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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001145236-02-000056.txt : 20020712
<SEC-HEADER>0001145236-02-000056.hdr.sgml : 20020712
<ACCEPTANCE-DATETIME>20020712170212
ACCESSION NUMBER:		0001145236-02-000056
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20020531
FILED AS OF DATE:		20020712

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:		02702208

	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>adp_ntic.htm
<TEXT>
<HTML>
<HEAD>
<TITLE> </TITLE>
</HEAD>
<BODY bgcolor=#ffffff>

<HR noshade size=4><HR noshade size=1><br>
<p align=center><font size=4><B>SECURITIES AND EXCHANGE COMMISSION</B></font><br>
<font size=2><b>Washington, D.C. 20549</b></font></p>
<HR noshade width=120>
<p align=center><font size=4><B>FORM 10-QSB</B></font></p>
<HR noshade width=120>
<p align=center><font size=2><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF</B><br><B>THE SECURITIES EXCHANGE ACT OF 1934</B></font></p>
<p align=center><font size=2><b>For the Quarterly Period Ended: May 31, 2002</b></font></p>
<p align=center><font size=2><b>Commission File Number 1-11038</b></font></p>
<p align=center><font size=5><B>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION</B></font><br>
<font size=2>(Exact name of registrant as specified in its charter)</font></p>
<table width=100% cellspacing=0 cellpadding=0><tr><td width=50>&nbsp;</td><td align=center valign=top width=380><font size=2><b>Delaware</b><br>
(State of Incorporation)<br>
<br></font></td>
<td align=center width=80>&nbsp;</td><td align=center valign=top width=380><font size=2><b>41-0857886</b><br>
(I.R.S. Employer <br>
Identification Number)</font></td><td width=50>&nbsp;</td></tr></table><br>
<p align=center><font size=2><b>6680 N. Highway 49, Lino Lakes, MN 55014</b><br>(Address of principal executive offices)</font></p>
<p align=center><font size=2><b>(651) 784-1250</b><br>(Registrant&#146;s telephone number)</font></p>
<p align=left><font 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.<br>Yes [x] No [&nbsp;]</font></p>
<p align=left><font 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>
<table width=100% cellspacing=0 cellpadding=0><tr><td width=50>&nbsp;</td><td align=center valign=top width=380><font size=2>Class<br>
Common Stock, $.02 par value<br></font></td>
<td align=center width=80>&nbsp;</td><td align=center valign=top width=380><font size=2>Outstanding as of July 12, 2002<br>
3,658,051</font></td><td width=50>&nbsp;</td></tr></table><br>
<br><HR noshade size=1><HR noshade size=4>
<p align=right><font size=2><i>This document consists of 12 pages</i></font></p>

