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<SEC-DOCUMENT>0001206774-03-000889.txt : 20031215
<SEC-HEADER>0001206774-03-000889.hdr.sgml : 20031215
<ACCEPTANCE-DATETIME>20031215161640
ACCESSION NUMBER:		0001206774-03-000889
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20030831
FILED AS OF DATE:		20031215

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:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11038
		FILM NUMBER:		031054796

	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>10KSB
<SEQUENCE>1
<FILENAME>d13692.htm
<TEXT>
<HTML>
<HEAD>
   <TITLE>d13692</TITLE>
   <META name="HandheldFriendly" content="true">
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<BODY bgcolor="#FFFFFF">
<blockquote>
  <HR style="MARGIN-TOP: -2px" noShade SIZE=4>
  <P align=center><FONT face="TIMES NEW ROMAN" size=5><B>SECURITIES AND EXCHANGE
    COMMISSION</B></FONT><BR>
    <FONT face="TIMES NEW ROMAN" size=2><B>Washington, D.C. 20549</B></FONT></P>
  <hr style="MARGIN-TOP: -10px" noshade size=1>
  <P align=center><FONT face="TIMES NEW ROMAN" size=5><B>FORM 10-KSB</B></FONT></P>
  <P><FONT face="TIMES NEW ROMAN" size=2><B>(Mark One)</B></FONT></P>
  <TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
    <TR>
      <TD vAlign=top width="6%"> <P><FONT face=WINGDINGS size=3><B>x</B></FONT></P></TD>
      <TD vAlign=top width="93%"> <P><FONT face="TIMES NEW ROMAN" size=3><B>ANNUAL
          REPORT PURSUANT TO SECTION 13 OR 15(d) OF<BR>
          THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></P></TD>
    </TR>
    <TR>
      <TD vAlign=top width="6%"> <P><FONT face="TIMES NEW ROMAN" size=1></FONT>&nbsp;</P></TD>
      <TD vAlign=top width="93%"> <P><FONT face="TIMES NEW ROMAN"><FONT size=2><B>For
          the Fiscal Year Ended August 31, 2003</B></FONT></FONT></P></TD>
    </TR>
  </TABLE>
  <P align=center><FONT face="TIMES NEW ROMAN" size=2><B>OR</B></FONT></P>
  <TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
    <TR>
      <TD vAlign=top width="6%"> <P><FONT face=WINGDINGS size=3><B>o</B></FONT></P></TD>
      <TD vAlign=top width="93%"> <P><FONT face="TIMES NEW ROMAN" size=3><B>TRANSITION
          REPORT PURSUANT TO SECTION 13 OR 15(d) OF<BR>
          THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></P></TD>
    </TR>
    <TR>
      <TD vAlign=top width="6%"> <P><FONT face="TIMES NEW ROMAN" size=1></FONT>&nbsp;</P></TD>
      <TD vAlign=top width="93%"> <P><FONT face="TIMES NEW ROMAN" size=2><B>For
          the transition period from _____________ to _______________</B></FONT></P></TD>
    </TR>
  </TABLE>
  <BR>
  <P align=center><FONT face="TIMES NEW ROMAN"><FONT size=2><B>Commission File
    Number 1-11038</B></FONT></FONT></P>
  <P align=center><FONT face="TIMES NEW ROMAN"><FONT size=6><B>NORTHERN TECHNOLOGIES
    INTERNATIONAL CORPORATION</B></FONT></FONT> <BR>
    <FONT size=2>(Exact name of small business issuer as specified in its charter)</FONT></P>
  <TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
    <TR>
      <TD vAlign=bottom width="49%"> <P align=center><FONT face="TIMES NEW ROMAN"><FONT size=2><U><strong>Delaware</strong></U></FONT></FONT></P></TD>
      <TD vAlign=bottom width="2%"> <P align=center><FONT face="TIMES NEW ROMAN" size=1></FONT>&nbsp;</P></TD>
      <TD vAlign=bottom width="49%"> <P align=center><FONT face="TIMES NEW ROMAN"><FONT size=2><U><strong>41-0857886</strong></U></FONT></FONT></P></TD>
    </TR>
    <TR>
      <TD vAlign=bottom width="49%"> <P align=center><FONT face="TIMES NEW ROMAN" size=2>(State
          or other jurisdiction of<BR>
          Incorporation or organization)</FONT></P></TD>
      <TD vAlign=bottom width="2%"> <P align=center><FONT face="TIMES NEW ROMAN" size=1></FONT>&nbsp;</P></TD>
      <TD vAlign=bottom width="49%"> <P align=center><FONT face="TIMES NEW ROMAN" size=2>(I.R.S.
          Employer<BR>
          Identification No.)</FONT></P></TD>
    </TR>
  </TABLE>
  <P align=center><FONT face="TIMES NEW ROMAN"><FONT size=2><strong>6680 N. Highway
    49, Lino Lakes, Minnesota 55014</strong><BR>
    (Address of Principal Executive Offices) (Zip Code)</FONT></FONT></P>
  <P align=center><FONT face="TIMES NEW ROMAN"><FONT size=2>Registrant&#146;s
    telephone number, including area code: <strong>(651) 784-1250<br>
    www.zerost.com </strong></FONT></FONT></P>
  <HR align=center width="20%" color=black noShade SIZE=2>
  <P align=center><FONT face="TIMES NEW ROMAN" size=2>Securities registered pursuant
    to Section 12(b) of the Act:</FONT></P>
  <TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
    <TR>
      <TD vAlign=bottom width="49%"> <P align=center><FONT face="TIMES NEW ROMAN" size=2><U>Title
          of each class</U></FONT></P></TD>
      <TD vAlign=bottom width="1%"> <P align=center><FONT face="TIMES NEW ROMAN" size=1></FONT>&nbsp;</P></TD>
      <TD vAlign=bottom width="49%"> <P align=center><FONT face="TIMES NEW ROMAN" size=2>Name
          of each exchange<U><BR>
          on which registered</U></FONT></P></TD>
    </TR>
    <TR>
      <TD vAlign=bottom width="49%"> <P align=center><strong><FONT face="TIMES NEW ROMAN" size=2>Common
          Stock, $.02 par value</FONT></strong></P></TD>
      <TD vAlign=bottom width="1%"> <P align=center><strong>&nbsp;</strong></P></TD>
      <TD vAlign=bottom width="49%"> <P align=center><strong><FONT face="TIMES NEW ROMAN" size=2>American
          Stock Exchange</FONT></strong></P></TD>
    </TR>
  </TABLE>
  <P align=center><FONT face="TIMES NEW ROMAN" size=2>Securities registered pursuant
    to Section 12(g) of the Act:<BR>
    <strong>None</strong></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush" -->
  <p><font size="2" face="Times New Roman, Times, serif"><FONT SIZE="2">Check
    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.&nbsp;&nbsp;Yes <font size="3">&nbsp;&nbsp;</font></font><FONT size=3 face=WINGDINGS>x</FONT><FONT SIZE="3">&nbsp;</font><FONT SIZE="2">&nbsp;&nbsp;&nbsp;No</font><FONT face=WINGDINGS size=3>
    o<B> </B></FONT></font></p>
  <!-- MARKER FORMAT-SHEET="Para Flush" -->
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, serif">Check if
    there is no disclosure of delinquent filers in response to Item 405 of Regulation
    S-B contained herein, and no disclosure will be contained, to the best of
    Registrant&#146;s knowledge, in definitive proxy or information statements
    incorporated by reference in Part III of this Form 10-KSB or any amendment
    to this Form 10-KSB.<font size="2" face="Times New Roman, Times, serif"><FONT SIZE="2">&nbsp;</font><FONT size="3" face=WINGDINGS>x</FONT><FONT SIZE="2">&nbsp;</font></font></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush" -->
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, serif">The Registrant&#8217;s
    revenues for the fiscal year ended August 31, 2003 were $8,353,875</FONT>
  </P>
  <!-- MARKER FORMAT-SHEET="Para Flush" -->
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, serif">As of December
    11, 2003, 3,626,192 shares of Common Stock of the Registrant were outstanding,
    and the aggregate market value of the Common Stock of the Registrant as of
    that date (based upon the $5.20 per share closing price of the Common Stock
    at that date as reported on the American Stock Exchange) excluding 1,081,503
    outstanding shares beneficially owned by directors, executive officers and
    officers, was approximately $13,232,382.</FONT> </P>
  <!-- MARKER FORMAT-SHEET="Para Flush" -->
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, serif">Documents
    incorporated by reference: None.</FONT> </P>
  <!-- MARKER FORMAT-SHEET="Para Flush" -->
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, serif">Transitional
    Small Business Disclosure Format (check one):&nbsp;&nbsp;Yes <font size="2" face="Times New Roman, Times, serif"><FONT SIZE="3">&nbsp;</font><FONT size="3" face=WINGDINGS>o</FONT><FONT SIZE="2">&nbsp;</font></font><FONT SIZE="2">&nbsp;</font>&nbsp;No
    <font size="2" face="Times New Roman, Times, serif"><FONT SIZE="3">&nbsp;<font face="WINGDINGS">x</font></font><FONT SIZE="2">&nbsp;</font></font><FONT SIZE="2">&nbsp;&nbsp;</font></font></P>
</blockquote>
<HR style="MARGIN-TOP: -10px" noShade SIZE=2>
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<A NAME="A008"></A>
<blockquote>
  <P ALIGN="CENTER"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>PART
    I</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush" -->
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><I>This
    Form 10-KSB contains certain forward-looking statements. For this purpose,
    any statements contained in this Form 10-KSB that are not statements of historical
    fact may be deemed to be forward-looking statements. Without limiting the
    foregoing, words such as &#147;may,&#148; &#147;will,&#148; &#147;expect,&#148;
    &#147;believe,&#148; &#147;anticipate,&#148; &#147;estimate&#148; or &#147;continue&#148;
    or comparable terminology are intended to identify forward-looking statements.
    These statements by their nature involve substantial risks and uncertainties,
    and actual results may differ materially depending on a variety of factors,
    including those set forth in the section below entitled &#147;Certain Important
    Factors&#148; and in &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#148; in this Report.</I></FONT> </P>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Item
    1. DESCRIPTION OF BUSINESS.</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A009"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business
    Development</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">Northern
          Instruments, Inc., a predecessor to Northern Technologies International
          Corporation, was incorporated in the State of Minnesota on August&nbsp;4,
          1970. In 1976, Northern Instruments, Inc. changed its name to Northern
          Instruments Corporation. In 1978, Northern Instruments Corporation,
          a Minnesota corporation, was merged with and into Northern Instruments
          Corporation, a newly formed Delaware corporation. In 1993, Northern
          Technologies International Corporation, a wholly owned subsidiary, was
          merged into Northern Instruments Corporation. As a result of such merger,
          Northern Instruments Corporation changed its name to Northern Technologies
          International Corporation, hereafter referred to as &#147;NTIC&#148;
          or the &#147;Company.&#148;</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">In
          1999, the Company organized Northern Instruments Corporation, LLC, an
          Ohio limited liability company (&#147;NIC&#148;), and the instruments
          operations of the Company were transferred into NIC. NIC is a wholly
          owned subsidiary of the Company. Effective March&nbsp;4, 1999, Special
          Control Systems, Inc., an Ohio corporation 100% owned by the Company,
          was merged into NIC; all operations of NIC were terminated as of August
          31, 2002. The operating results and assets of NIC are included in the
          consolidated financial statements of the Company prior to August 31,
          2002.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company established the wholly owned subsidiary NTI Facilities, Inc.
          on January 1, 2000.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          operating results and assets of NTI Facilities, Inc. are included in
          the consolidated financial statements of the Company.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A010"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business
    of the Company</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A011"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>General</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company offers expert technical service in corrosion management and
          unique technically superior products that prevent corrosion. The products
          and services primarily include proprietary volatile corrosion inhibiting
          products and packaging, sold under the brand name ZERUST&reg; (&#147;ZERUST&#148;).
          NTIC provides rust and corrosion protection products and custom packaging
          systems for avionics, automotive, electronics, electrical, mechanical,
          and military applications.&nbsp; Additionally, NTIC offers direct on-site
          technical support on rust and corrosion issues in 49 countries, and
          operates a marketing, distribution, and technical network through joint
          ventures in Asia, Europe, and South America. In a concerted effort to
          extend the Company&#146;s technological</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Center" -->
  <p ALIGN="center"><FONT size="2" FACE="Times New Roman, Times, Serif">2</FONT>
  </p>
</blockquote>
<HR style="MARGIN-TOP: -2px" noShade SIZE=2>
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<blockquote>
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">grasp,
          the Company engages in scientific research and development programs
          in the areas of material science and corrosion protection in new applications.</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A012"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Corporate
    Joint Ventures and European Holding Company</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company participates in an expanding number of corporate joint venture
          arrangements relating to Industrial Chemical, Non-Industrial Chemical
          and Business Consulting.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">Industrial
          Chemical Corporate Joint Ventures provide for the manufacturing, marketing
          and distribution of materials science based industrial packaging products
          based upon the Company&#146;s corrosion inhibiting technology. Both
          the Company and the Company&#146;s corporate joint venture in Germany,
          Excor Korrosionsschutz &#8212; Technologien und Produkte GmbH (&#147;Excor&#148;),
          through Excor&#146;s wholly owned subsidiary Excor Korrosionsforschung
          GmbH, manufacture and supply the proprietary ingredients, called Masterbatch,
          that make the Company&#146;s materials science based industrial packaging
          products functional, but the actual manufacturing of the finished product
          itself takes place in each country in which the Company has a joint
          venture or similar relationship. The corporate joint venture arrangements
          predominantly allow the Company to successfully market and sell its
          products in foreign countries through the marketing efforts of joint
          venture partners without the Company having to develop its own international
          sales force. The Company&#146;s corporate joint venture partners are
          knowledgeable in the applicable environmental, labor, tax and other
          requisite regulations and laws of the respective foreign countries in
          which they operate, as well as the local customs and business practices,
          and have a vested interest in making each joint venture a success.</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">React-NTI
          LLC is an Industrial Chemical corporate joint venture that focuses on
          the development, manufacture and marketing of proprietary lines of bio-based
          additives with both industrial and personal care applications. Based
          on cotton, soy, corn and other renewable resources, React-NTI products
          outperform many synthetically derived competing alternatives. React-NTI&#146;s
          target market includes NTIC&#146;s existing industrial customer base
          as well as the personal care/cosmetics industry.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">Non-Industrial
          Chemical Corporate Joint Ventures provide for the marketing and sales
          of welding machinery through the existing corporate joint venture network
          and sales and distribution of electronic sensing instruments.</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company&#146;s Business Consulting Corporate Joint Ventures utilize
          various government and military associations to develop new sales leads
          and potential investment opportunities. Additionally, one such Business
          Consulting Corporate joint venture provides for corporate representation
          at international and private financial institutions.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">In
          addition to the joint ventures described above, the Company also has
          a 50% ownership interest in NTI ASEAN, LLC for its corporate joint venture
          investments in the ASEAN region. Taiyo Petroleum Gas Co. Ltd., the Company&#8217;s
          existing joint venture partner in Japan, owns the remaining 50% ownership
          interest in NTI ASEAN, LLC.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Center" -->
  <p ALIGN="center"><FONT size="2" FACE="Times New Roman, Times, Serif">3</FONT>
  </p>
</blockquote>
<HR style="MARGIN-TOP: -2px" noShade SIZE=2>
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<blockquote>
  <P ALIGN="LEFT"><font size="2" face="Times New Roman, Times, Serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    Company has an ownership interest either directly or indirectly in Corporate
    Joint Ventures in the following countries:</font> </P>
  <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="100%">
    <TR VALIGN="BOTTOM">
      <TH ALIGN="left"><font size="1" face="Times New Roman, Times, serif">Joint
        Venture Name</font></TH>
      <TH><font size="1" face="Times New Roman, Times, serif"></font></th>
      <TH ALIGN="CENTER"><font size="1" face="Times New Roman, Times, serif">Country</font></TH>
      <TH><font size="1" face="Times New Roman, Times, serif"></font></th>
      <TH colspan="2"><font size="1" face="Times New Roman, Times, serif">NTIC<BR>
        Percent<BR>
        (%)<BR>
        Ownership</font></TH>
      <TH ALIGN="CENTER"><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></TH>
      <TH ALIGN="CENTER"><font size="1" face="Times New Roman, Times, serif">Date
        of<BR>
        Original<BR>
        Investment</font></TH>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD WIDTH="63%" ALIGN="LEFT" bgcolor="#00FFFF"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>INDUSTRIAL
        CHEMICAL CORPORATE JOINT VENTURE</B></FONT></TD>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="17%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="CENTER">&nbsp;</TD>
      <TD WIDTH="5%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TAIYONIC
        LTD.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Japan</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1987</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACOBAL
        SAS</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">France</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1990</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ZERUST-NIC
        CORP.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Taiwan</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">40</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1990</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EXCOR
        GmbH</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Germany</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1991</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ST
        ZERUST (SEA) PTE. LTD</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Singapore*</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">35</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1991</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ZERUST
        AB</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Sweden</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1991</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NTI-ZERUST
        INIBIDORES DE CORROS&Atilde;O VCI LTDA</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Brazil</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1993</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EUROMASCH</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Austria</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1994</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MOSTNIC</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Russia</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1994</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT" bgcolor="#00FFFF"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KOREA
        ZERUST CO., LTD.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">South
        Korea</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1994</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ZERUST
        OY</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Finland</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1995</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ACOR
        S.R.L.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Italy</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1996</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ZERUST
        (U.K.) LTD.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">United
        Kingdom</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1997</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FATRA-NTI
        s.r.o.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Czech
        Republic</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1997</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EXCOR
        SP. z.o.o.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Poland</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1998</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SPECIALTY
         &#8212; NTIA CO. LTD.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thailand*</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1998</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TIANJIN
        ZERUST CO.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">China*</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HARITA-NTI</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">India</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CHONG
        WAH-NTIA SDN. BHD.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Malaysia*</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ZERUST
        PHILIPPINES</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Philippines*</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2001</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FIBRO
        NTI JOINT STOCK CO.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Turkey</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ZERUST
        CONSUMER PRODUCTS, LLC</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">United
        States</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ZERUST
        BV</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Holland</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NTI
        NCC MIDDLE EAST SA.</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Lebanon</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;REACT
        NTI, LLC</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">United
        States</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT">&nbsp;</td>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="17%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="CENTER">&nbsp;</TD>
      <TD WIDTH="5%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>NON-INDUSTRIAL
        CHEMICAL CORPORATE JOINT VENTURE</b></FONT></TD>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="17%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="CENTER">&nbsp;</TD>
      <TD WIDTH="5%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MUTEC
        GMBH</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Germany</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">30</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2002</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RS
        TECHNOLOGIES GMBH</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Germany</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2003</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT">&nbsp;</td>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="17%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="CENTER">&nbsp;</TD>
      <TD WIDTH="5%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>BUSINESS
        CONSULTING CORPORATE JOINT VENTURE</B></FONT></TD>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="17%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="5%" ALIGN="CENTER">&nbsp;</TD>
      <TD WIDTH="5%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" BGCOLOR="#66FFFF">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WASHINGTON
        LIAISON OFFICE</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">United
        States</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1997</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM">
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ART
        AVILES ASSOCIATES</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Germany</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">25</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
      <TD ALIGN="CENTER">&nbsp;</TD>
      <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para" -->
  <P ALIGN="LEFT"><font size="2" face="Times New Roman, Times, Serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Indirect
    ownership interest through NTI ASEAN, LLC</font> </P>
  <blockquote>
    <p><FONT size="2" FACE="Times New Roman, Times, Serif">While the Company is
      not aware of any specific potential risk beyond its initial investment and
      undistributed earnings of the Corporate Joint Ventures, there can be no
      assurance that the Company will not be subject to lawsuits based on product
      liability claims or other claims arising out of the activities of each international
      joint venture. To protect against such an occurrence, the Company maintains
      liability insurance specifically applicable to its ownership positions in
      the joint venture arrangements in excess of any insurance the joint ventures
      may maintain.</FONT> </p>
  </blockquote>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Products</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para" -->
  <blockquote>
    <p align="LEFT"><font size="2" face="Times New Roman, Times, Serif">The Company
      primarily operates in the materials science based industrial packaging products
      business.</font> </p>
  </blockquote>
  <!-- MARKER FORMAT-SHEET="Para Center" -->
  <p ALIGN="center"><FONT size="2" FACE="Times New Roman, Times, Serif">4</FONT>
  </p>
</blockquote>
<HR style="MARGIN-TOP: -2px" noShade SIZE=2>
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    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><I>Materials
          Science Based Industrial Packaging Products</I>. Corrosion negatively
          affects products and components in the manufacturing industry. This
          applies to the rusting of ferrous metals (iron and steel) and the deterioration
          by oxidation of nonferrous metals (aluminum, copper, brass, etc.). In
          combating corrosion, the traditional approach has been to apply oils
          and greases to protect metal parts. This approach commonly requires
          specialized application equipment. In addition, the oils and greases
          may pose unacceptable health and fire hazards and also may collect and
          trap dirt and debris that, in some cases, may actually initiate corrosion.
