Note 11 - Segment and Geographic Information

12 Months Ended

Aug. 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 45 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:

	Fiscal 2021		Fiscal 2020
ZERUST® net sales	$	45,554,434	$	34,474,535
Natur-Tec® net sales		10,939,385		13,164,156
Total net sales	$	56,493,819	$	47,638,691

The following table sets forth the Company’s cost of goods sold by segment:

	Fiscal 2021		Fiscal 2020
Direct cost of goods sold
ZERUST®	$	26,028,555	$	18,717,684
Natur-Tec®		7,717,429		10,168,051
Indirect cost of goods sold		3,174,830		2,723,539
Total net cost of goods sold	$	36,920,814	$	31,609,274

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 for fiscal 2021 and fiscal 2020 were as follows:

	Fiscal Year Ended August 31,
	2021		2020
Inside the U.S.A. to unaffiliated customers	$	22,039,456	$	20,218,213
Outside the U.S.A. to:
Joint ventures in which the Company is a shareholder directly and indirectly		3,023,196		1,972,646
Unaffiliated customers		31,431,167		25,447,832
	$	56,493,819	$	47,638,691

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, respectively, were as follows:

	Fiscal 2021		% of Total Fees for Services Provided to Joint Ventures			Fiscal 2020		% of Total Fees for Services Provided to Joint Ventures
Germany	$	920,902		15.4	%	$	843,752		18.3	%
Japan		826,403		13.9	%		628,889		13.6	%
Poland		798,570		13.4	%		553,198		12.0	%
Sweden		528,755		8.9	%		372,017		8.1	%
France		435,032		7.3	%		310,661		6.7	%
Thailand		399,563		6.7	%		328,452		7.1	%
India		392,074		6.6	%		250,976		5.4	%
Czech Republic		377,395		6.3	%		270,032		5.9	%
South Korea		317,042		5.3	%		266,703		5.8	%
United Kingdom		316,786		5.3	%		255,121		5.5	%
Finland		298,663		5.0	%		256,375		5.6	%
Indonesia		122,513		2.1	%		99,543		2.2	%
Other		230,562		3.8	%		177,167		3.8	%
	$	5,964,260		100.0	%	$	4,612,885		100.0	%

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.

See Note 6 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, 2021		At August 31, 2020
China	$	5,110,071	$	376,088
Other		453,199		172,833
United States		6,258,188		6,561,868
Total long-lived assets	$	11,821,458	$	7,110,789

	Fiscal Year Ended August 31, 2021		Fiscal Year Ended August 31, 2020
China	$	17,343,623	$	13,409,770
Brazil		4,122,781		2,753,930
India		5,482,989		5,655,797
Other		7,504,970		5,600,982
United States		22,039,456		20,218,212
Total net sales	$	56,493,819	$	47,638,691

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 primarily related to ZERUST® products and services.