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EX-32 - CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANE - ChromaDex Corp.ex32-1.htm
EX-31 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF - ChromaDex Corp.ex31-2.htm
EX-31 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF - ChromaDex Corp.ex31-1.htm
EX-23 - CONSENTS OF EXPERTS AND COUNSEL - ChromaDex Corp.ex23-1.htm

 

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K/A
(Amendment No. 1)
 
 
 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
For the fiscal year ended December 31, 2019
or
 
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to
 
Commission file number 001-37752
 
CHROMADEX CORPORATION
(Exact name of Registrant as specified in its Charter)
 
Delaware
 
26-2940963
(State or other jurisdiction of incorporation)
 
(I.R.S. Employer Identification No.)
  
 
 
10900 Wilshire Blvd. Suite 600, Los Angeles, California
 
90024
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant's telephone number, including area code (310) 388-6706
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.001 par value per share
CDXC
The Nasdaq Capital Market
 
Securities registered pursuant to Section 12(g) of the Act: None.
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  [ ]  No [X ]
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  [ ] No [X]
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  [X] No [ ]
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
              Large accelerated filer [   ]                    Accelerated filer [X]                    Non-accelerated filer [   ]
   Smaller reporting company [X]                   Emerging growth company [   ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financing accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
 
As of June 30, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $190.4 million, based on the closing price of the registrant’s common stock on the NASDAQ Capital Market on June 30, 2019.
 
Number of shares of common stock of the registrant outstanding as of May 17, 2020: 61,477,895.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
None.
 

 
 

 
 
TABLE OF CONTENTS
 
 
Item
 
 
 
 
 
 
PART I
 
 

 
 1
 

PART II
 
 

 
 2
 

PART IV
 
 

 
 6
 
 
 
 
 
EXPLANATORY NOTE
 
 
ChromaDex Corporation (“ChromaDex,” the “Company,” “we,” “our” or “us”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to amend our Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”), originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 10, 2020. As a result of a material weakness in internal control over financial reporting that existed as of December 31, 2019 that was not identified until the Company was preparing its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, the Company is amending Part II, Item 9A “Controls and Procedures” with respect to (a) the Company’s conclusions regarding the effectiveness of (i) the Company’s disclosure controls and procedures and (ii) its internal control over financial reporting, and (b) Marcum LLP’s related attestation report on the Company’s internal control over financial reporting. In addition, the Company is revising Item 1A. “Risk Factors” to add a risk factor regarding this material weakness in internal control over financial reporting. The material weakness in internal controls over financial reporting is also reported in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020.
 
In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is including with this Amendment currently dated certifications as Exhibits 31.1, 31.2, and 32.1. We are also filing an updated Consent of Independent Registered Public Accounting Firm. Accordingly, Part IV, Item 15, “Exhibits and Financial Statement Schedules” is amended to include the currently dated certifications and consent as exhibits.
 
Except as described in this Explanatory Note, this Amendment does not reflect events occurring after the date of the filing of the Form 10-K, nor does it amend, modify or otherwise update any other information in the Form 10-K. Among other things, forward-looking statements made in the Form 10-K have not been revised to reflect events that occurred or facts that became known to us after filing of the Form 10-K, and any such forward-looking statements should be read in their historical context. Accordingly, this Amendment should be read in conjunction with the Form 10-K and with the Company’s filings with the SEC subsequent to the filing of the Form 10-K.
 
Notwithstanding the existence of the material weakness described in Part II. Item 9A – “Controls and Procedures,” the Company believes that the consolidated financial statements in the Form 10-K fairly present, in all material respects, the Company’s financial position, results of operations and cash flows as of the dates, and for the periods, presented, in conformity with U.S. generally accepted accounting principles.
 
 
 
 
PART I
 
Item 1A.          Risk Factors
 
The Company is supplementing the risk factors previously disclosed in “Item 1A. Risk Factors” of the Form 10-K with the following risk factor, which should be read in conjunction with the other risk factors presented in the Form 10-K:
 
Failure to remediate a material weakness in internal accounting controls could result in material misstatements in our financial statements.
 
Our management has identified a material weakness in our internal control over financial reporting and has concluded that, due to such material weakness, our disclosure controls and procedures were not effective as of December 31, 2019. The material weakness in internal control over financial reporting resulted from a deficiency in our disclosure controls and procedures which could have resulted in us not disclosing a material potential loss that was reasonably possible, and therefore requiring a qualitative disclosure in our consolidated financial statements under ASC 450 – Contingencies. The material weakness has not been remediated as of March 31, 2020. If not remediated, or if we identify further material weaknesses in our internal controls, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.
 
PART II
 
Item 9A.          Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures (As Revised)
 
In connection with the filing of our Form 10-K, our chief executive officer and our chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2019, concluded that our disclosure controls and procedures were effective.
 
Subsequent to that evaluation, management reevaluated the effectiveness of our disclosure controls and procedures as of December 31, 2019 and concluded that, because of the material weakness identified in our internal control over financial reporting discussed below, our disclosure controls and procedures were not effective as of December 31, 2019.
 
Management Report on Internal Control over Financial Reporting (As Revised)
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting include those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
  
(ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
 
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.
 
 
 
In connection with the Form 10-K, our management, including the undersigned principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In conducting its assessment, our management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework in 2013. Based on this assessment, our management concluded that, as of December 31, 2019, our internal control over financial reporting was effective based on those criteria.
 
Subsequent to that evaluation, management reevaluated the effectiveness of our internal control over financial reporting as of December 31, 2019 and concluded that, because of the material weakness identified, our internal control over financial reporting was not effective as of December 31, 2019.
 
