Note 11 - Segment and Geographic Information

12 Months Ended

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

	Fiscal 2024		Fiscal 2023
ZERUST® net sales	$	63,092,575	$	61,728,364
Natur-Tec® net sales		21,966,942		18,174,588
Total net sales	$	85,059,517	$	79,902,952

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

	Fiscal 2024		Fiscal 2023
Direct cost of goods sold
ZERUST®	$	33,623,834	$	35,297,352
Natur-Tec®		14,148,145		13,645,992
Indirect cost of goods sold		3,501,176		3,155,777
Total net cost of goods sold	$	51,273,155	$	52,099,121

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 2024 and fiscal 2023 were as follows:

	Fiscal Year Ended August 31,
	2024		2023
Inside the U.S. to unaffiliated customers	$	30,492,665	$	28,554,354
Outside the U.S. to:
Joint ventures in which the Company is a shareholder directly and indirectly		2,228,894		3,401,910
Unaffiliated customers		52,337,958		47,946,688
	$	85,059,517	$	79,902,952

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 2024 and fiscal 2023, respectively, were as follows:

	Fiscal 2024		% of Total Fees for Services Provided to Joint Ventures			Fiscal 2023		% of Total Fees for Services Provided to Joint Ventures
Poland	$	849,736		16.2	%	$	810,977		15.6	%
Germany		828,932		15.8	%		816,089		15.7	%
Japan		582,674		11.1	%		658,934		12.7	%
France		485,627		9.3	%		479,515		9.2	%
Sweden		445,560		8.5	%		498,463		9.6	%
Finland		395,515		7.5	%		388,627		7.5	%
United Kingdom		375,150		7.1	%		283,418		5.5	%
Czech Republic		338,195		6.4	%		365,018		7.0	%
Thailand		332,148		6.3	%		340,657		6.6	%
South Korea		258,314		4.9	%		266,562		5.1	%
Indonesia		166,053		3.2	%		130,081		2.5	%
Other		193,878		3.7	%		150,844		3.0	%
	$	5,251,782		100.0	%	$	5,189,185		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, which are based on the geographical location of the customer, is as follows:

	At August 31, 2024		At August 31, 2023
China	$	5,627,202	$	5,729,080
Other		1,217,400		745,469
United States		9,421,051		7,590,805
Total property and equipment	$	16,265,653	$	14,065,354

	Fiscal Year Ended August 31, 2024		Fiscal Year Ended August 31, 2023
China	$	14,245,238	$	13,469,075
Brazil		5,994,372		5,969,314
India		22,189,317		19,916,834
Other		12,137,925		11,993,375
United States		30,492,665		28,554,354
Total net sales	$	85,059,517	$	79,902,952

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.