<CENTER><font size=2><PAGE></font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=center><font size=2><B>PART I &#151; FINANCIAL INFORMATION</B></font></p>
<p align=left><font size=2><B>ITEM 1 &#151; FINANCIAL STATEMENTS</B></font></p>
<p align=center><font size=2><B>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES</B><br><B>CONSOLIDATED BALANCE SHEETS </B><br><b>(Unaudited)</b></font></p>
<table width=100% cellspacing=0 cellpadding=0><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=68 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=63 colspan=2><font size=1><b>August 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Center><font size=2><br>&nbsp;&nbsp;&nbsp;<B>ASSETS</B></font></td>
  <td width=8>&nbsp;</td>
  <td colspan=2></td>
  <td width=8>&nbsp;</td>
  <td colspan=2></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>CURRENT ASSETS:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Cash and cash equivalents</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=74><font size=2>451,318</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=67><font size=2>3,238,283</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Investments available for sale</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>3,500,000</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Receivables:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade excluding international corporate joint ventures, less allowance for doubtful <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;account of $34,000 and $25,000, respectively</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>1,034,761</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>864,319</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade international corporate joint ventures</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>252,355</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>193,509</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Technical and other services international corporate joint ventures</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>583,678</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>629,816</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>85,655</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>86,533</font></td>
  <td valign=bottom width=17><font size=2>&nbsp;</font></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Inventories</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>707,429</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>913,911</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Prepaid expenses and other</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>118,805</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>90,886</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Advance to related party</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>200,000</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Deferred income taxes</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>80,000</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>80,000</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>7,014,001</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>6,097,257</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td valign=bottom align=Left><font size=2>PROPERTY AND EQUIPMENT, net</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>415,643</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>1,067,138</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>OTHER ASSETS:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Investments in international corporate joint ventures</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>4,283,850</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>3,923,883</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Investment in European holding company</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>30,812</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>209,748</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Deferred income taxes</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>380,000</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>380,000</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Advance to related party</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>50,000</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Other</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>1,044,572</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>729,838</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>5,789,234</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>5,243,469</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=74><font size=2>13,218,878</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=67><font size=2>12,407,864</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Center><font size=2><br>&nbsp;&nbsp;&nbsp;<B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td valign=bottom align=Left><font size=2>CURRENT LIABILITIES:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Accounts payable</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=74><font size=2>214,372</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=67><font size=2>240,109</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Accrued liabilities:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payroll and related benefits</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>52,044</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>80,811</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>247,117</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>196,862</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>513,533</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>517,782</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td valign=bottom align=Left><font size=2>DEFERRED GROSS PROFIT</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>25,000</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>25,000</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>COMMITMENTS AND CONTINGENCIES</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td valign=bottom align=Left><font size=2>STOCKHOLDERS&#146; EQUITY:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Preferred stock, no par value, authorized 10,000 shares, none issued</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Common stock, $.02 par value per share; authorized 10,000,000 shares; issued and <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;outstanding 3,667,451 and 3,689,551, respectively</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>73,349</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>73,791</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Additional paid-in capital</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>4,274,482</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>4,318,682</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Retained earnings</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>9,022,308</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>8,199,866</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss (see Note 8)</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>(689,794</font></td>
  <td valign=bottom width=17><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>(727,257</font></td>
  <td valign=bottom width=17><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders&#146; equity</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=74><font size=2>12,680,345</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=67><font size=2>11,865,082</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=74><font size=2>13,218,878</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=67><font size=2>12,407,864</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td></tr></table>
<br>
<p align=center><font size=2>See notes to consolidated financial statements.</font></p>

<CENTER><font size=2>2</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=center><font size=2><B>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES</B><br><B>CONSOLIDATED STATEMENTS OF INCOME</B><br><b>(Unaudited)</b></font></p>
<table width=100% cellspacing=0 cellpadding=0><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=141 colspan=5><font size=1><b>Three Months Ended</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=144 colspan=5><font size=1><b>Nine Months Ended</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=5><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=5><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=60 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=60 colspan=2><font size=1><b>May 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=63 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=61 colspan=2><font size=1><b>May 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>SALES ORIGINATING IN NORTH AMERICA</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>2,003,500</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>2,363,956</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=59><font size=2>5,609,823</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=57><font size=2>6,947,618</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>COST OF GOODS SOLD</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>1,000,718</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>1,114,985</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>2,720,900</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>3,457,888</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>GROSS PROFIT</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>1,002,782</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>1,248,971</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>2,888,923</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>3,489,730</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>OPERATING EXPENSES:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Selling</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>426,459</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>376,980</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>1,087,914</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>1,147,442</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;General and administrative</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>418,605</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>548,045</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>1,370,623</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>1,685,998</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Research, engineering, and technical support</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>204,564</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>174,409</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>578,204</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>462,077</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>1,049,628</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>1,099,434</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>3,036,741</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>3,295,517</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>OPERATING (LOSS) INCOME</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>(46,846</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>149,537</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(147,818</font></td>
  <td valign=bottom width=17><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>194,213</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;INTERNATIONAL CORPORATE JOINT VENTURES AND <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EUROPEAN HOLDING COMPANY:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Equity in income of international corporate joint ventures <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and European holding company</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>270,270</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>94,874</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>639,497</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>333,474</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Fees for technical support and other services provided to <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;international corporate joint ventures</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>525,458</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>612,956</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>1,628,308</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>1,848,031</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Expenses incurred in support of international corporate joint <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ventures</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>(323,539</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>(372,157</font></td>
  <td valign=bottom width=17><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(1,115,994</font></td>
  <td valign=bottom width=17><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(1,066,113</font></td>
  <td valign=bottom width=17><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>472,189</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>335,673</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>1,151,811</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>1,115,392</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>INTEREST INCOME</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>10,656</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>21,204</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>22,301</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>94,455</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>INCOME BEFORE INCOME TAX EXPENSE</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>435,999</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>506,414</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>1,026,294</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>1,404,060</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>INCOME TAX EXPENSE</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>60,000</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>170,000</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>140,000</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>470,000</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>NET INCOME</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>375,999</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>336,414</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=59><font size=2>886,294</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=57><font size=2>934,060</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr><td valign=bottom align=Left><font size=2>NET INCOME PER COMMON SHARE:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Basic</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>.10</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>.09</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=59><font size=2>.24</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=57><font size=2>.25</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Diluted</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>.10</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>.09</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=59><font size=2>.24</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=57><font size=2>.25</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;WEIGHTED AVERAGE COMMON SHARES ASSUMED <br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OUTSTANDING:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Basic</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>3,667,747</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>3,742,269</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>3,669,291</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>3,775,360</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Diluted</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>3,667,747</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>3,742,356</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>3,669,291</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>3,778,217</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td></tr></table>
<br>
<p align=center><font size=2>See notes to consolidated financial statements.</font></p>

