Ladies and gentlemen thank you for standing by and welcome to the ChromaDex Corporation's second quarter 2015 earnings conference call. My name is Abigail and I will be the conference operator today. At this time all participants are in a listen only mode. And as a reminder, this conference call is being recorded. On Thursday, ChromaDex issuing new release and obtain the company's financial results for the second quarter of 2015 and filed the Form 10Q. If you have not reviewed this information, both are available within the Investor Relations section of ChromaDex's website at chromadex.com, and the Form 10Q is also available on the SEC's website. I would now like to turn the conference call over to Andrew Johnson, Director of Investor Relations. Please go ahead.

Thank you, Abigail, and good morning and welcome to ChromaDex Corporation 2015 second quarter results conference call. With us today are ChromaDex's Founder and Chief Executive Officer, Frank Jaksch and Chief Financial Officer Tom Varvaro. Today's conference call may include forward-looking statements that are subject to risk and uncertainties relating to ChromaDex's future business prospect and opportunities as well as anticipated results of operations. Forward-looking statements represents only the company's estimates on the day of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risk and uncertainties. Many factors could cause ChromaDex's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. Our annual report on Form10-K filed with the SEC on March 19, 2015, recent and fourth coming quarterly reports on Form 10Q, recent current reports on Form 8-K and 8-K amended and other SEC filings discussed some of the potential risk factors that may affect our business, results of operation and financial condition. The company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. In addition, certain of the financial information presented in this call references non-GAAP financial measures. The company's earnings release which was issued Thursday afternoon and is available on the company's website presents reconciliation for the appropriate GAAP measures and explanation of why the company believes such non-GAAP financial measures are useful to investors. Finally, this conference call is being recorded via webcast. The webcast will be available at the Investor Relations section of our website at www.chromadex.com. With that, it is now my pleasure to turn the call over to Frank Jaksch and Tom Varvaro.

Thank you, Andrew. Over the last five quarters we are pleased to have shown truly impressive growth from our proprietary ingredient business. The turn we expect to continue as we establish new distribution channels and penetrate additional markets. Now before I get into the highlights of the second quarter, I'd like to turn the call over to Tom so he can provide you the details of our second quarter 2015 financial results. Tom?

Thank you Frank, and good morning everyone. I want to paraphrase by saying that the following numbers are all approximates. For the three months ended July 4, 2015 our Q2 2015, ChromaDex recorded net sales of $6,101,000, increase of 58% as compared to $3,856,000 for the quarter ended June 28, 2014 or Q2, 2014. And a 16% sequential increase over Q1 2015. The ingredient segment generated net sales of $3,412,000 for Q2 2015, an increase of 98% compared to $1,722,000 for Q2 2014 and a 27% sequential increase over Q1 2015. The core standards and services segment also proceeded a 28% growth as it generated net sales of $2,371,000 for Q2 2015 compared to $1,857,000 for Q2 2014 at a 3% sequential growth over Q1 2015. Regulatory consulting segment net sales increased 15% from $277,000 for Q2 2014 to $318,000 for Q2 2015 at 13% sequentially over Q1 2015. Gross margins for the quarter were $2471,000 versus $1,399,000 for Q2 2014, a 77% growth and a 28% sequential growth over Q1 2015. Net loss for the quarter was negative $315,000 versus negative $1,653,000 in Q2 2014 and negative $1,260,000 in Q1 2015. Net income for the quarter after adjusting for noncash charges associated with share based compensation which is a non-GAAP measure was $192,000 compared to a net loss of negative $616,000 for Q2 2014 and a net loss of $310,000 for Q1 2015. Cash on hand at the end of the quarter was $5,699,000 versus $3,216,000 at end of Q1 2015. This will provide us sufficient cash on hand to fund our operations as well as anticipated expenses associated with increased R&D activities at least through Q4 2016. This increase was attributable to company's June draw down of the $2.5 million tranche object from Hercules growth technology. With that, I will now turn the call back over to Frank, so he can provide our Q2 2015 highlights.

