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Note 11 - Segment and Geographic Information
 3 Months Ended
Nov. 30, 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 months ended November 30, 2023 and 2022 by segment:

 

   

Three Months Ended

  
   

November 30, 2023

    

November 30, 2022

  

ZERUST® net sales

   $ 15,405,745     $ 15,370,001  

Natur-Tec® net sales

     4,775,930       4,582,765  

Total net sales

   $ 20,181,675     $ 19,952,766  

 

The following table sets forth the Company’s cost of goods sold for the three months ended November 30, 2023 and 2022 by segment:

 

   

November 30, 2023

    

% of Product Sales*

    

November 30, 2022

    

% of Product Sales*

  

Direct cost of goods sold

                                

ZERUST®

   $ 8,744,024       56.8 %   $ 9,179,254       59.7 %

Natur-Tec®

     3,228,583       67.6 %     3,570,673       77.9 %

Indirect cost of goods sold

     874,794    

 

 NA       849,715    

 

 NA  

Total net cost of goods sold ….

   $ 12,847,401             $ 13,599,642          

 

* 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, 2023 and 2022 were as follows:

 

   

Three Months Ended

  
   

November 30, 2023

    

November 30, 2022

  

Inside the U.S.A. to unaffiliated customers

   $ 12,097,843     $ 7,478,161  

Outside the U.S.A. to:

                

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

     851,452       633,465  

Unaffiliated customers

     7,232,380       11,841,140  
    $ 20,181,675     $ 19,952,766  

 

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, 2023 and 2022 were as follows:

 

   

Three Months Ended

  
   

November 30,
2023

    

% of Total Fees for Services Provided to Joint Ventures

    

November 30,
2022

    

% of Total Fees for Services Provided to Joint Ventures

 

Germany

   $ 205,643       16.5 %   $ 193,828       16.4 %

Poland

     198,017       15.9 %     186,696       15.8 %

Japan

     136,081       10.9 %     147,920       12.5 %

France

     121,966       9.8 %     109,357       9.3 %

Sweden

     110,536       8.9 %     100,436       8.5 %

Finland

     103,744       8.3 %     90,432       7.7 %

Thailand

     79,438       6.4 %     82,956       7.0 %

Czech Republic

     77,812       6.2 %     80,332       6.8 %

South Korea

     74,957       6.0 %     63,395       5.4 %

United Kingdom

     63,149       5.1 %     57,691       4.9 %

Other

     77,615       6.2 %     68,762       5.7 %
    $ 1,248,958       100.0 %   $ 1,181,805       100.0 %

 

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

 

   

At

November 30, 2023

    

At

August 31, 2023

  

China

   $ 5,801,146     $ 5,729,080  

Other

     817,898       745,469  

United States

     7,637,946       7,590,805  

Total property and equipment, net

   $ 14,256,990     $ 14,065,354  

 

   

Three Months Ended

  
   

November 30, 2023

    

November 30, 2022

  

China

   $ 3,678,523     $ 3,746,640  

Brazil

     1,529,623       1,367,418  

India

     5,180,391       4,846,927  

Other

     2,560,757       2,513,620  

United States

     7,232,381       7,478,161  

Total net sales

   $ 20,181,675     $ 19,952,766  

 

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.