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Note 12 - Segment and Geographic Information
 6 Months Ended
Feb. 28, 2025
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 and six months ended February 28, 2025 and February 29, 2024 by segment:

 

   

Three Months Ended

   

Six Months Ended

  
   

February 28, 2025

    

February 29, 2024

    

February 28, 2025

    

February 29, 2024

  

ZERUST® net sales

   $ 14,112,017     $ 15,218,095     $ 29,587,820     $ 30,623,840  

Natur-Tec® net sales

     4,960,049       5,624,443       10,822,639       10,400,373  

Total net sales

   $ 19,072,066     $ 20,842,538     $ 40,410,459     $ 41,024,213  

 

 

The following table sets forth the Company’s cost of goods sold for the three and six months ended February 28, 2025 and February 29, 2024 by segment:

 

   

Three Months Ended

   

Six Months Ended

 
   

February 28, 2025

    

% of Product Sales*

    

February 29, 2024

    

% of Product Sales*

    

February 28, 2025

    

% of Product Sales*

    

February 29, 2024

    

% of Product Sales*

  

Direct cost of goods sold

                                                                

ZERUST®

   $ 8,096,177       57.4 %   $ 8,082,163       53.1 %   $ 16,774,883       56.7 %   $ 16,826,187       54.9 %

Natur-Tec®

     3,237,854       65.3 %     3,568,719       63.5 %     6,927,037       64.0 %     6,797,302       65.4 %

Indirect cost of goods sold

     942,451       —       852,492       —       1,750,002       —       1,727,286       —  

Total net cost of goods sold

   $ 12,276,482             $ 12,503,374             $ 25,451,922             $ 25,350,775          

 

________________________

*

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 six months ended February 28, 2025 and February 29, 2024 were as follows:

 

   

Three Months Ended

    

Six Months Ended

 
   

February 28, 2025

    

February 29, 2024

    

February 28, 2025

    

February 29, 2024

  

Inside the U.S. to unaffiliated customers

   $ 6,668,183     $ 6,840,855     $ 14,150,801     $ 14,073,236  

Outside the U.S. to:

                                

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

     545,484       611,926       1,172,245       1,463,377  

Unaffiliated customers

     11,858,399       13,389,757       25,087,413       25,487,600  
    $ 19,072,066     $ 20,842,538     $ 40,410,459     $ 41,024,213  

 

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 28, 2025 and February 29, 2024 were as follows:

 

   

Three Months Ended

 
   

February 28, 2025

    

% of Total Fees for Services Provided to Joint Ventures

    

February 29, 2024

    

% of Total Fees for Services Provided to Joint Ventures

  

Germany

   $ 201,728       18.8 %   $ 206,740       15.9 %

Poland

     185,499       17.3 %     217,786       16.7 %

Japan

     122,548       11.5 %     111,995       8.6 %

Sweden

     96,133       9.0 %     102,984       7.9 %

Thailand

     86,721       8.1 %     90,264       6.9 %

France

     70,040       6.5 %     195,176       15.0 %

Finland

     69,923       6.5 %     95,748       7.3 %

United Kingdom

     68,804       6.4 %     55,101       4.2 %

Czech Republic

     61,340       5.7 %     84,789       6.5 %

South Korea

     27,320       2.6 %     63,381       4.9 %

Other

     80,207       7.6 %     79,095       6.1 %
    $ 1,070,263       100.0 %   $ 1,303,059       100.0 %

 

   

Six Months Ended

  
   

February 28, 2025

    

% of Total Fees for Services Provided to Joint Ventures

    

February 29, 2024

    

% of Total Fees for Services Provided to Joint Ventures

  

Germany

   $ 408,056       17.3 %   $ 412,383       16.2 %

Poland

     405,510       17.2 %     415,803       16.3 %

Japan

     271,086       11.5 %     248,076       9.7 %

Finland

     201,382       8.6 %     199,492       7.8 %

United Kingdom

     185,029       7.9 %     118,251       4.6 %

Thailand

     180,886       7.7 %     169,702       6.6 %

Sweden

     163,061       6.9 %     213,520       8.4 %

France

     149,104       6.3 %     317,142       12.4 %

Czech Republic

     133,972       5.7 %     162,601       6.4 %

South Korea

     95,021       4.0 %     138,338       5.4 %

Other

     161,275       6.9 %     156,710       6.1 %
    $ 2,354,382       100.0 %   $ 2,552,018       100.0 %

 

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

 

   

At

February 28, 2025

    

At

August 31, 2024

  

China

   $ 5,359,435     $ 5,627,202  

Other

     1,179,459       1,217,400  

United States

     8,275,495       9,421,051  

Total property and equipment, net

   $ 14,814,389     $ 16,265,653  

 

 

 

   

Three Months Ended

  
   

February 28, 2025

    

February 29,  2024

 

China

   $ 3,735,100     $ 3,455,846  

Brazil

     1,515,680       1,326,867  

India

     4,870,068       5,406,404  

Other

     2,283,035       3,812,566  

United States

     6,668,183       6,840,855  

Total net sales

   $ 19,072,066     $ 20,842,538  

 

   

Six Months Ended

  
   

February 28, 2025

    

February 29,  2024

  

China

   $ 7,729,869     $ 7,134,369  

Brazil

     2,900,874       2,856,490  

India

     10,915,803       10,586,795  

Other

     4,713,112       6,373,323  

United States

     14,150,801       14,073,236  

Total net sales

   $ 40,410,459     $ 41,024,213  

 

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.