          For the removal of such oils and greases, chemical solvents and specialized
          safety equipment may be necessary that typically introduce additional
          health and hazardous waste disposal problems.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">ZERUST
          volatile corrosion inhibiting (&#147;VCI&#148;) products may entirely
          eliminate or reduce the use of oils and greases to inhibit corrosion;
          ZERUST formulations contain proprietary chemical systems that emit a
          nontoxic vapor that is diffused throughout an enclosure. Electron scanning
          microscopy shows that the VCI-rich atmosphere causes VCI molecules to
          condense in a microscopic layer on all surfaces they reach. The corrosion-inhibiting
          layer is maintained as long as the metal product to be protected remains
          within the ZERUST package. Electron scanning further shows that once
          the contents are removed from the ZERUST package, the VCI layer is eliminated
          from the contents&#146; surfaces within two hours, leaving a clean,
          dry and corrosion-free product. This mechanism of corrosion protection
          enables the Company&#146;s customers to package and ship metal parts
          so that they arrive ready for use. Furthermore, by eliminating costly
          greasing and degreasing processes and/or significantly reducing the
          use of oils to inhibit corrosion, ZERUST VCI technology provides significant
          savings in labor, material and capital expenditures for equipment to
          apply, remove and dispose of oil and grease with all of the attendant
          environment problems, as compared to traditional methods of corrosion
          prevention.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">In
          1980, the Company developed a means of combining ZERUST VCI systems
          with polyethylene and polypropylene resins, and was granted a U.S. patent
          on this process on September 22, 1981 which has since expired in FY
          2000. Subsequently, a line of flexible packaging products in the form
          of low and high density polyethylene bags and shroud film, stretch,
          shrink, skin and bubble cushioning film, woven scrim and foam sheeting
          was introduced to United States industry. This gave packaging engineers
          an opportunity to ship and store ferrous, nonferrous and mixed multi-metal
          products in a clean, dry and corrosion-free condition, with an attendant
          overall savings in total packaging cost.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company subsequently expanded the ZERUST product line to include a range
          of rigid plastic products in the form of profile and corrugated board,
          thermoformed dunnage trays and bins, injection and blow molded products
          and flat netting. The Company also has developed additives in liquid
          form to imbue corrugated cardboard, solid fiber and chipboard packaging
          materials with VCI corrosion protection properties.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><I>Electronic
          Sensing Instruments</I>. Operations were discontinued in the Company&#8217;s
          electronic sensing instruments business in fiscal year 2002.</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A016"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Manufacturing</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
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    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company produces certain proprietary materials science based industrial
          packaging formulations and products at its facility in Lino Lakes, Minnesota.
          The Company&#146;s materials science based industrial packaging end
          products include flexible and rigid packaging systems and other products
          that are produced to customer specification by selected contractors
          who are supplied with the necessary active ingredients by the Company,
          under a trade secrecy agreement and/or a license agreement.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Center" -->
  <p ALIGN="center"><FONT size="2" FACE="Times New Roman, Times, Serif">5</FONT>
  </p>
</blockquote>
<HR style="MARGIN-TOP: -2px" noShade SIZE=2>
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<blockquote>
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    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company is ISO 9001 certified with respect to the manufacturing of its
          materials science based industrial packaging products. The Company believes
          that the process of ISO 9001 certification serves as an excellent total
          quality management tool, enabling the Company to provide consistency
          and excellence in its products. Also, because potential customers may
          prefer or require manufacturers to have achieved ISO certification,
          such ISO certification may provide the Company with certain competitive
          advantages.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company voluntarily became ISO 14000 certified as of August 2001 with
          respect to environmental management standards. The Company believes
          that the process of ISO 14000 certification serves as an excellent tool
          for the Company to continuously improve its environmental performance.
          Also, because existing and potential customers may prefer or require
          manufacturers to have achieved ISO certification, such ISO certification
          may provide the Company with certain competitive advantages in the future.</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A017"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Sales
    and Marketing of Materials Science Based Industrial Packaging Products</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">In
          the United States, the Company markets its materials science based industrial
          packaging products principally to industrial users by a direct sales
          force and through a network of distributors and manufacturer&#146;s
          sales representatives. The Company&#146;s technical service representatives
          work directly with the end users of the Company&#146;s products to analyze
          their specific needs and develop systems to meet their technical requirements.</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
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  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">Internationally,
          the Company has entered into joint ventures and similar arrangements
          with foreign partners (either directly or through NTI ASEAN, LLC). Pursuant
          to these arrangements, the Company and/or Excor supply certain proprietary
          formulations to the foreign joint venture entities, which in turn provide
          for the international manufacture and marketing of ZERUST and others
          finished products. The Company receives fees for providing technical
          support and marketing assistance to the joint ventures in accordance
          with the terms of the joint venture arrangements.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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  <A NAME="A018"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Competition</B></FONT></P>
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      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company is aware of other organizations that manufacture and market
          corrosion inhibiting packaging products, which compete with the Company&#146;s
          ZERUST products. The Company evaluates competing products on an ongoing
          basis.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">Some
          of the Company&#146;s competitors are established companies that may
          have financial and other resources greater than those of the Company.
          Additionally, some of these companies may have achieved significant
          market impact and brand recognition. The Company competes with such
          companies by providing high quality products and by attempting to provide
          the highest level of customer service, including real time direct technical
          support and applications engineering.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A019"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Significant
    Customers</B></FONT></P>
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    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">One
          customer accounted for approximately 13% and 12% of net sales and $219,054
          and $106,997 of receivables for the fiscal years ended August 31, 2003
          and 2002, respectively.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A020"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Research
    and Development</B></FONT></P>
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    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company&#146;s research and development activities are directed at the
          improvement of existing products, the development of new products and
          quality assurance through improved testing of the Company&#146;s products.
          The Company&#146;s research and development expenditures, including</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Center" -->
  <p ALIGN="center"><FONT size="2" FACE="Times New Roman, Times, Serif">6</FONT>
  </p>
</blockquote>
<HR style="MARGIN-TOP: -2px" noShade SIZE=2>
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      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">engineering
          and technical support, were $897,920, $805,796 and $648,129 in fiscal
          years 2003, 2002, and 2001, respectively. In 1997, the Company&#146;s
          joint venture in Germany, Excor, established a wholly owned subsidiary,
          Excor Korrosionsforschung GmbH, to conduct research into new fields
          of materials science based industrial packaging and the applications
          engineering thereof in conjunction with the Company&#146;s domestic
          research and development operation. Today the Company&#146;s internal
          research and development activities are conducted at its Minnesota headquarters,
          in Beachwood, Ohio, in Dresden, Germany, and at various international
          locations under the direction of internationally known scientists and
          research institutes under exclusive contract to the Company with respect
          to the subject of their respective research efforts. The conduct of
          the research and development activities outside Ohio, Minnesota and
          Germany, as with the results of the Company&#146;s research and development
          efforts conducted with the support of Michigan State University and
          the University of Missouri, frequently results in development of intellectual
          property rights for the Company.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A021"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Intellectual
    Property Rights</B></FONT></P>
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      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">In
          1979, the Company developed and filed for a US patent on the first Volatile
          Corrosion Inhibiting (&#147;VCI&#148;) Chemistry and Technology to be
          incorporated in polyolefin industrial packing material in the world.
          The Company blundered then, however, in omitting to extend that patent
          application internationally pursuant to the international patent cooperation
          agreements in place at the time. The US patent granted under this patent
          application become the single most important intellectual property right
          in the Company&#146;s history, and proved to be the basis for the development
          of the Company&#146;s federation of International Joint Venture Partners
          worldwide, notwithstanding the lack of international patent protection
          covering this VCI Chemistry and Technology. It would, withal, have been
          questionable as to whether the Company, in 1979, would have had adequate
          funds to pursue a worldwide patent strategy, particularly since the
          VCI Technology the Company had developed at that time was as yet unproven
          in the marketplace, rendering the entire issue moot.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">Although
          for many years thereafter the company relied on trade secrets alone
          to protect the Company&#146;s VCI Technology, it became evident, when
          the Company&#146;s original VCI patent in the US expired in the year
          2000 that a radically new strategy was needed to protect the Company&#146;s
          proprietary technology in the future.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">Thus,
          the Company has since filed for six letters patent in the US covering
          various corrosion inhibiting technologies, systems and applications;
          and these patent applications have all been extended to the countries
          of the Patent Cooperation Treaty (&#147;PCT&#148;) of relevance to the
          Company. In addition, the Company&#146;s Joint Venture Partner in Germany,
          Excor, has also filed three patent applications for proprietary new
          VCI Technology, to which the Company and its other Joint Venture Partners
          in the rest of the world will have equal rights.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">Other
          patent protection is currently being promulgated for various host materials
          into which such VCI and other protective features can be incorporated,
          proprietary new process technologies and chemical formulations outside
          the area of corrosion protection, but within the technology charter
          of the Company.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">In
          addition to developing a clear and precise patent protection strategy,
          the Company has also vigorously pursued an equally clear strategy of
          seeking and defending the Company&#146;s major Trademarks in the US,
          both Western and Eastern Europe, and Asia primarily.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Center" -->
  <p ALIGN="center"><FONT size="2" FACE="Times New Roman, Times, Serif">7</FONT>
  </p>
</blockquote>
<HR style="MARGIN-TOP: -2px" noShade SIZE=2>
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<A NAME="A022"></A>
<blockquote>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Backlog</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company had order backlog as of August 31, 2003 of $220,000. These are
          orders that are held by the Company pending release instructions from
          the customers to be used in just-in-time production. Customers generally
          place orders on an &#147;as needed&#148; basis and expect delivery within
          a relatively short period of time.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A023"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Working
    Capital and Availability of Materials</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
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    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company does not carry excess quantities of raw materials or purchased
          parts because of widespread availability thereof from various suppliers.
          The Company has sufficient working capital to meet all obligations when
          due.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A024"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Employees</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">As
          of August 31, 2003, the Company had 38 full-time direct employees located
          in the United States, consisting of eleven engaged in administration,
          eleven in sales and marketing, nine in research and development, six
          in operations and one person responsible for international coordination.
          There are no unions representing the Company&#146;s employees and the
          Company believes that its relations with employees are good.</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A025"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Certain
    Important Factors</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">In
          addition to the influences identified above, there are several important
          factors that could cause the Company&#146;s actual results to differ
          materially from those anticipated by the Company or which are reflected
          in any forward-looking statements of the Company. Such factors, which
          may impact the success of the Company&#146;s operations and its ability
          to achieve its goals, include the following:</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
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  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">(1)
          The Company&#146;s ability to make investments in existing and future
          joint ventures to generate a positive rate of return and demonstrate
          a pattern of growth consistent with past and current performance; and</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para" -->
  <table border="0" cellpadding="0" cellspacing="0">
    <tr valign="top">
      <td><p><font size="2" face="Times New Roman, Times, Serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p></td>
      <td><p><FONT size="2" FACE="Times New Roman, Times, Serif">(2) The Company&#146;s
          ability to continue to enter into international markets in a timely
          fashion; and</FONT> </p></td>
    </tr>
  </table>
  <font size="2" face="Times New Roman, Times, Serif"> <br>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  </font>
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">(3)&nbsp;The
          Company&#146;s ability to maintain gross margins at a level consistent
          with the technological advantages of its proprietary products.</FONT>
        </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Item
    2. DESCRIPTION OF PROPERTY.</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">The
          Company&#146;s primary office, production facilities and domestic research
          and development operations are located at 6680 North Highway 49, Lino
          Lakes, Minnesota 55014. The Company owns approximately 3.5 acres at
          this site and three buildings thereon. The main building, consisting
          of approximately 15,300 square feet, is used for office space, production,
          research and development and shipping and receiving. A second building
          of approximately 7,200 square feet and a third building of approximately
          4,800 square feet are used for warehouse space. In 2002, the Company
          sold a 10-acre parcel of land and a warehouse of approximately 18,000
          square feet located in Forest Lake, Minnesota, approximately six miles
          from the Company&#146;s offices.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">In
          fiscal year 1999, a subsidiary of the Company, NTI Facilities, Inc.,
          acquired a one-third ownership of Omni-Northern Ltd., an Ohio limited
          liability company, in contemplation of entering</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Para Center" -->
  <p ALIGN="center"><FONT size="2" FACE="Times New Roman, Times, Serif">8</FONT>
  </p>
</blockquote>
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<blockquote>
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">into
          a lease (as described below) for approximately 50% of the net rental
          space in the building itself. Omni-Northern Ltd. owns and operates a
          rental property located at 23205 Mercantile Road, Beachwood, Ohio, comprising
          approximately 1.989 acres of land and a building of approximately 33,877
          square feet, having an approximate value of $2,205,000 based upon the
          cash-to-mortgage acquisition price of the property paid in fiscal year
          2000. The Company has guaranteed up to $337,833 of the Omni-Northern
          Ltd.&#8217;s $2,027,000 mortgage obligation with National City Bank,
          Cleveland, Ohio. NTI Facilities, Inc. has entered into a 15-year lease
          agreement for approximately 16,994 square feet of office, manufacturing,
          laboratory and warehouse space requiring monthly payments of $17,072,
          which are adjusted annually according to the annual consumer price index
          through November 2014. By its ownership in Omni-Northern Ltd., NTI Facilities
          Inc. is entitled to one-third of operating results of Omni-Northern
          Ltd. The building is now fully leased.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A026"></A>
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Item
    3. &nbsp;LEGAL PROCEEDINGS.</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="TOP">
      <TD WIDTH="3%">&nbsp;</TD>
      <TD><P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif">There
          is no material pending or threatened legal, governmental, administrative
          or other adverse proceeding to which the Company is would be a defendant
          or of which any of its property is the subject.</FONT> </P></TD>
    </TR>
  </TABLE>
  <BR>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <P ALIGN="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Item
    4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Para" -->
  <P ALIGN="LEFT"><font size="2" face="Times New Roman, Times, Serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
    matter was submitted to a vote of security holders during the fourth quarter
    of the fiscal year covered by this Report.</font> </P>
  <!-- MARKER FORMAT-SHEET="Para Center" -->
  <p ALIGN="center"><FONT size="2" FACE="Times New Roman, Times, serif">9</FONT>
  </p>
</blockquote>
<HR SIZE=2 COLOR=GRAY NOSHADE>
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<A NAME="A027"></A>
<blockquote>
  <P ALIGN="CENTER"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>PART
    II</B></FONT></P>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
</blockquote>
<p><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Item 5. MARKET FOR THE
  REGISTRANT&#8217;S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.</B></FONT></p>
<blockquote>
  <p><FONT size="2" FACE="Times New Roman, Times, Serif">Effective September 10,
    1993, the Company&#146;s Common Stock commenced trading on, and continues
    to trade on, the American Stock Exchange under the symbol NTI.</FONT> </p>
  <TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
    <TR VALIGN="BOTTOM" bgcolor="#66FFFF">
      <TD bgcolor="#FFFFFF"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD width="100%" bgcolor="#FFFFFF"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD colspan="2" ALIGN="LEFT" bgcolor="#FFFFFF"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD colspan="5" ALIGN="RIGHT" bgcolor="#FFFFFF"><div align="center"><strong><FONT size="1" FACE="Times New Roman, Times, serif">Common
          Stock</FONT></strong></div></TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#FFFFFF">
      <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD width="100%"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD colspan="2" ALIGN="LEFT"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
      <TD ALIGN="RIGHT"><div align="center"><strong><FONT size="1" FACE="Times New Roman, Times, serif">High</FONT></strong></div></TD>
      <TD ALIGN="LEFT">&nbsp;</TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><div align="center"><strong><FONT size="1" FACE="Times New Roman, Times, serif">Low</FONT></strong></div></TD>
      <TD ALIGN="LEFT">&nbsp;</TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#66FFFF">
      <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
      <TD width="100%"><FONT size="2" FACE="Times New Roman, Times, Serif"><strong>2003:</strong></FONT></TD>
      <TD colspan="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#FFFFFF">
      <TD>&nbsp;</TD>
      <TD width="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fourth
        fiscal quarter</FONT></TD>
      <TD colspan="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$5.80</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$4.65</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#66FFFF">
      <TD>&nbsp;</TD>
      <TD width="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third
        fiscal quarter</FONT></TD>
      <TD colspan="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6.46</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.32</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#FFFFFF">
      <TD>&nbsp;</TD>
      <TD width="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second
        fiscal quarter</FONT></TD>
      <TD colspan="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4.35</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.20</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#66FFFF">
      <TD>&nbsp;</TD>
      <TD width="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First
        fiscal quarter</FONT></TD>
      <TD colspan="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.45</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.95</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#FFFFFF">
      <TD>&nbsp;</TD>
      <TD width="100%"><strong><font size="2">2002:</font></strong></TD>
      <TD colspan="2" ALIGN="LEFT">&nbsp;</TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="LEFT">&nbsp;</TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="LEFT">&nbsp;</TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#66FFFF">
      <TD>&nbsp;</TD>
      <TD width="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fourth
        fiscal quarter</FONT></TD>
      <TD colspan="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$3.76</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$3.25</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#FFFFFF">
      <TD>&nbsp;</TD>
      <TD width="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third
        fiscal quarter</FONT></TD>
      <TD colspan="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4.50</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3.65</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#66FFFF">
      <TD>&nbsp;</TD>
      <TD width="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second
        fiscal quarter</FONT></TD>
      <TD colspan="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4.70</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4.06</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
    <TR VALIGN="BOTTOM" bgcolor="#FFFFFF">
      <TD>&nbsp;</TD>
      <TD width="100%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First
        fiscal quarter</FONT></TD>
      <TD colspan="2" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5.00</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
      <TD ALIGN="RIGHT">&nbsp;</TD>
      <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4.20</FONT></TD>
      <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
    </TR>
  </TABLE>
  <!-- MARKER FORMAT-SHEET="Para Flush In 1" -->
  <p><FONT size="2" FACE="Times New Roman, Times, Serif">The Company declared
    Common Stock cash dividends of $0.17 per share payable to shareholders of
    record as of December 1, 2000, $0.085 per share on December 4, 2002 and $0.05
    per share on December 3, 2003 to all shareholders of record on those dates.
