XML 31 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Note 11 - Segment and Geographical Information
 3 Months Ended
Nov. 30, 2017
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
11.
       SEGMENT AND GEOGRAPHICAL 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
months ended
November 30, 2017
and
2016
by segment:
 
    Three Months Ended
    November 30, 2017   November 30, 2016
ZERUST® net sales   $
9,527,737
     $
8,084,678
  
Natur-Tec® net sales    
2,015,301
      
1,617,345
  
Total net sales   $
11,543,038
     $
9,702,023
  
 
The following table sets forth the Company’s cost of goods sold for the
three
months ended
November 
30,
2017
and
2016
by segment:
 
 
    November 30,
2017		   % of
Product
Sales*		  
November 30,
2016
   % of
Product
Sales*
Direct cost of goods sold                                
ZERUST®   $
5,803,980
      
60.9%
     $
4,699,537
      
58.1%
  
Natur-Tec®    
1,479,199
      
73.4%
      
1,213,168
      
75.0%
  
Indirect cost of goods sold    
605,291
      
NA
      
700,061
      
NA
  
Total net cost of goods sold   $
7,888,470
      
 
     $
6,612,766
      
 
  
 
* 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
months ended
November 30, 2017
and
2016
were as follows:
 
    Three Months Ended
    November 30, 2017   November 30, 2016
Inside the U.S.A. to unaffiliated customers   $
6,256,205
     $
5,268,999
  
Outside the U.S.A. to:                
Joint ventures in which the Company is a shareholder directly and indirectly    
507,631
      
701,799
  
Unaffiliated customers    
4,779,202
      
3,731,225
  
    $
11,543,038
     $
9,702,023
  
 
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
months ended
November 30, 2017
and
2016
were as follows:
 
    Three Months Ended
   
November 30,
2017
   % of Total Fees
for Services
Provided to
Joint Ventures		  
November 30,
2016
  
% of Total Fees for
Services Provided
to Joint Ventures
Germany   $
219,873
      
14.6
 %   $
203,000
      
15.4
 %
Poland    
206,076
      
13.7
 %    
149,204
      
11.3
 %
Japan    
174,045
      
11.5
 %    
146,037
      
11.1
 %
France    
139,641
      
9.3
 %    
97,673
      
7.4
 %
Sweden    
127,954
      
8.5
 %    
87,061
      
6.6
 %
United Kingdom    
111,775
      
7.4
 %    
86,131
      
6.5
 %
Thailand    
102,531
      
6.8
 %    
147,455
      
11.2
 %
Finland    
89,627
      
5.9
 %    
76,336
      
5.8
 %
India    
86,763
      
5.8
 %    
64,535
      
4.9
 %
Czech Republic    
84,225
      
5.6
 %    
70,828
      
5.4
 %
South Korea    
83,488
      
5.5
 %    
105,378
      
8.0
 %
Other    
81,144
      
5.4
 %    
81,953
      
6.2
 %
    $
1,507,142
      
100.0
 %   $
1,315,591
      
100.0
 %
 
The geographical distribution of key financial statement data is as follows:
 
   
At
November 30, 2017
  
At
August 31, 2017
China   $
207,094
     $
228,458
  
Brazil    
50,784
      
54,646
  
Germany    
16,619
      
14,171
  
India    
13,642
      
14,712
  
United States    
6,947,162
      
7,047,675
  
Total property and equipment   $
7,235,301
     $
7,359,662
  
 
 
    Three Months Ended
    November 30,
2017		   November 30,
2016
China   $
2,911,643
     $
1,546,810
  
Brazil    
639,841
      
601,524
  
India    
495,539
      
331,610
  
Germany    
48,771
      
118,259
  
Other    
683,407
      
1,133,022
  
United States    
6,763,837
      
5,970,798
  
Total net sales   $
11,543,038
     $
9,702,023
  
 
Total property and equipment 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 segment and geographic 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 primarily related to ZERUST
®
products and services.