<CENTER><font size=2>3</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=center><font size=2><B>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES</B><br><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B><br><b>(Unaudited)</b></font></p>
<table width=100% cellspacing=0 cellpadding=0><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=144 colspan=5><font size=1><b>Nine Months Ended</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=5><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=61 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=63 colspan=2><font size=1><b>May 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>CASH FLOWS FROM OPERATING ACTIVITIES:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Net income</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=57><font size=2>886,294</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=59><font size=2>934,060</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>151,742</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>174,674</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on disposal of fixed assets</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(12,032</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity income of international corporate joint ventures and European holding company</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(639,497</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(161,017</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends received from international corporate joint ventures</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>453,049</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>239,902</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in current assets and liabilities:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(170,442</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(82,219</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;International corporate joint ventures</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(58,846</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>76,013</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Technical fee</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>46,138</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>39,936</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>878</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>206,482</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>23,403</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(292,229</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(358,761</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(25,737</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(60,045</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax payable</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(288,729</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>21,488</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(96,231</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total adjustments</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(319,006</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(493,074</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>567,288</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>440,986</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>CASH FLOWS FROM INVESTING ACTIVITIES:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Purchases of investments available for sale</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(3,500,000</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Investments in international corporate joint ventures</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(136,056</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(142,267</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Additions to property and equipment</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(121,115</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(161,256</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Proceeds from the sale of property and equipment</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>632,900</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Partial return of original investment in European holding company</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>178,936</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Increase in other assets&nbsp;</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(300,424</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(100,000</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(3,245,759</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(403,523</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>CASH FLOWS FROM FINANCING ACTIVITIES:</font></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Proceeds from exercise of stock options</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>19,999</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Repurchase of common stock</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(108,494</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(387,033</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;Dividends paid</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>&#151;</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(644,972</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(108,494</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(1,012,006</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>NET DECREASE IN CASH AND CASH EQUIVALENTS</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>(2,786,965</font></td>
  <td valign=bottom width=16><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>(974,543</font></td>
  <td valign=bottom width=14><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=57><font size=2>3,238,283</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>3,840,057</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>CASH AND CASH EQUIVALENTS AT END OF PERIOD</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=57><font size=2>451,318</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=59><font size=2>2,865,514</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td></tr></table>
<br>
<p align=center><font size=2>See notes to consolidated financial statements.</font></p>

