-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000891554-02-000148.txt : 20020413
<SEC-HEADER>0000891554-02-000148.hdr.sgml : 20020413
ACCESSION NUMBER:		0000891554-02-000148
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20011130
FILED AS OF DATE:		20020114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NORTHERN TECHNOLOGIES INTERNATIONAL CORP
		CENTRAL INDEX KEY:			0000875582
		STANDARD INDUSTRIAL CLASSIFICATION:	CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670]
		IRS NUMBER:				410857886
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11038
		FILM NUMBER:		2509031

	BUSINESS ADDRESS:	
		STREET 1:		6680 N HIGHWAY 49
		CITY:			LINO LAKES
		STATE:			MN
		ZIP:			55014
		BUSINESS PHONE:		6127841250

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NORTHERN INSTRUMENTS CORP
		DATE OF NAME CHANGE:	19930328
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>d70689_f10-qsb.htm
<DESCRIPTION>QUARTERLY REPORT
<TEXT>

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     <!-- Project:        X:\JOBS\70689\d70689.hep                                         -->
     <!-- Control Number: 70689                                                            -->
     <!-- Rev Number:     1.0                                                              -->
     <!-- Client Name:    Northern Technologies Int'l Corporation                          -->
     <!-- Project Name:   Form 10-QSB                                                      -->
     <!-- Firm Name:      ADP                                                              -->
     <TITLE>Form 10-QSB</TITLE>
</HEAD>
<BODY>

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<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>SECURITIES
AND
EXCHANGE COMMISSION </B></FONT><BR>

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<FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Washington,
D.C. 20549 </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>FORM 10-QSB</B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Quarterly Report
Pursuant to Section 13 or 15 (d) of<BR> The Securities Exchange Act of 1934 </FONT></P>

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<BR>

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<TR VALIGN=TOP>
<TD ALIGN=CENTER WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the Quarterly Period Ended:<BR>November 30, 2001</FONT></TD>
<TD ALIGN=CENTER WIDTH=41%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=CENTER WIDTH=26%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Commission File Number<BR>1-11038</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>

<!-- MARKER FORMAT-SHEET="Reg Cover Company Name" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4><B>NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION</B></FONT><BR>
<FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>(Exact name of
registrant as specified in its charter) </FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD ALIGN=CENTER WIDTH=26%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Delaware<BR>(State of Incorporation)  </FONT></TD>
<TD ALIGN=CENTER WIDTH=36%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=CENTER WIDTH=38%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>41-0857886<BR>
(I.R.S. Employer Identification Number)</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>6680 N. Highway 49,
Lino Lakes, MN 55014<BR> (Address of principal executive offices) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>(651) 784-1250<BR>
(Registrant&#146;s telephone number) </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark
whether the Registrant (1) has filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. </FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=BOTTOM>
<TD ALIGN=CENTER WIDTH=30%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>YES&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X</FONT></TD>
<TD ALIGN=CENTER WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NO</FONT></TD>
<TD ALIGN=CENTER WIDTH=30%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD ALIGN=CENTER WIDTH=30%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=RIGHT WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT><HR ALIGN=RIGHT WIDTH=42% SIZE=1 NOSHADE></TD>
<TD ALIGN=CENTER WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=RIGHT WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT><HR ALIGN=RIGHT WIDTH=42% SIZE=1 NOSHADE></TD>
<TD ALIGN=CENTER WIDTH=30%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate the number of
shares outstanding of each of the issuer&#146;s classes of common stock, as of
the latest practicable date. </FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD ALIGN=CENTER WIDTH=30%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Class </FONT></TD>
<TD ALIGN=CENTER WIDTH=36%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=CENTER WIDTH=34%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Outstanding
as of December 31, 2001</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD ALIGN=CENTER WIDTH=30%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT><HR SIZE=1 WIDTH=23% NOSHADE></TD>
<TD ALIGN=CENTER WIDTH=36%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=CENTER WIDTH=34%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT><HR SIZE=1 NOSHADE></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Common Stock, $.02 par value </FONT></TD>
<TD ALIGN=CENTER WIDTH=34%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=CENTER WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3,669,551</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD ALIGN=CENTER WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=CENTER WIDTH=34%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=33%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;This
document consists of 11 pages. No exhibits are being filed.&#148;</FONT></TD>
</TR>
</TABLE>
<BR>





