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Note 11 - Segment and Geographic Information

6 Months Ended

Feb. 29, 2020

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

and

six

months ended

February

29,

2020

and

February 28, 2019

by segment:

		Three Months Ended								Six Months Ended
		February 29, 2020				February 28, 2019				February 29, 2020				February 28, 2019
ZERUST ® net sales		$	9,016,222			$	9,108,395			$	18,965,734			$	19,173,569
Natur-Tec ® net sales			4,217,561				4,207,009				8,899,449				8,235,887
Total net sales		$	13,233,783			$	13,315,404			$	27,865,183			$	27,409,456

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

three

and

six

months ended

February

29,

2020

and

February 28, 2019

by segment:

		Three Months Ended																Six Months Ended
		February 29, 2020				% of Segment Sales*				February 28, 2019				% of Segment Sales*				February 29, 2020				% of Segment Sales*				February 28, 2019				% of Segment Sales*
Direct cost of goods sold
ZERUST ®		$	4,638,514				51.4	%		$	5,249,617				57.6	%		$	10,081,686				53.7	%		$	10,871,316				56.7	%
Natur-Tec ®			3,276,058				77.7	%			3,354,693				79.7	%			6,890,477				77.4	%			6,510,768				79.1	%
Indirect cost of goods sold			772,729				—				679,789				—				1,420,040				—				1,363,152				—
Total net cost of goods sold		$	8,687,301							$	9,284,099							$	18,492,385							$	18,745,236

____________________________

* 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

29,

2020

and

February 28, 2019

were as follows:

		Three Months Ended								Six Months Ended
		February 29, 2020				February 28, 2019				February 29, 2020				February 28, 2019
Inside the U.S.A. to unaffiliated customers		$	6,628,647			$	6,467,940			$	14,527,345			$	13,391,874
Outside the U.S.A. to:
Joint ventures in which the Company is a shareholder directly and indirectly			245,630				708,955				831,246				1,192,142
Unaffiliated customers			6,359,506				6,138,509				12,506,592				12,825,440
		$	13,233,783			$	13,315,404			$	27,865,183			$	27,409,456

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

29,

2020

and

February 28, 2019

were as follows:

		Three Months Ended
		February 29, 2020				% of Total Fees for Services Provided to Joint Ventures				February 28, 2019				% of Total Fees for Services Provided to Joint Ventures
Germany		$	208,128				16.6	%		$	215,337				15.0	%
Poland			170,916				13.6	%			188,529				13.1	%
Japan			150,150				12.0	%			167,496				11.7	%
Sweden			98,398				7.8	%			149,750				10.4	%
Thailand			90,878				7.2	%			105,299				7.3	%
France			85,709				6.8	%			106,270				7.4	%
United Kingdom			64,279				5.1	%			96,209				6.7	%
Czech Republic			80,200				6.4	%			93,928				6.6	%
India			80,024				6.4	%			85,401				5.9	%
South Korea			75,289				6.0	%			87,413				6.1	%
Finland			74,001				5.9	%			64,648				4.5	%
Other			78,241				6.2	%			76,494				5.3	%
		$	1,256,213				100.0	%		$	1,436,774				100.0	%

		Six Months Ended
		February 29, 2020				% of Total Fees for Services Provided to Joint Ventures				February 28, 2019				% of Total Fees for Services Provided to Joint Ventures
Germany		$	420,229				16.1	%		$	430,328				15.0	%
Poland			365,894				14.0	%			370,374				12.9	%
Japan			314,079				12.0	%			337,296				11.7	%
Sweden			207,904				8.0	%			279,993				9.8	%
Thailand			193,212				7.4	%			203,647				7.1	%
France			179,340				6.9	%			216,332				7.6	%
United Kingdom			149,758				5.7	%			190,990				6.7	%
Czech Republic			169,214				6.5	%			183,620				6.4	%
India			162,984				6.2	%			180,128				6.3	%
South Korea			151,321				5.8	%			173,880				6.1	%
Finland			141,942				5.4	%			146,464				5.1	%
Other			158,661				6.1	%			152,157				5.3	%
		$	2,614,538				100.0	%		$	2,865,209				100.0	%

The geographical distribution of key financial statement data is as follows:

		At February 29, 2020				At August 31, 2019
China		$	397,139			$	337,162
Brazil			79,825				101,548
Germany			23,734				14,791
India			72,951				61,748
United States			6,653,875				6,842,910
Total property and equipment		$	7,227,524			$	7,358,159

		Three Months Ended
		February 29, 2020				February 28, 2019
China		$	3,024,384			$	3,005,199
Brazil			823,218				726,799
India			2,059,564				2,224,149
Other			967,111				891,317
United States			6,359,506				6,467,940
Total net sales		$	13,233,783			$	13,315,404

		Six Months Ended
		February 29, 2020				February 28, 2019
China		$	6,885,956			$	6,173,259
Brazil			1,715,196				1,551,595
India			4,095,774				3,875,790
Other			2,661,665				2,416,938
United States			12,506,592				13,391,874
Total net sales		$	27,865,183			$	27,409,456

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.

X

- References

No definition available.

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- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

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