Business Segmentation and Geographical Distribution

6 Months Ended

Jun. 28, 2014

Business Segmentation And Geographical Distribution

Note 9. 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				Scientific and
Three months ended	and Contract Services		Ingredients		Regulatory Consulting
June 28, 2014	segment		segment		segment		Other			Total
Net sales	$	1,856,950	$	1,721,872	$	277,332	$	-		$	3,856,154
Cost of sales		1,295,530		1,043,538		118,320		-			2,457,388
Gross profit		561,420		678,334		159,012		-			1,398,766
Operating expenses:
Sales and marketing		221,797		310,386		39,365		-			571,548
General and administrative		-		-		-		2,468,646			2,468,646
Loss from investment in affiliate		-		-		-		-			-
Operating expenses		221,797		310,386		39,365		2,468,646			3,040,194
Operating income (loss)	$	339,623	$	367,948	$	119,647	$	(2,468,646	)	$	(1,641,428	)

	Core Standards				Scientific and
Three months ended	and Contract Services		Ingredients		Regulatory Consulting
June 29, 2013	segment		segment		segment		Other			Total
Net sales	$	1,830,197	$	674,175	$	202,524	$	-		$	2,706,896
Cost of sales		1,200,670		413,743		131,745		-			1,746,158
Gross profit		629,527		260,432		70,779		-			960,738
Operating expenses:
Sales and marketing		407,911		222,536		1,112		-			631,559
General and administrative		-		-		-		1,342,280			1,342,280
Operating expenses		407,911		222,536		1,112		1,342,280			1,973,839
Operating income (loss)	$	221,616	$	37,896	$	69,667	$	(1,342,280	)	$	(1,013,101	)

	Core Standards				Scientific and
Six months ended	and Contract Services		Ingredients		Regulatory Consulting
June 28, 2014	segment		segment		segment		Other			Total
Net sales	$	3,592,833	$	2,858,181	$	479,278	$	-		$	6,930,292
Cost of sales		2,489,165		1,761,715		295,638		-			4,546,518
Gross profit		1,103,668		1,096,466		183,640		-			2,383,774
Operating expenses:
Sales and marketing		434,572		550,346		51,197		-			1,036,115
General and administrative		-		-		-		4,806,309			4,806,309
Loss from investment in affiliate		-		-		-		21,543			21,543
Operating expenses		434,572		550,346		51,197		4,827,852			5,863,967
Operating income (loss)	$	669,096	$	546,120	$	132,443	$	(4,827,852	)	$	(3,480,193	)

	Core Standards				Scientific and
Six months ended	and Contract Services		Ingredients		Regulatory Consulting
June 29, 2013	segment		segment		segment		Other			Total
Net sales	$	3,403,758	$	1,252,128	$	445,862	$	(60,285	)	$	5,041,462
Cost of sales		2,352,210		776,186		278,533		955			3,407,884
Gross profit (loss)		1,051,547		475,942		167,329		(61,240	)		1,633,578
Operating expenses:
Sales and marketing		792,854		434,370		2,600		131,159			1,360,983
General and administrative		-		-		-		2,702,181			2,702,181
Operating expenses		792,854		434,370		2,600		2,833,340			4,063,164
Operating income (loss)	$	258,693	$	41,572	$	164,729	$	(2,894,580	)	$	(2,429,586	)

	Core Standards				Scientific and
	and Contract Services		Ingredients		Regulatory Consulting
At June 28, 2014	segment		segment		segment		Other		Total
Total assets	$	3,216,680	$	3,019,217	$	171,262	$	2,471,052	$	8,878,211

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