    The Company&#146;s Board of Directors will continue to consider the payment
    of dividends annually, based on the Company&#146;s net income and operating
    cash requirements.</FONT> <br>
    <br>
    <!-- MARKER FORMAT-SHEET="Para" -->
  </p>
  <p align="LEFT"><font size="2" face="Times New Roman, Times, Serif">As of August
    31, 2003, approximately 390 shareholders of record held the Company&#146;s
    Common Stock.</font> </p>
  <!-- MARKER FORMAT-SHEET="Para" -->
  <p align="LEFT"><font size="2" face="Times New Roman, Times, Serif">See disclosure
    under Item 11 below for certain information regarding the Company&#146;s equity
    compensation plans.</font> </p>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
</blockquote>
<p align="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Item 6.
  MANAGEMENT&#8217;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.</B></FONT></p>
<blockquote>
  <!-- MARKER FORMAT-SHEET="Left Head Bold" -->
  <A NAME="A028"></A> </blockquote>
<p align="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B>Results
  of Operations</B></FONT></p>
<blockquote>
  <!-- MARKER FORMAT-SHEET="Left Head Bold/Italic" -->
  <A NAME="A029"></A> </blockquote>
<p align="LEFT"><FONT size="2" FACE="Times New Roman, Times, Serif"><B><I>Fiscal
  Year 2003 Compared to Fiscal Year 2002</I></B></FONT></p>
<blockquote>
  <p><FONT size="2" FACE="Times New Roman, Times, Serif"><I>Net Sales and Cost
    of Sales.</I> The Company had net sales originating in the United States of
    $8,353,875 in fiscal year 2003; an increase of $759,492 or 10.0% from net
    sales of $7,594,383 in fiscal year 2002. The increase in net sales was due
    primarily to an increase in the volume of materials science based industrial
    packaging products sold to new and existing customers in North America. The
    increase in demand was due to an increased allocation of resources dedicated
    to the sales efforts and an upturn in the industrial sector that the Company
    serves. One customer accounted for approximately 13% and 12% of net sales
    and $219,054 and $106,997 of receivables for the fiscal years ended August
    31, 2003 and 2002, respectively.</FONT> <BR>
    <!-- MARKER FORMAT-SHEET="Para Center" -->
  </p>
  <p ALIGN="center"><FONT size="2" FACE="Times New Roman, Times, Serif">10</FONT>
  </p>
</blockquote>
<HR SIZE=2 COLOR=GRAY NOSHADE>

<blockquote>
  <p><font size="2" face="Times New Roman, Times, serif">Cost of sales increased
    as a percentage of sales to 47.5% in fiscal year 2003 from 47.3% in fiscal
    year 2002. The variation in the cost of sales percentage is attributable to
    the change in the market price for certain raw materials.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Selling Expenses.
    </I>The Company&#146;s selling expenses increased by $358,443 or 24.42% to
    $1,825,970 in fiscal year 2003 from $1,467,527 in fiscal year 2002. The increase
    in selling expenses in fiscal year 2003 was primarily related to a combination
    of increases in salary and commission to salespeople and commission and retainers
    to manufacturer&#146;s representatives totaling $279,000 and travel and entertainment
    related expenses for sales personnel of approximately $90,000, which were
    partially offset by decreases in sales consulting of approximately $136,000.
    As a percentage of sales these costs increased to 21.9% in fiscal year 2003
    from 19.3% in fiscal year 2002.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>General and Administrative
    Expenses.</I> The Company&#146;s general and administrative expenses increased
    by $362,027 or 18.4% to $2,327,684 in fiscal year 2003 from $1,965,657 in
    fiscal year 2002. The increase is attributable to increases in salaries of
    $292,000, legal and court costs of $37,000, education expense of $41,000,
    directors expenses of $30,000 and group insurance of $29,000 offset by decreases
    in depreciation expense of $34,000 and general office expense of $39,000.
    As a percentage of sales, general and administrative expenses increased to
    27.9% in fiscal year 2003 from 25.9% in fiscal year 2002.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Research, Engineering,
    and Technical Support Expenses.</I> The Company&#146;s research, engineering,
    and technical support expenses increased by $92,124 or 11.4% to $897,920 in
    fiscal year 2003 from $805,796 in fiscal year 2002. An increase of approximately
    $70,000 is attributed to an increase in salary expense related to hiring additional
    people in technical support and $19,000 related to increased depreciation
    expense. As a result of the Company&#146;s international research and development
    activities, certain proprietary rights to new technology have been added to
    the Company. As a percentage of sales, research, engineering and technical
    support expenses increased to 10.8% in fiscal year 2003 from 10.6% in fiscal
    year 2002 due to the increased level of spending.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>International Corporate
    Joint Ventures and European Holding Company. </I>The Company continues its
    business program of establishing corporate joint venture arrangements in international
    markets directly, or indirectly through NTI ASEAN, LLC (&#147;NTI ASEAN&#148;).
    The Company maintains a 50% ownership interest in NTI ASEAN, with the remaining
    50% ownership interest owned by Taiyo Petroleum Gas Co. Ltd., which also owns
    the other 50% ownership interest in the Company&#146;s corporate joint venture
    located in Japan.</font> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company and/or an
    existing corporate joint venture manufactures and supplies proprietary ingredients,
    which make the finished products functional and enable manufacturing of the
    finished products to take place in the foreign countries. The Corporate Joint
    Ventures then market the finished products in their respective territories,
    and the Corporate Joint Ventures&#146; profits are shared by the respective
    corporate joint venture shareholders in accordance with share ownership.</FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Corporate joint venture
    sales were as follows: </FONT> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2003</font></b></div></TD>
    <TD valign="bottom"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD valign="bottom"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2002</font></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD valign="bottom" bgcolor="#66FFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%" valign="bottom" bgcolor="#66FFFF"><p><FONT size=2 face="Times New Roman, Times, serif">Industrial
        chemical</FONT></p></TD>
    <TD align="center" valign="bottom" bgcolor="#66FFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD valign="bottom" bgcolor="#66FFFF"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">33,124,771</FONT></div></TD>
    <TD valign="bottom" bgcolor="#66FFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center" valign="bottom" bgcolor="#66FFFF"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD valign="bottom" bgcolor="#66FFFF"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">24,931,945</FONT></div></TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
  </TR>
  <TR>
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom"><p><FONT size=2 face="Times New Roman, Times, serif">Industrial
        chemical (indirect ownership through NTI ASEAN)</FONT></p></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">2,611,060</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">2,072,326</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD valign="bottom" bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" valign="bottom" bgcolor="#00FFFF"><p><FONT size=2 face="Times New Roman, Times, serif">Non-industrial
        chemical</FONT></p></TD>
    <TD valign="bottom" bgcolor="#00FFFF">&nbsp;</TD>
    <TD valign="bottom" bgcolor="#00FFFF"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,245,373</FONT></div></TD>
    <TD valign="bottom" bgcolor="#00FFFF">&nbsp;</TD>
    <TD valign="bottom" bgcolor="#00FFFF">&nbsp;</TD>
    <TD valign="bottom" bgcolor="#00FFFF"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,023,343</FONT></div></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR>
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom"><p><FONT size=2 face="Times New Roman, Times, serif">Business
        consulting</FONT></p></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">252,508</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">256,769</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD valign="bottom" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" valign="bottom" bgcolor="#FFFFFF"><p>&nbsp; </p></TD>
    <TD colspan="2" valign="bottom" bgcolor="#FFFFFF"><HR align="right" size=1 noshade></TD>
    <TD valign="bottom" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD valign="bottom" bgcolor="#FFFFFF"><HR align="right" size=1 noshade></TD>
    <TD valign="bottom" bgcolor="#FFFFFF"><HR align="right" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom"><p><FONT size=2 face="Times New Roman, Times, serif">Total</FONT></p></TD>
    <TD align="center" valign="bottom"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">37,233,712</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD align="center" valign="bottom"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">28,284,383</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom"><p>&nbsp;</p></TD>
    <TD valign="bottom"><HR noshade size=2></TD>
    <TD valign="bottom"><HR noshade size=2></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><HR noshade size=2></TD>
    <TD valign="bottom"><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<p align="center"><font size="2">11</font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_12"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company receives fees
    for technical and other support to the Corporate Joint Ventures based on the
    revenues of the individual Corporate Joint Ventures. The Company recognized
    fee income for such support in the amounts of $2,601,634 and $2,131,513 for
    fiscal years 2003 and 2002, respectively. The increase in fees for technical
    and other support to Corporate Joint Ventures was due to the increase in revenues
    from the Corporate Joint Ventures as a whole.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company sponsors a
    worldwide Corporate Joint Venture conference every three years in which all
    of its Corporate Joint Ventures are invited to participate. The Company defers
    a portion of its royalty income received from its Corporate Joint Ventures
    in each period leading up to the next conference, reflecting that the Company
    has not fully earned the royalty payments received during that period. The
    next Joint Venture conference is scheduled to be held in 2004 and there was
    $225,000 and $103,200 of deferred royalty income recorded within other accrued
    liabilities at August 31, 2003 and 2002, respectively, related to this conference.
    The deferred income is expected to be recognized in 2004 when the conference
    is held. The costs associated with these joint venture conferences are recognized
    as incurred, generally in the period in which the conference is held. </FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company incurred direct
    expenses related to Corporate Joint Ventures and the European holding company
    of $2,551,730 and $1,585,931 in fiscal years 2003 and 2002, respectively.
    These expenses include: consulting, technical and marketing services to existing
    joint ventures, legal fees regarding the establishment of new joint ventures,
    registration and promotion and legal defense of worldwide trademarks and legal
    fees incurred in the filing of patent applications for new technologies to
    which the Company acquired certain rights.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company also had an
    investment in a European holding company, which was never utilized to invest
    in a company in Germany as originally intended. In fiscal year 2002 the majority
    of the investment was returned to the original investors. In fiscal year 2003,
    the remaining investment was converted into a new European joint venture in
    Holland.</FONT> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Interest Income.
    </I>The Company&#146;s interest income increased to $101,497 in fiscal year
    2003 from $90,310 in fiscal year 2002. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Income Before Income
    Taxes.</I> Income before income taxes decreased $989,449 to $422,727 in fiscal
    year 2003, compared to the income before income taxes of $1,412,176 in fiscal
    year 2002, a net decrease of 70.1%. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Income Taxes. </I>The
    Company&#8217;s effective income tax expense rate was 13.1% for fiscal year
    2002 and is a tax benefit of 20.1% of pre-tax net income for fiscal year 2003.
    The Company&#8217;s annual effective income tax rate for fiscal 2002 and 2003
    was lower than the statutory rate primarily due to the Company&#8217;s equity
    in income of Corporate Joint Ventures and European holding company being recognized
    based on after-tax earnings of these entities. To the extent joint ventures&#8217;
    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>
</blockquote>
<p> <font size="2" face="Times New Roman, Times, serif"><B><I>Fiscal Year 2002
  Compared to Fiscal Year 2001 </I></B> </font></p>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Net Sales and Cost
    of Sales.</I> The Company had net sales originating in the United States of
    $7,594,383 in fiscal year 2002; a decrease of $1,675,336 or 18.1% from net
    sales of $9,269,719 in fiscal year 2001. The decrease in net sales was due
    primarily to a decrease in the volume of materials science based industrial
    packaging products sold to new and existing customers in North </font> </p>
</blockquote>
<p align="center"><font size="2" face="Times New Roman, Times, serif">12</font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_13"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">America. The decrease
    in demand was due to the continued slowdown in the industrial sector that
    the Company serves. One existing customer accounted for 12% of sales in fiscal
    year 2002 and 10% of sales in fiscal year 2001.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Cost of sales decreased
    as a percentage of sales to 47.3% in fiscal year 2002 from 49.7% in fiscal
    year 2001. The variation in the cost of sales percentage is attributable to
    the decrease in the market price for certain raw materials.</FONT> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Selling Expenses.
    </I>The Company&#146;s selling expenses increased by $20,636 or 1.4% to $1,467,527
    in fiscal year 2002 from $1,446,891 in fiscal year 2001. The increase in selling
    expenses in fiscal year 2002 was primarily related to a combination of increases
    in consulting expense of approximately $48,000, salary and commission and
    travel related expenses for sales personnel of approximately $66,000, and
    offset by decreases in depreciation expense of approximately $32,000, and
    expenses related to trade shows of approximately $40,000. As a percentage
    of sales these costs increased to 19.3% in fiscal year 2002 from 15.6% in
    fiscal year 2001 due to the decreased level of net sales and the overall slight
    increase in selling expenses in fiscal year 2002.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>General and Administrative
    Expenses.</I> The Company&#146;s general and administrative expenses decreased
    by $123,033 or 5.9% to $1,965,657 in fiscal year 2002 from $2,088,690 in fiscal
    year 2001. The decrease is attributed to there being no expenses relating
    to NIC, which in fiscal year 2001 was $200,000; the wholly owned subsidiary
    ceased operations in fiscal year 2002. Additionally, there was a decrease
    in total salary expense of approximately $44,000 and a decrease in travel
    of $40,000. There were increases in legal fees and information technology
    expense of approximately $100,000. As a percentage of sales, general and administrative
    expenses increased to 25.9% in fiscal year 2002 from 22.5% in fiscal year
    2001.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Research, Engineering,
    and Technical Support Expenses.</I> The Company&#146;s research, engineering,
    and technical support expenses increased by $157,667 or 24.3% to $805,796
    in fiscal year 2002 from $648,129 in fiscal year 2001. An increase of approximately
    $175,000 is attributed to an increase in salary expense related to hiring
    additional people in technical support. As a result of the Company&#146;s
    international research and development activities, certain proprietary rights
    to new technology have been added to the Company. As a percentage of sales,
    research, engineering and technical support expenses increased to 10.6% in
    fiscal year 2002 from 7.0% in fiscal year 2001 due to the decreased level
    of net sales and the increase in spending.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>International Corporate
    Joint Ventures and European Holding Company. </I>The Company continues its
    business program of establishing corporate joint venture arrangements in international
    markets directly, or indirectly through NTI ASEAN, LLC (&#147;NTI ASEAN&#148;).
    The Company maintains a 50% ownership interest in NTI ASEAN, with the remaining
    50% ownership interest owned by Taiyo Petroleum Gas Co. Ltd., which also owns
    the other 50% ownership interest in the Company&#146;s corporate joint venture
    located in Japan.</font> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company and/or an
    existing corporate joint venture manufactures and supplies proprietary ingredients,
    which make the finished products functional and enable manufacturing of the
    finished products to take place in the foreign countries. The Corporate Joint
    Ventures then market the finished products in their respective territories,
    and the Corporate Joint Ventures&#146; profits are shared by the respective
    corporate joint venture shareholders in accordance with share ownership.</FONT>
  </p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">13 </font></p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<p><font size="2" face="Times New Roman, Times, serif"><A name="page_14"></A> </font>
</p>
<blockquote>
  <p><FONT size=2 face="Times New Roman, Times, serif">Corporate joint venture
    sales were as follows:</FONT></p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><p>&nbsp;</p></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2001</FONT></b></div></TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Industrial
        chemical</font></p></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">24,931,945</FONT></div></TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">21,218,289</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Industrial
        chemical (indirect ownership through NTI ASEAN)</font></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">2,072,326</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,938,092</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Non-industrial
        chemical</font></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,023,343</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Business
        consulting</font></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">256,769</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">294,173</FONT></div></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif"> .</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><p>&nbsp;</p></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Total</font></p></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">28,284,383</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">23,450,554</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
    <TD width="100%" bgcolor="#FFFFFF"><p><font color="#FFFFFF"></font></p></TD>
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=2 noshade></TD>
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
    <TD bgcolor="#FFFFFF"><font color="#FFFFFF">&nbsp;</font></TD>
  </TR>
</TABLE>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company receives fees
    for technical and other support to the Corporate Joint Ventures based on the
    revenues of the individual Corporate Joint Ventures. The Company recognized
    fee income for such support in the amounts of $2,131,513 and $2,527,795 for
    fiscal years 2002 and 2001, respectively. The decrease in fees for technical
    and other support to Corporate Joint Ventures was primarily due to the decrease
    in fees related to the international corporate joint venture in Germany.</FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company sponsors a
    worldwide Corporate Joint Venture conference every three years in which all
    of its Corporate Joint Ventures are invited to participate. The Company defers
    a portion of its royalty income received from its Corporate Joint Ventures
    in each period leading up to the next conference, reflecting that the Company
    has not fully earned the royalty payments received during that period. The
    next Joint Venture conference is scheduled to be held in 2004 and there was
    $103,200 of deferred royalty income recorded within other accrued liabilities
    at August 31, 2002, related to this conference. The deferred income is expected
    to be recognized in 2004 when the conference is held. The costs associated
    with these joint venture conferences are recognized as incurred, generally
    in the period in which the conference is held. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company incurred direct
    expenses related to Corporate Joint Ventures and the European holding company
    of $1,585,931 and $1,956,810 in fiscal years 2002 and 2001, respectively.
