Business Segments

6 Months Ended

Jun. 30, 2020

Business Segments

11. Business Segments

Note 11. Business Segments

The Company has the following three reportable segments for the three- and six-month periods ended June 30, 2020:

· Consumer products segment: provides finished dietary supplement products that contain the Company's proprietary ingredients directly to consumers as well as to distributors.

· Ingredients segment: develops and commercializes proprietary-based ingredient technologies and supplies these ingredients as raw materials to the manufacturers of consumer products.

· Analytical reference standards and services segment: includes supply of phytochemical reference standards and other research and development services.

The “Corporate and 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	Consumer				Analytical Reference
June 30, 2020	Products		Ingredients		Standards and			Corporate
(In thousands)	segment		segment		Services segment			and other			Total
Net sales	$	11,720	$	2,850	$	717		$	-		$	15,287
Cost of sales		4,339		1,135		725			-			6,199
Gross profit		7,381		1,715		(8	)		-			9,088
Operating expenses:
Sales and marketing		4,743		76		140			-			4,959
Research and development		805		137		-			-			942
General and administrative		-		-		-			6,874			6,874
Operating expenses		5,548		213		140			6,874			12,775
Operating income (loss)	$	1,833	$	1,502	$	(148	)	$	(6,874	)	$	(3,687	)

Three months ended	Consumer				Analytical Reference
June 30, 2019	Products		Ingredients		Standards and		Corporate
(In thousands)	segment		segment		Services segment		and other			Total
Net sales	$	8,744	$	1,387	$	970	$	-		$	11,101
Cost of sales		3,519		641		687		-			4,847
Gross profit		5,225		746		283		-			6,254
Operating expenses:
Sales and marketing		4,072		79		157		-			4,308
Research and development		875		194		-		-			1,069
General and administrative		-		-		-		7,932			7,932
Other		-		-		-		125			125
Operating expenses		4,947		273		157		8,057			13,434
Operating income (loss)	$	278	$	473	$	126	$	(8,057	)	$	(7,180	)

Six months ended	Consumer					Analytical Reference
June 30, 2020	Products		Ingredients			Standards and			Corporate
(In thousands)	segment		segment			Services segment			and other			Total
Net sales	$	22,864	$	5,325		$	1,443		$	-		$	29,632
Cost of sales		8,641		2,191			1,401			-			12,233
Gross profit		14,223		3,134			42			-			17,399
Operating expenses:
Sales and marketing		9,152		(8	)		262			-			9,406
Research and development		1,587		274			-			-			1,861
General and administrative		-		-			-			15,709			15,709
Operating expenses		10,739		266			262			15,709			26,976
Operating income (loss)	$	3,484	$	2,868		$	(220	)	$	(15,709	)	$	(9,577	)

Six months ended	Consumer					Analytical Reference
June 30, 2019	Products			Ingredients		Standards and		Corporate
(In thousands)	segment			segment		Services segment		and other			Total
Net sales	$	16,198		$	2,881	$	2,070	$	-		$	21,149
Cost of sales		6,590			1,454		1,550		-			9,594
Gross profit		9,608			1,427		520		-			11,555
Operating expenses:
Sales and marketing		7,989			191		302		-			8,482
Research and development		1,844			393		-		-			2,237
General and administrative		-			-		-		16,263			16,263
Other		-			-		-		125			125
Operating expenses		9,833			584		302		16,388			27,107
Operating income (loss)	$	(225	)	$	843	$	218	$	(16,388	)	$	(15,552	)

	Consumer				Analytical Reference
At June 30, 2020	Products		Ingredients		Standards and		Corporate
(In thousands)	segment		segment		Services segment		and other		Total
Total assets	$	14,392	$	2,280	$	950	$	24,370	$	41,992

	Consumer				Analytical Reference
At December 31, 2019	Products		Ingredients		Standards and		Corporate
(In thousands)	segment		segment		Services segment		and other		Total
Total assets	$	12,137	$	2,135	$	918	$	25,057	$	40,247

Disaggregation of Revenue

We disaggregate our revenue from contracts with customers by type of goods or services for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. See details in the tables below.

