Nature of Business and Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Nature of Business and Significant Accounting Policies [Text Block]

Note 2. Nature of Business and Significant Accounting Policies

Nature of business :  The Company is a natural products company that provides proprietary, science-based solutions and ingredients to the dietary supplement, food and beverage, cosmetic and pharmaceutical industries. The Company supplies ingredients, phytochemical reference standards and related phytochemical products and services. The Company recently launched its BluScience retail consumer line based on its proprietary ingredients. The Company provides these products and services at various terms.

Basis of presentation :  The financial statements and accompanying notes have been prepared on a consolidated basis and reflect the consolidated financial position of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated from these financial statements. The Company's fiscal year ends on the Saturday closest to December 31, and the Company’s normal fiscal quarters end on the Saturday 13 weeks after the last fiscal year end or fiscal quarter end.  Every fifth or sixth fiscal year, the inclusion of an extra week occurs due to the Company’s floating year-end date.  The fiscal year 2014 will include 53 weeks instead of the normal 52 weeks.

Inventories :  Inventories are comprised of raw materials, work-in-process and finished goods.  They are stated at the lower of cost, determined by the first-in, first-out method (FIFO) method, or market.  The inventory on the balance sheet is recorded net of valuation allowances of $217,753 and $226,582 for the periods ended March 31, 2012 and December 31, 2011, respectively.  Labor and overhead has been added to inventory that was manufactured or characterized by the Company.  The amounts of major classes of inventory for the periods ended March 31, 2012 and December 31, 2011 are as follows:

	March 31, 2012		December 31, 2011
Reference standards	$	1,471,816	$	1,458,912
Bulk ingredients		428,795		174,847
Dietary supplements – raw materials		801,585		709,476
Dietary supplements – work in process		38,295		38,293
Dietary supplements – finished goods		1,528,157		750,654
		4,268,648		3,132,182
Less valuation allowance		217,753		226,582
	$	4,050,895	$	2,905,600

Earnings per share : Potentially dilutive common shares consist of the incremental common shares issuable upon the exercise of common stock options and warrants for all periods.   For all periods presented, the basic and diluted shares reported are equal because the common shares equivalents are anti-dilutive. Below is a tabulation of the potentially dilutive securities that were “in the money” for the three month periods ended March 31, 2012 and April 2, 2011.

	Three Months Ended
	March 31, 2012		April 2, 2011
Basic weighted average common shares outstanding		84,706,196		62,944,298
Warrants and options in the money, net		6,583,163		17,216,311
Weighted average common shares outstanding assuming dilution		91,289,359		80,160,609

Total warrants and options that were not “in the money” at March 31, 2012 and April 2, 2011 were 18,579,518 and 6,958,350 respectively.