in sales of TRU NIAGEN.
 
Gross margin as a percentage of net sales improved by 110 basis points to 52.0% for Q4 2018 compared to 50.9% versus the prior year. We experienced better gross margins due to the positive impact of TRU NIAGEN consumer product sales, which was partially offset by a negative impact of 140 basis points related to our decision to wind down sales for two ingredients in our ingredients segment.
 
 
 
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Operating expenses were $13.0 million in Q4 2018, compared to $12.6 million in the same period for 2017. The increase of $0.4 million in operating expenses was the result of the Company’s strategic decision to invest $2.3 million more in advertising and marketing to build out the TRU NIAGEN brand, offset by $1.8 million of lower general and administrative spending and $0.2 million lower R&D expenses. The lower general and administrative expenses was primarily due to lower equity-based compensation expenses, which decreased by $1.6 million, from $3.4 million to $1.8 million.
 
The net loss for the fourth quarter of 2018 was $8.2 million or ($0.15) per share as compared to a net loss of $8.8 million or ($0.17) per share for the fourth quarter of 2017. For Q4 2018, the reported loss was negatively impacted by a non-cash charge of $2.0 million related to equity-based compensation.
 
Results of operations for the year ended December 31, 2018
 
For full year 2018, net revenues were $31.6 million, up 49% compared to $21.2 million from continuing operations for full year 2017, fueled by the growth of TRU NIAGEN. TRU NIAGEN net revenues increased by 238%, from $5.5 million to $18.5 million and represented 58% of the total company’s revenues.
 
Gross margin as a percentage of net sales improved for full year 2018 by 150 basis points to 50.9% compared to 49.4% for the same period in 2017. We experienced better margins due to the positive impact of TRU NIAGEN consumer product sales.
 
Operating expenses were $49.2 million for full year 2018, compared to $26.9 million from continuing operations in the same period for 2017. The increase of $22.3 million in operating expenses for full year 2018 was the result of the Company’s strategic decision to invest $12.1 million more in advertising and marketing to build the TRU NIAGEN brand, as well as higher R&D expenses of $1.5 million, higher legal costs of $4.7 million, and higher equity-based compensation of $1.0 million in general and administrative expenses. Excluding legal and equity-based compensation expenses, general and administrative expenses were $11.7 million, up by $3.8 million as compared to the prior year.
 
The net loss for full year 2018 was $33.3 million or ($0.61) per share as compared to a loss from continuing operations of $16.5 million or ($0.37) per share for full year 2017. For full year 2018, the reported loss was negatively impacted by a non-cash charge of $6.4 million related to equity-based compensation.
 
For full year 2018, the net cash used in operating activities was $20.9 million versus $9.8 million in the prior year. The Company ended the year of 2018 with a solid balance sheet with cash of $22.6 million, which does not include the $4 million upfront payment from Nestlé since the payment was received in the first quarter of 2019.
 
2019 Outlook
 
Looking forward, the Company expects revenue growth to be driven primarily by its U.S. ecommerce and Watsons’ international business, as well as the launch of TRU NIAGEN® with other distributors in certain new international markets. The Company expects continued gross margin improvement and lower selling, marketing and advertising in absolute dollars as well as general and administrative expenses as a percentage of net sales.
 
Based on these drivers, we continue to expect the Company to be cash flow breakeven by the fourth quarter of 2019 or early 2020.
 
 
 
 
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Investor Conference Call
 
ChromaDex management will host an investor conference call to discuss the year end results and provide a general business update on Thursday, March 7, at 4:30pm ET.
 
Participants should call in at least 10 minutes prior to the call. The dial-in information is as follows:
 
Date: Thursday, March 7, 2019
 
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
 
Toll-free dial-in number: 1-866-327-8118
 
International dial-in number: 1-678-509-7526
 
Conference ID: 5675308
 
Webcast link: https://edge.media-server.com/m6/p/h5vfpb7m
 
The webcast replay will be available after the completion of the call on the Investor Relations section of the Company website, www.chromadex.com.
 
The earnings press release, and its accompanying financial exhibits, will be available on the Investor Relations section of the Company website, www.chromadex.com.
 
About ChromaDex:
 
ChromaDex Corp. is a science-based integrated nutraceutical company devoted to improving the way people age. ChromaDex scientists partner with leading universities and research institutions worldwide to uncover the full potential of NAD and identify and develop novel, science-based ingredients. Its flagship ingredient, NIAGEN® nicotinamide riboside, sold directly to consumers as TRU NIAGEN®, is backed with clinical and scientific research, as well as extensive IP protection. TRU NIAGEN® is helping the world AGE BETTER®. ChromaDex maintains a website at www.chromadex.com to which ChromaDex regularly posts copies of its press releases as well as additional and financial information about the Company.
 
 
 
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Important Note on Forward Looking Statements:
 
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such statements include the quotation from ChromaDex’s Chief Executive Officer, and statements related to future, revenue growth being driven by ChromaDex’s U.S. ecommerce and Watsons’ international business, launching TRU NIAGEN in certain new international markets, the expectations of gross margin improvement, the expectations of lower selling, marketing and advertising expenses in absolute dollars, the expectations of lower general and administrative expenses as a percentage of net sales and the expectations of future cash flow. Other risks that contribute to the uncertain nature of the forward-looking statements are reported in our most recent Forms 10-Q and 10-K 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.
 
