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Note 11 - Segment and Geographic Information
 3 Months Ended
Feb. 29, 2024
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 six months ended February 29, 2024 and February 28, 2023 by segment:

 

   

Three Months Ended

   

Six Months Ended

  
   

February 29, 2024

    

February 28, 2023

    

February 29, 2024

    

February 28, 2023

  

ZERUST® net sales

   $ 15,218,095     $ 14,458,747     $ 30,623,840     $ 29,828,748  

Natur-Tec® net sales

     5,624,443       3,812,078       10,400,373       8,394,843  

Total net sales

   $ 20,842,538     $ 18,270,825     $ 41,024,213     $ 38,223,591  

 

The following table sets forth the Company’s cost of goods sold for the three and six months ended February 29, 2024 and February 28, 2023 by segment:

 

   

Three Months Ended

   

Six Months Ended

 
   

February 29, 2024

    

% of Product Sales*

    

February 28, 2023

    

% of Product Sales*

    

February 29, 2024

    

% of Product Sales*

    

February 28, 2023

    

% of Product Sales*

  

Direct cost of goods sold

                                                                

ZERUST®

   $ 8,082,163       53.1 %   $ 8,115,451       56.1 %   $ 16,826,187       54.9 %   $ 17,294,705       58.0 %

Natur-Tec®

     3,568,719       63.5 %     2,931,036       76.9 %     6,797,302       65.4 %     6,501,709       77.4 %

Indirect cost of goods sold

     852,492       —       921,270       —       1,727,286       —       1,770,985       —  

Total net cost of goods sold

   $ 12,503,374             $ 11,967,757             $ 25,350,775             $ 25,567,399          

 

*         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 six months ended February 29, 2024 and February 28, 2023 were as follows:

 

   

Three Months Ended

    

Six Months Ended

 
   

February 29, 2024

    

February 28, 2023

    

February 29, 2024

    

February 28, 2023

  

Inside the U.S.A. to unaffiliated customers

   $ 6,840,855     $ 6,750,997     $ 14,073,236     $ 14,229,158  

Outside the U.S.A. to:

                                

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

     611,926       1,529,763       1,463,377       2,163,228  

Unaffiliated customers

     13,389,757       9,990,065       25,487,600       21,831,205  
    $ 20,842,538     $ 18,270,825     $ 41,024,213     $ 38,223,591  

 

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 six months ended February 29, 2024 and February 28, 2023 were as follows:

 

   

Three Months Ended

 
   

February 29, 2024

    

% of Total Fees for Services Provided to Joint Ventures

    

February 28, 2023

    

% of Total Fees for Services Provided to Joint Ventures

  

Poland

   $ 217,786       16.7 %   $ 199,927       16.0 %

Germany

     206,740       15.9 %     202,964       16.2 %

France

     195,176       15.0 %     118,938       9.5 %

Japan

     111,995       8.6 %     153,795       12.3 %

Sweden

     102,984       7.9 %     112,615       9.0 %

Finland

     95,748       7.3 %     91,620       7.3 %

Thailand

     90,264       6.9 %     91,601       7.3 %

Czech Republic

     84,789       6.5 %     91,001       7.3 %

South Korea

     63,381       4.9 %     65,803       5.3 %

United Kingdom

     55,101       4.2 %     65,648       5.2 %

Other

     79,095       6.1 %     58,834       4.7 %
    $ 1,303,059       100.0 %   $ 1,252,746       100.0 %

 

 

   

Six Months Ended

  
   

February 29, 2024

    

% of Total Fees for Services Provided to Joint Ventures

    

February 28, 2023

    

% of Total Fees for Services Provided to Joint Ventures

  

Poland

   $ 415,803       16.3 %   $ 386,623       15.9 %

Germany

     412,383       16.2 %     396,792       16.3 %

France

     317,142       12.4 %     228,295       9.4 %

Japan

     248,076       9.7 %     301,715       12.4 %

Sweden

     213,520       8.4 %     213,051       8.8 %

Finland

     199,492       7.8 %     182,052       7.5 %

Thailand

     169,702       6.6 %     174,557       7.2 %

Czech Republic

     162,601       6.4 %     171,333       7.0 %

South Korea

     138,338       5.4 %     129,197       5.3 %

United Kingdom

     118,251       4.6 %     123,339       5.1 %

Other

     156,709       6.1 %     127,597       5.2 %
    $ 2,552,017       100.0 %   $ 2,434,551       100.0 %

 

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

 

   

At

February 29, 2024

    

At

August 31, 2023

  

China

   $ 5,680,609     $ 5,729,080  

Other

     804,148       745,469  

United States

     8,478,429       7,590,805  

Total property and equipment, net

   $ 14,963,186     $ 14,065,354  

 

   

Three Months Ended

  
   

February 29, 2024

    

February 28, 2023

 

China

   $ 3,455,846     $ 2,871,795  

Brazil

     1,326,867       1,206,790  

India

     5,406,404       4,364,358  

Other

     3,812,566       3,076,885  

United States

     6,840,855       6,750,997  

Total net sales

   $ 20,842,538     $ 18,270,825  

 

 

   

Six Months Ended

  
   

February 29, 2024

    

February 28, 2023

  

China

   $ 7,134,369     $ 6,618,435  

Brazil

     2,856,490       2,574,208  

India

     10,586,795       9,211,285  

Other

     6,373,323       5,590,505  

United States

     14,073,236       14,229,158  

Total net sales

   $ 41,024,213     $ 38,223,591  

 

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.