Note 11 - Segment and Geographic Information

12 Months Ended

Aug. 31, 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 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 tables present the Company’s business segment information:

	Fiscal 2023		Fiscal 2022
ZERUST® net sales	$	61,728,364	$	57,459,382
Natur-Tec® net sales		18,174,588		16,699,508
Total net sales	$	79,902,952	$	74,158,890

The following table sets forth the Company’s cost of goods sold by segment:

	Fiscal 2023		Fiscal 2022
Direct cost of goods sold
ZERUST®	$	35,297,352	$	34,673,146
Natur-Tec®		13,645,992		12,859,343
Indirect cost of goods sold		3,155,777		3,557,809
Total net cost of goods sold	$	52,099,121	$	51,090,298

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.

Sales to the Company’s joint ventures are included in the foregoing geographic and segment information, however, sales by the Company’s joint ventures to other parties are not included. The foregoing geographic and segment information represents only sales and cost of goods sold recognized directly by the Company.

All joint venture operations, including equity in income, fees for services, and related dividends, are related to ZERUST® products and services.

Geographic Information

Net sales by geographic location for fiscal 2023 and fiscal 2022 were as follows:

	Fiscal Year Ended August 31,
	2023		2022
Inside the U.S.A. to unaffiliated customers	$	28,554,354	$	25,301,067
Outside the U.S.A. to:
Joint ventures in which the Company is a shareholder directly and indirectly		3,401,910		2,968,089
Unaffiliated customers		47,946,688		45,889,734
	$	79,902,952	$	74,158,890

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 fiscal 2023 and fiscal 2022, respectively, were as follows:

	Fiscal 2023		% of Total Fees for Services Provided to Joint Ventures			Fiscal 2022		% of Total Fees for Services Provided to Joint Ventures
Germany	$	816,089		15.7	%	$	834,725		14.5	%
Poland		810,977		15.6	%		730,523		12.7	%
Japan		658,934		12.7	%		669,371		11.6	%
Sweden		498,463		9.6	%		447,441		7.8	%
France		479,515		9.2	%		448,579		7.8	%
Finland		388,627		7.5	%		340,783		5.9	%
Czech Republic		365,018		7.0	%		300,257		5.2	%
Thailand		340,657		6.6	%		344,649		6.0	%
United Kingdom		283,418		5.5	%		342,488		5.9	%
South Korea		266,562		5.1	%		270,309		4.7	%
Indonesia		130,081		2.5	%		156,476		2.7	%
Other		150,844		3.0	%		882,081		15.2	%
	$	5,189,185		100.0	%	$	5,767,682		100.0	%

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.

See Note 6 for additional details on geographical information regarding equity in income from joint ventures.

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

	At August 31, 2023		At August 31, 2022
China	$	5,729,080	$	5,826,898
Other		745,469		565,022
United States		7,590,805		5,778,573
Total property and equipment	$	14,065,354	$	12,170,493

	Fiscal Year Ended August 31, 2023		Fiscal Year Ended August 31, 2022
China	$	13,469,075	$	15,754,051
Brazil		5,969,314		5,160,572
India		19,916,834		18,555,603
Other		11,993,375		9,387,597
United States		28,554,354		25,301,067
Total net sales	$	79,902,952	$	74,158,890

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.