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<TD><HR SIZE=5 NOSHADE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I &#151; FINANCIAL INFORMATION </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 1 &#151; FINANCIAL STATEMENTS </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=4>NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION<BR>AND SUBSIDIARIES</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>CONSOLIDATED BALANCE SHEETS
(Unaudited)</B> </FONT>

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<HR SIZE=2 NOSHADE>

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</TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">November 30,<BR>2001</FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">August 31,<BR>2001</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="71%" ALIGN="LEFT"><FONT SIZE="2"><B>ASSETS</B></FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="71%" ALIGN="LEFT"><FONT SIZE="2">CURRENT ASSETS:</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Cash and cash equivalents</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;3,135,811</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;3,238,283</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Receivables:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade excluding international corporate joint ventures, less allowance</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for doubtful accounts of $25,000 and $30,000, respectively</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">920,727</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">864,319</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade international corporate joint ventures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">196,066</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">193,509</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Technical and other services international corporate joint ventures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">569,160</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">629,816</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">86,533</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Inventories</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">929,942</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">913,911</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Prepaid expenses and other</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">220,804</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">90,886</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Advance to related party</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">200,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">80,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">80,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">6,252,510</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">6,097,257</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">PROPERTY AND EQUIPMENT, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,030,832</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,067,138</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">OTHER ASSETS:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Investments in international corporate joint ventures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">4,011,779</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">3,923,883</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Investment in European holding company</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">28,424</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">209,748</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">380,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">380,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Other</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">909,603</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">729,838</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">5,329,806</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">5,243,469</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;12,613,148</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;12,407,864</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">CURRENT LIABILITIES:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Accounts payable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;129,309</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;240,109</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Income taxes payable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">29,930</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Accrued liabilities:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payroll and related benefits</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">51,903</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">80,811</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">221,517</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">196,862</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">432,659</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">517,782</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">DEFERRED GROSS PROFIT</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">25,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">25,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">STOCKHOLDERS&#146; EQUITY:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Preferred stock, no par value, authorized 10,000 shares, none issued</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Common stock, $.02 par value per share; authorized 10,000,000 shares;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;issued and outstanding 3,669,551 and 3,689,551, respectively</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">73,391</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">73,791</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Additional paid-in capital</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">4,278,682</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">4,318,682</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Retained earnings</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">8,627,828</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">8,199,866</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss (See Note 7)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(824,412</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(727,257</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders&#146; equity</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">12,155,489</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">11,865,082</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;12,613,148</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;12,407,864</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>


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<TD>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See notes to financial
statements. </FONT></P>



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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>2 </FONT></P>


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<BR>


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<BR>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=4>NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION<BR>AND SUBSIDIARIES</FONT></H2>

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<FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)</B> </FONT><BR>

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<FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>THREE MONTHS ENDED NOVEMBER 30,
2001 AND 2000</B> </FONT>

