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Note 11 - Segment and Geographic Information | 9 Months Ended
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May 31, 2023
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 and nine months ended May 31, 2023 and 2022 by segment:
|  | Three Months Ended May 31, |  |  | Nine Months Ended May 31, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
ZERUST® net sales |  | $ | 16,100,674 |  |  | $ | 14,446,832 |  |  | $ | 45,929,422 |  |  | $ | 41,988,394 |
Natur-Tec® net sales |  |  | 4,869,052 |  |  |  | 4,518,089 |  |  |  | 13,263,895 |  |  |  | 11,918,579 |
Total net sales |  | $ | 20,969,726 |  |  | $ | 18,964,921 |  |  | $ | 59,193,317 |  |  | $ | 53,906,973 |
The following table sets forth the Company’s cost of goods sold for the three and nine months ended May 31, 2023 and 2022 by segment:
|  | Three Months Ended May 31, |  |  | Nine Months Ended May 31, |
|  | 2023 |  |  | % of Product Sales* |  |  | 2022 |  |  | % of Product Sales* |  |  | 2023 |  |  | % of Product Sales* |  |  | 2022 |  |  | % of Product Sales* |
Direct cost of goods sold |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ZERUST® |  | $ | 9,116,091 |  |  |  | 56.6 | % |  | $ | 8,409,392 |  |  |  | 58.2 | % |  | $ | 26,410,796 |  |  |  | 57.5 | % |  | $ | 25,267,333 |  |  |  | 60.2 | %
Natur-Tec® |  |  | 3,576,676 |  |  |  | 73.5 | % |  |  | 3,432,152 |  |  |  | 76.0 | % |  |  | 10,078,385 |  |  |  | 76.0 | % |  |  | 9,129,686 |  |  |  | 76.6 | %
Indirect cost of goods sold |  |  | 587,817 |  |  |  | — |  |  |  | 881,289 |  |  |  | — |  |  |  | 2,258,684 |  |  |  | — |  |  |  | 2,580,601 |  |  |  | — |
Total net cost of goods sold |  | $ | 13,280,584 |  |  |  |  |  |  | $ | 12,722,833 |  |  |  |  |  |  | $ | 38,747,865 |  |  |  |  |  |  | $ | 36,977,620 |  |  |  |  |
______________________
* | 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, 2023 and 2022 were as follows:
|  | Three Months Ended May 31, |  |  | Nine Months Ended May 31, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Inside the U.S.A. to unaffiliated customers |  | $ | 7,729,820 |  |  | $ | 6,884,726 |  |  | $ | 21,958,978 |  |  | $ | 18,157,010 |
Outside the U.S.A. to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Joint ventures in which the Company is a shareholder directly and indirectly |  |  | 732,437 |  |  |  | 528,665 |  |  |  | 2,895,665 |  |  |  | 2,252,618 |
Unaffiliated customers |  |  | 12,507,469 |  |  |  | 11,551,530 |  |  |  | 34,338,674 |  |  |  | 33,497,345 |
|  | $ | 20,969,726 |  |  | $ | 18,964,921 |  |  | $ | 59,193,317 |  |  | $ | 53,906,973 |
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, 2023 and 2022 were as follows:
|  | Three Months Ended May 31, |
|  | 2023 |  |  | % of Total Fees for Services Provided to Joint Ventures |  |  | 2022 |  |  | % of Total Fees for Services Provided to Joint Ventures |
Poland |  | $ | 224,288 |  |  |  | 16.5 | % |  | $ | 171,181 |  |  |  | 12.9 | %
Germany |  |  | 209,398 |  |  |  | 15.4 | % |  |  | 204,316 |  |  |  | 15.4 | %
Japan |  |  | 152,593 |  |  |  | 11.2 | % |  |  | 168,075 |  |  |  | 12.6 | %
Sweden |  |  | 144,981 |  |  |  | 10.7 | % |  |  | 130,681 |  |  |  | 9.8 | %
France |  |  | 128,149 |  |  |  | 9.4 | % |  |  | 123,869 |  |  |  | 9.3 | %
Finland |  |  | 103,879 |  |  |  | 7.6 | % |  |  | 92,036 |  |  |  | 6.9 | %
Czech Republic |  |  | 99,090 |  |  |  | 7.3 | % |  |  | 84,797 |  |  |  | 6.4 | %
Thailand |  |  | 82,725 |  |  |  | 6.1 | % |  |  | 95,574 |  |  |  | 7.2 | %