<CENTER><font size=2>4</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=center><font size=2><B>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES</B><br><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><br><b>(Unaudited)</b></font></p>
<p align=left><font size=2><b>1.</b>&nbsp;&nbsp;&nbsp;<B>INTERIM FINANCIAL INFORMATION</B></font></p>
<ul><p align=left><font 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 financial position of Northern Technologies International Corporation and Subsidiaries as of May 31, 2002 and May 31, 2001, the results of operations for the three and nine months ended May 31, 2002 and May 31, 2001, and the cash flows for the nine months ended May 31, 2002 and May 31, 2001, in conformity with generally accepted accounting principles in the United States of America.</font></p></ul>
<ul><p align=left><font 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 9, 2001 and with Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations appearing on pages 7 through 10 of this quarterly report.</font></p></ul>
<p align=left><font size=2><b>2.</b>&nbsp;&nbsp;&nbsp;<B>RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS</B></font></p>
<ul><p align=left><font size=2>In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets (the Statements). At August 31, 2001, the Company did not have any goodwill or intangible assets. Therefore, the adoption of the Statements did not impact the Company&#146;s financial statements. </font></p></ul>
<ul><p align=left><font 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 present 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></p></ul>
<ul><p align=left><font size=2>In September 2001, the FASB also issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets. SFAS No. 144 replaces SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposal Of. The FASB issued SFAS No. 144 to establish a single accounting model, based on the framework established in SFAS No. 121, as SFAS No. 121 did not address the accounting for a segment of a business accounted for as a discontinued operation under Accounting Principle Board Opinion No. 30, 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. SFAS No. 144 also resolves significant implementation issues related to SFAS No. 121. The provisions of SFAS No. 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. 144 in fiscal year 2003. The Company has not yet determined the impact of SFAS No. 144 on its financial position and results of operations.</font></p></ul>
<p align=left><font size=2><b>3.</b>&nbsp;&nbsp;&nbsp;<B>INVESTMENTS AVAILABLE &#151; FOR-SALE</B></font></p>
<ul><p align=left><font size=2>In accordance with the provisions of SFAS No. 115 &#147;Accounting for Certain Investments in Debt and Equity Securities&#148; these investments are carried at fair market value with unrealized gains and losses, if any, reported in stockholders&#146; equity as a component of the comprehensive income (loss). An investment policy has been enacted and approved by the board of directors to insure that the principal investment is protected, adequate liquidity is maintained and investment yield is maximized consistent with the parameters of safety and liquidity. The current investments include corporate debt and commercial paper </font></p></ul>
<CENTER><font size=2>5</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<ul><p align=left><font size=2>with the highest rating category, and certificates of deposit which are insured up to the federal limit guaranteed by the US government.</font></p></ul>
<p align=left><font size=2><b>4.</b>&nbsp;&nbsp;&nbsp;<B>INVENTORIES</B></font></p>
<ul><p align=left><font size=2>Inventories consist of the following:</font></p></ul>
<table width=85% align=center cellspacing=0 cellpadding=0><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=60 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=62 colspan=2><font size=1><b>August 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>Production materials</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>256,349</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=58><font size=2>396,793</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>Work in process</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>26,737</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=58><font size=2>27,071</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>Finished goods</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=56><font size=2>424,343</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=58><font size=2>490,047</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=56><font size=2>707,429</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=58><font size=2>913,911</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td></tr></table>
<br>
<p align=left><font size=2><b>5.</b>&nbsp;&nbsp;&nbsp;<B>PROPERTY AND EQUIPMENT</B></font></p>
<ul><p align=left><font size=2>Property and equipment consist of the following:</font></p></ul>
<table width=85% align=center cellspacing=0 cellpadding=0><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=63 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=72 colspan=2><font size=1><b>August 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
</tr><tr><td></td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>Land</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=59><font size=2>29,097</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=68><font size=2>246,097</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>Buildings and improvements</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>520,681</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=68><font size=2>1,165,542</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>Machinery and equipment</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>673,433</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=68><font size=2>1,180,823</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>1,223,211</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=68><font size=2>2,592,462</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>Less accumulated depreciation</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=59><font size=2>807,568</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=68><font size=2>1,525,324</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=59><font size=2>415,643</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=68><font size=2>1,067,138</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td></tr></table>
<br>
<p align=left><font size=2><b>6.</b>&nbsp;&nbsp;&nbsp;<B>INVESTMENTS IN INTERNATIONAL CORPORATE JOINT VENTURES</B></font></p>
<ul><p align=left><font size=2>During the nine months ended May 31, 2002, the Company invested an additional $36,056 in an existing international corporate joint venture and $100,000 in a new corporate joint venture. The Company has a 50% ownership interest in the new entity. The new entity had no significant operations prior to the Company&#146;s investment.</font></p></ul>
<p align=left><font size=2><b>7.</b>&nbsp;&nbsp;&nbsp;<B>STOCKHOLDERS&#146; EQUITY</B></font></p>
<ul><p align=left><font size=2>During the nine months ended May 31, 2002, the Company purchased and retired 22,100 shares of common stock for $108,494.</font></p></ul>
<p align=left><font size=2><b>8.</b>&nbsp;&nbsp;&nbsp;<B>COMPREHENSIVE (LOSS) INCOME</B></font></p>
<p align=left><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s total comprehensive (loss) income was as follows:</font></p>
<table width=85% align=center cellspacing=0 cellpadding=0><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=131 colspan=5><font size=1><b>Three Months Ended</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=132 colspan=5><font size=1><b>Nine Months Ended</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=5><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=5><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=57 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=57 colspan=2><font size=1><b>May 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=57 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=57 colspan=2><font size=1><b>May 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>Net income</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=53><font size=2>375,999</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=53><font size=2>336,414</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=53><font size=2>886,294</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=53><font size=2>934,060</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>Other comprehensive (loss) income &#151; foreign currency <br>&nbsp;&nbsp;&nbsp;translation adjustment</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=53><font size=2>225,902</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=53><font size=2>(177,465</font></td>
  <td valign=bottom width=17><font size=2>)</font></td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=53><font size=2>37,463</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=right valign=bottom width=53><font size=2>(251,003</font></td>
  <td valign=bottom width=8><font size=2>)</font></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=1></td>
  <td width=8></td>
</tr><tr><td valign=bottom align=Left><font size=2>Total comprehensive (loss) income</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=53><font size=2>601,901</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=53><font size=2>158,949</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=53><font size=2>923,757</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4><font size=2>$</font></td><td align=right valign=bottom width=53><font size=2>683,057</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td align=center valign=top colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td></tr></table>
<br>
<p align=left><font size=2><b>9.</b>&nbsp;&nbsp;&nbsp;<B>NET INCOME PER SHARE</B></font></p>
<ul><p align=left><font size=2>Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per share assumes the exercise of stock options using the treasury stock method, if dilutive.</font></p></ul>