The material weakness in internal control over financial reporting resulted from a deficiency in our disclosure controls and procedures which could have resulted in the Company not disclosing a material potential loss that was reasonably possible, and therefore requiring a qualitative disclosure in consolidated financial statements under ASC 450 – Contingencies.
 
The Company is still in the process of analyzing and addressing the material weakness. The material weakness will not be considered remediated until the applicable remedial control operates for a sufficient period of time and management has concluded, through testing, that this control is operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of year 2020.
 
We did not revise our financial statements for prior periods for the disclosure of the potential loss based on our belief that the effect of the lack of the disclosure was not material to the financial statements taken as a whole. Therefore, our chief executive officer and our chief financial officer believe that, notwithstanding the material weakness discussed above, the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019 present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented.
 
Changes in Internal Control over Financial Reporting
 
Except as noted above, there were no changes in internal controls over financial reporting (as defined in Rule 13a−15(f) promulgated under the Exchange Act) that occurred during our fourth fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
 
Inherent Limitations on Disclosure Controls and Procedures
 
The effectiveness of our disclosure controls and procedures is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures, no matter how well conceived, will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
 
Inherent Limitations on Internal Control
 
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of control. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, our internal control over financial reporting is designed to provide reasonable assurance of achieving their objectives.
 
 
Attestation Report of the Registered Public Accounting Firm
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 

To the Shareholders and Board of Directors of
ChromaDex Corporation
 
Adverse Opinion on Internal Control over Financial Reporting
 
We have audited ChromaDex Corporation’’s (the "Company") internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weakness described in the following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2019 and 2018 and the related consolidated statements of operations, shareholders’ equity, and cash flows and the related notes for the December 31, 2019 and 2018 of the Company and our report dated March 10, 2020, except for the restatement as to the effectiveness of internal control over financial reporting for the material weakness related to ineffective designed controls over the evaluation and conclusion of contingencies under ASC 450, as to which the date is May 18, 2020, expressed an unqualified opinion on those consolidated financial statements.
 
In our report dated March 10, 2020, we expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting. As described below, the Company subsequently identified a material weakness in its internal control over financial reporting. Accordingly, management has revised its assessment about the effectiveness of the Company's internal control over financial reporting, and our present opinion on the effectiveness of the Company's internal control over financial reporting as of May 18, 2020, as presented herein, is different from that expressed in our previous report.
 
A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness have been identified and included in Management's Annual Report on Internal Control Over Financial Reporting:
 
Management does not have adequate controls over financial reporting resulting from ineffective designed controls over the evaluation and conclusion of contingencies under ASC 450.
 
This material weakness were considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal December 31, 2019 consolidated financial statements, and this report does not affect our report dated March 10, 2020 on those consolidated financial statements.
 
 
-3-
 
 

 
Basis for Opinion
 
The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
Definition and Limitations of Internal Control over Financial Reporting
 
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
 
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.
 

 
Marcum llp
New York, NY
March 10, 2020, except for the restatement as to the effectiveness of internal control over financial reporting for the material weakness related to ineffective designed controls over the evaluation and conclusion of contingencies under ASC 450, as to which the date is May 18, 2020.
 
 
PART IV
 
Item 15.                Exhibits and Financial Statement Schedules
 
(a)(3) List of Exhibits
 
 
INDEX TO EXHIBITS
 
Exhibit No.
 
 
Description
 
 
 
 
Consent of Marcum, LLP, Independent Registered Public Accounting Firm❖
 
 
 
 
Certification of the Chief Executive Officer pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended❖
 
 
 
 
Certification of the Chief Financial Officer pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended❖
 
 
 
 
Certification pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)❖
 _________
❖ 
Filed herewith.
 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to its Annual Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized, on the 18th day of May 2020.
 
 
 
 
 
CHROMADEX CORPORATION 
 
 
 
By:  
/s/ ROBERT FRIED
 
 

Robert Fried
 
 

Chief Executive Officer
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment No. 1 to the Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
 
Signature
 
Title
 
Date
 
 
 
 
 
/s/ ROBERT FRIED
 
Chief Executive Officer and Director
 
May 18, 2020
Robert Fried
 
(Principal Executive Officer)
 
 
 
 
 
 
 
/s/ KEVIN FARR
 
Chief Financial Officer
 
May 18, 2020
Kevin Farr
 
(Principal Financial and Accounting Officer)
 
 
 
 
 
 
 
/s/ FRANK L. JAKSCH JR.*
 
Executive Chairman of the Board and Director
 
May 18, 2020
Frank L. Jaksch Jr.
 
 
 
 
 
 
 
 
 
/s/ STEPHEN BLOCK*
 
Director
 
May 18, 2020
Stephen Block
 
 
 
 
 
 
 
 
 
/s/ JEFF BAXTER*
 
Director
 
May 18, 2020
Jeff Baxter
 
 
 
 
 
 
 
 
 
/s/ KURT GUSTAFSON*
 
Director
 
May 18, 2020
Kurt Gustafson
 
 
 
 
 
 
 
 
 
/s/ STEVEN RUBIN*
 
Director
 
May 18, 2020
Steven Rubin
 
 
 
 
 
 
 
 
 
/s/ TONY LAU*
 
Director
 
May 18, 2020
Tony Lau
 
 
 
 
 
 
 
 
 
/s/ WENDY YU*
 
Director
 
May 18, 2020
Wendy Yu
 
 
 
 
 
 
*Pursuant to Power of Attorney 
 
BY:   
/s/ ROBERT FRIED 
 
 
 

Robert Fried, as attorney in fact
 
 
 
 
 
 
-6-