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<HR SIZE=2 NOSHADE>

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</TD>
</TR>
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<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">2001</FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">2000</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="73%" ALIGN="LEFT"><FONT SIZE="2"></FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="73%" ALIGN="LEFT"><FONT SIZE="2">SALES ORIGINATING IN NORTH AMERICA</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;2,099,189</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;2,505,707</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">COST OF GOODS SOLD</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">910,722</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,293,805</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">GROSS PROFIT</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,188,467</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,211,902</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">OPERATING EXPENSES:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Selling</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">269,276</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">434,646</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;General and administrative</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">552,961</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">512,346</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Research, engineering, and technical support</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">190,096</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">156,848</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,012,333</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,103,840</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">OPERATING INCOME</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">176,134</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">108,062</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">INTERNATIONAL CORPORATE JOINT VENTURES AND</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EUROPEAN HOLDING COMPANY:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Equity in income of international corporate joint ventures and</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;European holding company</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">185,051</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">92,754</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Fees for technical support and other service provided to</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;international corporate joint ventures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">569,360</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">601,605</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Expenses incurred in support of international corporate joint ventures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(295,858</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(186,288</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">458,553</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">508,071</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">INTEREST INCOME</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">22,875</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">38,393</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">INCOME BEFORE INCOME TAXES</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">657,562</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">654,526</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">INCOME TAXES</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">170,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">200,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">NET INCOME </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;487,562</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;454,526</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">NET INCOME PER SHARE:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Basic</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.13</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.12</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Diluted</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.13</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.12</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Basic</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">3,670,870</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">3,796,175</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Diluted</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">3,670,870</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">3,804,058</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE WIDTH=94% SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See notes to financial
statements. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>3 </FONT></P>

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<BR>



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<BR>


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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=4>NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION<BR>AND SUBSIDIARIES</FONT></H2>

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<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited)</B> </FONT></FONT> <BR>

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<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>THREE MONTHS ENDED NOVEMBER 30, 2001
AND 2000</B> </FONT></FONT>

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<HR SIZE=2 NOSHADE>

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<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">2001</FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">2000</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="73%" ALIGN="LEFT"><FONT SIZE="2">CASH FLOWS FROM OPERATING ACTIVITIES:</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Net income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;487,562</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;454,526</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash (used in) provided by</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;operating activities:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">52,354</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">52,371</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity in income of international corporate joint ventures and</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;European holding company</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(185,051</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(92,754</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends received from international corporate joint ventures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">226,660</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in current assets and liabilities:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(56,408</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(140,267</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;International corporate joint ventures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(2,557</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(4,528</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Technical fee</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">60,656</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">31,259</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">86,533</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(16,031</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">7,781</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(368,183</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(19,519</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(110,800</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(120,447</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">29,930</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(276,996</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(4,253</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(66,263</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total adjustments</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(513,810</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(402,703</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by operating activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(26,248</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">51,823</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">CASH FLOWS FROM INVESTING ACTIVITIES:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Investment in international corporate joint ventures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(142,267</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Additions to property</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(16,048</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(131,744</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Partial return of original investment in European holding company</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">181,324</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Increase in other assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(141,500</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) investing activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">23,776</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(274,011</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">CASH FLOWS FROM FINANCING ACTIVITIES:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Repurchase of common stock</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(100,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(72,825</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;Issuance of common stock</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">&#151;</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">19,999</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(100,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(52,826</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">NET DECREASE IN CASH AND CASH EQUIVALENTS</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(102,472</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(275,014</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">3,238,283</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">3,840,057</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">CASH AND CASH EQUIVALENTS AT END OF PERIOD</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;3,135,811</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;3,565,043</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="2"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE SIZE="2"></TD><TD></TD></TR>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See notes to financial
statements. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>4 </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=4>NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION<BR>AND SUBSIDIARIES</FONT></H2>

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<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited)</B> </FONT></FONT><BR>