<CENTER><font size=2>6</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=left><font size=2><B>ITEM 2 &#151; MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></font></p>
<p align=left><font size=2><i>Critical Accounting Policies</i></font></p>
<p align=left><font size=2>The consolidated financial statements include accounts of the Company and all wholly owned subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company does not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.</font></p>
<p align=left><font size=2><i>Revenue Recognition</i></font></p>
<p align=left><font size=2>Revenues are recognized when the Company receives a valid bill of lading from the shipping agent when the shipping terms are FOB Destination. At this time, ownership and risk of loss is transferred to the customer. Revenues are recognized when the Company ships an order when the shipping terms are FOB Shipping Point. At this time, title and risk of loss is transferred to the customer. There are no provisions for returns recorded as all products are quality tested and most are made to order.</font></p>
<p align=left><font size=2><i>Allowance for Doubtful Accounts</i></font></p>
<p align=left><font size=2>Accounts receivable are reduced by an allowance for amounts that may become uncollectable in the future. The majority of the Company&#146;s receivables are due from manufacturing facilities located in the United States. The estimated allowance for doubtful accounts is based upon the age of the outstanding receivables and the payment history and credit worthiness of each customer. Management on a quarterly basis evaluates adequacy of the reserve for doubtful accounts.</font></p>
<p align=left><font size=2><i>Inventories</i></font></p>
<p align=left><font size=2>Inventories are valued at the lower of cost or market. On a quarterly basis, management assesses the inventory quantities on hand to estimated future usage and sales and, if necessary, writes down the value of inventory deemed obsolete or excess to market.</font></p>
<p align=left><font size=2><i>International Corporate Joint Ventures</i></font></p>
<p align=left><font size=2>International Corporate Joint Ventures are recorded on the equity basis of accounting due to 50% or less ownership for all of its joint venture investments and does not exercise control. The Company records income from its proportionate ownership share of income or loss in equity investors and also records income relating to fees for technical support and other services provided by the Company to the International Corporate Joint Ventures. Management reviews the historical and planned future operations of each joint venture on a quarterly basis to determine if the Company&#146;s investment in the Joint Venture is recoverable.</font></p>
<p align=left><font size=2><B>RESULTS OF OPERATIONS</B></font></p>
<p align=left><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. The exchange rate differential relating to investments in foreign joint ventures is accounted for under the requirements of SFAS No.&nbsp;52.</font></p>
<p align=left><font size=2><i>Sales Originating in North America </i>&#151; Net sales decreased by $360,456 or 15.2% during the third quarter of 2002 from those of the third quarter of 2001. Net sales decreased by $1,337,795 or 19.3% during the nine months ended May 31, 2002 compared to the nine months ended May 31, 2001. These changes in sales are due to a decrease in demand for materials science based industrial packaging products. This decrease in demand was due to the slow down in the industrial sector we serve.</font></p>
<CENTER><font size=2>7</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=left><font size=2><i>Cost of Sales</i> &#151; Cost of goods sold as a percentage of net sales were 49.9% and 47.2% for the third quarter of 2002 and 2001, respectively. The cost of goods sold percentage of net sales was 48.5% and 49.8% for the nine months ended May 31, 2002 and May 31, 2001. Variations are due primarily to the mix of product sales and changes in the price of resin.</font></p>
<p align=left><font size=2><i>Operating Expenses</i> &#151; As a percentage of net sales, total operating expenses were 52.4% in the third quarter of fiscal 2002 and 46.5% in the third quarter of fiscal 2001. Operating expenses were 54.1% and 47.4% of net sales for the nine months ended May 31, 2002 and for the nine months ended May 31, 2001.</font></p>
<p align=left><font size=2>Operating expense classification percentages of net sales were as follows:</font></p>
