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Note 11 - Segment and Geographic Information
 3 Months Ended
Nov. 30, 2022
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 almost 50 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, 2022 and 2021 by segment:

 

   

Three Months Ended

  
   

November 30,

2022

    

November 30,

2021

  

ZERUST® net sales

   $ 15,370,001     $ 14,423,785  

Natur-Tec® net sales

     4,582,765       3,769,628  

Total net sales

   $ 19,952,766     $ 18,193,413  

 

The following table sets forth the Company’s cost of goods sold for the three months ended November 30, 2022 and 2021 by segment:

 

   

November 30,

2022

    

% of
Product
Sales*

    

November 30,
2021

    

% of
Product
Sales*

  
Direct cost of goods sold                                

ZERUST®

   $ 9,179,254       59.7 %   $ 8,706,667       60.4 %

Natur-Tec®

     3,570,673       77.9 %     2,922,098       77.5 %

Indirect cost of goods sold

     849,715     NA       861,718     NA  

Total net cost of goods sold ….

   $ 13,599,642             $ 12,490,483          

 

*

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, 2022 and 2021 were as follows:

 

   

Three Months Ended

  
   

November 30,

2022

    

November 30,

2021

  

Inside the U.S.A. to unaffiliated customers

   $ 7,478,161     $ 6,156,322  
Outside the U.S.A. to:                

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

     633,465       840,439  

Unaffiliated customers

     11,841,140       11,196,652  
    $ 19,952,766     $ 18,193,413  

 

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, 2022 and 2021 were as follows:

 

   

Three Months Ended

  
   

November 30,
2022

    

% of Total Fees for

Services Provided to

Joint Ventures

    

November 30,
2021

    

% of Total Fees for

Services Provided

to Joint Ventures

 

Germany

   $ 193,828       16.4 %   $ 218,430       17.4 %

Poland

     186,696       15.8 %     176,927       14.1 %

Japan

     147,920       12.5 %     166,807       13.3 %

France

     109,357       9.3 %     116,295       9.2 %

Sweden

     100,436       8.5 %     108,070       8.6 %

Finland

     90,432       7.7 %     80,173       6.4 %

Thailand

     82,956       7.0 %     87,554       7.0 %

Czech Republic

     80,332       6.8 %     70,098       5.6 %

South Korea

     63,395       5.4 %     62,626       5.0 %

United Kingdom

     57,691       4.9 %     94,927       7.5 %

Other

     68,762       5.7 %     76,951       5.9 %
    $ 1,181,805       100.0 %   $ 1,258,858       100.0 %

 

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

 

   

At

November 30, 2022

    

At

August 31, 2022

  

China

   $ 5,740,401     $ 5,826,898  

Other

     631,835       565,022  

United States

     5,772,916       5,778,573  

Total property and equipment, net

   $ 12,145,152     $ 12,170,493  

 

 

 

   

Three Months Ended

  
   

November 30,

2022

    

November 30,

2021

  

China

   $ 3,746,640     $ 4,057,853  

Brazil

     1,367,418       1,296,217  

India

     4,846,927       4,476,984  

Other

     2,513,620       2,206,037  

United States

     7,478,161       6,156,322  

Total net sales

   $ 19,952,766     $ 18,193,413  

 

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.