While GMPs are a burden for some companies, Chromadex is in the right spot at the right time. The company reported its first quarter results for the period ending April 4, 2009, showing a 37% increase in net sales, $1.45 million as compared to $1.06 million (rounded dollar figures) for the same quarter the previous year, ending March 29, 2008. The company can thank the upcoming GMP regulations for the increase. "The growth was largely because of the increasing need for testing and standards. This can easily be attributed to the cGMP deadline in June," says Frank Jaksch, CEO and president.
Not all companies can attest to the same levels of growth, but Chromadex founding in 1999, as a supplier of reference standards for botanicals, functional food, pharmaceutical, personal care, and dietary supplement markets has proven to be a good move. "The fact that the company was able to exhibit noteworthy growth in a quarter that was the most challenging in US history is significant," Jaksch says.
Despite the positive first quarter filing in a decidedly declining economy, recent media reports questioned the company's ability to obtain future financing. According to Jaksch, nothing could be further from the truth. "As this whole economic meltdown was happening, we were in the middle of our reverse merger. ChromaDex's ability to close a reverse merger and secure financing when things were not pretty says a lot about to our company's success."
Chromadex early financing was largely "bootstrapped," meaning the financing was obtained without the initial help of start-up capital. "We managed to fund our company with little or no investment capital until the reverse merger," Jaksch says.
On July 14, 2008 Chromadex completed its merger with CDI acquisition, the wholly owned subsidiary of Cody Resources Inc. And on July 29, 2008 the company completed its last round of sale under a private placement agreement, which was authorized for up to $6 million and yielded gross proceeds of $4.67 million.
Jaksch says the company will continue to grow as a result of the continuing need for compliance standards, a "wave" he predicts will not subside anytime soon. "As a growing company, we will continue to seek investment capital to invest in growth, as do all successful companies," he says. Adding that, "the environment is such that even if one has the ability to raise capital, the valuation is terrible, because no one is willing to take a risk right now. That environment is going to be poor for some time."
Even so, he says, the company will continue to add new testing services for ingredients and dietary supplements and streamline processes for better customer services. "We have the capacity to be able to meet the needs of the industry for quite some time, Jaksch says. Chromadex recently hired more staff and expanded its testing equipment and headquarters in Irvine, Calif. to better meet the needs of clients.