<table width=100% cellspacing=0 cellpadding=0><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=122 colspan=5><font size=1><b>Three Months Ended</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=122 colspan=5><font size=1><b>Nine Months Ended</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=5><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=5><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td align=center valign=bottom width=54 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=54 colspan=2><font size=1><b>May 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=54 colspan=2><font size=1><b>May 31,</b><br><b>2002</b></font></td>
  <td width=8></td>
  <td align=center valign=bottom width=54 colspan=2><font size=1><b>May 31,</b><br><b>2001</b></font></td>
  <td width=8></td>
</tr><tr><td></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
  <td colspan=2><HR noshade align=center width=100% size=2></td>
  <td width=8></td>
</tr><tr BGCOLOR=#EAF9E8><td></td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
  <td width=4>&nbsp;</td><td>&nbsp;</td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>Selling expense</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>&nbsp;&nbsp;&nbsp;21%</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>&nbsp;&nbsp;&nbsp;16%</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>&nbsp;&nbsp;&nbsp;19%</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>&nbsp;&nbsp;&nbsp;17%</font></td>
  <td width=8>&nbsp;</td>
</tr><tr BGCOLOR=#EAF9E8><td valign=bottom align=Left><font size=2>General and administrative</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>21</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>23</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>24</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>24</font></td>
  <td width=8>&nbsp;</td>
</tr><tr><td valign=bottom align=Left><font size=2>Research, engineering, and technical support</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>10</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>&nbsp;7</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>10</font></td>
  <td width=8>&nbsp;</td>
  <td valign=bottom width=4>&nbsp;</td><td align=Center valign=bottom width=50><font size=2>&nbsp;7</font></td>
  <td width=8>&nbsp;</td></tr></table>
<br>
<p align=left><font size=2>Selling expense increased during the third quarter of fiscal 2002 as compared to the same period in fiscal 2001. This is primarily due to the increase in salaries associated with adding additional employees to the existing sales staff and related commission and travel expenses. Selling expense amounts for the nine months ended May 31, 2002 decreased slightly over the same period in fiscal 2001 due to a reduction in spending in the first quarter of fiscal 2002 related to trade show attendance and related travel expenses. Selling expense for the three and nine months ended May 31, 2002 as a percentage of net sales increased over the same periods in fiscal 2001 due to selling expense not decreasing proportionately with the decrease in sales levels.</font></p>
<p align=left><font size=2>General and administrative expenses decreased during the three and nine months ended May 31, 2002 as compared to the same periods in fiscal 2001 due primarily to decreases in consulting expense and expenses related to the operation of Northern Instruments Corporation (a 100% owned Subsidiary). These same reasons accounted for general and administrative expenses as a percentage of net sales decreasing for the three months ended May 31, 2002, as compared to the same period in fiscal 2001. General and administrative expenses as a percentage of net sales remained stable for the nine months ended May 31, 2002, as compared to the same period in fiscal 2001.</font></p>
<p align=left><font size=2>Research, engineering, and technical support expenses increased during the three and nine months ended May 31, 2002 as compared to the same periods in fiscal 2001. This is primarily due to an increase in lab expenses and consulting services for product development and product support. Such expenses as a percentage of sales were significantly increased for the three months and nine months ended May 31, 2002 as compared to the same period in fiscal 2001 due both to research, engineering, and technical support expense not decreasing proportionately with the decrease in sales levels and an increase in expenses.</font></p>
<p align=left><font 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 $472,189 and $1,151,811 for the three and nine months ended May 31, 2002, respectively, compared to $335,673 and $1,115,392 for the three and the nine months ended May 31, 2001. This net increase is due to increased sales volume at certain of the Company&#146;s joint ventures.</font></p>
<p align=left><font size=2><i>Income Taxes</i> &#151; Income tax expense for the three and nine months ended May 31, 2002 and May 31, 2001 was calculated based on management&#146;s estimate of the Company&#146;s annual effective income tax rate. The Company&#146;s annual effective income tax rate for fiscal&nbsp;2002 was 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>

