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Note 11 - Segment and Geographic Information
 9 Months Ended
May 31, 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 nine months ended May 31, 2024 and 2023 by segment:

 

   

Three Months Ended

   

Nine Months Ended

 
   

May 31, 2024

    

May 31, 2023

    

May 31, 2024

    

May 31, 2023

  

ZERUST® net sales

   $ 14,837,235     $ 16,100,674     $ 45,461,075     $ 45,929,422  

Natur-Tec® net sales

     5,848,962       4,869,052       16,249,335       13,263,895  

Total net sales

   $ 20,686,197     $ 20,969,726     $ 61,710,410     $ 59,193,317  

 

The following table sets forth the Company’s cost of goods sold for the three and nine months ended May 31, 2024 and 2023 by segment:

 

   

Three Months Ended

   

Nine Months Ended

 
   

May 31,
2024

    

% of
Product
Sales*

    

May 31,
2023

    

% of
Product
Sales*

    

May 31,
2024

    

% of
Product
Sales*

    

May 31,
2023

    

% of
Product
Sales*

  

Direct cost of goods sold

                                                                

ZERUST®

     8,168,215       55.1 %   $ 9,116,091       56.6 %   $ 24,994,401       55.0 %   $ 26,410,796       57.5 %

Natur-Tec®

     3,768,921       64.4 %     3,576,676       73.5 %     10,566,223       65.0 %     10,078,385       76.0 %

Indirect cost of goods sold

     855,967       —       697,106       —       2,583,254       —       2,468,091       —  

Total net cost of goods sold

   $ 12,793,103             $ 13,389,873             $ 38,143,878             $ 38,957,272          

______________________________

*   The percent of product 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, 2024 and 2023 were as follows:

 

   

Three Months Ended May 31,

    

Nine Months Ended May 31,

  
   

2024

    

2023

    

2024

    

2023

  

Inside the U.S.A. to unaffiliated customers

   $ 7,086,859     $ 7,729,820     $ 21,160,095     $ 21,958,978  

Outside the U.S.A. to:

                                

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

     441,067       732,437       1,904,444       2,895,665  

Unaffiliated customers

     13,158,272       12,507,469       38,645,871       34,338,674  
    $ 20,686,197     $ 20,969,726     $ 61,710,410     $ 59,193,317  

 

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, 2024 and 2023 were as follows:

 

   

Three Months Ended

 
   

May 31, 2024

    

% of Total Fees
for Services
Provided to
Joint Ventures

    

May 31, 2023

    

% of Total Fees
for Services
Provided to
Joint Ventures

 

Poland

   $ 213,102       17.6 %   $ 224,288       16.5 %

Germany

     205,853       17.0 %     209,398       15.4 %

Japan

     118,606       9.8 %     152,593       11.2 %

Sweden

     110,542       9.1 %     144,981       10.7 %

Czech Republic

     101,111       8.3 %     99,089       7.3 %

Finland

     97,437       8.0 %     103,879       7.6 %

United Kingdom

     96,872       8.0 %     83,586       6.1 %

Thailand

     77,206       6.4 %     82,725       6.1 %

South Korea

     58,732       4.8 %     61,668       4.5 %

France

     47,206       3.9 %     128,149       9.4 %

Other

     85,830       7.1 %     70,953       5.2 %
    $ 1,212,497       100.0 %   $ 1,361,311       100.0 %

 

 

   

Nine Months Ended

 
   

May 31, 2024

    

% of Total Fees
for Services
Provided to
Joint Ventures

    

May 31, 2023

    

% of Total Fees
for Services
Provided to
Joint Ventures

 

Poland

   $ 628,905       16.7 %   $ 610,911       16.1 %

Germany

     618,236       16.4 %     606,189       16.0 %

Japan

     366,682       9.7 %     454,308       12.0 %

France

     364,348       9.7 %     356,444       9.4 %

Sweden

     324,062       8.6 %     358,032       9.4 %

Finland

     296,929       7.9 %     285,931       7.5 %

Czech Republic

     263,712       7.0 %     270,422       7.1 %

Thailand

     246,908       6.6 %     257,282       6.8 %

United Kingdom

     215,123       5.7 %     206,925       5.5 %

South Korea

     197,070       5.2 %     190,866       5.0 %

Other

     242,540       6.4 %     198,552       5.2 %
    $ 3,764,514       100.0 %   $ 3,795,862       100.0 %

 

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

 

   

At

May 31, 2024

    

At

August 31, 2023

  

China

   $ 5,575,097     $ 5,729,080  

Other

     1,061,309       745,469  

United States

     9,042,166       7,590,805  

Total property and equipment, net

   $ 15,678,572     $ 14,065,354  

 

 

 

   

Three Months Ended

   

Nine Months Ended

 
   

May 31, 2024

    

May 31, 2023

    

May 31, 2024

    

May 31, 2023

  

China

   $ 3,540,570     $ 3,318,373     $ 10,674,939     $ 9,936,808  

Brazil

     1,508,680       1,488,510       4,365,170       4,062,718  

India

     5,814,829       5,145,423       16,401,624       14,356,708  

Other

     2,735,259       3,287,600       9,108,583       8,878,105  

United States

     7,086,859       7,729,820       21,160,095       21,958,978  

Total net sales

   $ 20,686,197     $ 20,969,726     $ 61,710,410     $ 59,193,317  

 

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.