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Note 11 - Segment and Geographic Information
 3 Months Ended
Nov. 30, 2019
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
11.
SEGMENT AND GEOGRAPHIC INFORMATION
 
Segment Information
 
The Company’s chief operating decision maker 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, 2019
and
2018
by segment:
 
    Three Months Ended
    November 30, 2019   November 30, 2018
ZERUST
®
net sales
   $
9,949,512
     $
10,065,174
  
Natur-Tec
®
net sales
    
4,681,888
      
4,028,878
  
Total net sales   $
14,631,400
     $
14,094,052
  
 
The following table sets forth the Company’s cost of goods sold for the
three
months ended
November 
30,
2019
and
2018
by segment:
 
    November 30,
2019		   % of
Product
Sales*		   November 30,
2018		   % of
Product
Sales*
Direct cost of goods sold                                
ZERUST®   $
5,543,355
      
55.7
 %   $
5,621,700
      
55.9
 %
Natur-Tec®    
3,614,419
      
77.2
 %    
3,156,076
      
78.3
 %
Indirect cost of goods sold    
647,311
      
NA
      
683,361
      
NA
  
Total net cost of goods sold   $
9,805,085
      
 
     $
9,461,137
      
 
  
 
* 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, 2019
and
2018
were as follows:
 
    Three Months Ended
    November 30, 2019   November 30, 2018
Inside the U.S.A. to unaffiliated customers   $
6,147,086
     $
6,923,934
  
Outside the U.S.A. to:                
Joint ventures in which the Company is a shareholder directly and indirectly    
585,616
      
483,187
  
Unaffiliated customers    
7,898,698
      
6,686,931
  
    $
14,631,400
     $
14,094,052
  
 
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, 2019
and
2018
were as follows:
 
    Three Months Ended
    November 30,
2019		   % of Total Fees
for Services
Provided to
Joint Ventures		   November 30,
2018		   % of Total Fees for
Services Provided
to Joint Ventures
Germany   $
212,101
      
15.6
 %   $
214,992
      
15.1
 %
Poland    
194,978
      
14.4
 %    
181,844
      
12.7
 %
Japan    
163,929
      
12.1
 %    
169,800
      
11.9
 %
Sweden    
109,506
      
8.1
 %    
130,243
      
9.1
 %
Thailand    
102,334
      
7.5
 %    
98,348
      
6.9
 %
France    
93,631
      
6.9
 %    
110,062
      
7.7
 %
Czech Republic    
89,014
      
6.6
 %    
89,692
      
6.3
 %
United Kingdom    
85,478
      
6.3
 %    
94,781
      
6.6
 %
India    
82,960
      
6.1
 %    
94,727
      
6.6
 %
South Korea    
76,032
      
5.6
 %    
86,467
      
6.1
 %
Finland    
67,942
      
5.0
 %    
81,816
      
5.7
 %
Other    
80,420
      
5.9
 %    
75,663
      
5.3
 %
    $
1,358,325
      
100.0
 %   $
1,428,435
      
100.0
 %
 
The geographical distribution of key financial statement data is as follows:
 
    At
November 30, 2019		   At
August 31, 2019
China   $
310,821
     $
337,162
  
Brazil    
172,753
      
101,548
  
Germany    
23,435
      
14,791
  
India    
57,916
      
61,748
  
United States    
6,781,553
      
6,842,910
  
Total property and equipment   $
7,346,478
     $
7,358,159
  
 
    Three Months Ended
    November 30,
2019		   November 30,
2018
China   $
3,861,572
     $
3,168,060
  
Brazil    
891,978
      
824,796
  
India    
2,036,210
      
1,651,641
  
Germany    
—
      
6,472
  
Other    
1,694,554
      
1,519,149
  
United States    
6,147,086
      
6,923,934
  
Total net sales   $
14,631,400
     $
14,094,052
  
 
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.