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Note 12 - Segment and Geographic Information
 6 Months Ended
Feb. 28, 2017
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
12.
       SEGMENT AND GEOGRAPHIC INFORMATION
 
Segment Information
 
The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The Company’s business is organized into
two
reportable segments: ZERUST® and Natur-Tec®. The Company has been selling its proprietary ZERUST® rust and corrosion inhibiting products and services to the automotive, electronics, electrical, mechanical, military and retail consumer markets for over
40
years, and more recently, has targeted and expanded into the oil and gas industry. The Company also sells a portfolio of bio-based and compostable (fully biodegradable) polymer resins and finished products under the Natur-Tec® brand.
 
The following table sets forth the Company’s net sales for the
three
and
six
months ended
February
28,
2017
and
February
29,
2016
by segment:
 
    Three Months Ended   Six Months Ended
    February 28,
2017		   February 29,
2016		   February 28,
2017		   February 29,
2016
ZERUST® net sales   $
7,228,027
     $
6,385,337
     $
15,312,705
     $
12,363,019
  
Natur-Tec® net sales    
1,514,876
      
1,319,597
      
3,132,221
      
2,366,352
  
Total net sales   $
8,742,903
     $
7,704,934
     $
18,444,926
     $
14,729,371
  
 
The following table sets forth the Company’s cost of goods sold for the
three
and
six
months ended
February
28,
2017
and
February
29,
2016
by segment:
 
    Three Months Ended   Six Months Ended
    February 28,
2017		   % of
Segment
Sales*		   February 29,
2016		   % of
Segment
Sales*		   February 28,
2017		   % of
Segment
Sales*		   February 29,
2016		   % of
Segment
Sales*
Direct cost of goods sold                                
ZERUST®   $
4,254,524
      
58.9
 %   $
3,576,073
      
56.0
 %   $
8,954,061
      
58.5
 %   $
6,940,628
      
56.1
 %
Natur-Tec®    
1,068,231
      
70.5
 %    
984,938
      
74.6
 %    
2,281,399
      
72.8
 %    
1,819,197
      
76.9
 %
Indirect cost of goods sold    
547,431
      
—
      
707,213
      
—
      
1,247,492
      
—
      
1,383,822
      
—
  
Total net cost of goods sold   $
5,870,186
      
 
     $
5,268,224
      
 
     $
12,482,952
      
 
     $
10,143,647
      
 
  
______________________
*
The percent of segment sales is calculated by dividing the direct cost of goods sold for each individual segment category by the net sales for each segment category.
 
The Company utilizes product net sales and direct and indirect cost of goods sold for each product in reviewing the financial performance of a product type. Further allocation of Company expenses or assets, aside from amounts presented in the tables above, is not utilized in evaluating product performance, nor does such allocation occur for internal financial reporting.
 
Geographic Information
 
Net sales by geographic location for the
three
and
six
months ended
February
28,
2017
and
February
29,
2016
were as follows:
 
    Three Months Ended   Six Months Ended
    February 28,
2017		   February 29,
2016		   February 28,
2017		   February 29,
2016
Inside the U.S.A. to unaffiliated customers   $
5,245,092
     $
4,683,208
     $
10,395,832
     $
9,522,987
  
Outside the U.S.A to:                                
Joint ventures in which the Company is shareholder directly and indirectly    
433,317
      
677,320
      
1,253,375
      
1,200,347
  
Unaffiliated customers    
3,064,494
      
2,344,406
      
6,795,719
      
4,006,037
  
    $
8,742,903
     $
7,704,934
     $
18,444,926
     $
14,729,371
  
 
Net sales by geographic location are based on the location of the customer. Fees for services provided to joint ventures by geographic location as a percentage of total fees for services provided to joint ventures during the
three
and
six
months ended
February
28,
2017
and
February
29,
2016
were as follows:
 
    Three Months Ended
    February 28,
2017		   % of Total Fees
for Services
Provided to
Joint Ventures		   February 29,
2016		   % of Total Fees
for Services
Provided to
Joint Ventures
Germany   $
199,509
      