<CENTER><font size=2>8</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=left><font size=2><B>LIQUIDITY AND CAPITAL RESOURCES</B></font></p>
<p align=left><font size=2>At May 31, 2002, the Company&#146;s working capital was $6,500,468, including $451,318 in cash and cash equivalents and $3,500,000 in investments available for sale, 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>
<p align=left><font 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 provided by operations for the nine months ended May 31, 2002 and 2001 were $567,288 and $440,986, respectively. The net cash provided by operations for the nine months ended May 31, 2002 resulted principally from net income, inventories, dividends and depreciation, offset by equity income of international corporate joint ventures and European holding company and increases in receivables and prepaid expenses and other. The net cash provided by operations for the nine months ended May 31, 2001 was principally from net income, depreciation, dividends received from international corporate joint ventures and accounts receivable. This was offset by equity income of international corporate joint ventures and European holding company, income tax payments, prepaid


 expenses, accounts payable and accrued liabilities.</font></p>
<p align=left><font size=2>Net cash used in investing activities for the nine months ended May 31, 2002 was $3,245,759, which resulted from the purchase of investments available for sale, increased investments in international corporate joint ventures, an increase in other assets and additions to property and equipment partially offset by a partial return of the Company&#146;s original investment in European holding company and the proceed from the sale of fixed assets. Net cash used in investing activities for the nine months ended May 31, 2001 was $403,523, which resulted from investments in international corporate joint ventures, additions to property and equipment and increases in other assets.</font></p>
<p align=left><font size=2>Net cash used in financing activities for the nine months ended May 31, 2002 was $108,494, which resulted from the repurchase of common stock. Net cash used in financing activities for the nine months ended May 31, 2001 was $1,012,006, which resulted from the repurchase of common stock of $387,033 and dividends paid of $644,972 offset by proceeds from the exercise of stock options of $19,999.</font></p>
<p align=left><font 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>
<p align=left><font size=2>The Company has no long-term debt and no material capital lease commitments at May 31, 2002; 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>
<p align=left><font size=2>The Company has no postretirement benefit plan and does not anticipate establishing any postretirement benefit program.</font></p>
<p align=left><font size=2><b>Recently Issued Accounting Pronouncements</b></font></p>
<p align=left><font 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 statement does not impact the Company&#146;s financial statements.</font></p>
<p align=left><font 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 present 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>
<CENTER><font size=2>9</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=left><font size=2>In September 2001, the FASB also issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets. SFAS No. 144 replaces SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposal Of. The FASB issued SFAS No. 144 to establish a single accounting model, based on the framework established in SFAS No. 121, as SFAS No. 121 did not address the accounting for a segment of a business accounted for as a discontinued operation under Accounting Principle Board Opinion No. 30, 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. SFAS No. 144 also resolves significant implementation issues related to SFAS No. 121. The provisions of SFAS No. 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively. The Company expe