    These expenses include: technical and marketing services to existing joint
    ventures, legal fees regarding the establishment of new joint ventures, registration
    and promotion of worldwide trademarks and legal fees incurred in the filing
    of patent applications for new technologies to which the Company acquired
    certain rights. Additionally in 2001, the Company incurred expenses totaling
    $314,347 relating to the Joint Venture Conference held in Chennai, India which
    are included in Expenses incurred in support of International Corporate Joint
    Ventures. This conference is held approximately every three years as a means
    to discuss new products and technologies being offered and to evaluate current
    and future market and material science strategies for all joint ventures.</FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company&#146;s investments
    in Corporate Joint Ventures and the European holding company are accounted
    for using the equity method and resulted in income to the Company of $1,035,053
    and $543,455 for fiscal years 2002 and 2001, respectively.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company also has an
    investment in a European holding company, which is in the process of being
    converted into a new European joint venture in Holland. </FONT> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Interest Income.</I>
    The Company&#146;s interest income decreased to $90,310 in fiscal year 2002
    from $143,452 in fiscal year 2001 due to the decrease in interest rates during
    fiscal year 2002.</font></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">14</font>
  </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_15"></A> </font>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Income Before Income
    Taxes. </I>Income before income taxes decreased $295,270 to $1,412,176 in
    fiscal year 2002, compared to the income before income taxes of $1,707,446
    in fiscal year 2001, a net decrease of 17.3%. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Income Taxes.</I>
    The Company&#146;s effective income tax rate was 13.1% and 34.3% for fiscal
    years 2002 and 2001, respectively. The Company&#146;s annual effective income
    tax rate for fiscal 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>
</blockquote>
<p> <font size="2" face="Times New Roman, Times, serif"><B>Liquidity and Capital
  Resources </B> </font></p>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">At August 31, 2003, the
    Company&#146;s working capital was $4,760,183, including $283,326 in cash
    and cash equivalents and $1,643,939 in investments available for sale, compared
    to working capital of $6,276,934, including $230,274 in cash and cash equivalents
    and $4,008,417 in investments available for sale as of August 31, 2002.</FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Cash flows (used in) provided
    by operations for the fiscal year ended August 31, 2003 and 2002 were ($1,347,902)
    and $1,072,104, respectively. The net cash used in operations for the fiscal
    year ended August 31, 2003 resulted principally from net income and dividends
    received from Corporate Joint Ventures being more than offset by the noncash
    equity income of industrial chemical joint ventures, and uses of cash for
    increases in operating assets and reductions of operating liabilities. During
    the fiscal year ended August 31, 2003, the Company made a $445,469 deposit
    relating to a legal case involving potential trademark infringement against
    a competitor in Europe. The Company expects that the amount will be fully
    recoverable at the conclusion of the prosecution of the competitor, although
    the Company can offer no assurances that this will be the case. The net cash
    provided by operations for the fiscal year ended August 31, 2002 resulted
    principally from net income and dividends received from Corporate Joint Ventures,
    offset by non-cash equity income of Industrial Chemical Corporate Joint Ventures,
    increases in receivables, foreign deposits, inventories, and prepaid expenses
    and other.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Net cash provided by investing
    activities for the fiscal year ended August 31, 2003 was $1,774,282, which
    resulted from the sales of short-term investments and a partial return of
    the Company&#146;s original investment in a European holding company partially
    offset by investments in Corporate Joint Ventures and additions to property
    and equipment and industrial patents. Net cash used in investing activities
    for the fiscal year ended August 31, 2002 was $3,884,429, which were comprised
    of the purchase of investments available-for-sale and additions to property
    and equipment and industrial patents partially offset by the proceeds from
    the sale of equipment and a partial return of the Company&#146;s original
    investment in a European holding company.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Net cash used in financing
    activities for the fiscal year ended August 31, 2003 was $373,328, which were
    comprised of the repurchase of common stock and payment of dividends. Net
    cash used in financing activities for the fiscal year ended August 31, 2002
    was $195,684, which resulted from the repurchase of common stock. </FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company expects to
    meet future liquidity requirements by utilizing its existing cash and cash
    equivalents and investments available for sale combined with cash flows from
    future operations and distributions of earnings and technical assistance fees
    to the Company from the corporate joint venture investments. </FONT></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">15</font>
  </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_16"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company has no long-term
    debt and no material capital lease commitments as of August 31, 2003; however,
    the Company&#146;s subsidiary has entered into a 15-year lease agreement for
    16,994 square feet of office, manufacturing, laboratory, and warehouse space
    requiring monthly payments of $17,072, which are adjusted annually according
    to the annual consumer price index through November 2014.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company has no postretirement
    benefit plan and does not anticipate establishing any postretirement benefit
    program.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Inflation in the U.S.
    historically has had little effect on the Company.</FONT> </p>
</blockquote>
<p> <font size="2" face="Times New Roman, Times, serif"><B>Critical Accounting
  Policies </B> </font></p>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The preparation of the
    consolidated financial statements in conformity with accounting principles
    generally accepted in the United States of America requires the Company to
    make not only estimates and judgments that affect the reported amounts of
    assets and liabilities and expenses, but also related disclosures. The Company
    bases the estimates on historical experience, knowledge of economic and market
    factors and various other assumptions that it believes to be reasonable under
    the circumstances. Actual results may differ materially from these estimates
    if the assumptions or conditions turn out to be incorrect. The Company believes
    the following critical accounting policies are affected by significant estimates,
    assumptions and judgments used in the preparation of its consolidated financial
    statements.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The consolidated financial
    statements include accounts of the Company and its wholly owned subsidiary.
    All significant intercompany transactions have been eliminated.</FONT> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Sales Originating
    in North America</I>  &#8212; The Company considers sales originating in North America
    to be all sales shipped/invoiced from the Company&#146;s facilities located
    in Minnesota and Ohio. There are no sales from the Corporate Joint Ventures
    included in the amount as the Company&#146;s investments in Corporate Joint
    Ventures are accounted for using the equity method. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Cash Equivalents</I>
     &#8212; The Company considers investments with an original maturity of three months
    or less to be cash equivalents. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Investments Available
    for Sale</I>  &#8212; The Company accounts for securities available for sale in accordance
    with Statement of Financial Accounting Standards No. 115, <I>Accounting for
    Certain Investments in Debt and Equity Securities</I> (&#147;SFAS No. 115&#148;).
    SFAS No. 115 requires that available-for-sale securities be carried at fair
    value, with unrealized gains and losses reported as other comprehensive income
    within stockholders&#146; equity, net of applicable income taxes. Realized
    gains and losses and declines in value deemed to be other-than-temporary on
    available-for-sale securities are included in other income. Fair value of
    the securities is based upon the quoted market price on the last business
    day of the quarter or fiscal year. The cost basis for realized gains and losses
    on available-for-sale securities is determined on a specific identification
    basis. At August 31, 2003, the Company&#146;s available-for-sale securities
    consisted of commercial paper, corporate debt, certificates of deposit and
    discount notes with a cost basis and accrued interest income totaling its
    fair value of $1,643,939. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Inventories</I>  &#8212; Inventories are recorded at the lower of cost (first-in, first-out basis)
    or market. </font></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">16</font>
  </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_17"></A> </font>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Property and Depreciation</I>
     &#8212; Property and equipment are stated at cost. Depreciation is computed using
    the straight-line method based on the estimated service lives of the various
    assets as follows: </font> </p>
  <blockquote>
    <table border="0">
      <tr>
        <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
        <td><FONT size=2 face="Times New Roman, Times, serif">Buildings and improvements
          </FONT></td>
        <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
        <td><FONT size=2 face="Times New Roman, Times, serif">5-20&nbsp;years</FONT></td>
      </tr>
      <tr>
        <td>&nbsp;</td>
        <td><FONT size=2 face="Times New Roman, Times, serif">Machinery and equipment
          </FONT></td>
        <td>&nbsp;</td>
        <td><FONT size=2 face="Times New Roman, Times, serif">3-10&nbsp;years
          </FONT></td>
      </tr>
    </table>
  </blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Investments in Corporate
    Joint Ventures</I>  &#8212; Investments in Corporate Joint Ventures are accounted
    for using the equity method. Intercompany profits on inventories held by the
    Corporate Joint Ventures that were purchased from the Company have been eliminated
    based on the Company&#146;s ownership percentage in each corporate joint venture.
    </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Recoverability of
    Long-Lived Assets</I>  &#8212; The Company reviews its long-lived assets whenever
    events or changes in circumstances indicate the carrying amount of the assets
    may not be recoverable. The Company determines potential impairment by comparing
    the carrying value of the assets with expected net cash flows expected to
    be provided by operating activities of the business or related products. Should
    the sum of the expected undiscounted future net cash flows be less than the
    carrying value, the Company would determine whether an impairment loss should
    be recognized. An impairment loss would be measured by comparing the amount
    by which the carrying value exceeds the fair value of the asset. As of August
    31, 2003, the Company did not consider any of its assets impaired. </font>
  </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Income Taxes</I>
     &#8212; The Company utilizes the liability method of accounting for income taxes
    as set forth in Statement of Financial Accounting Standards (SFAS) No. 109,
    <I>Accounting for Income Taxes</I>. SFAS No. 109 requires an asset and liability
    approach to financial accounting and reporting for income taxes. Deferred
    income tax assets and liabilities are computed annually for differences between
    the financial statement and tax basis of assets and liabilities that will
    result in taxable or deductible amounts in the future, based on enacted tax
    laws and rates applicable to the periods in which the differences are expected
    to affect taxable income. Valuation allowances are established when necessary
    to reduce deferred tax assets to the amount expected to be realized. Income
    tax expense is the tax payable or refundable for the period plus or minus
    the change during the period in deferred tax assets and liabilities. </font>
  </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Foreign Currency
    Translation (Accumulated Other Comprehensive Income (Loss))</I>  &#8212; The functional
    currency of each international corporate joint venture is the applicable local
    currency. The translation of the applicable foreign currencies into U.S. dollars
    is performed for balance sheet accounts using current exchange rates in effect
    at the balance sheet date and for revenue and expense accounts using an average
    monthly exchange rate. Translation gains or losses are reported as an element
    of accumulated other comprehensive income (loss). </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Revenue Recognition</I>
     &#8212; In recognizing revenue, the Company applies the provisions of the Securities
    and Exchange Commission Staff Accounting Bulletin 101, <I>Revenue Recognition</I>.
    The Company recognizes revenue from the sale of its products when persuasive
    evidence of an arrangement exists, the product has been delivered, the fee
    is fixed and determinable and collection of the resulting receivable is reasonably
    assured. A portion of the gross profit on products shipped to the Company&#146;s
    Corporate Joint Ventures is deferred until such products are sold by the Corporate
    Joint Ventures. </font></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">17</font>
  </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_18"></A> </font>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Shipping and Handling</I>
     &#8212; The Company records all amounts billed to customers in a sales transaction
    related to shipping and handling as sales. The Company records costs related
    to shipping and handling in cost of goods sold.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Use of Estimates</I>
     &#8212; The preparation of the financial statements in conformity with accounting
    principles generally accepted in the United States of America requires management
    to make estimates and assumptions that affect the reported amounts of assets
    and liabilities and disclosure of contingent assets and liabilities at the
    date of the financial statements and the reported amounts of revenues and
    expenses during the reporting period. Actual results could differ from those
    estimates. </font> </p>
</blockquote>
<p> <font size="2" face="Times New Roman, Times, serif"><B>Recently Issued Accounting
  Pronouncements </B> </font></p>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company accounts for
    its stock option plan using the intrinsic value method and has adopted the
    &#8220;disclosure only&#8221; provision of SFAS No. 123, as amended in 2002 by SFAS No.
    148, <I>Accounting for Stock-Based Compensation &#8212; Transition and Disclosure</I>.
    No compensation cost has been recognized for the stock options granted under
    the stock incentive plan. See disclosure within Note 2 to the consolidated
    financial statements. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">In November 2002, the
    Financial Accounting Standards Board (FASB) issued FASB Interpretation No.
    45, <I>Guarantor&#8217;s Accounting and Disclosure Requirements for Guarantees,
    Including Indirect Guarantees of Indebtedness of Others</I> (FIN 45). FIN
    45 clarifies the requirements for a guarantor&#8217;s accounting for and disclosure
    of certain issued and outstanding guarantees. The initial recognition and
    initial measurement provisions of FIN 45 are applicable to guarantees issued
    or modified after December 31, 2002. Adoption of this statement did not have
    a material effect on the Company&#8217;s financial statements. </FONT></p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">In January 2003, the Financial
    Accounting Standards Board (FASB) issued FASB Interpretation No. 46, <I>Consolidation
    of Variable Interest Entities</I> (FIN 46). FIN 46 addresses consolidation
    by business enterprises where equity investors do not bear the residual economic
    risks and rewards. These entities have been commonly referred to as &#147;special
    purpose entities.&#148; FIN 46 is effective for the Company for the second
    quarter of fiscal 2004 ending February 28, 2004. The Company is in the process
    of evaluating the impact this will have on the financial statements of the
    Company.</FONT> </p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">18 </font></p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_19"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>Item 7. FINANCIAL STATEMENTS.
  </B> </font></P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B>INDEX TO CONSOLIDATED
  FINANCIAL STATEMENTS </B> </font></P>
<P> <FONT size=2 face="Times New Roman, Times, serif">The following items are
  included herein: </FONT> </P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR bgcolor="#FFFFFF">
    <TD><div align="left"><b><FONT size=1 face="Times New Roman, Times, serif">Financial
        Statements:</FONT></b></div></TD>
    <TD align="center"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Page</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="right"><hr width="100%" size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_20">Independent
      Auditors&#146; Report</a></FONT></TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_20">20</a></FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_21">Consolidated
      Balance Sheets as of August 31, 2003 and 2002</a></FONT></TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_21">21</a></FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_22">Consolidated
      Statements of Income for the years ended August 31, 2003, 2002 and 2001</a></FONT></TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_22">22</a></FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_23">Consolidated
      Statements of Stockholders&#146; Equity for the years ended August 31, 2003,</a></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_23">2002
      and 2001</a></FONT></TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_23">23</a></FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_24">Consolidated
      Statements of Cash Flows for the years ended August 31, 2003, 2002</a></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_24">and
      2001</a></FONT></TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_24">24</a></FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif"><a href="#page_25">Notes
      to Consolidated Financial Statements</a></FONT></TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">25-36</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">&nbsp; </FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<p align="center"><font size="2" face="Times New Roman, Times, serif">19</font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_20"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>INDEPENDENT AUDITORS&#146;
  REPORT </B> </font></P>
<P> <FONT size=2 face="Times New Roman, Times, serif">To the Stockholders and
  Board of Directors <br>
  Northern Technologies International Corporation <br>
  Lino Lakes, Minnesota </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">We have audited the accompanying
  consolidated balance sheets of Northern Technologies International Corporation
  and Subsidiaries (the Company) as of August 31, 2003 and 2002 and the related
  consolidated statements of income, stockholders&#146; equity, and cash flows
  for the years ended August 2003, 2002 and 2001. These consolidated financial
  statements are the responsibility of the Company&#146;s management. Our responsibility
  is to express an opinion on these consolidated financial statements based on
  our audits.</FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">We conducted our audits
  in accordance with auditing standards generally accepted in the United States
  of America. Those standards require that we plan and perform the audit to obtain
  reasonable assurance about whether the consolidated financial statements are
  free of material misstatement. An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures in the consolidated financial
  statements. An audit also includes assessing the accounting principles used
  and significant estimates made by management, as well as evaluating the overall
  financial statement presentation. We believe that our audits provide a reasonable
  basis for our opinion. </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">In our opinion, such consolidated
  financial statements present fairly, in all material respects, the financial
  position of Northern Technologies International Corporation and Subsidiaries
  at August 31, 2003 and 2002 and the results of their operations and their cash
  flows for the years ended August 31, 2003, 2002 and 2001 in conformity with
  accounting principles generally accepted in the United States of America. </FONT>
</P>
<P> <FONT size=2 face="Times New Roman, Times, serif">Deloitte &amp; Touche LLP
  </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">Minneapolis, Minnesota <br>
  December 11, 2003 </FONT></P>
<p align="center"><font size="2" face="Times New Roman, Times, serif">20</font>
</p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_21"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>NORTHERN TECHNOLOGIES
  INTERNATIONAL CORPORATION AND SUBSIDIARIES </B> </font></P>
<P> <font size="2" face="Times New Roman, Times, serif"><B>CONSOLIDATED BALANCE
  SHEETS </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B>AUGUST 31, 2003 AND 2002</B></font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5" bgcolor="#FFFFFF"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2003</font></b></div></TD>
    <TD align="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5" align="center" bgcolor="#FFFFFF"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2002</font></b></div></TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">ASSETS</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD colspan=2 align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD colspan=3 align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">CURRENT
      ASSETS:</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Cash
      and cash equivalents</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">283,326</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;&nbsp;&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">230,274</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Investments,
      available-for-sale</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">1,643,939</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">4,008,417</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Receivables:</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade
      excluding corporate joint ventures, less allowance</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for
      doubtful accounts of $11,563 and $11,563, respectively</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">1,278,173</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">1,009,674</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade
      corporate joint ventures</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">292,938</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">239,967</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Technical
      and other services, corporate joint ventures</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">765,679</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">625,294</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      taxes</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">531,088</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">61,925</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Inventories</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">971,499</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">859,228</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Prepaid
      expenses</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">125,542</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">85,367</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Deferred
      income taxes</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">12,000</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">45,000</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current assets</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">5,904,184</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">7,165,146</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">PROPERTY
      AND EQUIPMENT, net</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">526,738</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">409,780</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">OTHER
      ASSETS:</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Investments
      in corporate joint ventures:</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrial
      chemical</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">5,920,644</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">4,919,600</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrial
      non-chemical</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">232,277</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">260,225</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Investment
      in European holding company</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">30,812</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Deferred
      income taxes</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">343,000</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">395,000</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Notes
      receivable and foreign deposit</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">1,177,847</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">250,286</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Note
      from employee</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">126,043</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">206,473</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Industrial
      patents, net</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">317,166</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">186,980</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Other</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">198,777</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">263,141</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#66FFFF">&nbsp;</TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#66FFFF"><FONT size=2 face="Times New Roman, Times, serif">8,315,754</FONT></TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#66FFFF"><FONT size=2 face="Times New Roman, Times, serif">6,512,517</FONT></TD>
    <TD align="right" bgcolor="#66FFFF">&nbsp;</TD>
    <TD bgcolor="#66FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">14,746,676</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">14,087,443</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><font size="2" face="Times New Roman, Times, serif">LIABILITIES AND STOCKHOLDERS&#146;
      EQUITY</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">CURRENT
      LIABILITIES:</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Accounts
      payable</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">538,520</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">492,102</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Accrued
      liabilities:</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payroll
      and related benefits</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">165,326</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">97,380</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">440,155</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">298,730</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current liabilities</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">1,144,001</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">888,212</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">DEFERRED
      GROSS PROFIT</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">25,000</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">25,000</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">COMMITMENTS
      AND CONTINGENCIES</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">STOCKHOLDERS&#146;
      EQUITY:</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Preferred
      stock, no par value, authorized 10,000 shares, none issued</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Common
      stock, $0.02 par value per share; authorized 10,000,000</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares;
      issued and outstanding 3,626,192 and 3,626,792, respectively</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">72,524</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">72,891</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Additional
      paid-in capital</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">4,191,964</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">4,228,682</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Retained
      earnings</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">9,493,742</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">9,322,258</FONT></TD>
    <TD align="right" bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Accumulated
      other comprehensive loss</font></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">(180,555</FONT></TD>
    <TD bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">(449,600</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      stockholders&#146; equity</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">13,577,675</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">13,174,231</FONT></TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="3" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">14,746,676</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">14,087,443</FONT></TD>
    <TD align="right" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<P> <FONT size=2 face="Times New Roman, Times, serif">See notes to consolidated
  financial statements.</FONT></P>
<p align="center"><font size="2" face="Times New Roman, Times, serif">21</font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_22"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>NORTHERN TECHNOLOGIES
  INTERNATIONAL CORPORATION AND SUBSIDIARIES </B> </font></P>
<P> <font size="2" face="Times New Roman, Times, serif"><B>CONSOLIDATED STATEMENTS
  OF INCOME </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B>YEARS ENDED AUGUST 31,
  2003, 2002 AND 2001 </B> </font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=2 align="center"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2003</font></b></div></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=2 align="center"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2002</font></b></div></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=2 align="center"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2001</font></b></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">NORTH AMERICAN
      OPERATIONS:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Sales</font></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">8,353,875</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">7,594,383</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">9,269,719</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Cost
      of goods sold</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,970,073</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,589,172</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,611,455</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Gross
      profit</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,383,802</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,005,211</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,658,264</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Operating
      expenses:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,825,970</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,467,527</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,446,891</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General
      and administrative</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,327,684</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,965,657</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,088,690</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research,
      engineering, and technical support</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">897,920</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">805,796</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">648,129</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">5,051,574</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,238,980</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,183,710</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">NORTH AMERICAN
      OPERATING (LOSS) INCOME</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(667,772</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(233,769</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">474,554</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">CORPORATE
      JOINT VENTURES AND</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EUROPEAN
      HOLDING COMPANY:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Equity
      in income of industrial chemical corporate</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;joint
      ventures and European holding company</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,069,170</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,035,053</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">543,455</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Equity
      in loss of industrial non-chemical</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;corporate
      joint ventures</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(105,072</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Equity
      in loss of business consulting</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;corporate
      joint ventures</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(25,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(25,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(25,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Fees
      for technical support and other services</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;provided
      to corporate joint ventures</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,601,634</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,131,513</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,527,795</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Expenses
      incurred in support of corporate</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;joint
      ventures</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(2,551,730</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(1,585,931</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(1,956,810</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">INCOME
      FROM CORPORATE JOINT</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;VENTURES
      AND EUROPEAN HOLDING</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;COMPANY</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">989,002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,555,635</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,089,440</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">INTEREST
      INCOME</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">101,497</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">90,310</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">143,452</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">INCOME
      BEFORE INCOME TAX</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;(BENEFIT)