16.8
 %   $
192,869
      
19.9
 %
Poland    
153,453
      
13.0
 %    
145,765
      
15.0
 %
Japan    
145,722
      
12.3
 %    
137,476
      
14.2
 %
Thailand    
87,627
      
7.4
 %    
39,322
      
4.0
 %
Korea    
86,103
      
7.3
 %    
2,500
      
.3
 %
France    
83,112
      
7.0
 %    
73,112
      
7.5
 %
Sweden    
77,464
      
6.5
 %    
50,356
      
5.2
 %
Czech Republic    
73,286
      
6.2
 %    
64,381
      
6.6
 %
Finland    
66,946
      
5.7
 %    
52,896
      
5.5
 %
United Kingdom    
53,241
      
4.5
 %    
64,735
      
6.7
 %
India    
74,196
      
6.3
 %    
72,077
      
7.4
 %
Other    
83,369
      
7.0
 %    
75,553
      
7.7
 %
    $
1,184,028
      
100.0
 %   $
971,042
      
100.0
 %
 
 
    Six Months Ended
    February 28,
2017		   % of Total Fees
for Services
Provided to
Joint Ventures		   February 29,
2016		   % of Total Fees
for Services
Provided to
Joint Ventures
Germany   $
402,509
      
16.1
 %   $
422,654
      
17.2
 %
Poland    
302,657
      
12.1
 %    
285,023
      
11.6
 %
Japan    
291,759
      
11.7
 %    
268,149
      
10.9
 %
Thailand    
235,081
      
9.4
 %    
263,063
      
10.7
 %
Korea    
191,481
      
7.6
 %    
171,902
      
7.0
 %
France    
180,785
      
7.2
 %    
162,785
      
6.6
 %
Sweden    
164,525
      
6.6
 %    
123,317
      
5.0
 %
Czech Republic    
144,114
      
5.8
 %    
121,933
      
5.0
 %
Finland    
143,282
      
5.7
 %    
121,829
      
5.0
 %
United Kingdom    
139,372
      
5.6
 %    
173,646
      
7.1
 %
India    
138,731
      
5.6
 %    
152,527
      
6.2
 %
Other    
165,323
      
6.6
 %    
189,643
      
7.7
 %
    $
2,499,619
      
100.0
 %   $
2,456,471
      
100.0
 %
 
Sales to the Company’s joint ventures are included in the foregoing geographic and segment information, however, sales by the Company’s joint ventures to other parties are not included. The foregoing geographic and segment information represents only sales and cost of goods sold recognized directly by the Company.
 
The geographical distribution of key financial statement data is as follows:
 
    At February 28,
2017		   At August 31,
2016
Brazil   $
63,765
     $
66,938
  
India    
12,027
      
13,645
  
Germany    
15,512
      
—
  
China    
200,452
      
253,931
  
United States    
7,193,441
      
6,941,358
  
Total long-lived assets   $
7,485,197
     $
7,275,872
  
 
    Six Months Ended
    February 28,
2017		   February 29,
2016
Brazil   $
1,118,166
     $
997,636
  
India    
733,581
      
549,402
  
Germany    
217,496
      
—
  
China    
3,296,299
      
1,439,754
  
United States    
13,079,384
      
11,742,579
  
Total net sales   $
18,444,926
     $
14,729,371
  
 
Total long-lived assets located in Brazil, India, Germany and China primarily consist of property and equipment. These assets are periodically reviewed to assure the net realizable value from the estimated future production based on forecasted sales exceeds the carrying value of the assets. Total assets located in the United States include the Company’s investments in joint ventures.
 
Sales to the Company’s joint ventures are included in the foregoing segment and geographic information; however, sales by the Company’s joint ventures to other parties are not included. The foregoing geographic and segment information represents only sales and cost of goods sold recognized directly by the Company.
 
All joint venture operations including equity in income, fees for services and related dividends are related to ZERUST® products and services.