ChromaDex Investor Relations Contact:
 
Brianna Gerber, Sr. Director of FP&A and Investor Relations
(949) 344-3782
briannag@chromadex.com
 
ChromaDex Media Contact:
 
Alex Worsham, Director of Strategic Partnerships
(949) 648-3775
alexw@chromadex.com
 
 
 
ChromaDex Corporation
 
 
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ChromaDex Corporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
Three Months Ended December 31, 2018 and December 30, 2017
 
 
 
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Q4 2018 
  Q4 2017 
 
    
    
Sales, net
 $9,067 
 $7,531 
Cost of sales
  4,356 
  3,696 
 
    
    
Gross profit
  4,711 
  3,835 
 
    
    
Operating expenses:
    
    
Sales and marketing
  4,658 
  2,401 
Research and development
  1,275 
  1,453 
General and administrative
  6,943 
  8,759 
Other
  75 
  - 
Operating expenses
  12,951 
  12,613 
 
    
    
Operating loss
  (8,240)
  (8,778)
 
    
    
Nonoperating income (expense):
    
    
Interest income (expense), net
  22 
  (44)
Nonoperating income (expenses)
  22 
  (44)
 
    
    
Net loss
 $(8,218)
 $(8,822)
 
    
    
Basic and diluted loss per common share
 $(0.15)
 $(0.17)
 
    
    
Basic and diluted weighted average common shares outstanding
  55,203 
  51,179 
 

See Notes to Consolidated Financial Statements in Part II of ChromaDex's Annual Report on Form 10-K filed with Securities and Exchange Commission on March 7, 2019.
 
 
 
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ChromaDex Corporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
Years Ended December 31, 2018 and December 30, 2017
 
 
 
 
 
 
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
 
2017
 
 
 
 
 
 
 
 
Sales, net
 $31,557 
 $21,201 
Cost of sales
  15,502 
  10,724 
 
    
    
Gross profit
  16,055 
  10,477 
 
    
    
Operating expenses:
    
    
Sales and marketing
  16,537 
  4,459 
Research and development
  5,478 
  4,007 
General and administrative
  27,137 
  17,642 
Other
  75 
  746 
Operating expenses
  49,227 
  26,854 
 
    
    
Operating loss
  (33,172)
  (16,377)
 
    
    
Nonoperating expense:
    
    
Interest expense, net
  (79)
  (153)
Other
  (65)
  - 
Nonoperating expenses
  (144)
  (153)
 
    
    
Loss from continuing operations
  (33,316)
  (16,530)
 
    
    
Loss from discontinued operations
  - 
  (315)
Gain on sale of discontinued operations
  - 
  5,467 
Income from discontinued operations, net
  - 
  5,152 
 
    
    
Net loss
 $(33,316)
 $(11,378)
 
    
    
Basic and diluted earnings (loss) per common share:
    
    
Loss from continuing operations
 $(0.61)
 $(0.37)
Earnings from discontinued operations
 $- 
 $0.11 
 
    
    
Basic and diluted loss per common share
 $(0.61)
 $(0.26)
 
    
    
Basic and diluted weighted average common shares outstanding
  55,006 
  44,599 

 
See Notes to Consolidated Financial Statements in Part II of ChromaDex's Annual Report on Form 10-K filed with Securities and Exchange Commission on March 7, 2019.
 
 
 
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ChromaDex Corporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Balance Sheets
 
 
 
 
 
 
December 31, 2018 and December 30, 2017
 
 
 
 
 
 
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dec. 31, 2018
 
 
Dec. 30, 2017
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
Cash, including restricted cash of $0.2 million and $0, respectively
 $22,616 
 $45,389 
    Trade receivables, net of allowances of $0.5 million and $0.7 million, respectively;
 
    
Receivables from Related Party: $0.7 million and $1.0 million, respectively
  4,359 
  5,338 
Contract assets
  56 
  - 
Receivable held at escrow, net of allowance of $0.1 million
  677 
  - 
Inventories
  8,249 
  5,796 
Prepaid expenses and other assets
  577 
  655 
Total current assets
  36,534 
  57,178 
 
    
    
Leasehold Improvements and Equipment, net
  3,585 
  2,872 
Deposits
  243 
  272 
Receivable Held at Escrow
  - 
  750 
Intangible Assets, net
  1,547 
  1,652 
Other Long-term Assets
  323 
  - 
 
    
    
Total assets
 $42,232 
 $62,724 
 
    
    
Liabilities and Stockholders' Equity
    
    
 
    
    
Current Liabilities
    
    
Accounts payable
 $9,548 
 $3,719 
Accrued expenses
  4,313 
  3,645 
Current maturities of capital lease obligations
  173 
  196 
Contract liabilities and customer deposits
  275 
  314 
Deferred rent, current
  131 
  114 
Due to officer
  - 
  100 
Total current liabilities
  14,440 
  8,088 
 
    
    
Capital Lease Obligations, Less Current Maturities
  137 
  310 
Deferred Rent, Less Current
  477 
  492 
 
    
    
Total liabilities
  15,054 
  8,890 
 
    
    
Commitments and Contingencies
    
    
 
    
    
Stockholders' Equity
    
    
Common stock, $.001 par value; authorized 150,000 shares;
    
    
issued and outstanding December 31, 2018 55,089 shares and
    
    
December 30, 2017 54,697 shares
  55 
  55 
Additional paid-in capital
  116,876 
  110,380 
Accumulated deficit
  (89,753)
  (56,601)
Total stockholders' equity
  27,178 
  53,834 
 
    
    
Total liabilities and stockholders' equity
 $42,232 
 $62,724 
 
 
See Notes to Consolidated Financial Statements in Part II of ChromaDex's Annual Report on Form 10-K filed with Securities and Exchange Commission on March 7, 2019.
 
 
 
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