      EXPENSE</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">422,727</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,412,176</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,707,446</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">INCOME
      TAX (BENEFIT) EXPENSE</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(85,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">185,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">555,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">NET INCOME</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">507,727</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,227,176</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,152,446</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">NET INCOME
      PER COMMON SHARE:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Basic</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">.14</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">.34</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">.31</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><div align="left">
        <hr align="left" size=2 noshade>
      </div></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Diluted</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">.14</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">.34</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">.31</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><div align="left">
        <hr align="left" size=2 noshade>
      </div></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">WEIGHTED
      AVERAGE COMMON SHARES</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ASSUMED
      OUTSTANDING:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Basic</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,632,391</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,665,961</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,761,211</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><div align="left">
        <hr align="left" size=2 noshade>
      </div></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Diluted</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,636,679</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,665,961</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,763,363</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><div align="left">
        <hr align="left" size=2 noshade>
      </div></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
</TABLE>
<P> <FONT size=2 face="Times New Roman, Times, serif">See notes to consolidated
  financial statements.</FONT> </P>
<p align="center"><font size="2" face="Times New Roman, Times, serif">22</font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_23"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>NORTHERN TECHNOLOGIES
  INTERNATIONAL CORPORATION AND SUBSIDIARIES </B> </font></P>
<P> <font size="2" face="Times New Roman, Times, serif"><B>CONSOLIDATED STATEMENTS
  OF STOCKHOLDERS&#146; EQUITY <br>
  AUGUST 31, 2003, 2002 AND 2001 </B> </font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=9><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><b><font size="1" face="Times New Roman, Times, serif">Accumulated</font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=6 align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="7" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Common
      Stock</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Additional</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Other</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="6" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Total</B></font></TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="7" ALIGN="center"><HR noshade size=1></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Paid-in</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Retained</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Comprehensive</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="6" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Stockholders&#146;</B></font></TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Shares</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Amount</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Capital</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Earnings</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>(Income)
      Loss</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="6" ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Equity</B></font></TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan=5><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan=5><hr noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan=5><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan=5><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan=6><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD>&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD COLSPAN="5" ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD COLSPAN="5" ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD COLSPAN="5" ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD COLSPAN="5" ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD COLSPAN="6" ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">BALANCE AT AUGUST 31,
      2000</FONT></TD>
    <TD align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="right">&nbsp;&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,803,118</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">76,062</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,532,550</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">8,093,286</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(594,094</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">12,107,804</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repurchase
      of common stock</font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(116,900</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(2,338</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(233,800</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(400,894</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(637,032</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock
      options exercised</font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,333</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">67</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">19,932</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">19,999</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends
      on common stock -</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$.17
      per share</font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(644,972</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(644,972</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive
      income, 2001:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign
      currency translation</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;adjustment</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(133,163</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(133,163</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      income</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,152,446</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,152,446</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive
      income, 2001</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,019,283</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">BALANCE AT AUGUST 31,
      2001</FONT></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,689,551</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">73,791</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,318,682</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">8,199,866</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(727,257</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">11,865,082</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repurchase
      of common stock</font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(45,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(900</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(90,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(104,784</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(195,684</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive
      income, 2002:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign
      currency translation</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;adjustment</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">277,657</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">277,657</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      income</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,227,176</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,227,176</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive
      income, 2002</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,504,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">BALANCE AT AUGUST 31,
      2002</FONT></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,644,551</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">72,891</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,228,682</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">9,322,258</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(449,600</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">13,174,231</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repurchase
      of common stock</font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(18,359</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(367</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(36,718</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(27,039</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(64,124</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends
      on common stock -</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$.085
      per share</font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(309,204</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(309,204</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Comprehensive
      income, 2003:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign
      currency translation</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;adjustment</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">269,045</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">269,045</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      income</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">507,727</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">507,727</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive
      income, 2003</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">776,772</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">BALANCE AT AUGUST 31,
      2003</FONT></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,626,192</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">72,524</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,191,964</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">9,512,342</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(180,555</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">13,577,675</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2></TD>
    <TD><HR noshade size=2></TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<P> <FONT size=2 face="Times New Roman, Times, serif">See notes to consolidated
  financial statements. </FONT></P>
<p align="center"><font size="2" face="Times New Roman, Times, serif">23</font>
</p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_24"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>NORTHERN TECHNOLOGIES
  INTERNATIONAL CORPORATION AND SUBSIDIARIES </B> </font></P>
<P> <font size="2" face="Times New Roman, Times, serif"><B>CONSOLIDATED STATEMENTS
  OF CASH FLOWS </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B>YEARS ENDED AUGUST 31,
  2003, 2002 AND 2001 </B> </font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2003</font></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2002</font></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2001</font></b></div></TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">CASH FLOWS
      FROM OPERATING ACTIVITIES:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Net
      income</font></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">507,727</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,227,176</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,152,446</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Adjustments
      to reconcile net income to net cash (used in) provided by</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;by
      operating activities:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
      expense</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">184,033</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">194,329</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">265,309</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
      expense</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">7,537</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,768</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity
      in (income) loss from corporate joint ventures:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrial
      chemical</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(1,069,169</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(1,060,053</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(568,455</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrial
      non-chemical</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">105,072</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business
      consulting</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">25,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">25,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">25,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends
      received from corporate joint ventures</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">490,309</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">453,049</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">308,252</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
      income taxes</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">85,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">20,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">70,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
      gross profit</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(25,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain
      on sale of equipment</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(8,605</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(12,032</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment
      impairment loss</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">150,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change
      in current assets and liabilities:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade
      excluding corporate joint ventures</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(268,499</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(145,355</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">285,239</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade
      corporate joint ventures</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(52,971</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(46,458</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">47,197</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Technical
      and other services receivables, corporate joint ventures</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(140,385</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,522</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(21,680</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      taxes</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(469,163</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">86,533</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(86,533</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(112,271</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">54,683</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">15,750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid
      expenses and other</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(40,175</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">5,518</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(39,820</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes
      receivable and foreign deposits</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(927,561</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(47,583</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">95,479</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Note
      from employee</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">80,430</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">501</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
      payable</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">46,418</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">251,993</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">18,873</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      taxes payable</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">173,126</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(313,806</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued
      liabilities</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">209,371</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(116,613</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(147,775</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      cash (used in) provided by operating activities</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(1,347,902</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,072,104</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,230,476</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">CASH FLOWS
      FROM INVESTING ACTIVITIES:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Sale
      (purchase) of investments available for sale</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,364,478</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(4,008,417</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Additions
      to property</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(300,991</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(193,253</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(113,258</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Investment
      in joint ventures:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrial
      chemical</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(166,780</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(111,056</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(160,301</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industrial
      non-chemical</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(63,483</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business
      consulting</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(25,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(25,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(25,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Proceeds
      from the sale of property and equipment</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">8,605</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">668,314</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Partial
      return of original investment in European holding company</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">30,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">178,936</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Investment
      in and note receivable from German corporation</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(260,225</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Increase
      in other assets</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">64,364</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(57,020</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(271,686</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Additions
      to industrial patents</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(137,723</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(190,748</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      cash provided by (used in) investing activities</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,774,282</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(3,884,429</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(570,245</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">CASH FLOWS
      FROM FINANCING ACTIVITIES:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Dividend
      paid to shareholders</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(309,204</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(644,972</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Repurchase
      of common stock</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(64,124</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(195,684</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(637,032</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Issuance
      of common stock</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">19,999</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      cash used in financing activities</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(373,328</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(195,684</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(1,262,005</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">NET INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">53,052</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(3,008,009</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(601,774</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">CASH AND
      CASH EQUIVALENTS AT BEGINNING OF YEAR</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">230,274</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,238,283</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,840,057</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">CASH AND
      CASH EQUIVALENTS AT END OF YEAR</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">283,326</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">230,274</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,238,283</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<P> <FONT size=2 face="Times New Roman, Times, serif">See notes to consolidated
  financial statements. </FONT></P>
<p align="center"><font size="2" face="Times New Roman, Times, serif">24</font>
</p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_25"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>NORTHERN TECHNOLOGIES
  INTERNATIONAL CORPORATION AND SUBSIDIARIES </B> </font></P>
<P> <font size="2" face="Times New Roman, Times, serif"><B>NOTES TO CONSOLIDATED
  FINANCIAL STATEMENTS <br>
  YEARS ENDED AUGUST 31, 2003, 2002, AND 2000 </B> </font></P>
<P> <FONT size=2 face="Times New Roman, Times, serif">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NATURE
  OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES </FONT> </P>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Sales Originating
    in North America</I> &#8212; Northern Technologies International Corporation
    and Subsidiaries (the Company) considers sales originating in North America
    to be all sales shipped/invoiced from the Company&#146;s facilities located
    in Minnesota and Ohio. There are no sales from the Corporate Joint Ventures
    included in the amount as the Company&#146;s investments in Corporate Joint
    Ventures are accounted for using the equity method. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Cash Equivalents</I>
     &#8212; The Company considers investments with an original maturity of three months
    or less to be cash equivalents. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Investments Available
    for Sale</I>  &#8212; The Company accounts for securities available for sale in accordance
    with Statement of Financial Accounting Standards No. 115, <I>Accounting for
    Certain Investments in Debt and Equity Securities</I> (SFAS No. 115). SFAS
    No. 115 requires that available-for-sale securities be carried at fair value,
    with unrealized gains and losses reported as other comprehensive income within
    stockholders&#146; equity, net of applicable income taxes. Realized gains
    and losses and declines in value deemed to be other-than-temporary on available-for-sale
    securities are included in other income. Fair value of the securities is based
    upon the quoted market price on the last business day of the quarter or fiscal
    year. The cost basis for realized gains and losses on available-for-sale securities
    is determined on a specific identification basis. At August 31, 2003, the
    Company&#146;s available-for-sale securities consisted of commercial paper,
    corporate debt, certificates of deposit and discount notes with a cost basis
    and accrued interest income totaling a fair value of $1,643,939. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Inventories</I>  &#8212; Inventories are recorded at the lower of cost (first-in, first-out basis)
    or market. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Property and Depreciation</I>
     &#8212; Property and equipment are stated at cost. Depreciation is computed using
    the straight-line method based on the estimated service lives of the various
    assets as follows: </font> </p>
  <table border="0">
    <tr>
      <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
      <td><FONT size=2 face="Times New Roman, Times, serif">Buildings and improvements
        </FONT></td>
      <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
      <td><FONT size=2 face="Times New Roman, Times, serif">5-20&nbsp;years</FONT></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td><FONT size=2 face="Times New Roman, Times, serif">Machinery and equipment
        </FONT></td>
      <td>&nbsp;</td>
      <td><FONT size=2 face="Times New Roman, Times, serif">3-10&nbsp;years </FONT></td>
    </tr>
  </table>
  <p><font size="2" face="Times New Roman, Times, serif"><I>Investments in Corporate
    Joint Ventures</I>  &#8212; Investments in Corporate Joint Ventures are accounted
    for using the equity method. Intercompany profits on inventories held by the
    Corporate Joint Ventures that were purchased from the Company have been eliminated
    based on the Company&#146;s ownership percentage in each corporate joint venture.
    </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Recoverability of
    Long-Lived Assets</I>  &#8212; The Company reviews its long-lived assets whenever
    events or changes in circumstances indicate the carrying amount of the assets
    may not be recoverable. The Company determines potential impairment by comparing
    the carrying value of the assets with expected net cash flows expected to
    be provided by operating activities of the business or related products. Should
    the sum of the expected undiscounted future net cash flows be less than the
    carrying value, the Company would determine whether an impairment loss should
    be recognized. An impairment loss would be measured by comparing the amount
    by which the carrying value exceeds the fair value of the asset. As of August
    31, 2003, the Company did not consider any of its assets impaired. </font></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">25</font></p>
  </blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_26"></A> </font>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Income Taxes</I>
     &#8212; The Company utilizes the liability method of accounting for income taxes
    as set forth in Statement of Financial Accounting Standards (SFAS) No. 109,
    <I>Accounting for Income Taxes</I>. SFAS No. 109 requires an asset and liability
    approach to financial accounting and reporting for income taxes. Deferred
    income tax assets and liabilities are computed annually for differences between
    the financial statement and tax basis of assets and liabilities that will
    result in taxable or deductible amounts in the future, based on enacted tax
    laws and rates applicable to the periods in which the differences are expected
    to affect taxable income. Valuation allowances are established when necessary
    to reduce deferred tax assets to the amount expected to be realized. Income
    tax expense is the tax payable or refundable for the period plus or minus
    the change during the period in deferred tax assets and liabilities. </font>
  </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Foreign Currency
    Translation (Accumulated Other Comprehensive Income (Loss))</I>  &#8212; The functional
    currency of each international corporate joint venture is the applicable local
    currency. The translation of the applicable foreign currencies into U.S. dollars
    is performed for balance sheet accounts using current exchange rates in effect
    at the balance sheet date and for revenue and expense accounts using an average
    monthly exchange rate. Translation gains or losses are reported as an element
    of accumulated other comprehensive income (loss). </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Revenue Recognition</I>
     &#8212; In recognizing revenue, the Company applies the provisions of the Securities
    and Exchange Commission Staff Accounting Bulletin 101, <I>Revenue Recognition</I>.
    The Company recognizes revenue from the sale of its products when persuasive
    evidence of an arrangement exists, the product has been delivered, the fee
    is fixed and determinable and collection of the resulting receivable is reasonably
    assured. A portion of the gross profit on products shipped to the Company&#146;s
    Corporate Joint Ventures is deferred until such products are sold by the Corporate
    Joint Ventures. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Shipping and Handling</I>
     &#8212; The Company records all amounts billed to customers in a sales transaction
    related to shipping and handling as sales. The Company records costs related
    to shipping and handling in cost of goods sold.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Use of Estimates</I>
     &#8212; The preparation of the financial statements in conformity with accounting
    principles generally accepted in the United States of America requires management
    to make estimates and assumptions that affect the reported amounts of assets
    and liabilities and disclosure of contingent assets and liabilities at the
    date of the financial statements and the reported amounts of revenues and
    expenses during the reporting period. Actual results could differ from those
    estimates.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Recently Issued Accounting
    Pronouncements</I> &#8212; The Company accounts for its stock option plan
    using the intrinsic value method and has adopted the &#8220;disclosure only&#8221;
    provision of SFAS No. 123, as amended in 2002 by SFAS No. 148, <I>Accounting
    for Stock-Based Compensation &#8212; Transition and Disclosure</I>. These
    provisions require the Company to show, on a pro forma basis, the Company&#146;s
    net income if it recorded an expense for stock options at the time of grant.
    Other than disclosure in this footnote, the Company does not use these pro
    forma results for any purpose. No compensation cost has been recognized for
    the stock options granted under the stock incentive plan.</font> </p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">26</font></p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_27"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">If compensation cost for
    the Company&#146;s Plans had been determined based on the fair value at the
    grant date for awards in the fiscal years ended August 31, consistent with
    the provisions of SFAS No. 123, the Company&#146;s net income would have changed
    to the pro forma amounts indicated below: </FONT> </p>
</blockquote>
<table width="100%" border=0 cellpadding=0 cellspacing=0>
  <tr valign="bottom" bgcolor="#66FFFF">
    <td bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></td>
    <td width="100%" bgcolor="#FFFFFF"><p><font face="Times New Roman, Times, serif"><font size="1"><b></b></font></font></p></td>
    <td bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></td>
    <td colspan="5" bgcolor="#FFFFFF"><div align="center"><b><font size=1 face="Times New Roman, Times, serif">2003</font></b></div></td>
    <td bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></b></td>
    <td colspan="5" bgcolor="#FFFFFF"> <div align="center"><b><font size=1 face="Times New Roman, Times, serif">2002</font></b></div></td>
    <td bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></b></td>
    <td colspan="5" bgcolor="#FFFFFF"> <div align="center"><b><font size=1 face="Times New Roman, Times, serif">2001</font></b></div></td>
  </tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td width="100%"><p>&nbsp;</p></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#66FFFF">
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td width="100%"><p><font size=2 face="Times New Roman, Times, serif">Net
        income, as reported</font></p></td>
    <td align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align="center">&nbsp;&nbsp;</td>
    <td align="center"><font size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">507,727</font></td>
    <td>&nbsp;</td>
    <td align="center">&nbsp;&nbsp;</td>
    <td align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align="center">&nbsp;&nbsp;</td>
    <td align="center"><div align="left"><font size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</font></div></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">1,227,176</font></td>
    <td>&nbsp;</td>
    <td align="center">&nbsp;&nbsp;</td>
    <td align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align="center">&nbsp;&nbsp;</td>
    <td align="center"><div align="left"><font size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</font></div></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">1,152,446</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td>&nbsp;</td>
    <td width="100%"><p><font size=2 face="Times New Roman, Times, serif">Net
        income, pro forma</font></p></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">466,134</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">1,169,886</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">1,088,384</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#66FFFF">
    <td>&nbsp;</td>
    <td width="100%"><p>&nbsp;</p></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td>&nbsp;</td>
    <td width="100%"><p><font size=2 face="Times New Roman, Times, serif">Basic
        net income per common share, as reported</font></p></td>
    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="center"><font size=2 face="Times New Roman, Times, serif">$</font></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.14</font></td>
    <td>&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="center"><div align="left"><font size=2 face="Times New Roman, Times, serif">$</font></div></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.34</font></td>
    <td>&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="center">&nbsp;</td>
    <td align="center"><div align="left"><font size=2 face="Times New Roman, Times, serif">$</font></div></td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.31</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#66FFFF">
    <td>&nbsp;</td>
    <td width="100%"><p><font size=2 face="Times New Roman, Times, serif">Basic
        net income per common share, pro forma</font></p></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.13</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.32</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.29</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td>&nbsp;</td>
    <td width="100%"><p>&nbsp;</p></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#66FFFF">
    <td>&nbsp;</td>
    <td width="100%"><p><font size=2 face="Times New Roman, Times, serif">Diluted
        net income per share, as reported</font></p></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.14</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.34</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.31</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td>&nbsp;</td>
    <td width="100%"><p><font size=2 face="Times New Roman, Times, serif">Diluted
        net income per share, pro forma</font></p></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.13</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.32</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right"><font size=2 face="Times New Roman, Times, serif">0.29</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">As noted above, accounting
    principles require the Company to show, on a pro forma basis, the Company&#146;s
    net income if it recorded an expense for stock options at the time of grant.
