ChromaDex(CDXC) - 2019 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2019, net sales increased by 48% to $12.1 million compared to $8.1 million for the same period in 2018[124]. - The company reported a net loss of $7.2 million for the three months ended September 30, 2019, an improvement from a net loss of $8.6 million for the same period in 2018[124]. - The ingredients segment experienced a 33% decline in sales for the three months ended September 30, 2019, primarily due to the focus on expanding the consumer products business[127]. - The analytical reference standards and services segment saw a 5% increase in sales for the three months ended September 30, 2019, attributed to increased regulatory consulting services[128]. Consumer Products Segment - Consumer products segment sales grew by 86% to $9.7 million for the three months ended September 30, 2019, up from $5.2 million in the same period last year[126]. - The gross profit margin for the consumer products segment was 60% for the three months ended September 30, 2019, reflecting better margins due to TRU NIAGEN® sales[133]. - The consumer products segment reported a gross profit of $5.8 million for the three months and $15.4 million for the nine months ending September 30, 2019, reflecting a 79% and 110% increase year-over-year respectively[138]. - The company anticipates continued growth in consumer product sales over the next twelve months following its strategic shift towards this segment[126]. Expenses and Costs - The cost of sales as a percentage of net sales decreased by 2% for the three months ended September 30, 2019, compared to the same period in 2018[132]. - Total sales and marketing expenses decreased by 4% to $4.6 million for the three months ending September 30, 2019, but increased by 10% to $13.1 million for the nine months, driven by increased staffing and direct marketing expenses[143]. - Research and development expenses totaled $1.0 million for the three months and $3.3 million for the nine months, reflecting a 23% and 22% decrease year-over-year as the company realigns its R&D priorities[146]. - General and administrative expenses increased by 18% to $8.0 million for the three months and by 20% to $24.2 million for the nine months, largely due to higher legal expenses and royalties[148]. Cash Flow and Financing - The company had approximately $18.9 million in cash and cash equivalents as of September 30, 2019, sufficient to meet projected operating plans for at least the next twelve months[118]. - Net cash used in operating activities was approximately $19.8 million for the nine months ended September 30, 2019, compared to $15.8 million for the same period in 2018[164]. - Net cash provided by financing activities was approximately $16.6 million for the nine months ended September 30, 2019, significantly up from approximately $47,000 used in financing activities for the same period in 2018[167]. - The company anticipates that its current cash and cash equivalents will be sufficient to meet projected operating plans for at least the next twelve months, but may require additional financing[162]. - The company closed a financing transaction on August 15, 2019, raising approximately $6.8 million through the issuance of 1.6 million shares of common stock[119]. - The company recorded debt discounts of approximately $0.8 million related to the issuance of convertible promissory notes totaling $10.0 million[152]. Segment Performance - The ingredients segment experienced a gross profit decrease of 31% for the three months and 34% for the nine months, attributed to a decline in sales as the company transitions to a consumer-driven nutraceutical model[139]. - The analytical reference standards and services segment saw a 45% increase in gross profit for the three months, but an 8% decrease for the nine months, primarily due to increased sales of regulatory consulting services[140]. Other Financial Information - No material changes in contractual obligations during the nine months ended September 30, 2019[168]. - No material off-balance sheet arrangements reported for the nine months ended September 30, 2019[169]. - No applicable quantitative and qualitative disclosures about market risk[171].