11.	SEGMENT AND GEOGRAPHIC 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

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, 2019

and

2018

by segment:

	Three Months Ended				Nine Months Ended
		May 31, 2019		May 31, 2018		May 31, 2019		May 31, 2018
ZERUST® net sales	$	10,077,203	$	10,382,884	$	29,250,772	$	30,102,080
Natur-Tec® net sales		4,815,914		2,540,953		13,051,801		6,578,770
Total net sales	$	14,893,117	$	12,923,837	$	42,302,573	$	36,680,850

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

three

and

nine

months ended

May

31,

2019

and

2018

by segment:

	Three Months Ended										Nine Months Ended
	May 31, 2019		% of Segment Sales*			May 31, 2018		% of Segment Sales*			May 31, 2019		% of Segment Sales*			May 31, 2018		% of Segment Sales*
Direct cost of goods sold
ZERUST®	$	5,725,220		56.8	%	$	6,139,699		59.1	%	$	16,596,536		56.7	%	$	17,948,941		59.6	%
Natur-Tec®		3,670,282		76.2	%		1,812,084		71.3	%		10,181,050		78.0	%		4,738,523		72.0	%
Indirect cost of goods sold		742,851		—			640,583		—			2,106,003		—			1,806,208		—
Total net cost of goods sold	$	10,138,353				$	8,592,366				$	28,883,589				$	24,493,672

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, 2019

and

2018

were as follows:

	Three Months Ended				Nine Months Ended
		May 31, 2019		May 31, 2018		May 31, 2019		May 31, 2018
Inside the U.S.A. to unaffiliated customers	$	6,172,882	$	7,434,991	$	19,564,756	$	19,771,031
Outside the U.S.A. to:
Joint ventures in which the Company is a shareholder directly and indirectly		1,112,313		879,324		2,304,455		2,201,077
Unaffiliated customers		7,607,922		4,609,522		20,433,362		14,708,742
	$	14,893,117	$	12,923,837	$	42,302,573	$	36,680,850

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, 2019

and

2018

were as follows:

	Three Months Ended
		May 31, 2019	% of Total Fees for Services Provided to Joint Ventures			May 31, 2018	% of Total Fees for Services Provided to Joint Ventures
Germany	$	212,825	14.8	%	$	224,366	14.9	%
Poland		181,057	12.6	%		185,107	12.3	%
Japan		164,136	11.5	%		183,335	12.2	%
Sweden		137,642	9.6	%		155,588	10.3	%
India		114,705	8.0	%		49,778	3.3	%
France		112,063	7.8	%		146,949	9.7	%
Thailand		109,427	7.6	%		110,894	7.4	%
South Korea		85,732	6.0	%		96,574	6.4	%
Czech Republic		83,086	5.8	%		100,131	6.6	%
Finland		75,135	5.2	%		81,402	5.4	%
United Kingdom		70,972	5.0	%		80,931	5.4	%
Other		87,043	6.1	%		93,445	6.1	%
	$	1,433,823	100.0	%	$	1,508,500	100.0	%

	Nine Months Ended
		May 31, 2019	% of Total Fees for Services Provided to Joint Ventures			May 31, 2018	% of Total Fees for Services Provided to Joint Ventures
Germany	$	643,154	15.0	%	$	680,939	14.7	%
Poland		551,430	12.8	%		598,221	13.0	%
Japan		501,432	11.6	%		529,412	11.4	%
Sweden		417,635	9.7	%		448,707	9.7	%
France		328,395	7.6	%		416,913	9.0	%
Thailand		313,075	7.3	%		325,205	7.0	%
India		294,833	6.9	%		274,980	5.9	%
Czech Republic		266,706	6.2	%		283,193	6.1	%
United Kingdom		261,961	6.1	%		275,137	6.0	%
South Korea		259,612	6.0	%		279,524	6.0	%
Finland		221,599	5.2	%		247,574	5.4	%
Other		239,200	5.6	%		264,727	5.8	%
	$	4,299,032	100.0	%	$	4,624,532	100.0	%

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

		At May 31, 2019		At August 31, 2018
China	$	341,145	$	205,490
Brazil		117,811		71,677
India		51,208		22,220
Other		15,619		7,058
United States		6,767,354		6,862,381
Total property and equipment	$	7,293,137	$	7,168,826

	Three Months Ended				Nine Months Ended
		May 31, 2019		May 31, 2018		May 31, 2019		May 31, 2018
China	$	3,691,220	$	3,069,232	$	9,864,479	$	9,176,174
Brazil		792,299		853,675		2,343,894		2,310,131
India		2,283,346		564,339		6,159,136		1,642,633
Other		1,953,370		1,267,475		4,370,308		2,875,428
United States		6,172,882		7,169,116		19,564,756		20,676,484
Total net sales	$	14,893,117	$	12,923,837	$	42,302,573	$	36,680,850

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.