    Other than disclosure in this footnote, the Company does not use these pro
    forma results for any purpose. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The fair value of each
    option grant is estimated on the grant date using the Black-Scholes option-pricing
    model with the following assumptions and results for the grants: </FONT> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2001</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Dividend
        yield</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2.0</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2.0</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2.0</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Expected
        volatility</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">42.7</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">43.9</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">45.9</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Expected
        life of option</FONT></p></TD>
    <TD colspan=2><div align="right"><FONT size=2 face="Times New Roman, Times, serif">5&nbsp;years</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan=3><div align="right"><FONT size=2 face="Times New Roman, Times, serif">5&nbsp;years</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan=3><div align="right"><FONT size=2 face="Times New Roman, Times, serif">5&nbsp;years</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Average
        risk-free interest rate</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3.04</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4.37</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">5.67</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Average
        fair value of options on grant date</FONT></p></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1.16</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1.76</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2.59</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">In November 2002, the
    Financial Accounting Standards Board (FASB) issued FASB Interpretation No.
    45, <I>Guarantor&#8217;s Accounting and Disclosure Requirements for Guarantees,
    Including Indirect Guarantees of Indebtedness of Others</I> (FIN 45). FIN
    45 clarifies the requirements for a guarantor&#8217;s accounting for and disclosure
    of certain issued and outstanding guarantees. The initial recognition and
    initial measurement provisions of FIN 45 are applicable to guarantees issued
    or modified after December 31, 2002. Adoption of this statement did not have
    a material effect on the Company&#8217;s financial statements. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">In January 2003, the Financial
    Accounting Standards Board (FASB) issued FASB Interpretation No. 46, <I>Consolidation
    of Variable Interest Entities</I> (FIN 46). FIN 46 addresses consolidation
    by business enterprises where equity investors do not bear the residual economic
    risks and rewards. These entities have been commonly referred to as &#147;special
    purpose entities.&#148; The Company is in the process of evaluating the impact
    this will have on the financial statements. </FONT></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">27</font>
  </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_28"></A> </font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2.</FONT></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">INVENTORIES</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD colspan="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Inventories
      at August 31 consist of the following:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD WIDTH="100%">&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD COLSPAN="3"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Production
      materials</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">187,828</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">249,596</FONT></div></TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Work-in-process</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,737</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Finished
      goods</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">783,671</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">607,895</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR align="right" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR align="right" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">971,499</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">859,228</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="right" size=2 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="right" size=2 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
</TABLE>
<p><font size="2" face="Times New Roman, Times, serif">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PROPERTY
  AND EQUIPMENT</font></p>
<blockquote>
  <p><font size="2" face="Times New Roman, Times, serif"> Property and equipment
    at August 31 consist of the following:</font> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Land</FONT></p></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">29,097</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;</font></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD><div align="right">&nbsp;&nbsp;</div></TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">29,097</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Buildings
        and improvements</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">639,531</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">521,480</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Machinery
        and equipment</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">831,347</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">693,245</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p>&nbsp;</p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p>&nbsp;</p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,499,975</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,243,822</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Less
        accumulated depreciation</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">973,237</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">834,042</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><p>&nbsp;</p></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR align="right" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"> <HR align="right" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">526,738</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">409,780</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="right" size=2 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR align="right" size=2 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<P> <FONT size=2 face="Times New Roman, Times, serif">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOTES
  RECEIVABLE AND FOREIGN DEPOSITS </FONT> </P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Notes
        receivable and foreign deposits consist of the following:</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="4" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="5" bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><blockquote>&nbsp;</blockquote></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD colspan="4"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;2003</font></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Notes
        receivable from North American operations</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">500,000</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;</font></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Notes
        receivable from industrial chemical corporate</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;joint
        venture partners</font></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">232,378</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">250,286</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Foreign
        deposits</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">445,469</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><font size="2" face="Times New Roman, Times, serif">&#8212;
        </font></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><p>&nbsp;</p></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="right" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="right" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p>&nbsp;</p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,177,847</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">250,286</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="right" size=2 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
</TABLE>
<p><font size="2" face="Times New Roman, Times, serif">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INVESTMENTS</font></p>
<blockquote>
  <p><font size="2" face="Times New Roman, Times, serif"><I>Corporate Joint Ventures
    </I> &#8212; The corporate joint venture arrangements allow the Company to successfully
    market and sell its products in foreign countries through the marketing efforts
    of joint venture partners without the Company having to develop its own international
    sales force. The Company&#146;s corporate joint venture partners are knowledgeable
    in the applicable environmental, labor, tax and other requisite regulations
    and laws of the respective foreign countries in which they operate, as well
    as the local customs and business practices, and have a vested interest in
    making each joint venture a success.</font></p>
  <p><font size="2" face="Times New Roman, Times, serif">The Company participates
    in various Corporate Joint Ventures in countries around the world. The Industrial
    Chemical Corporate Joint Ventures provide for the manufacturing, marketing,
    and distribution of materials science based industrial packaging products,
    the Non-Industrial Chemical joint ventures engage in manufacturing marketing
    and distribution outside of the traditional chemical products and the Business
    Consulting Corporate Joint Ventures provide sales and</font></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">28</font>
  </p>
  </blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_29"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">financing consulting services
    for a number of multination industrial customers and financial institutions.
    </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company also has a
    50% ownership interest in NTI ASEAN, LLC, which is used as a holding company
    for its corporate joint venture investments in the ASEAN region. Taiyo Petroleum
    Gas Co. Ltd., the Company&#146;s existing joint venture partner in Japan,
    owns the remaining 50% ownership interest in NTI ASEAN, LLC.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company has an ownership
    interest either directly or indirectly in Corporate Joint Ventures in the
    following countries: </FONT> </p>
</blockquote>
<TABLE width="100%" border=0 cellspacing=0 cellpadding=0>
  <TR bgcolor="#FFFFFF">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" width="18%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" width="12%"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">NTIC</font></b></div></TD>
    <TD align="center" width="3%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" width="13%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="3%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" WIDTH="18%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" WIDTH="12%"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Percent</B></font></div></TD>
    <TD ALIGN="center" WIDTH="3%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" WIDTH="13%"><font size="1" face="Times New Roman, Times, serif"><B>Date
      of</B></font></TD>
    <TD WIDTH="3%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" width="18%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" width="12%"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>(%)</B></font></div></TD>
    <TD align="center" width="3%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" width="13%"><font size="1" face="Times New Roman, Times, serif"><B>Original</B></font></TD>
    <TD width="3%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR>
    <TD><div align="left"><b><font size="1" face="Times New Roman, Times, serif">Joint
        Venture Name</font></b></div></TD>
    <TD ALIGN="center" WIDTH="18%"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Country</B></font></div></TD>
    <TD ALIGN="center" WIDTH="12%"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Ownership</B></font></div></TD>
    <TD ALIGN="center" WIDTH="3%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" WIDTH="13%"><font size="1" face="Times New Roman, Times, serif"><B>Investment</B></font></TD>
    <TD WIDTH="3%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><HR noshade size=1></TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">INDUSTRIAL CHEMICAL
      CORPORATE JOINT VENTURE</font></TD>
    <TD width="18%" align="center">&nbsp;</TD>
    <TD width="12%" align="center">&nbsp;</TD>
    <TD width="3%" align="center">&nbsp;</TD>
    <TD width="13%" align="center">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;TAIYONIC
      LTD.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Japan</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1987</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ACOBAL
      SAS</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">France</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1990</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ZERUST-NIC
      CORP.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Taiwan</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">40%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1990</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;EXCOR
      GmbH</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Germany</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1991</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ST
      ZERUST (SEA) PTE. LTD</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Singapore*</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">35%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1991</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ZERUST
      AB</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Sweden</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1991</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;NTI-ZERUST
      INIBIDORES DE CORROS&Atilde;O VCI LTDA.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Brazil</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1993</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;EUROMASCH</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Austria</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1994</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;MOSTNIC</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Russia</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1994</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;KOREA
      ZERUST CO., LTD.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">South
        Korea</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">25%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1994</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ZERUST
      OY</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Finland</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1995</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ACOR
      S.R.L.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Italy</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1996</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ZERUST
      (U.K.) LTD.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">United
        Kingdom</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1997</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;FATRA-NTI
      s.r.o.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Czech
        Republic</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1997</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;EXCOR
      SP. Z.o.o.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Poland</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1998</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;SPECIALTY
      &#8212; NTIA CO. LTD.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Thailand*</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">25%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1998</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;TIANJIN
      ZERUST CO.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">China*</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">25%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2000</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;HARITA-NTI</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">India</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2000</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;CHONG
      WAH-NTIA SDN. BHD.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Malaysia*</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">25%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2000</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ZERUST
      PHILIPPINES</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Philippines*</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2001</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;FIBRO
      NTI JOINT STOCK CO.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Turkey</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2002</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ZERUST
      CONSUMER PRODUCTS, LLC</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">United
        States</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2002</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ZERUST
      BV</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Holland</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;NTI
      NCC MIDDLE EAST SA.</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Lebanon</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;REACT
      NTI, LLC</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">United
        States</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD colspan=2 width="72%"><font size="2" face="Times New Roman, Times, serif">NON-INDUSTRIAL
      CHEMICAL CORPORATE JOINT VENTURE</font></TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;MUTEC
      GMBH</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Germany</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">30%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2002</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;RS
      TECHNOLOGIES GMBH</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Germany</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">10%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">BUSINESS CONSULTING
      CORPORATE JOINT VENTURE</font></TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;WASHINGTON
      LIAISON OFFICE</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">United
        States</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">50%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">1997</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;ART
      AVILES ASSOCIATES</font></TD>
    <TD width="18%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">United
        States</FONT></div></TD>
    <TD align="right" width="12%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">25%</FONT></div></TD>
    <TD width="3%">&nbsp;</TD>
    <TD align="center" width="13%"><FONT size=2 face="Times New Roman, Times, serif">2000</FONT></TD>
    <TD width="3%">&nbsp;</TD>
  </TR>
</TABLE>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">*Indirect ownership interest
    through NTI ASEAN, LLC</FONT> </p>
</blockquote>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">29 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_30"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Fees earned from the Corporate
    Joint Ventures under licenses and technical and other support agreements were
    $2,601,634, $2,131,513 and $2,527,795, for the fiscal years ended August 31,
    2003, 2002 and 2001, respectively.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company sponsors a
    worldwide Corporate Joint Venture conference every three years in which all
    of its Corporate Joint Ventures are invited to participate. The Company defers
    a portion of its royalty income received from its Corporate Joint Ventures
    in each period leading up to the next conference, reflecting that the Company
    has not fully earned the royalty payments received during that period. The
    next Joint Venture conference is scheduled to be held in 2004 and there was
    $225,000 and $103,200 of deferred royalty income recorded within other accrued
    liabilities at August 31, 2003 and 2002, respectively, related to this conference.
    The deferred income is expected to be recognized in 2004 when the conference
    is held. The costs associated with these joint venture conferences are recognized
    as incurred, generally in the period in which the conference is held. </FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company incurred expenses
    associated with the performance of its services for its Corporate Joint Ventures
    of $2,551,730, $1,585,931 and $1,956,810, for the fiscal years ended August
    31, 2003, 2002 and 2001, respectively. These expenses were incurred primarily
    in conjunction with the performance of the technical services to existing
    Corporate Joint Ventures, travel, and legal fees related to the development
    of new joint ventures.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Composite financial information
    from the audited and unaudited financial statements of the Company&#146;s
    joint ventures carried on the equity basis is summarized as follows: </FONT>
  </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD colspan="8"><div align="center"><FONT size=1 face="Times New Roman, Times, serif">August
        31</FONT></div></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD><font size="1" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN="BOTTOM" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="9"> <HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003&nbsp;&nbsp;</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="3"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Current
        assets</FONT></p></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">19,359,530</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">13,053,513</FONT></div></TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Total
        assets</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">23,954,072</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">16,462,161</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Current
        liabilities</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">8,254,472</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6,198,701</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Noncurrent
        liabilities</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">2,544,017</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">245,895</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Joint
        ventures&#146; equity</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">13,795,966</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">10,017,521</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Northern
        Technologies International Corporation&#146;s</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;share
        of Corporate Joint Ventures&#146; equity</font></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6,152,921</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">5,179,825</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p>&nbsp;</p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p>&nbsp;</p></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="15"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Years
        Ended August 31</FONT></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p>&nbsp;</p></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="15"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p>&nbsp;</p></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="3"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2001</FONT></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p>&nbsp;</p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Sales</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">37,233,712</FONT></div></TD>
    <TD><div align="right">&nbsp;&nbsp;</div></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">24,931,945</FONT></div></TD>
    <TD><div align="right">&nbsp;&nbsp;</div></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">21,218,289</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Gross
        profit</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">18,437,864</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">11,447,114</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">10,762,703</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Net
        income</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,695,717</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">2,042,812</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">912,865</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><FONT size=2 face="Times New Roman, Times, serif">Northern
        Technologies International</FONT></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Corporation&#146;s
        share of equity in income</font></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><p><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;of
        Corporate Joint Ventures</font></p></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">939,098</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,010,053</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">530,348</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>European Holding
    Company</I>  &#8212; During the fiscal year 1997 the Company invested $254,639 for
    a 50% ownership interest in a European holding company. In fiscal year 2002,
    the European holding company paid out dividends of $190,434 to the Company
    for a partial return of its investment.</font> </p>
</blockquote>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">30 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_31"></A> </font>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Investment in and
    Note Receivable from German Corporation</I>  &#8212; During fiscal year 2002, the
    Company invested $141,500 for a 30% ownership interest in Mutec Instruments
    GmbH. This German corporation is a developer and producer of electronic industrial
    instrumentation. The German corporation is accounted for using the equity
    method of accounting. In addition, on June 30, 2002, the Company entered into
    a promissory note with Mutec Instruments GmbH for &#128;125,000 (see Note
    8). </font> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">During 2003, the Company
    invested in a variety of new and existing Corporate Joint Ventures as follows:</FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company invested $127,742
    in a new industrial chemical corporate joint venture in Holland. The contributions
    were made during the first and third quarters. This investment was financed
    by the extinguishment of the investment in the European holding company and
    additional cash contributions. The Company has a 50% ownership interest in
    the new entity. The new entity had no operations prior to the Company&#146;s
    investment.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">During the second quarter
    the Company commenced investing under an oral understanding with two unrelated
    parties in a new industrial chemical joint venture to be formed in the United
    States called React-NTI LLC. Not all of the terms and conditions of the transaction
    were finalized as of year end, but as of August 31, 2003 the Company had invested
    approximately $310,000, most of which was applied to product development,
    resulting in the acquisition of inventory and equipment. Subsequent to year
    end the Company has acquired 75% of the investment and will be consolidating
    the entity and its wholly owned subsidiary React Inc. going forward in fiscal
    year 2004. The Company made this acquisition to secure the proprietary technology
    owned by React Inc. and its affiliates to give the company a new product line
    compatible, but not competitive with , with the Company&#146;s material science
    based industrial packaging products, systems and technology. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company invested $63,486
    in a new industrial non-chemical corporate joint venture in Germany during
    the first quarter. The Company obtained a 10% ownership interest in this existing
    German GmbH and planned to partner with the German GmbH to market and sell
    welding machinery through the existing corporate joint venture network. In
    the fourth quarter this investment was written down to $0 as the investment
    was determined to be insolvent. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company invested $25,000
    in an existing business consulting corporate joint venture in the United States.