Three Months Ended June 30, 2020 (In thousands)	Consumer Products Segment		Ingredients Segment		Analytical Reference Standards and Services Segment		Total
TRU NIAGEN®, Consumer Product	$	11,720	$	-	$	-	$	11,720
NIAGEN® Ingredient		-		1,995		-		1,995
Subtotal NIAGEN Related	$	11,720	$	1,995	$	-	$	13,715
Other Ingredients		-		855		-		855
Reference Standards		-		-		686		686
Consulting and Other		-		-		31		31
Subtotal Other Goods and Services	$	-	$	855	$	717	$	1,572
Total Net Sales	$	11,720	$	2,850	$	717	$	15,287

Three Months Ended June 30, 2019 (In thousands)	Consumer Products Segment		Ingredients Segment		Analytical Reference Standards and Services Segment		Total
TRU NIAGEN , Consumer Product	$	8,744	$	-	$	-	$	8,744
NIAGEN Ingredient		-		1,080		-		1,080
Subtotal NIAGEN Related	$	8,744	$	1,080	$	-	$	9,824
Other Ingredients		-		307		-		307
Reference Standards		-		-		717		717
Consulting and Other		-		-		253		253
Subtotal Other Goods and Services	$	-	$	307	$	970	$	1,277
Total Net Sales	$	8,744	$	1,387	$	970	$	11,101

Six Months Ended June 30, 2020 (In thousands)	Consumer Products Segment		Ingredients Segment		Analytical Reference Standards and Services Segment		Total
TRU NIAGEN®, Consumer Product	$	22,864	$	-	$	-	$	22,864
NIAGEN® Ingredient		-		3,956		-		3,956
Subtotal NIAGEN Related	$	22,864	$	3,956	$	-	$	26,820
Other Ingredients		-		1,369		-		1,369
Reference Standards		-		-		1,359		1,359
Consulting and Other		-		-		84		84
Subtotal Other Goods and Services	$	-	$	1,369	$	1,443	$	2,812
Total Net Sales	$	22,864	$	5,325	$	1,443	$	29,632

Six Months Ended June 30, 2019 (In thousands)	Consumer Products Segment		Ingredients Segment		Analytical Reference Standards and Services Segment		Total
TRU NIAGEN®, Consumer Product	$	16,198	$	-	$	-	$	16,198
NIAGEN® Ingredient		-		2,190		-		2,190
Subtotal NIAGEN Related	$	16,198	$	2,190	$	-	$	18,388
Other Ingredients		-		691		-		691
Reference Standards		-		-		1,547		1,547
Consulting and Other		-		-		523		523
Subtotal Other Goods and Services	$	-	$	691	$	2,070	$	2,761
Total Net Sales	$	16,198	$	2,881	$	2,070	$	21,149

Disclosure of Major Customers

Major customers who accounted for more than 10% of the Company’s total sales were as follows:

Three months ended

Six months ended

Major Customers

Jun. 30, 2020

Jun. 30, 2019

Jun. 30, 2020

Jun. 30, 2019

Horizon Ventures - Related Party

10.2

%

*

*

*

A.S. Watson Group - Related Party

*

17.2

%

10.6

%

15.1

%

Major accounts which had more than 10% of the Company’s total trade receivables were as follows:

	Percentage of the Company's Total Trade Receivables
Major Accounts	At June 30, 2020			At December 31, 2019
A.S. Watson Group - Related Party (1)		26.7	%		39.0	%
Dr. Loges		15.4	%	*
Thorne Research		12.1	%	*
Life Extension		10.1	%		27.4	%
Amazon Marketplaces	*				10.3	%
_____________________
* Represents less than 10%.
(1) Includes approximately $0.1 million trade receivables from Horizon Ventures.