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<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>THREE MONTHS ENDED NOVEMBER 30, 2001
AND 2000</B> </FONT></FONT>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1. </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INTERIM
FINANCIAL INFORMATION </FONT></TD>
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<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
the opinion of management, the accompanying unaudited consolidated financial statements
contain all necessary adjustments, which are of a normal recurring nature, to present
fairly the consolidated financial position of Northern Technologies International
Corporation and Subsidiaries as of November 30, 2001 and the results of their operations
and their cash flows for the three months ended November 30, 2001 and 2000, in conformity
with generally accepted accounting principles.</FONT></TD>
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<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
These
financial statements should be read in conjunction with the financial statements and
related notes as of and for the year ended August 31, 2001 contained in the Company&#146;s
filing on Form 10-KSB dated November 29, 2001 and with Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operations appearing on pages 7 through 9
of this quarterly report.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2. </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS </FONT></TD>
</TR>
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<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets (the Statements).
The Company does not currently have any goodwill or intangible assets
relating to business acquisitions.  Therefore, the adoption of the Statements does
not impact the Company&#146;s financial statements. </FONT></TD>
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<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations.
SFAS No. 143 requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. When the liability is
initially recorded, the entity capitalizes a cost by increasing the carrying amount of
the related long-lived asset. Over time, the liability is accreted to its fair value
each period, and the capitalized cost is depreciated over the useful life of the related
asset. Upon settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. SFAS No. 143 is effective for
fiscal years beginning after June 15, 2002. The Company expects to adopt SFAS No. 143 in
fiscal year 2003. The Company has not yet determined the impact of SFAS No. 143 on its
financial position and results of operations.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In September 2001, the FASB
also issued SFAS No.&nbsp;144, <I>Accounting for the Impairment or Disposal of
Long-lived Assets</I>. SFAS No.&nbsp;144 replaces SFAS No.&nbsp;121, <I>Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposal Of.</I>
The FASB issued SFAS No.&nbsp;144 to establish a single accounting model, based on
the framework established in SFAS No.&nbsp;121, as SFAS No.&nbsp;121 did not
address the accounting for a segment of a business accounted for as a
discontinued operation under Accounting Principle Board Opinion No.&nbsp;30,
<I>Reporting the Results of Operations&#151;Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequent Occurring
Events and Transactions.</I> SFAS No.&nbsp;144 also resolves significant
implementation issues related to SFAS No.&nbsp;121. The provisions of SFAS
No.&nbsp;144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001 and, generally, are to be applied
prospectively. The Company expects to adopt SFAS No.&nbsp;144 in fiscal year
2003. The Company has not yet determined the impact of SFAS No.&nbsp;144 on its
financial postion and results of operations. </FONT></TD>
</TR>
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<TD>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>5 </FONT></P>

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<TD><HR SIZE=5 NOSHADE>
<BR>

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</TR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3. </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INVENTORIES </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Inventories
consist of the following:</FONT></TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">November 30,<BR>2001</FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">August 31,<BR>2001</FONT></TH></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT SIZE="2">Production materials</FONT></TD>
     <TD WIDTH="22%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;311,784</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;396,793</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">Work in process</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">26,737</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">27,071</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">Finished goods</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">591,421</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">490,047</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="3"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=80% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=80% SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;929,942</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;&nbsp;913,911</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="3"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=80% SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=80% SIZE="2"></TD><TD></TD></TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4. </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROPERTY
AND EQUIPMENT </FONT></TD>
</TR>
</TABLE>
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<TR VALIGN=TOP>
<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Property
and equipment consist of the following: </FONT></TD>
</TR>
</TABLE>
<BR>



<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">November 30,<BR>2001</FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">August 31,<BR>2001</FONT></TH></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="46%" ALIGN="LEFT"><FONT SIZE="2">Land</FONT></TD>
     <TD WIDTH="17%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;246,097</FONT></TD>
        <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;&nbsp;&nbsp;246,097</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">Buildings and improvements</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,165,542</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,165,542</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">Machinery and equipment</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">762,526</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,180,823</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="3"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=85% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=85% SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">2,174,165</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">2,592,462</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">Less accumulated depreciation</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,143,333</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">1,525,324</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="3"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=85% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=85% SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$1,030,832</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$1,067,138</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="3"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=85% SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=85% SIZE="2"></TD><TD></TD></TR>
</TABLE>