    The Company made quarterly payments of $6,250. The Company has obtained a
    25% ownership interest in this company to utilize various government and military
    associations. As the company has no assets its investment value is $0. However,
    the Company anticipates receiving annual dividends going forward. </FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company also received
    a portion of its original investment in NTI ASEAN, LLC back during the second
    quarter in the amount of $120,962. This amount was refunded pursuant to the
    unanimous agreement of the NTI ASEAN, LLC shareholders to reduce NTI ASEAN,
    LLC total capitalization. NTI ASEAN, LLC reduced its capital of the other
    50% shareholder in the company by forgiving a $120,962 receivable from that
    shareholder. As a result, the Company&#146;s ownership interest remained unchanged
    at 50%. </FONT> </p>
  <p align="center"> <font size="2" face="Times New Roman, Times, serif">31 </font></p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<p><font size="2" face="Times New Roman, Times, serif"><A name="page_32"></A></font></p>
<p><font size="2" face="Times New Roman, Times, serif">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STOCKHOLDERS&#146;
  EQUITY</font></p>
<blockquote>
  <p><font size="2" face="Times New Roman, Times, serif">During fiscal years 2003,
    2002, and 2001, the Company acquired and retired 18,359, 45,000 and 116,900
    shares of common stock for $64,124, $195,684 and $637,032, respectively.</font>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">During fiscal years 2000
    and 1994 the Company&#146;s Board of Directors and shareholders approved stock
    option plans (the Plans) providing for the granting of options to purchase
    450,000 shares of common stock in total. Under the Plans, incentive stock
    options and nonqualified stock options could be granted to directors, officers,
    non-officer employees, and others. The options have a term of five years and
    become exercisable ratably over a three &#8212; or four-year period beginning on
    the first annual anniversary date of the grant. Options are granted at prices
    equal to the market value of the stock on the date of grant. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">A summary of the status
    of the Company&#146;s stock options for the years ended August 31 is as follows:
    </FONT></p>
</blockquote>

<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="10"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=10 align="center"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=10 align="center"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2001</FONT>
        </b></div></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="10"> <HR align="left" size=1 noshade> </TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="10"><HR align="left" size=1 noshade> </TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="10"><div align="left">
        <hr align="left" size=1 noshade>
      </div></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Wgtd&nbsp;Avg</FONT></b></div></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=3 align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Wgtd&nbsp;Avg</FONT></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=4 align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Wgtd&nbsp;Avg</FONT>
      </b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Shares</FONT></b></div></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Exer&nbsp;Price
        </FONT></b></div></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="4" ALIGN="center"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Shares</FONT></b></div></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="3" ALIGN="center"><b><FONT size=1 face="Times New Roman, Times, serif">Exer&nbsp;Price</FONT></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="4" ALIGN="center"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Shares</FONT></b></div></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="4" ALIGN="center"><b><FONT size=1 face="Times New Roman, Times, serif">Exer&nbsp;Price</FONT>
      </b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Outstanding
        at beginning of year</FONT></div></TD>
    <TD><div align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD><div align="left">&nbsp;&nbsp;</div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">128,896</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif"> $&nbsp;&nbsp;</FONT></div></TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">5.84</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD><div align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD align="right">&nbsp;&nbsp;&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">85,562</FONT></div></TD>
    <TD>&nbsp; </TD>
    <TD align="right"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;</font></TD>
    <TD align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="right">&nbsp;&nbsp;</TD>
    <TD align="right"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.60</FONT></div></TD>
    <TD><div align="left">&nbsp;&nbsp;</div></TD>
    <TD align="right">&nbsp;&nbsp;</TD>
    <TD align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="right">&nbsp;&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">94,562</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><div align="left">&nbsp;&nbsp;</div></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.57</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Granted</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">18,000</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">3.34</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">58,000</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">4.70</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">14,000</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.39</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Exercised</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">0.00</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">0.00</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">(3,333</FONT></div></TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.00</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Canceled</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">(28,575</FONT></div></TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.12</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">(14,666</FONT></div></TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">5.73</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">(19,667</FONT></div></TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.45</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Outstanding
        at end of year</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">118,321</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif"> $</FONT></div></TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">5.39</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">128,896</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">5.84</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">85,562</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.60</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=2 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=2 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=2 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Options
        exercisable at year-end</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">65,772</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif"> $</FONT></div></TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.19</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">50,015</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.81</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">40,796</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="center"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6.50</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=2 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=2 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="right" size=2 noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>

<blockquote>
  <p><FONT size=2 face="Times New Roman, Times, serif">The following table summarizes
    information about stock options outstanding at August 31, 2003:</FONT> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD bgcolor="#FFFFFF"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></div></TD>
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font>
      </b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="9" bgcolor="#FFFFFF"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Options
        Outstanding</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="9" bgcolor="#FFFFFF"> <HR align="center" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font>
      </b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=4 bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Weighted</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=7 align="center" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Options
        Exercisable</FONT></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font>
      </b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=4 bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Average</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=7 bgcolor="#FFFFFF"><HR align="center" size=1 noshade></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font>
      </b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=4 bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Remaining</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Weighted</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=3 align="right" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Weighted</FONT></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Range
        of</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=4 bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Contractual</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Average</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=3 align="right" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Average</FONT></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Exercise</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Number</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="4" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Life</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Exercise</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=3 align="right" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Number</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=3 align="right" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Exercise</FONT></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Prices</font></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Outstanding</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=4 bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">(Years)</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;</font></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Price</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;</font></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=3 align="right" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Exercisable</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;</font></b></div></TD>
    <TD colspan="3" bgcolor="#FFFFFF"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Price</FONT></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$3.34&#8212;$</FONT><FONT size=2 face="Times New Roman, Times, serif">7.00</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">118,321</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">2.42</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">5.39</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=3 align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">65,772</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD colspan=2 align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">6.19</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>

<p><font size="2" face="Times New Roman, Times, serif">7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SEGMENT
  INFORMATION</font></p>
<blockquote>
  <p><font size="2" face="Times New Roman, Times, serif">The Company is engaged
    in the development, manufacturing, and marketing of proprietary materials
    science based industrial packaging products. The Company&#146;s electronic
    sensing business was terminated in fiscal year 2002. Further disclosure regarding
    the two businesses is not presented, as management uses the consolidated information
    to allocate resources and evaluate performance.</font></p>
</blockquote>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">32 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_33"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Sales by geographic location
    as a percentage of total sales were as follows:</FONT> </p>
  </blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD width="100%" align="right"><div align="left"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></div></TD>
    <TD align="right"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></div></TD>
    <TD align="right"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></div></TD>
    <TD align="right"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2001</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%" align="right"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">U.S.A.
        to unaffiliated customers</FONT></div></TD>
    <TD align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">70</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">74</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">72</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Outside
        the U.S.A. to: </FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%" align="right"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">&nbsp;&nbsp;Corporate
        Joint Ventures in which the Company is a</FONT></div></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%" align="right"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;shareholder
        directly and indirectly</FONT></div></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">8</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">7</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%" align="right"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Unaffiliated
        customers</FONT></div></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">20</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">18</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">21</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%" align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">100</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">100</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">100</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">%</FONT></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<br>
<TABLE>
  <tr>
    <td valign="top" colspan="2"><blockquote>
        <p><FONT size=2 face="Times New Roman, Times, serif">One customer accounted
          for approximately 13%, 12% and 10% of net sales for the fiscal years
          ended August 31, 2003, 2002 and 2001, respectively.</FONT><FONT size=2 face="Times New Roman, Times, serif"><br>
          <BR>
          </FONT></p>
        </blockquote></td>
  </tr>
  <tr>
    <td valign="top" width="3%"><p><FONT size=2 face="Times New Roman, Times, serif">8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></p></td>
    <td valign="top"><p><FONT size=2 face="Times New Roman, Times, serif">RETIREMENT
        PLAN AND EMPLOYEE STOCK PURCHASE PLAN<br>
        </FONT><FONT size=2 face="Times New Roman, Times, serif"><br>
        </FONT></p>
      </td>
  </tr>
  <tr>
    <td height="65" colspan="2" valign="top"><blockquote>
        <p><FONT size=2 face="Times New Roman, Times, serif">The Company has a
          401(k) employee savings plan. Employees who meet certain age and service
          requirements may elect to contribute up to 7% of their salaries. The
          Company contributes the lesser of 50% of the participant&#146;s contributions
          or 3.5% of the employee&#146;s salary. The Company recognized expense
          for the savings plan of $56,070, $42,000, and $37,000 for the fiscal
          years ended August 31, 2003, 2002 and 2001, respectively.<BR>
          </FONT></p>
      </blockquote></td>
  </tr>
  <tr>
    <td valign="top" colspan="2"><blockquote>
        <p><FONT size=2 face="Times New Roman, Times, serif">The Company has an
          employee stock purchase plan. Employees who meet certain age and service
          requirements may elect to contribute a portion of their salary to purchase
          up to 2000 shares in a fiscal year. Employees receive a 10% discount
          on the purchase price of the stock and shares can be purchased quarterly.
          </FONT></p>
      </blockquote></td>
  </tr>
  <tr>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><p><FONT size=2 face="Times New Roman, Times, serif">RELATED-PARTY
        TRANSACTIONS</FONT></p></td>
  </tr>
  <tr>
    <td valign="top" colspan="2"><blockquote>
        <p><FONT size=2 face="Times New Roman, Times, serif">The Company paid
          reimbursement for travel and related expenses of $421,000, $240,000,
          and $249,000 for the fiscal years ended August 31, 2003, 2002, and 2001,
          respectively, to a financial and management consulting firm, Inter Alia,
          which owns 25.1% of the Company&#146;s outstanding common shares, and
          of which the Company&#146;s Co-Chief Executive Officer and Chairman
          of the Board, the Company&#146;s other Co-Chief Executive Officer and
          President and Corporate Secretary are shareholders. The management consulting
          firm earned commissions of approximately $51,882, $66,420, and $52,544
          for the fiscal years ended August 31, 2003, 2002, and 2001, respectively,
          on the net proceeds of sales of the Company&#146;s product. In addition,
          the Company has paid all life insurance premiums related to all policies
          that insure the related parties of which the Company&#146;s Co-Chief
          Executive Officer and Chairman of the Board and the Company&#146;s other
          Co-Chief Executive Officer and President, for which the Company is the
          beneficiary.<BR>
          </FONT></p>
      </blockquote></td>
  </tr>
  <tr>
    <td valign="top" colspan="2"><p><FONT size=2 face="Times New Roman, Times, serif">On
        May 31, 2002, the Company made a loan of $50,000 to Atagencer LLC, a limited
        liability corporation that is principally owned by Dr. Mehmet Gencer,
        a member of the Company&#146;s Board of Directors. This loan was evidenced
        by a promissory note held by the Company and the outstanding principal
        balance bore interest at a rate of 2% per annum. The note was due five
        years from the date of issuance<I>. </I>The loan was made to Atagencer
        LLC to enable it to obtain a 25% share in Fibro NTI Joint Stock Company
        in Turkey, of which NTIC is a 50% owner. This note was paid in full in
        July 2003. Additionally, Atagencer LLC entered into a consulting agreement
        in 2001, prior to Dr. Gencer becoming a director in 2002, to provide consulting
        services to the Company. During fiscal 2003 and 2002, the Company paid
        $96,000 and $79,000, respectively, for these services.<BR>
        </FONT></p></td>
  </tr>
</TABLE>
<p align="center"><font size="2" face="Times New Roman, Times, serif">33</font></p>
<HR noshade align="center" width="100%" size=2>
<p><font size="2" face="Times New Roman, Times, serif"><A name="page_34"></A></font></p>
<blockquote>
  <p><font size="2" face="Times New Roman, Times, serif">On June 30, 2002, the
    Company made a loan of &#128;125,000 to Mutec Instruments GmbH. This loan
    is evidenced by a promissory note held by the Company and the outstanding
    principal balance bears interest at a rate of 6.55% per annum. The note is
    due to the Company ten years from the date of the note<I>. </I>NTIC currently
    owns 30% of the company. The proceeds of the loan will be used by Mutec Instruments
    GmbH to obtain capital equipment and finance operations.</font></p>
  <p><font size="2" face="Times New Roman, Times, serif">On June 1, 2003, the
    Company made a loan of $25,000 to Tao Meng, who subsequently became a member
    of the Company&#146;s Board of Directors on July 15, 2003. The loan is evidenced
    by a promissory note held by the Company which bears interest at a rate of
    2% per annum. The note is due to the Company five years from the date of issuance<I>.
    </I>The loan was obtained by Tao Meng to obtain a 25% share in Tianjin ZERUST
    Ltd. in China, of which NTIC is a 25% owner.</font></p>
</blockquote>
<p><font size="2" face="Times New Roman, Times, serif">10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INCOME
  TAXES</font></p>
<blockquote>
  <p><font size="2" face="Times New Roman, Times, serif"> The provisions for income
    taxes for the fiscal years ended August 31 consist of the following:</font>
  </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR bgcolor="#66FFFF">
    <TD valign="bottom" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" valign="bottom" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD valign="bottom" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="6" valign="bottom" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></div></TD>
    <TD valign="bottom" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5" valign="bottom" bgcolor="#FFFFFF"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD valign="bottom" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="6" valign="bottom" bgcolor="#FFFFFF"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2001</FONT></b></div></TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD valign="bottom">&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%" valign="bottom"><FONT size=2 face="Times New Roman, Times, serif">Current:</FONT></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD valign="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%" valign="bottom"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Federal</font></TD>
    <TD align="center" valign="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;&nbsp;</TD>
    <TD align="center" valign="bottom"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD colspan="2" align="right" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">(176,000</FONT></div></TD>
    <TD valign="bottom"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD valign="bottom">&nbsp;&nbsp;</TD>
    <TD valign="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD valign="bottom">&nbsp;&nbsp;</TD>
    <TD valign="bottom"><div align="left">&nbsp;&nbsp;</div></TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">137,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;&nbsp;</TD>
    <TD align="center" valign="bottom"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD colspan="2" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">445,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;State</font></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" align="right" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">6,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">28,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">40,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="3" valign="bottom"><HR align="left" size=1 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom"><HR align="left" size=1 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="3" valign="bottom"><HR align="left" size=1 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" align="right" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">(170,000</FONT></div></TD>
    <TD valign="bottom"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">165,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">485,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom"><FONT size=2 face="Times New Roman, Times, serif">Deferred:</FONT></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Federal</font></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" align="right" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">78,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">19,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">60,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;State</font></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" align="right" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">7,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">1,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">10,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="3" valign="bottom"><HR align="left" size=1 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom"><HR align="left" size=1 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="3" valign="bottom"><HR align="left" size=1 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" align="right" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">85,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">20,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">70,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="3" valign="bottom"><HR align="left" size=1 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom"><HR align="left" size=1 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="3" valign="bottom"><HR align="left" size=1 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom">&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD align="center" valign="bottom"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD colspan="2" align="right" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">(85,000</FONT></div></TD>
    <TD valign="bottom"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">185,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD align="center" valign="bottom"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD colspan="2" valign="bottom"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">555,000</FONT></div></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD width="100%" valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="3" valign="bottom"><HR align="right" size=2 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="2" valign="bottom"><HR align="right" size=2 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD colspan="3" valign="bottom"><HR align="right" size=2 noshade></TD>
    <TD valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Reconciliations of the
    expected federal income tax at the statutory rate with the provisions for
    income taxes for the three fiscal years ended August 31 are as follows: </FONT>
  </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR bgcolor="#FFFFFF">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2001</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Tax computed
      at statutory rates</FONT></TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">130,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">480,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">600,000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">State income
      tax, net of federal benefit</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">6,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">20,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">30,000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Equity
      in income of international joint ventures</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(296,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(352,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(185,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Other</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">75,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">37,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">110,000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><hr align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR align="left" size=1 noshade></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(85,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">185,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">555,000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><HR noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><hr noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="2" bgcolor="#FFFFFF"><hr noshade size=2></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
</TABLE>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company has not recognized
    a deferred tax liability relating to undistributed earnings of Corporate Joint
    Ventures and European holding company that are essentially permanent in duration
    of $1,709,000 and $1,395,388 at August 31, 2003 and 2002, respectively. If
    some or all of the undistributed earnings of the Corporate Joint Ventures
    and European holding company are remitted to the Company in the future, income
    taxes, if any, after the application of foreign tax credits will be provided
    at that time. </FONT> </p>
</blockquote>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">34 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_35"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The tax effect of the
    temporary differences and tax carryforwards comprising the net deferred taxes
    shown on the balance sheets at August 31 are as follows: </FONT> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="4" bgcolor="#FFFFFF"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5" bgcolor="#FFFFFF"> <div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></div></TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Current:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Allowance
      for doubtful accounts</font></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">5,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Inventory
      costs</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">17,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">20,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Prepaid
      expenses and other</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(32,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(12,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Accrued
      expenses</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">16,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">23,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Deferred
      gross profit</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">9,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">9,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"> <HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"> <HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">12,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">45,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Noncurrent:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Excess
      of book over tax depreciation</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">56,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">71,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Asset
      valuation reserves</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">287,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">324,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"> <HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"> <HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      noncurrent</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">343,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">395,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=2 noshade></TD>
    <TD><HR noshade size=2></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<p><br>
  <font size="2" face="Times New Roman, Times, serif">11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;COMMITMENTS
  AND CONTINGENCIES</font></p>
<blockquote>
  <p><FONT size=2 face="Times New Roman, Times, serif">In 1999 the Company obtained
    a one-third ownership in an Ohio limited liability company (the LLC). The
    LLC owns and operates a rental property located in Beachwood, Ohio, acquired
    at a cost of $2,205,000 in fiscal 2000. As of August 31, 2003, the Company
    has guaranteed up to $337,833 of the LLC&#146;s $2,027,000 mortgage obligation.
    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 $16,994, which is adjusted annually according
    to the annual consumer price index through November 2014. Total rent expense
    under the lease was approximately $204,864 and $205,344 for the years ended
    August 31, 2003 and 2002, respectively. By its ownership in the LLC, the Company&#146;s
    subsidiary is entitled to one-third of the LLC&#146;s operating results, which
    are accounted for on the equity method. The rental property is now fully leased.</FONT>
  </p>
  <p><FONT size=2 face="Times New Roman, Times, serif">The Company is involved
    in various legal actions arising in the normal course of business. Management
    is of the opinion that any judgment or settlement resulting from pending or
    threatened litigation would not have a material adverse effect on the financial
    position or results of operations of the Company.</FONT></p>
</blockquote>
<p><FONT size=2 face="Times New Roman, Times, serif">12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STATEMENTS
  OF CASH FLOWS</FONT> </p>
<blockquote>
  <p><FONT size=2 face="Times New Roman, Times, serif">Supplemental disclosures
    of cash flow information for the three fiscal years ended August 31 consist
    of:</FONT></p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=3 align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2003</FONT></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2002</FONT></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><b><FONT size=1 face="Times New Roman, Times, serif">2001</FONT></b></TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Cash paid
      (received) during the year for income taxes</FONT></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD><div align="right"><FONT size=2 face="Times New Roman, Times, serif">111,535</FONT></div></TD>
    <TD><div align="left">&nbsp;&nbsp;</div></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">(61,594</FONT></div></TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></div></TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">740,551</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">Increase
      (decrease) in the Company&#146;s investment in Corporate<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Joint Ventures and accumulated other comprehensive</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">loss due
      to changes in exchange rates</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">269,045</FONT></div></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">277,657</FONT></div></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><div align="right"><FONT size=2 face="Times New Roman, Times, serif">(133,163</FONT></div></TD>
    <TD bgcolor="#FFFFFF"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">)</FONT></div></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
</TABLE>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">35 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_36"></A> </font>
<P> <FONT size=2 face="Times New Roman, Times, serif">13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;QUARTERLY
  INFORMATION (UNAUDITED)</FONT> </P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="23"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Quarter
        Ended</FONT></b></div></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font> </b></TD>
    <TD COLSPAN="23"><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">November
        30</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="4"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">February
        28</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="4"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">May
        31</FONT></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">August
        31</FONT></b></div></TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">Fiscal
      year 2003:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      sales</font></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,981,071</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,001,116</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,189,926</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,181,762</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
      profit</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,064,479</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,042,692</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,105,255</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,171,376</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      before income taxes</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">251,320</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">456,413</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(102,707</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(182,299</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      taxes</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(1,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">66,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(82,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(68,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      income</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">252,320</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">390,413</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(20,707</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(114,299</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Net income
      per share:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.07</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.11</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(0.01</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(0.03</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.07</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.11</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(0.01</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(0.03</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Weighted
      average common shares assumed</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;outstanding:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,638,530</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,635,086</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,629,863</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,632,391</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,638,530</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,636,919</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,635,179</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,636,679</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD colspan="24" bgcolor="#FFFFFF">&nbsp;</TD>
  </TR>
</table>
<br>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="23" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Quarter
        Ended</FONT></b></div></TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font>
      </b></TD>
    <TD colspan="23" bgcolor="#FFFFFF"><hr noshade size=1></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">November
        30</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="4" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">February
        28</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="4" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">May
        31</FONT></b></div></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="5" bgcolor="#FFFFFF"><div align="center"><b><FONT size=1 face="Times New Roman, Times, serif">August
        31</FONT></b></div></TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">Fiscal
      year 2002:</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      sales</font></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,099,189</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,564,085</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,003,500</FONT></TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,927,609</FONT></TD>
    <TD>&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
      profit</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,188,467</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">765,674</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,002,782</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1,048,288</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      before income taxes</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">657,562</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(67,267</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">435,999</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">385,882</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
      taxes</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">170,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(90,000</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">60,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">45,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      income</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">487,562</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">22,733</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">375,999</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">340,882</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Net income
      per share:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.01</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.01</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Weighted
      average common shares</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;assumed
      outstanding:</font></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,670,870</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,669,273</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,667,747</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,653,471</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</font></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,670,870</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,669,273</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,667,747</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,653,471</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">36 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_37"></A></font>
<br>
<br>
<TABLE>
  <tr>
    <td valign="top"><font size="2" face="Times New Roman, Times, serif"><B>Item&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></font></td>
    <td valign="top" colspan="2"><font size="2" face="Times New Roman, Times, serif"><B>CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON</B><BR>
      <B>ACCOUNTING AND FINANCIAL DISCLOSURE.</B></font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top" colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2" face="Times New Roman, Times, serif">None.</font></td>
    <td valign="top" colspan="2"><font size="2" face="Times New Roman, Times, serif"><BR>
      </font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top" colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2" face="Times New Roman, Times, serif"><B>Item&nbsp;8A.</B></font></td>
    <td valign="top" colspan="2"><p><font size="2" face="Times New Roman, Times, serif"><B>CONTROLS
        AND PROCEDURES.</B></font></p></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top" colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top" colspan="2"><FONT size=2 face="Times New Roman, Times, serif">As
      of August 31, 2003, the end of the period covered by this report, the Company
      carried out an evaluation under the supervision of, and with participation
      from, its Chairman of the Board and Co-Chief Executive Officer, President
      and Co-Chief Executive Officer, and Chief Financial Officer, of the Company&#146;s
      disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
      under the Securities Exchange Act of 1934 (the Exchange Act). Based upon
      that evaluation the Company, as well as its Chairman of the Board and Co-Chief
      Executive Officer, President and Co-Chief Executive Officer, and Chief Financial
      Officer, concluded that the Company&#146;s disclosure controls and procedures
      need improvement to be considered effective. We continue to evaluate methods
      to improve our internal controls and procedures and he Company intends to
      evaluate and fix all weaknesses in internal controls as required by the
      rules promulgated under the Exchange Act and the Sarbanes-Oxley Act of 2002.
