Business Segmentation and Geographical Distribution

3 Months Ended

Mar. 29, 2014

Business Segmentation And Geographical Distribution

Note 6. Business Segmentation

Since the year ended December 28, 2013, the Company has generated significant revenue from its ingredients operations and has made operational changes, including changes in the organizational structure to support the ingredients operations.  As a result, on December 29, 2013, the Company began segregating its financial results for ingredients operations, and has following three reportable segments.

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

· Ingredients segment develops and commercializes proprietary-based ingredient technologies and supplies these ingredients to the manufacturers of consumer products in various industries including the nutritional supplement, food and beverage and animal health industries.

· 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.

	Core Standards and				Scientific and
Three months ended	Contract Services		Ingredients		Regulatory
March 29, 2014	segment		segment		Consulting segment		Other			Total
Net sales	$	1,735,883	$	1,136,309	$	201,946	$	-		$	3,074,138
Cost of sales		1,193,635		718,177		177,318		-			2,089,130
Gross profit		542,248		418,132		24,628		-			985,008
Operating expenses:
Sales and marketing		212,775		239,960		11,832		-			464,567
General and administrative		-		-		-		2,337,663			2,337,663
Loss from investment in affiliate		-		-		-		21,543			21,543
Operating expenses		212,775		239,960		11,832		2,359,206			2,823,773
Operating income (loss)	$	329,473	$	178,172	$	12,796	$	(2,359,206	)	$	(1,838,765	)

	Core Standards				Scientific and
Three months ended	and Contract Services		Ingredients		Regulatory Consulting
March 30, 2013	segment		segment		segment		Other			Total
Net sales	$	1,573,561	$	577,953	$	243,338	$	(60,285	)	$	2,334,566
Cost of sales		1,151,540		362,443		146,788		955			1,661,726
Gross profit (loss)		422,020		215,510		96,550		(61,240	)		672,840
Operating expenses:
Sales and marketing		384,943		211,834		1,488		131,159			729,424
General and administrative		-		-		-		1,359,901			1,359,901
Operating expenses		384,943		211,834		1,488		1,491,060			2,089,325
Operating income (loss)	$	37,077	$	3,676	$	95,062	$	(1,552,300	)	$	(1,416,485	)

	Core Standards and				Scientific and
	Contract Services		Ingredients		Regulatory
At March 29, 2014	segment		segment		Consulting segment		Other		Total
Total assets	$	2,934,128	$	2,253,549	$	147,448	$	3,136,693	$	8,471,818

	Core Standards and				Scientific and
	Contract Services		Ingredients		Regulatory
At December 28, 2013	segment		segment		Consulting segment		Other		Total
Total assets	$	2,952,270	$	1,083,856	$	139,765	$	4,811,001	$	8,986,892