Business Segmentation

3 Months Ended

Mar. 30, 2013

Business Segmentation

Note 9 .Business Segmentation

Since the year ended December 29, 2012, the Company has generated considerable revenue from its recently acquired subsidiary, Spherix, which provides scientific and regulatory consulting.  As a result, the Company began segregating its financial results for Spherix, and has following three 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, 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.

· Scientific and regulatory consulting segment which consist of providing scientific and regulatory consulting to the clients in the food, supplement and pharmaceutical industries to manage potential health and regulatory risks.

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.

Three months ended March 30, 2013	Core Standards, Contract Services and Ingredients segment			Retail Dietary Supplement Products segment			Scientific and Regulatory Consulting segment			Other			Total
Gross Sales	$	2,177,355		$	557,111		$	245,786		$	—		$	2,980,252
Discounts and returns		(25,842	)		(617,396	)		(2,448	)		—			(645,686	)
Net sales		2,151,513			(60,285	)		243,338			—			2,334,566
Cost of sales		1,513,983			955			146,788			—			1,661,726
Gross profit (loss)		637,530			(61,240	)		96,550			—			672,840
Operating expenses:
Sales and marketing		596,777			131,159			1,488			—			729,424
General and administrative		—			—			—			1,359,901			1,359,901
Gain on sale of assets		—			(2,891,917	)		—			—			(2,891,917	)
Operating expenses		596,777			(2,760,758	)		1,488			1,359,901			(802,592	)
Operating income (loss)	$	40,753		$	2,699,518		$	95,062		$	(1,359,901	)	$	1,475,432

Three months ended March 31, 2012	Core Standards, Contract Services and Ingredients segment			Retail Dietary Supplement Products segment			Scientific and Regulatory Consulting segment		Other			Total
Gross Sales	$	1,871,718		$	2,179,426		$	—	$	—		$	4,051,144
Promotions, discounts and returns		(16,970	)		(2,249,168	)		—		—			(2,266,138	)
Net sales		1,854,748			(69,742	)		—		—			1,785,006
Cost of sales		1,346,622			1,042,598			—		—			2,389,220
Gross profit (loss)		508,126			(1,112,340	)		—		—			(604,214	)
Operating expenses:
Sales and marketing		474,944			1,383,718			—		—			1,858,662
General and administrative		—			—			—		1,961,912			1,961,912
Operating expenses		474,944			1,383,718			—		1,961,912			3,820,574
Operating income (loss)	$	33,182		$	(2,496,058	)	$	—	$	(1,961,912	)		(4,424,788	)

At March 30, 2013	Core Standards, Contract Services and Ingredients segment		Retail Dietary Supplement Products segment		Scientific and Regulatory Consulting segment		Other		Total
Total assets	$	3,218,208	$	—	$	201,898	$	7,297,325	$	10,717,431

At December 29, 2012	Core Standards, Contract Services and Ingredients segment		Retail Dietary Supplement Products segment		Scientific and Regulatory Consulting segment		Other		Total
Total assets	$	3,542,355	$	4,331,866	$	72,573	$	1,087,727	$	9,034,521