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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5. </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>STOCKHOLDERS&#146; EQUITY </FONT></TD>
</TR>
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<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
During
the three months ended November 30, 2001, the Company purchased and retired 20,000 shares
of common stock for $100,000.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6. </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPREHENSIVE
INCOME </FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company&#146;s total comprehensive incomes were as follows: </FONT></TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT SIZE="1"></FONT></TH>
     <TH COLSPAN="4"><FONT SIZE="1">Three Months Ended<BR>November 30 </FONT><HR WIDTH=90% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">2001</FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">2000</FONT></TH></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2"></FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="67%" ALIGN="LEFT"><FONT SIZE="2">Net income</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;487,562</FONT></TD>
        <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;454,526</FONT></TD>
        <TD WIDTH="1%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">Other comprehensive loss &#151; foreign currency translation adjustment</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(97,155</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">(118,718</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR>
<TR>
     <TD COLSPAN="3"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=90% SIZE="1"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=90% SIZE="1"></TD><TD></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">Total comprehensive income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;390,407</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">$&nbsp;335,808</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN="3"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=90% SIZE="2"></TD><TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE ALIGN=RIGHT WIDTH=90% SIZE="2"></TD><TD></TD></TR>
</TABLE>


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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7. </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INCOME
PER SHARE </FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Basic
income per share is computed by dividing net income by the weighted average number of
common shares outstanding. Diluted income per share assumes the exercise of stock options
using the treasury stock method, if dilutive.</FONT></TD>
</TR>
</TABLE>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>6 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 2 &#151; MANAGEMENT&#146;S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RESULTS OF OPERATIONS </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><I>General</I> &#151; The Company conducts all
foreign transactions based on the U.S. dollar, except for its investments in foreign
joint ventures and foreign company. The exchange rate differential relating to
investments in foreign joint ventures and foreign company is accounted for under the
requirements of SFAS No. 52. </FONT></FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><I>Sales Originating in North America</I> &#151;
Net sales originating in North America decreased by $406,518 or 16% during the first
quarter of fiscal 2002 as compared to the first quarter of fiscal 2001. These changes in
sales are due to a decrease in demand for materials-science-based industrial packaging
products. The decrease was due to the slow down in the industrial sector that the Company
serves. </FONT></FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><I>Cost of Goods Sold</I> &#151; Cost of goods
sold decreased as a percentage of sales to 43% in the first quarter of fiscal 2002 from
52% in the first quarter of fiscal 2001. The variation in the cost of sales percentage is
attributable to the decrease in the market price for certain raw materials. </FONT></FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><I>Operating Expenses</I> &#151; As a percentage
of net sales, total operating expenses were 48% in the first quarter of fiscal 2002 and
44% in the first quarter of fiscal 2001. </FONT></FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Operating expense classification
percentages of sales were as follows: </FONT></P>

