11.

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

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 tables present the Company’s business segment information in fiscal

2019

and fiscal

2018:

	Fiscal 2019		Fiscal 2018
ZERUST ® net sales	$	38,174,712	$	41,374,305
Natur-Tec ® net sales		17,575,425		10,050,516
Total net sales	$	55,750,137	$	51,424,821

The following table sets forth the Company’s cost of goods sold for fiscal

2019

and fiscal

2018

by segment:

	Fiscal 2019		Fiscal 2018
Direct cost of goods sold
ZERUST®	$	21,505,335	$	24,326,493
Natur-Tec®		13,691,038		7,303,439
Indirect cost of goods sold		2,773,871		2,535,508
Total net cost of goods sold	$	37,970,244	$	34,165,440

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.

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.

All joint venture operations, including equity in income, fees for services, and related dividends, are related to ZERUST

products and services.

Geographic Information

Net sales by geographic location were as follows:

	Fiscal Year Ended August 31,
	2019		2018
Inside the U.S.A. to unaffiliated customers	$	24,560,459	$	25,301,243
Outside the U.S.A. to:
Joint ventures in which the Company is a shareholder directly and indirectly		2,607,554		2,908,072
Unaffiliated customers		28,582,124		23,215,506
	$	55,750,137	$	51,424,821

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 fiscal

2019

and fiscal

2018,

respectively, were as follows:

	Fiscal 2019		Fiscal 2018
Germany	$	852,526	$	900,316
Japan		748,489		759,418
Poland		704,942		775,319
Sweden		589,654		600,336
France		430,537		532,565
Thailand		418,334		429,319
India		350,171		365,018
South Korea		346,244		370,171
Czech		345,798		377,844
United Kingdom		319,671		352,585
Finland		281,296		320,501
Other		339,917		358,747
	$	5,727,579	$	6,142,139

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.

See Note

for additional details on geographical information regarding equity in income from joint ventures.

The geographical distribution of total long-lived assets and net sales is as follows:

	At August 31, 2019		At August 31, 2018
China	$	337,162	$	205,490
Other		178,087		100,955
United States		6,842,910		6,862,381
Total long-lived assets	$	7,358,159	$	7,168,826

	Fiscal Year Ended August 31, 2019		Fiscal Year Ended August 31, 2018
China	$	13,030,298	$	12,507,039
Brazil		3,151,509		3,093,697
India		8,109,468		3,052,741
Other		6,898,403		7,470,101
United States		24,560,459		25,301,243
Total net sales	$	55,750,137	$	51,424,821

Long-lived assets located in China, Brazil, Germany, and India 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.

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 recognized directly by the Company and sold in that geographic territory.

All joint venture operations, including equity in income, fees for services, and related dividends, are related to ZERUST

products and services.