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Note 11 - Segment and Geographic Information
 9 Months Ended
May 31, 2021
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 nine months ended May 31, 2021 and 2020 by segment:

 

  

Three Months Ended May 31,

  

Nine Months Ended May 31,

 
  

2021

  

2020

  

2021

  

2020

 

ZERUST® net sales

 $12,378,215  $7,356,781  $32,882,882  $26,322,515 

Natur-Tec® net sales

  3,040,309   2,388,042   8,097,636   11,287,491 

Total net sales

 $15,418,524  $9,744,823  $40,980,518  $37,610,006 

 

The following table sets forth the Company’s cost of goods sold for the three and nine months ended May 31, 2021 and 2020 by segment:

 

  

Three Months Ended May 31,

  

Nine Months Ended May 31,

 
  

2021

  

% of Segment Sales*

  

2020

  

% of Segment Sales*

  

2021

  

% of Segment Sales*

  

2020

  

% of Segment Sales*

 

Direct cost of goods sold

                                

ZERUST®

 $7,091,220   57.3% $4,011,244   54.5% $18,928,272   57.6% $14,193,113   53.9%

Natur-Tec®

  2,251,996   74.1%  1,842,539   77.2%  5,703,807   70.4%  8,733,016   77.4%

Indirect cost of goods sold

  809,366   —   645,319   —   2,365,503   —   2,065,358   — 

Total net cost of goods sold

 $10,152,582      $6,499,102      $26,997,582      $24,991,487

 

 

 

 

 

______________________________

*

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 nine months ended May 31, 2021 and 2020 were as follows:

 

  

Three Months Ended May 31,

  

Nine Months Ended May 31,

 
  

2021

  

2020

  

2021

  

2020

 

Inside the U.S.A. to unaffiliated customers

 $6,717,886  $4,051,709  $16,198,372  $16,558,301 

Outside the U.S.A. to:

                

Joint ventures in which the Company is a shareholder directly and indirectly

  1,253,919   673,751   2,361,165   1,504,997 

Unaffiliated customers

  7,446,719   5,019,363   22,420,981   19,546,708 
  $15,418,524  $9,744,823  $40,980,518  $37,610,006 

 

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 nine months ended May 31, 2021 and 2020 were as follows:

 

  

Three Months Ended May 31,

 
  

2021

  

% of Total Fees for Services Provided to Joint Ventures

  

2020

  

% of Total Fees for Services Provided to Joint Ventures

 

Germany

 $232,026   14.6% $199,877   22.8%

Poland

  226,174   14.2%  75,118   8.6%

Japan

  200,270   12.6%  139,268   15.9%

Sweden

  127,710   8.0%  51,767   5.9%

France

  119,172   7.5%  61,716   7.0%

Thailand

  108,842   6.9%  67,919   7.7%

India

  107,021   6.7%  24,842   2.8%

Czech Republic

  109,680   6.9%  46,709   5.3%

United Kingdom

  113,886   7.2%  52,484   6.0%

South Korea

  78,507   4.9%  54,951   6.3%

Finland

  75,577   4.8%  52,870   6.0%

Other

  90,756   5.7%  49,185   5.6%
  $1,589,621   100.0% $876,706   100.0%

 

  

Nine Months Ended May 31,

 
  

2021

  

% of Total Fees for Services Provided to Joint Ventures

  

2020

  

% of Total Fees for Services Provided to Joint Ventures

 

Germany

 $692,770   15.8% $620,106   17.8%

Poland

  626,527   14.3%  441,011   12.6%

Japan

  561,725   12.8%  453,347   13.0%

Sweden

  365,095   8.3%  259,671   7.4%

France

  322,717   7.4%  241,056   6.9%

Thailand

  306,151   7.0%  261,132   7.5%

India

  290,713   6.6%  187,826   5.4%

Czech Republic

  268,571   6.1%  215,923   6.2%

United Kingdom

  247,560   5.6%  202,241   5.8%

South Korea

  241,805   5.5%  206,272   5.9%

Finland

  223,356   5.1%  194,813   5.6%

Other

  241,876   5.5%  207,846   6.0%
  $4,388,866   100.0% $3,491,244   100.0

%

 

The geographical distribution of total property and equipment and net sales is as follows:

 

  

At May 31, 2021

  

At August 31, 2020

 

China

 $384,523  $376,088 

Other

  421,662   172,833 

United States

  6,370,827   6,561,868 

Total property and equipment

 $7,177,012  $7,110,789 

 

  

Three Months Ended May 31,

  

Nine Months Ended May 31,

 
  

2021

  

2020

  

2021

  

2020

 

China

 $4,037,493  $3,089,135   13,025,127  $9,975,091 

Brazil

  1,237,586   365,222   2,756,008   2,080,418 

India

  1,540,734   631,551   4,036,208   4,727,325 

Other

  1,884,825   1,607,206   4,964,803   4,268,871 

United States

  6,717,886   4,051,709   16,198,372   16,558,301 

Total net sales

 $15,418,524  $9,744,823  $40,980,518  $37,610,006 

 

Long-lived assets located in China and other locations outside of the United States 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 primarily related to ZERUST® products and services.