Note 12 - Geographic and Segment Information

3 Months Ended

Nov. 30, 2015

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

12.     GEOGRAPHIC AND SEGMENT 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 35 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, 2015 and 2014 by segment:

	Three Months Ended
	November 30, 2015		November 30, 2014
ZERUST® net sales	$	5,977,682	$	6,238,071
Natur-Tec® net sales		1,046,755		976,024
Total net sales	$	7,024,437	$	7,214,095

The following table sets forth the Company’s cost of goods sold for the three months ended November 30, 2015 and 2014 by segment:

	November 30, 2015		% of Product Sales*			November 30, 2014		% of Product Sales*
Direct cost of goods sold
ZERUST®	$	3,364,555		56.3	%	$	3,338,588		53.5	%
Natur-Tec®		834,259		79.7	%		782,575		80.2	%
Indirect cost of goods sold		676,609		NA			685,448		NA
Total net cost of goods sold	$	4,875,423				$	4,806,611

* 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, 2015 and 2014 were as follows:

	Three Months Ended
	November 30, 2015		November 30, 2014
Inside the U.S.A. to unaffiliated customers	$	1,661,631	$	1,526,930
Outside the U.S.A. to:
Joint ventures in which the Company is a shareholder directly and indirectly		549,546		808,987
Unaffiliated customers		4,813,260		4,878,179
	$	7,024,437	$	7,214,095

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, 2015 and 2014 were as follows:

	Three Months Ended
	November 30, 2015		% of Total Fees for Services Provided to Joint Ventures			November 30, 2014		% of Total Fees for Services Provided to Joint Ventures
Germany	$	229,785		15.5	%	$	238,321		11.2	%
Thailand		223,741		15.1	%		140,634		6.6	%
Korea		169,402		11.4	%		191,499		9.0	%
Poland		139,257		9.4	%		171,223		8.0	%
Japan		130,673		8.8	%		160,341		7.5	%
United Kingdom		108,911		7.3	%		96,371		4.5	%
France		89,673		6.0	%		133,379		6.3	%
India		80,451		5.4	%		69,291		3.2	%
Sweden		72,961		4.9	%		86,920		4.1	%
Finland		68,933		4.6	%		93,522		4.4	%
China		-		0.0	%		516,139		24.2	%
Other		171,642		11.6	%		236,030		11.0	%
	$	1,485,429		100.0	%	$	2,133,670		100.0	%

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.

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

	At November 30, 2015		At August 31, 2015
Brazil	$	39,958	$	46,918
India		15,337		16,402
China		120,410		45,220
United States		7,218,779		7,184,623
Total long-lived assets	$	7,394,484	$	7,293,163

	Three Months Ended
	November 30, 2015		November 30, 2014
Brazil	$	448,268	$	763,585
India		278,690		206,907
China		679,755		-
United States		5,617,724		6,243,603
Total net sales	$	7,024,437	$	7,214,095

Total assets located in Brazil, China and India primarily consist of cash and cash equivalents, customer receivables and inventory. 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. Total assets located in the United States include the Company’s investments in joint ventures.