Thanks, Tom. I'm pleased to report our record revenue and I would now like to update you on our recent developments of the company. First, I'm going to focus on our ingredient segment. Q1 was the first quarter in our ingredient, where our ingredient revenues were higher than our legacy business. In Q2, the growth in the ingredient segment continue to accelerate and represents the majority of the company's revenue, at turn we except to continue. NIAGEN continues to be the primary growth driver within the ingredient business and is the first section within the ingredients base I'm going to talk about here. We continue to build out our distribution channels, the NIAGEN customer count currently stands at about 10 customers that have NIAGEN in their products. A few examples of ones that we've already announced like thorough research, Life Extension Foundation, Healthy Directions, Life Cell Research and five links in the network marketing channel. We've been very successful with the early adopters in the dietary supplement space, and as the NIAGEN story continues to develop, we expect a larger dietary supplement companies to incorporate NIAGEN into their products as well. Although revenue growth has been robust over the past five quarters, we still only in the early stages of expanding into additional distribution channels, not only in the dietary supplement space, but other market such as food, beverage, skin care, cosmetic, medical food and other markets as well. From a regulatory aspect, we're on track to have self affirmation of grass and for those of you who might not know what grass is, grass is generally recognized to safe which is a regulatory distinction that allows for dis-ingredient to be included in food products and we're on track right now to have that completed sometime by the end of…

[Operator Instructions] And our first question comes from the line of Michael Kay with Kay Associates. Your line is open.

Thank you very much. Would you please - well congratulations on a very good progress and a great quarter. Could you please clarify for me the trajectory by which the company gets revenues, in other words like say pterostilbene or a NIAGEN or life expansion [indiscernible] or Healthy Directions has it in some of their products. Then does the company get royalties for each bottle sold or used or is it a one-shot type payment, you know I appreciate some clarification on it.

So, it's a little bit of both. I mean most of the revenue that we generate as a result of supply agreements that we have. So we - they purchase the material from us and then or buy it as essentially powder to put into their formulations and we're largely covering most of our revenue under that. But some of the licensing arrangements or some of supply agreements that we have depending upon whether they have exclusivity or some other special terms do include royalties, not all of ours, all the customers that we sell to under any of the ingredients we have in the portfolio will include royalties but some of them do include royalties, and we have been generating some royalty revenue and that’s been increasing as well.

And the contracts, they're non-exclusive, so that means you could deal with a variety of companies for the same substance right?

That’s correct, I mean but we do have some exclusive arrangements as well just to be clear. So there are some but majority of them are actually non-exclusive relationships.

Have there been studies that showed that NR has anti-inflammatory effects?

Well, we haven't focused on the anti-inflammatory side of things, there is some evidence that shows that there is some impact potentially on inflammation but that’s not a primary focus for us.

Okay, and the last question, am I right in saying that pterostilbene applied externally to the skin could have a protective effects against harmful rays?

Well I wouldn't - pterostilbene yes has - it is a natural sun block. So there is a natural sun block effective, but more importantly it's a natural sun block that actually prevents a lot of the effects associated with the UVA or UVA exposure, meaning DNA damage as a some protective abilities in terms of vary your functions. So it's a compound that not only protects you from the sun but it also protects you from the damage potentially that could come from exposure to the sun.

That’s crucial because that one study is recently have shown that actually many of the products on the market sun block products actually could declass in [indiscernible] or they don’t do the job so this could be a great market for the product.

There is no doubt, and as I mentioned during the call, I mean that’s a big piece of focus for us in terms of pterostilbene. We've been working on the development of the skin care side of pterostilbene now for several years, the science is really starting to prove itself out more struggling to get interest from the larger Fortune 500 companies that are aware of the science that’s starting to prove out there.

Thank you very much for your responses.

Thank you. [Operator Instructions] Our next question comes from the line of Anthony [indiscernible], Private Investor. Please go ahead.