United Kingdom |  |  | 83,586 |  |  |  | 6.1 | % |  |  | 89,363 |  |  |  | 6.7 | %
South Korea |  |  | 61,669 |  |  |  | 4.5 | % |  |  | 78,542 |  |  |  | 5.9 | %
Other |  |  | 70,953 |  |  |  | 5.2 | % |  |  | 91,554 |  |  |  | 6.9 | %
|  | $ | 1,361,311 |  |  |  | 100.0 | % |  | $ | 1,329,988 |  |  |  | 100.0 | %
|  | Nine Months Ended May 31, |
|  | 2023 |  |  | % of Total Fees for Services Provided to Joint Ventures |  |  | 2022 |  |  | % of Total Fees for Services Provided to Joint Ventures |
Poland |  | $ | 610,911 |  |  |  | 16.1 | % |  | $ | 520,807 |  |  |  | 13.6 | %
Germany |  |  | 606,189 |  |  |  | 16.0 | % |  |  | 639,738 |  |  |  | 16.7 | %
Japan |  |  | 454,308 |  |  |  | 12.0 | % |  |  | 486,815 |  |  |  | 12.7 | %
Sweden |  |  | 358,032 |  |  |  | 9.4 | % |  |  | 337,929 |  |  |  | 8.8 | %
France |  |  | 356,444 |  |  |  | 9.4 | % |  |  | 355,827 |  |  |  | 9.3 | %
Finland |  |  | 285,931 |  |  |  | 7.5 | % |  |  | 257,635 |  |  |  | 6.7 | %
Czech Republic |  |  | 270,422 |  |  |  | 7.1 | % |  |  | 224,280 |  |  |  | 5.8 | %
Thailand |  |  | 257,282 |  |  |  | 6.8 | % |  |  | 271,046 |  |  |  | 7.1 | %
United Kingdom |  |  | 206,925 |  |  |  | 5.5 | % |  |  | 271,027 |  |  |  | 7.1 | %
South Korea |  |  | 190,866 |  |  |  | 5.0 | % |  |  | 205,342 |  |  |  | 5.4 | %
Other |  |  | 198,552 |  |  |  | 5.2 | % |  |  | 265,309 |  |  |  | 6.8 | %
|  | $ | 3,795,862 |  |  |  | 100.0 | % |  | $ | 3,835,755 |  |  |  | 100.0 | %
The geographical distribution of total property and equipment and net sales is as follows:
|  | At May 31, 2023 |  |  | At August 31, 2022 |
China |  | $ | 5,805,738 |  |  | $ | 5,826,898 |
Other |  |  | 770,863 |  |  |  | 565,022 |
United States |  |  | 7,234,329 |  |  |  | 5,778,573 |
Total property and equipment, net |  | $ | 13,810,930 |  |  | $ | 12,170,493 |
|  | Three Months Ended May 31, |  |  | Nine Months Ended May 31, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
China |  | $ | 3,318,373 |  |  | $ | 3,624,396 |  |  | $ | 9,936,808 |  |  | $ | 11,845,989 |
Brazil |  |  | 1,488,510 |  |  |  | 1,554,364 |  |  |  | 4,062,718 |  |  |  | 3,786,670 |
India |  |  | 5,145,423 |  |  |  | 4,824,004 |  |  |  | 14,356,708 |  |  |  | 13,369,769 |
Other |  |  | 3,287,600 |  |  |  | 2,077,431 |  |  |  | 8,878,105 |  |  |  | 6,747,535 |
United States |  |  | 7,729,820 |  |  |  | 6,884,726 |  |  |  | 21,958,978 |  |  |  | 18,157,010 |
Total net sales |  | $ | 20,969,726 |  |  | $ | 18,964,921 |  |  | $ | 59,193,317 |  |  | $ | 53,906,973 |
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.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 22 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-22 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-15 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 31 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-31 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-42 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 40 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-40 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//280/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 26 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-26 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 34 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-34 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 41 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-41 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 + Details
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