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</TABLE>
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<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT SIZE="1"></FONT></TH>
     <TH COLSPAN="4"><FONT SIZE="1">Three Months Ended<BR>November 30</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">2001</FONT></TH>
     <TH COLSPAN="2"><FONT SIZE="1">2000</FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="64%" ALIGN="LEFT"><FONT SIZE="2"></FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2"></FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"></FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="64%" ALIGN="LEFT"><FONT SIZE="2">Selling</FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE="2">13</FONT></TD>
        <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE="2">17</FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">General and administrative</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">26</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">21</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR>
<TR VALIGN="BOTTOM">
        <TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT SIZE="2">Research, engineering, and technical support</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">9</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD>
     <TD ALIGN="RIGHT"><FONT SIZE="2">6</FONT></TD>
        <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR>
</TABLE>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling expenses decreased
$165,370 during the three months ended November 30, 2001 as compared to the same
period in fiscal&nbsp;2001 due primarily to decreases in sales driven expenses,
mainly travel. Selling expense as a percentage of net sales decrease as there
was an increased emphasis placed on decreasing travel expenditures in the
period. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>General and administrative
expenses increased $40,615 during the first quarter of fiscal&nbsp;2002 as
compared to the same period in fiscal 2001 due primarily to increases in general
insurance, legal and consulting expenses, and additional employees. General and
administrative expenses as a percentage of net sales increased for the
three&nbsp;months ended November 30, 2001, as compared to the same periods in
2001, due to the decrease in sales in the first quarter of fiscal&nbsp;2002
compared to the same period in fiscal 2001, coupled with relatively fixed
general and administrative expenses during the same period. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Research, engineering, and
technical support expenses increased $33,248 during the first quarter of
fiscal&nbsp;2002 as compared to the same period in fiscal&nbsp;2001 due
primarily to a increase in independent consulting services for product
development and salary expense associated with an additional employee in the
area. Research, engineering, and technical support expenses as a percentage of
net sales increased for the three months ended November 30, 2001 compared to the
same periods in fiscal 2001 due to the decreases in sales in fiscal&nbsp;2002
coupled with an increase in fiscal&nbsp;2002 research, engineering, and
technical support expenses. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>7 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>International Corporate
Joint Ventures and European Holding Company </I>&#151; Net earnings from
international corporate joint ventures and European holding company were
$458,553 for the three months ended November 30, 2001, compared to $508,071 for
the three months ended November 30, 2000. The net decrease for the three months
ended November 30, 2001 compared to the same periods in fiscal 2001 is due
primarily to lower expenses incurred by certain of the Company&#146;s
international corporate joint ventures and an increase in expenses incurred in
support of international corporate joint ventures. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Income Taxes</I> &#151;
Income tax expense for the three months ended November 30, 2001 and 2000 was
calculated based on management&#146;s estimate of the Company&#146;s annual
effective income tax rate. The Company&#146;s effective income tax rate for
fiscal&nbsp;2001 and 2000 is lower than the statutory rate primarily due to the
Company&#146;s equity in income of international corporate joint ventures and
European holding company being recognized based on after-tax earnings of these
entities. To the extent joint ventures&#146; undistributed earnings are
distributed to the Company, it does not result in any material additional income
tax liability after the application of foreign tax credits. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>LIQUIDITY AND CAPITAL RESOURCES </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At November 30, 2001, the
Company&#146;s working capital was $5,819,851, including $3,135,811 in cash and
cash equivalents, compared to working capital of $5,579,475 including $3,238,283
in cash and cash equivalents as of August&nbsp;31, 2001. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net cash provided from
operations has been sufficient to meet liquidity requirements, capital
expenditures, research and development cost, and expansion of operations of the
Company&#146;s international joint ventures. Cash flows (used in) provided by
operations for the three months ended November 30, 2001 and 2000 was ($26,248)
and $51,823, respectively. The net cash used in operations for the three months
ended November 30, 2001 resulted principally from net income and depreciation,
offset by equity income of international corporate joint ventures and European
holding company, and increases in prepaid expenses and other. The net cash provided by
in operations for the three months ended November&nbsp;30, 2000 was principally
from net income and dividends received from international corporate joint
ventures offset by equity in income of international corporate joint ventures
and European holding company and decreases in current liabilities. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net cash provided by
investing activities for the three months ended November 30, 2001 was $23,776,
which resulted from a partial return of the Company&#146;s original investment
in European holding company partially offset by an increase in other assets and
additions to property and equipment. Net cash used in investing activities for
the three months ended November 30, 2000 was $274,011, which resulted from
investments in international corporate joint ventures and additions to property. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net cash used in financing
activities for the three months ended November 30, 2001 was $100,000, which
resulted from the repurchase of common stock. Net cash used in financing
