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Note 12 - Segment and Geographic Information
 3 Months Ended
Nov. 30, 2024
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

12.

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 over 50 years and, more recently, has also expanded into the oil and gas industry. The Company also sells a portfolio of proprietary 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, 2024 and 2023 by segment:

 

   

Three Months Ended November 30,

  
   

2024

    

2023

  

ZERUST® net sales

   $ 15,475,803     $ 15,405,745  

Natur-Tec® net sales

     5,862,590       4,775,930  

Total net sales

   $ 21,338,393     $ 20,181,675  

 

The following table sets forth the Company’s cost of goods sold for the three months ended November 30, 2024 and 2023 by segment:

 

   

November 30,
2024

    

% of
Product
Sales*

    

November 30,
2023

    

% of
Product
Sales*

  

Direct cost of goods sold

                                

ZERUST®

   $ 8,678,706       56.1 %   $ 8,744,024       56.8 %

Natur-Tec®

     3,689,183       62.9 %     3,228,583       67.6 %

Indirect cost of goods sold

     807,551    

NA

       874,794    

NA

  

Total net cost of goods sold

   $ 13,175,440             $ 12,847,401          

 

*

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 months ended November 30, 2024 and 2023 were as follows:

 

   

Three Months Ended November 30,

  
   

2024

    

2023

  

Inside the U.S. to unaffiliated customers

   $ 13,088,319     $ 12,097,843  

Outside the U.S. to:

                

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

     767,456       851,452  

Unaffiliated customers

     7,482,618       7,232,380  
    $ 21,338,393     $ 20,181,675  

 

 

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, 2024 and 2023 were as follows:

 

   

Three Months Ended November 30,

  
   

2024

    

% of Total Fees
for Services
Provided to
Joint Ventures

    

2023

    

% of Total Fees for
Services Provided
to Joint Ventures

 

Poland

   $ 220,010       17.1 %   $ 198,017       15.9 %
Germany     206,329       16.1 %     205,643       16.5 %

Japan

     148,538       11.6 %     136,081       10.9 %

Finland

     131,460       10.2 %     103,744       8.3 %

United Kingdom

     116,226       9.1 %     63,149       5.1 %

Thailand

     94,165       7.3 %     79,438       6.4 %

France

     79,064       6.2 %     121,966       9.8 %

Czech Republic

     72,631       5.7 %     77,812       6.2 %

South Korea

     67,701       5.3 %     74,957       6.0 %

Sweden

     66,928       5.2 %     110,536       8.9 %

Other

     81,067       6.3 %     77,615       6.2 %
    $ 1,284,119       100.0 %   $ 1,248,958       100.0 %

 

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

 

   

At

November 30, 2024

    

At

August 31, 2024

  

China

   $ 5,453,786     $ 5,627,202  

Other

     1,212,917       1,217,400  

United States

     10,386,536       9,421,051  

Total property and equipment, net

   $ 17,053,239     $ 16,265,653  

 

   

Three Months Ended November 30,

  
   

2024

    

2023

  

China

   $ 3,994,769     $ 3,678,523  

Brazil

     1,385,194       1,529,623  

India

     6,045,735       5,180,391  

Other

     2,430,077       2,560,757  

United States

     7,482,618       7,232,381  

Total net sales

   $ 21,338,393     $ 20,181,675  

 

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.