Hi Frank, about five years ago at least I had the pleasure meeting you in New York City with some analysts and you discussed the prospects of the company. And indeed they were very exciting and in this interim you've gained a lot of intellectual property and personnel. I have a couple of questions. As a investor I've kind of been disappointed and that we still at this point in time have not come into the black, I noticed that the retained earnings now we have a deposit in excess of $40 million. I look at the last statement that was made and I see a $507,000 that was [indiscernible] "noncash expenditures" and I have a question with respect to that entry, how does that relate to our number of shares outstanding, because it seems to be dilutive and it represents an excess of 8% of our top line. So, I would appreciate if you could address some of those issues and thank you so much.

So the majority of that was related to noncash based stock compensation, basically related to the employee option pool. So we maintain a pool - an option pool that is basically a fixed ratio and Tom, if you want to jump in and maybe cover a little bit more about that. Tom is on mute.

Sorry, I was on mute. The $507,000 on you are referring to is based around share based compensation. That’s again as Frank mentioned the annual employee grants and we grant those across the entire breathe of the company. We feel that’s critical for the company to maintain the high quality employees that we built and giving stock options as everyone is very well aware is a very good rate of retain these people and keep them loyal to the company. That is where the majority of that $507,000 came from in Q2.

How dilutive is it to the shareholders?

Well, I mean the stock options are issued at market price. So, it's not really dilutive in the sense that they were issued below market.

Frank, did you address some of the issues in terms of profitability, when can we look and see and enjoy some profitability here? It's been at least five years since I'm acquired with the company.

Right. Well, I mean most of the - over the past five years, five years ago we launched our first ingredient, so we've been spending money and developing out the ingredient portfolio that we have including NIAGEN and that costs money. And at the same time we've been having the revenue ramp up and if you notice in Q2 that we started - we did generate positive cash in Q2 and the - you'll notice that the financials gotten a lot stronger over the past three or four quarters in particular and we expect that trend to continue. So we're not that far off of getting to profitability, we still need to make R&D related spend or spend some money on R&D related development to the ingredients and on a quarter-by-quarter basis that could still impact the profitability of the company as we continue to grow other revenue, but if the revenue keeps growing at the pace that it is we should finally get to a point where it'll turn the other way.

In the short-term do you see the need for any funding of this research?

We have enough cash on hand right now to fund the budget that we have. So, at this point our stance is that we don’t need to raise additional capital unless something were to change over the next 12 months.

Thank you so much, I appreciate it. Good luck, take care.

Thank you. Our next question comes from the line of [indiscernible], Private Investor. Your line is open.

Thank you. Question is, are you going to implement the reverse split and lift yourself at the company on [indiscernible] investor for many, many years and it was strongest long term ago and as they promised you [indiscernible] if you will list the company on the MX? And my second question is Dr. Frost exiting the company?

So the first question is, and we've been talking about this publicly but we have started a few months ago a strategy basically to move in the direction of up listing the company to a national exchange. So we have been for the first time in several years been aggressively pursuing that and I can't talk anymore specifically about that but that is something that we are actively working on. The second question about Dr. Frost, Dr. Frost is still actively involved in the company is still the largest shareholder in the company next to myself the shareholder of the company. And he still does - he is available when I need him, last year he was the one who made the introduction to Roger Kornberg for us, that helps or build the framework for scientific advisory board and he continues to be an asset for the company when we needed.

All right, thank you.

Thank you. I'm showing no further questions at this time. I'd like to turn the call back to management for closing remarks.

Thank you gentlemen for - or everybody for joining the call today. We are pretty excited by the results out of Q2 and our expectations is that if you look over the past five quarters that the growth has been continuing in the near term. We expect that trend to continue and we look forward to discussing our results and updates regarding the progress of the company on future calls.

Ladies and gentlemen, thank you for participating in today's conference call. This does conclude the program. You may all disconnect. Everyone have a great day.