activities for the three months ended November&nbsp;30, 2000 was $52,826, which
resulted from the repurchase of common stock of $72,825 offset by proceeds from
the exercise of stock options of $19,999. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company expects to meet
future liquidity requirements with its existing cash and cash equivalents and
from cash flows of future operating earnings and distributions of earnings and
technical assistance fees from the international corporate joint venture
investments. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has no
long-term debt and no material capital lease commitments at November 30, 2001;
however, the Company&#146;s subsidiary has entered into a 15-year lease
agreement for 16,826 square feet of office, manufacturing, laboratory, and
warehouse space requiring monthly payments of $16,434, which can be adjusted
annually according to the annual consumer price index through November 2014. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>8 </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has no
postretirement benefit plan and does not anticipate establishing any
postretirement benefit program. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Euro Currency Issue </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On January 1, 1999, twelve
of the fifteen member countries of the European Union established fixed
conversion rates between their respective existing currencies and the Euro and
elected to adopt the Euro as their common legal currency on that date (the
&#147;Euro Conversion&#148;). Following the Euro Conversion, however, the
previously existing currencies of the participating countries will remain legal
tender in the participating countries through January 2002. During the
transition period, public and private parties have been paying for goods and
services using both the Euro and the previously existing currencies. The
participating countries were issued new Euro-denominated bills and coins for use
in cash transactions. No later than July 1, 2002, the participating countries
will withdraw all bills and coins denominated in the previously existing
currencies making Euro Conversion complete. The Euro Conversion has not impacted
on the overall business operations of the Company or its international corporate
joint ventures. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Recently Issued Accounting
Pronouncements </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In July 2001, the Financial
Accounting Standards Board (FASB) issued SFAS No.&nbsp;141, Business
Combinations, and SFAS No.&nbsp;142, Goodwill and Other Intangible Assets (the
Statements). The Company does not currently have any goodwill or intangible assets
relating to business acquisitions.  Therefore, the adoption of the Statements does
not impact the Company&#146;s financial statements. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In August 2001, the FASB
issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS
No.&nbsp;143 requires entities to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. When the
liability is initially recorded, the entity capitalizes a cost by increasing the
carrying amount of the related long-lived asset. Over time, the liability is
accreted to its fair value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. SFAS No.&nbsp;143 is effective for fiscal
years beginning after June&nbsp;15, 2002. The Company expects to adopt SFAS
No.&nbsp;143 in fiscal year 2003. The Company has not yet determined the impact
of SFAS No.&nbsp;143 on its financial position and results of operations. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In September 2001, the FASB
also issued SFAS No.&nbsp;144, <I>Accounting for the Impairment or Disposal of
Long-Lived Assets.</I> SFAS No.&nbsp;144 replaces SFAS No.&nbsp;121, <I>Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposal Of.</I>
The FASB issued SFAS No.&nbsp;144 to establish a single accounting model, based on
the framework established in SFAS No.&nbsp;121, as SFAS No.&nbsp;121 did not
address the accounting for a segment of a business accounted for as a
discontinued operation under Accounting Principle Board Opinion No.&nbsp;30,
<I>Reporting the Results of Operations&#151;Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequent Occurring
Events and Transactions.</I> SFAS No.&nbsp;144 also resolves significant
implementation issues related to SFAS No.&nbsp;121. The provisions of SFAS
No.&nbsp;144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001 and, generally, are to be applied
prospectively. The Company expects to adopt SFAS No.&nbsp;144 in fiscal year
2003. The Company has not yet determined the impact of SFAS No.&nbsp;144 on its
financial postion and results of operations. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>9 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II &#151; OTHER INFORMATION </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 1 &#151; LEGAL PROCEEDINGS </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>None </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 2 &#151; CHANGES IN SECURITIES </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>None </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 3 &#151; DEFAULTS UPON SENIOR
SECURITIES </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>None </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 4 &#151; SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>None </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 5 &#151; OTHER INFORMATION </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>None </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 6 &#151; EXHIBITS AND REPORTS ON
FORM 8-K </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>None </FONT></P>


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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>10 </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES</FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the
requirements of the Securities and Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized. </FONT></P>

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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION</FONT></TD>
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<TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January
11, 2002 </FONT></TD>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=65%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Matthew C. Wolsfeld, CPA</FONT><HR SIZE=1 NOSHADE>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>Matthew C. Wolsfeld, CPA<BR>Chief Financial Officer</FONT></TD>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>11 </FONT></P>

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