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Note 13 - Segment and Geographic Information
 12 Months Ended
Aug. 31, 2022
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

13.         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 almost 50 years and, more recently, has also expanded into the oil and gas industry. The Company also sells a portfolio of proprietary 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 2022

    

Fiscal 2021

  

ZERUST® net sales

   $ 57,459,382     $ 45,554,434  

Natur-Tec® net sales

     16,699,508       10,939,385  

Total net sales

   $ 74,158,890     $ 56,493,819  

 

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

 

   

Fiscal 2022

    

Fiscal 2021

  

Direct cost of goods sold

                

ZERUST®

   $ 34,673,146     $ 26,028,555  

Natur-Tec®

     12,859,343       7,717,429  

Indirect cost of goods sold

     3,557,809       3,174,830  

Total net cost of goods sold

   $ 51,090,298     $ 36,920,814  

 

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 2022 and fiscal 2021 were as follows:

 

   

Fiscal Year Ended August 31,

  
   

2022

    

2021

  

Inside the U.S.A. to unaffiliated customers

   $ 25,301,067     $ 22,039,456  

Outside the U.S.A. to:

                

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

     2,968,089       3,023,196  

Unaffiliated customers

     45,889,734       31,431,167  
    $ 74,158,890     $ 56,493,819  

 

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 fiscal 2022 and fiscal 2021, respectively, were as follows:

 

   

Fiscal 2022

    

% of Total Fees for Services Provided to Joint Ventures

    

Fiscal 2021

    

% of Total Fees for Services Provided to Joint Ventures

  

Germany

   $ 834,725       14.5 %   $ 920,902       15.4 %

Poland

     730,523       12.7 %     798,570       13.4 %

Japan

     669,371       11.6 %     826,403       13.9 %

France

     448,579       7.8 %     435,032       7.3 %

Sweden

     447,441       7.8 %     528,755       8.9 %

Thailand

     344,649       6.0 %     399,563       6.7 %

United Kingdom

     342,488       5.9 %     316,786       5.3 %

Finland

     340,783       5.9 %     298,663       5.0 %

Czech Republic

     300,257       5.2 %     377,395       6.3 %

South Korea

     270,309       4.7 %     317,042       5.3 %

Indonesia

     156,476       2.7 %     122,513       2.1 %

India

     -       -       392,074       6.6 %

Other *

     882,081       15.2 %     230,562       3.8 %
    $ 5,767,682       100.0 %   $ 5,964,260       100.0 %

 

* NTI Asean recovered $681,859 in previously written-off fees for services related to the termination of its joint venture in China in fiscal 2015.

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 7 for additional details on geographical information regarding equity in income from joint ventures.

 

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

 

   

At August 31, 2022

    

At August 31, 2021

  

China

   $ 5,826,898     $ 5,110,071  

Other

     565,022       453,199  

United States

     5,778,573       6,258,188  

Total property and equipment

   $ 12,170,493     $ 11,821,458  

 

 

   

Fiscal Year Ended August 31, 2022

    

Fiscal Year Ended August 31, 2021

  

China

   $ 15,754,051     $ 17,343,623  

Brazil

     5,160,572       4,122,781  

India

     18,555,603       5,482,989  

Other

     9,387,597       7,504,970  

United States

     25,301,067       22,039,456  

Total net sales

   $ 74,158,890     $ 56,493,819  

 

Long-lived assets 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.