Business Segmentation and Geographical Distribution

12 Months Ended

Jan. 03, 2015

Business Segmentation And Geographical Distribution

Business Segmentation and Geographical Distribution

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.

Year ended January 3, 2015	Core Standards and Contract Services segment		Ingredients segment		Regulatory Consulting segment		Other			Total
Net sales	$	7,487,189	$	6,857,177	$	968,813	$	-		$	15,313,179
Cost of sales		5,141,667		4,257,347		588,500		-			9,987,514
Gross profit		2,345,522		2,599,830		380,313		-			5,325,665
Operating expenses:
Sales and marketing		975,800		1,081,209		79,575		-			2,136,584
General and administrative		-		-		-		8,374,601			8,374,601
Loss from investment in affiliate		-		-		-		45,829			45,829
Operating expenses		975,800		1,081,209		79,575		8,420,430			10,557,014
Operating income (loss)	$	1,369,722	$	1,518,621	$	300,738	$	(8,420,430	)	$	(5,231,349	)

Year ended December 28, 2013	Core Standards and Contract Services segment		Ingredients segment		Scientific and Regulatory Consulting segment		Other			Total
Net sales	$	6,643,832	$	2,430,699	$	1,146,718	$	(60,285	)	$	10,160,964
Cost of sales		4,893,649		1,501,187		632,037		955			7,027,828
Gross profit (loss)		1,750,183		929,512		514,681		(61,240	)		3,133,136
Operating expenses:
Sales and marketing		1,459,620		752,121		14,705		131,159			2,357,605
General and administrative		-		-		-		5,117,016			5,117,016
Loss from investment in affiliate		-		-		-		44,961			44,961
Operating expenses		1,459,620		752,121		14,705		5,293,136			7,519,582
Operating income (loss)	$	290,563	$	177,391	$	499,976	$	(5,354,376	)	$	(4,386,446	)

At January 3, 2015	Core Standards and Contract Services segment		IngrediEnts segment		Scientific and Regulatory Consulting segment		Other		Total
Total assets	$	3,220,518	$	3,757,073	$	105,711	$	4,524,906	$	11,608,208

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

Revenue from international sources for the core standards and contract services segment approximated $1,756,000 and $1,488,000 for the years ended January 3, 2015 and December 28, 2013, respectively.  Revenues from international sources for the ingredients segment approximated $35,000 and $22,000 for the years ended January 3, 2015 and December 28, 2013, respectively.  Revenues from international sources for the scientific and regulatory consulting segment approximated $104,000 and $450,000 for the years ended January 3, 2015 and December 28, 2013, respectively.  International sources which the Company generates revenue include Europe, North America, South America, Asia, and Oceania.

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