cts to adopt SFAS No. 144 in fiscal year 2003. The Company has not yet determined the impact of SFAS No. 144 on its financial position and results of operations.</font></p>

<CENTER><font size=2>10</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=center><font size=2><B>PART II &#151; OTHER INFORMATION</B></font></p>
<p align=left><font size=2><B>ITEM 1 &#151; LEGAL PROCEEDINGS</B></font></p>
<p align=left><font size=2>None</font></p>
<p align=left><font size=2><B>ITEM 2 &#151; CHANGES IN SECURITIES</B></font></p>
<p align=left><font size=2>None</font></p>
<p align=left><font size=2><B>ITEM 3 &#151; DEFAULTS UPON SENIOR SECURITIES</B></font></p>
<p align=left><font size=2>None</font></p>
<p align=left><font size=2><B>ITEM 4 &#151; SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</B></font></p>
<p align=left><font size=2>None</font></p>
<p align=left><font size=2><B>ITEM 5 &#151; OTHER INFORMATION</B></font></p>
<p align=left><font size=2>None</font></p>
<p align=left><font size=2><B>ITEM 6 &#151; EXHIBITS AND REPORTS ON FORM 8-K</B></font></p>
<p align=left><font size=2>None</font></p>

<CENTER><font size=2>11</font></CENTER><br><HR noshade align=center width=100% size=2><PAGE>

<p align=center><font size=2><B>SIGNATURES</B></font></p>
<p align=left><font 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>
<table width=80% cellspacing=0 cellpadding=0><tr><td width=40%  align=left><font size=2><br><br><br></font></td>
  <td width=12%>&nbsp;</td>
<td colspan=2 width=40% align=left><font size=2><B>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION</B><br><br><br></font></td></tr>
<tr><td width=40% align=left><font size=2>July 12, 2002</font></td>
  <td width=3%>&nbsp;</td>
  <td width=4%>&nbsp;</td>
<td width=38% align=left><font size=2>/s/ Matthew Wolsfeld</font></td></tr>
<tr><td></td>
  <td width=3%>&nbsp;</td>
  <td width=4%>&nbsp;</td>
  <td><HR noshade align=center width=100% size=1></td></tr>
<tr>  <td width=40%>&nbsp;</td>
  <td width=3%>&nbsp;</td>
  <td width=4%>&nbsp;</td>
<td width=38% align=left><font size=2>Matthew Wolsfeld, CPA</font></td></tr>
<tr>  <td width=40%>&nbsp;</td>
  <td width=3%>&nbsp;</td>
  <td width=4%>&nbsp;</td>
<td width=38% align=left><font size=2>Chief Financial Officer</font></td></tr>
</TABLE><br>


<CENTER><font size=2>12</font></CENTER>


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