Business Segments

9 Months Ended

Sep. 27, 2014

Business Segments

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
	and Contract				Regulatory
Three months ended September 27, 2014	Services segment		Ingredients segment		Consulting segment		Other			Total
Net sales	$	1,814,622	$	2,031,250	$	293,838	$	-		$	4,139,710
Cost of sales		1,239,356		1,200,790		176,618		-			2,616,764
Gross profit		575,266		830,460		117,220		-			1,522,946
Operating expenses:
Sales and marketing		259,951		243,068		15,643		-			518,662
General and administrative		-		-		-		1,651,718			1,651,718
Operating expenses		259,951		243,068		15,643		1,651,718			2,170,380
Operating income (loss)	$	315,315	$	587,392	$	101,577	$	(1,651,718	)	$	(647,434	)

	Core Standards					Scientific and
	and Contract					Regulatory
Three months ended September 28, 2013	Services segment			Ingredients segment		Consulting segment		Other			Total
Net sales	$	1,574,970		$	780,489	$	362,749	$	-		$	2,718,207
Cost of sales		1,309,562			484,511		173,947		-			1,968,020
Gross profit		265,408			295,977		188,802		-			750,187
Operating expenses:
Sales and marketing		328,043			165,025		12,000		-			505,068
General and administrative		-			-		-		1,453,611			1,453,611
Loss from investment in affiliate		-			-		-		33,281			33,281
Operating expenses		328,043			165,025		12,000		1,486,892			1,991,960
Operating income (loss)	$	(62,635	)	$	130,952	$	176,802	$	(1,486,892	)	$	(1,241,773	)

	Core Standards
	and Contract				Regulatory
Nine months ended September 27, 2014	Services segment		Ingredients segment		Consulting segment		Other			Total
Net sales	$	5,407,455	$	4,889,431	$	773,116	$	-		$	11,070,002
Cost of sales		3,728,521		2,962,505		472,256		-			7,163,282
Gross profit		1,678,934		1,926,926		300,860		-			3,906,720
Operating expenses:
Sales and marketing		694,523		793,414		66,840		-			1,554,777
General and administrative		-		-		-		6,458,027			6,458,027
Loss from investment in affiliate		-		-		-		21,543			21,543
Operating expenses		694,523		793,414		66,840		6,479,570			8,034,347
Operating income (loss)	$	984,411	$	1,133,512	$	234,020	$	(6,479,570	)	$	(4,127,627	)

	Core Standards				Scientific and
	and Contract				Regulatory
Nine months ended September 28, 2013	Services segment		Ingredients segment		Consulting segment		Other			Total
Net sales	$	4,978,727	$	2,032,616	$	808,610	$	(60,285	)	$	7,759,668
Cost of sales		3,661,772		1,260,697		452,479		955			5,375,903
Gross profit (loss)		1,316,955		771,919		356,131		(61,240	)		2,383,765
Operating expenses:
Sales and marketing		1,120,897		599,395		14,600		131,159			1,866,051
General and administrative		-		-		-		4,155,792			4,155,792
Loss from investment in affiliate		-		-		-		33,281			33,281
Operating expenses		1,120,897		599,395		14,600		4,320,232			6,055,124
Operating income (loss)	$	196,058	$	172,524	$	341,531	$	(4,381,472	)	$	(3,671,359	)

	Core Standards and				Scientific and
	Contract Services		Ingredients		Regulatory Consulting
At September 27, 2014	segment		segment		segment		Other		Total
Total assets	$	3,394,033	$	2,618,062	$	277,007	$	2,410,049	$	8,699,151

	Core Standards and				Scientific 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