Business Segmentation and Geographical Distribution

12 Months Ended

Dec. 29, 2012

Business Segmentation And Geographical Distribution

Note 13. Business Segmentation and Geographical Distribution

Since the year ended December 31, 2011, the Company has generated significant gross sales from its consumer dietary supplement product line, BluScience. As a result, the Company has begun segregating its financial results into two reportable segments.

· Core standards, contract services and ingredients segment includes supply of phytochemical reference standards, which are small quantities of plant-based compounds typically used to research an array of potential attributes, and reference materials, related contract services, technical consulting and proprietary ingredients.

· Retail dietary supplement products segment which consist of the supply of the BluScience line of dietary supplement products containing our proprietary ingredients to various retail distribution channels.

The “Other” classification includes corporate items not allocated by the Company to each reportable segment. Further, there are no intersegment sales that require elimination. The Company evaluates performance and allocates resources based on reviewing gross margin by reportable segment. Information about the Company’s reporting segments is provided below:

Year ended December 29, 2012		Core Standards, Contract Services and Ingredients segment			Retail Dietary Supplement Products segment			Other			Total
Gross Sales	$	8,661,638		$	6,861,035		$	-		$	15,522,673
Promotions, discounts and returns		(133,838	)		(3,778,341	)		-			(3,912,179	)
Net sales		8,527,800			3,082,694			-			11,610,494
Cost of sales		6,100,779			3,234,278			-			9,335,057
Gross profit (loss)		2,427,021			(151,584	)		-			2,275,437
Operating expenses:
Sales and marketing		2,227,934			3,292,207			-			5,520,141
General and administrative		-			-			8,391,730			8,391,730
Operating expenses		2,227,934			3,292,207			8,391,730			13,911,871
Operating income (loss)	$	199,087		$	(3,443,791	)	$	(8,391,730	)	$	(11,636,434	)

Year ended December 31, 2011		Core Standards, Contract Services and Ingredients segment			Retail Dietary Supplement Products segment			Other			Total
Gross Sales	$	8,107,231		$	40,056		$	-		$	8,147,287
Promotions, discounts and returns		(27,271	)		(7,406	)		-			(34,677	)
Net sales		8,079,960			32,650			-			8,112,610
Cost of sales		5,416,486			224,305			-			5,640,791
Gross profit (loss)		2,663,474			(191,655	)		-			2,471,819
Operating expenses:
Sales and marketing		1,748,360			790,892			-			2,539,252
General and administrative		-			-			7,796,806			7,796,806
Operating expenses		1,748,360			790,892			7,796,806			10,336,058
Operating income (loss)	$	915,114		$	(982,547	)	$	(7,796,806	)	$	(7,864,239	)
At December 29, 2012		Core Standards, Contract Services and Ingredients segment			Retail Dietary Supplement Products segment			Other			Total
Total assets	$	3,604,573		$	4,331,866		$	1,098,082		$	9,034,521
At December 31, 2011		Core Standards, Contract Services and Ingredients segment			Retail Dietary Supplement Products segment			Other			Total
Total assets	$	3,167,191		$	1,915,817		$	1,186,897		$	6,269,905

Revenue from international sources for the core standards, contract services and ingredients segment approximated $1,690,000 and $1,900,000 for the years ended December 29, 2012 and December 31, 2011, respectively. International sources which the Company generates revenue include Europe, North America, South America, Asia, and Oceania. We did not have any revenue from international sources for the retail dietary supplement products segment for the years ended December 29, 2012 and December 31, 2011.

The Company’s long-lived assets are located within the United States.