      We do not believe that these disclosure and internal control deficiencies
      resulted in material misstatements in our consolidated financial statements
      contained in this Form 10-KSB.</FONT></td>
  </tr>
</TABLE>
<p align="center"><font size="2" face="Times New Roman, Times, serif">37</font></p>
<HR noshade align="center" width="100%" size=2>
<p><font size="2" face="Times New Roman, Times, serif"><A name="page_38"></A></font></p>
<p align="center"><font size="2" face="Times New Roman, Times, serif"><b>PART
  III</b></font></p>
<table border="0" cellpadding="0">
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif"><B>Item&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></font></td>
    <td><font size="2" face="Times New Roman, Times, serif"><B>DIRECTORS, EXECUTIVE
      OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF
      THE EXCHANGE ACT.</B></font></td>
  </tr>
</table>
<p><font size="2" face="Times New Roman, Times, serif"><B>A. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors
  of the Registrant</B></font></p>
<blockquote>
  <p><font size="2" face="Times New Roman, Times, serif"> The following table
    sets forth certain information as of December 11, 2003, which has been furnished
    to the Company by the directors named below.<BR>
    </font> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD valign="bottom">&nbsp;</TD>
    <TD valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Name</font></b></div></TD>
    <TD align="center" valign="bottom"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" valign="bottom"><b><font size="1" face="Times New Roman, Times, serif">Age</font></b></TD>
    <TD align="center" valign="bottom"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="100%" align="center" valign="bottom"><b><font size="1" face="Times New Roman, Times, serif">Principal
      Occupation</font></b></TD>
    <TD align="center" valign="bottom"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" valign="bottom"><b><font size="1" face="Times New Roman, Times, serif">Director&nbsp;Since</font></b></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR VALIGN="TOP">
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="100%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Philip
      M. Lynch</FONT></TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">67</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Co-Chief
      Executive Officer and Chairman of the</FONT></TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">1979</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Board
      of the Company and Executive Vice</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">President
      of Inter Alia Holding Company</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">Dr.
      Donald A. Kubik</FONT></TD>
    <TD align="center" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">63</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">Vice
      Chairman and Chief Technology Officer of</FONT></TD>
    <TD align="center" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">1995</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">the
      Company</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Richard G. Lareau</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Partner
      of Oppenheimer Wolff &amp; Donnelly LLP</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">1980</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Ursula Kiel-Dixon</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">50</FONT></TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Senior
      Vice President at ThyssenKrupp A.G.</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2001</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Prof.&nbsp;Aradhna&nbsp;Krishna</FONT></TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">42</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Professor
      of Marketing, University of Michigan</FONT></TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">2001</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Business
      School</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Mark J. Stone</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">44</FONT></TD>
    <TD>&nbsp;</TD>
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">President,
      Petrus International, Inc.</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2001</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#000000">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Stephan
      C. Taylor</FONT></TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">56</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">President
      and Co-founder of Taylor Packaging</FONT></TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">2001</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">and
      C.E.O. of Zerust (U.K.) Ltd. and Zerust B.V.</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">Dr.
      Mehmet A. Gencer</FONT></TD>
    <TD align="center" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">51</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">Founder
      and President of Atagencer LLC and</FONT></TD>
    <TD align="center" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">2002</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">IMET
      Corporation, Akron, Ohio</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Pierre
      Chenu</FONT></TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">65</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Retired
      Vice-President, Worldwide Operations, in</FONT></TD>
    <TD align="center" bgcolor="#00FFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#00FFFF"><FONT size=2 face="Times New Roman, Times, serif">Asahi&#8217;s
      Flat Glass Company</FONT></TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD bgcolor="#00FFFF">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">Tao
      Meng</FONT></TD>
    <TD align="center" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">39</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">General
      Manager of Tianjin Zerust Anti-</FONT></TD>
    <TD align="center" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">Corrosion
      Technologies Ltd.</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mr. Philip M. Lynch has
    been Executive Vice President of Inter Alia Holding Company, a financial and
    management consulting firm, for more than six years. Mr. Lynch is a member
    of the Board of Directors of Fosbel S.A., headquartered in Brussels, Belgium
    (operating in North America, South America, Asia and in 17 Western and three
    Eastern European countries). Fosbel S.A. is itself a joint venture between
    Glaverbel S.A., (Bruxelles), a leading Belgian glass manufacturing company
    and an affiliate of Asahi Glass Co. Ltd., and Cinven Limited, an English financial
    institution. Mr. Lynch is also a member of the Board of Directors of Agra
    Tagger AG. in Austria and EDR Inc. in Cleveland, Ohio. Mr. Philip M. Lynch
    is the father of Jennifer S. Lynch and G. Patrick Lynch. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Dr. Donald A. Kubik has
    been employed by the Company since 1978, and was named Vice Chairman in September
    1999. Dr. Kubik served as Vice President of the Company from 1979 to</FONT>
  </p>
  <p align="center"> <font size="2" face="Times New Roman, Times, serif">38&nbsp;
    </font> </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_39"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">September 1999 at which
    time Dr. Kubik was appointed Vice Chairman. Additionally he served as Co-Chief
    Executive Officer of the Company from September 1999 to May 2000. In May 2000,
    Dr. Kubik was made Chief Technology Officer of the Company and is a member
    of the Executive Committee. During his employment as Chief Technology Officer
    with the Company, Dr. Kubik has been responsible for developing the patent
    that led to the Company&#146;s introduction of protective plastic film and
    paper products incorporating volatile corrosion inhibitors. Prior to joining
    the Company, Dr. Kubik held a research and development position with Minnesota
    Mining &amp; Manufacturing (3M).</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mr. Richard G. Lareau
    has been a partner at the law firm of Oppenheimer Wolff &amp; Donnelly LLP
    since 1960. Mr. Lareau also serves as a trustee of Mesabi Trust, a New York
    Stock Exchange listed royalty trust.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mrs. Ursula Kiel-Dixon,
    a German citizen, has been Head of Corporate Affairs International with ThyssenKrupp
    A.G., Germany, since November 1999. Previously, Mrs. Kiel-Dixon served as
    Head of Department, Sales and M&amp;A Strategy with ThyssenKrupp Stainless
    GmbH, Germany, from October 1997 until October 1999, and as Director, Marketing
    for ThyssenKrupp Nirosta GmbH, from April 1997 to September 1997. From 1991
    to 1997 Mrs. Kiel-Dixon was Deputy Head of Controlling Department with Fried.
    Krupp A.G. Hoesch &#8212; Krupp. Mrs. Kiel-Dixon holds an M.A. in Economics
    from State University of New York at Stony Brook, NY. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Prof. Aradhna Krishna
    has been Professor of Marketing at University of Michigan Business School
    since 2000 and Associate Professor of Marketing at the same institution from
    1998 until 2000. Prof. Aradhna Krishna was an Associate Professor of Marketing
    at Columbia University from 1993 to 1998. She serves on the Editorial Boards
    of the Journal of Marketing Research, Journal of Consumer Research, Marketing
    Science and Marketing Letters, and has numerous articles published in academic
    journals. Prof. Krishna holds a Ph.D. in marketing from the Stern School of
    Business, New York University.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mr. Mark J. Stone has
    been President of Petrus International, Inc., an international consulting
    firm, since 1992. Mr. Stone has advised a variety of Japanese and other multi-national
    corporations in areas including project finance and international investment
    strategy. Mr. Stone was a director of Aqua Design, Inc., an international
    water desalination company, from 1988 - 1996. Mr. Stone was Director, Marketing
    &amp; Business Development of Toray Marketing &amp; Sales (America) Inc. from
    1986 to 1992. From 1980 - 1986 Mr. Stone was employed by Mitsui &amp; Co.
    (U.S.A.), Inc. where he founded and was Treasurer of Hydro Management Resources,
    a Mitsui subsidiary which finances, owns, and operates water treatment projects.
    Mr. Stone holds an A.B. from Harvard University. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mr. Stephan Taylor, a
    citizen of the United Kingdom, graduated in education from Bede College, Durham
    University, England in 1969. He then spent four years teaching before founding,
    with his Father, Taylor Packaging Ltd. Taylor Packaging maintains a 50% ownership
    in both Zerust (UK) Ltd. and Zerust B.V., the company&#146;s joint ventures
    in the United Kingdom and the Netherlands. Mr. Taylor is Chief Executive Officer
    of both companies. Mr. Taylor is also Chairman and Managing Director of Taylor
    Packaging Ltd, Taypac Moroc Sarl and T.P. Enterprises Ltd and Vice Chairman
    of Business Link County Durham, Business Support Advisory Board, County Durham,
    England. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Dr. Mehmet A. Gencer has
    been the President and founder of IMET Corporation, Akron, Ohio since 1997.
    Dr. Gencer was with BF Goodrich Company from 1984 though 1999. While with
    BF Goodrich Co. he held the positions of Director of Emerging Technologies,
    Associate Director of Technology and New Business Development, Senior R&amp;D
    Manager, Environmental Technology Research Manager and Biotechnology Group
    Senior R&amp;D Engineer. Dr. Gencer obtained his</FONT> </p>
</blockquote>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">39&nbsp;
  </font> </p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_40"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Doctor of Philosophy in
    Chemical Engineering from Drexel University, Masters of Science in Chemical
    Engineering from University of Pennsylvania, and Bachelor of Science in Chemical
    Engineering from Ege University. Dr. Gencer has been providing consulting
    services to the Company since May 2000. Atagencer LLC, a limited liability
    corporation that is principally owned by Dr. Gencer, maintains a 25% ownership
    interest in the Company&#146;s corporate joint venture located in Turkey.
    </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mr. Pierre Chenu, a citizen
    of Belgium, most recently served as Vice President, Worldwide Operations,
    Flat Glass Activities within the Asahi-Glaverbel Glass Group. Prior to that,
    Mr. Chenu was a member of the Executive Committee of Glaverbel S.A., with
    various operating responsibilities in France, Spain, Italy, Russia, Germany,
    China and the United States. Before joining Glaverbel, Mr. Chenu worked for
    U.S. Steel in steel production in Pittsburgh, Pennsylvania and for Corning
    Inc. where he held various staff, line and executive positions in the United
    States, France and the United Kingdom. Mr. Chenu holds a Master&#146;s Degree
    in Engineering, with a specialty in metallurgy, from the University of Liege
    (Belgium) and a M.B.A. from Harvard University. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mr. Tao Meng, a citizen
    of China, received his Bachelor&#146;s and Master&#146;s Degrees in Systems
    Engineering at the Huazhong University of Science and Technology. Following
    successful completion of Advanced Training Programs in International Trading
    and International Cooperation in England and Canada, Mr. Meng was appointed
    Deputy Director, Division of America and Oceania in the Department of International
    Cooperation at the Ministry of Internal Trade of the People&#146;s Republic
    of China. From there, Mr. Meng was posted to New York where he served as Chief
    Representative of the Ministry of Internal Trade of the People&#146;s Republic
    of China in the United States from 1996 to 1999. In 1999, Mr. Meng was named
    General Manager of Tianjin Zerust Co., where he currently serves as a partner
    in charge of Northern Technologies joint venture company in China. </FONT>
  </p>
</blockquote>
<p> <font size="2" face="Times New Roman, Times, serif"><B>B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Executive Officers of the Registrant</B> </font> </p>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The executive officers
    of the Company, their ages and the offices held, as of November 15, 2003,
    are as follows: </FONT> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Name</font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">Age</font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">Position
      in the Company</font></b></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Philip M. Lynch</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">67</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Chairman of the Board
      and Co-Chief Executive Officer*</FONT></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">G. Patrick Lynch</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">36</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">President and Co-Chief
      Executive Officer*</FONT></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Dr. Donald A. Kubik</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">63</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Vice Chairman, Chief
      Technology Officer*</FONT></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Matthew C. Wolsfeld</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">29</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Chief Financial Officer*</FONT></TD>
  </TR>
</TABLE>
<blockquote>
  <blockquote>
    <p> <FONT size=2 face="Times New Roman, Times, serif">*Members of the Executive
      Committee </FONT> </p>
  </blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mr. Philip M. Lynch has
    been Executive Vice President of Inter Alia Holding Company for more than
    five years. Mr. Lynch is the father of Mr. G. Patrick Lynch. Refer to &#147;Directors
    of the Registrant&#148; for a more detailed discussion. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mr. G. Patrick Lynch,
    an employee of the Company since 1995, has been President and Co-Chief Executive
    Officer since May 2000. Mr. G. Patrick Lynch was Vice President of Strategic
    Planning, Corporate Secretary and a member of the Executive Committee, which
    served as Co-Chief</FONT> </p>
  <p align="center"> <font size="2" face="Times New Roman, Times, serif">40&nbsp;
    </font> </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_41"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Executive Officer from
    September 1999 to May 2000. Mr. G. Patrick Lynch is also an officer and director
    of Inter Alia Holding Company. Prior to joining the Company, Mr. G. Patrick
    Lynch held positions in sales management for Fuji Electric Co., Ltd. in Tokyo,
    Japan, and programming project management for BMW AG in Munich, Germany. Mr.
    G. Patrick Lynch received an M.B.A. degree from the University of Michigan
    Business School in Ann Arbor, Michigan. Mr. G. Patrick Lynch is the son of
    Mr. Philip M. Lynch and the brother of Jennifer S. Lynch. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Dr. Donald A. Kubik has
    been employed by the Company since 1978. Refer to &#147;Directors of the Registrant&#148;
    for a more detailed discussion.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Mr. Matthew C. Wolsfeld,
    an employee of the Company since February 2001, has been the Company&#146;s
    Chief Financial Officer since November 9, 2001. Mr. Wolsfeld was Controller
    of the Company from May 2001 through November 2001. Prior to joining the Company,
    Mr. Wolsfeld held an auditing position with PricewaterhouseCoopers LLP in
    Minneapolis, Minnesota. Mr. Wolsfeld received a B.A. degree in Accounting
    from the University of Notre Dame and is currently obtaining his M.B.A. degree
    at the University of Minnesota, Carlson School of Business. Mr. Wolsfeld is
    a Certified Public Accountant.</FONT> </p>
</blockquote>
<p><font size="2" face="Times New Roman, Times, serif"><B>C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Officers
  of the Registrant</B></font></p>
<blockquote>
  <p><font size="2" face="Times New Roman, Times, serif"> Officers of the Company,
    their ages and the offices held, as of November 15, 2003, are as follows:</font>
  </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR bgcolor="#FFFFff">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Name</font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">Age</font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">Position
      in the Company</font></b></TD>
  </TR>
  <TR bgcolor="#FFFFff">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Elsie F. Gilles</FONT></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">62</FONT></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Treasurer</FONT></TD>
  </TR>
  <TR bgcolor="#FFFFff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Irina V. Roytman</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">38</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Vice President and Coordinator
      for Eastern Europe</FONT></TD>
  </TR>
  <TR bgcolor="#FFFFff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Prof. Efim Ya. Lyublinski</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">66</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Vice President and Director
      of Applications Engineering</FONT></TD>
  </TR>
  <TR bgcolor="#FFFFff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Dr. Yelena L. Shanina</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">55</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Vice President and Director
      of Technical Coordination</FONT></TD>
  </TR>
  <TR bgcolor="#FFFFff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Jennifer S. Lynch</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">30</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Corporate Secretary</FONT></TD>
  </TR>
</TABLE>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Ms. Elsie F. Gilles has
    been employed by the Company since 1985, serving in a variety of capacities
    in the areas of accounting and personnel. Ms. Gilles has been the Treasurer
    of the Company since November 20, 2000. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Ms. Irina V. Roytman has
    been employed by the Company since September 1994 serving in a variety of
    capacities in the area of international business development. She has been
    Vice President and Coordinator for Eastern Europe since July 2000. Ms. Roytman
    holds B.S. in engineering from the Technical University of St. Petersburg
    in Russia. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Prof. Efim Ya. Lyublinski
    has been employed by the Company since March 2000 in the position of Vice
    President and Director of Applications Engineering. Prof. Lyublinski is a
    Member of the Russian Academy of Natural Sciences. From 1984 to 1999 Prof.
    Lyublinski was Head of Laboratory of Complex Methods of Corrosion Protection
    at the Central Research Institute of Structural Materials (&#147;Prometey&#148;),
    St. Petersburg. Prof. Lyublinski also held a Senior Consulting Position with
    Osmos Technology, Boston, Massachusssetts from 1995 to 1999. Prof. Lyublinski</FONT>
  </p>
  <p align="center"> <font size="2" face="Times New Roman, Times, serif">41&nbsp;
    </font> </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<p><font size="2" face="Times New Roman, Times, serif"><A name="page_42"></A>
  </font> </p>
<blockquote>
  <p><FONT size=2 face="Times New Roman, Times, serif">holds 14 patents, is responsible
    for 64 inventions and has authored 8 books, 6 booklets, 140 articles and 75
    contributions to various conferences in the areas of materials science and
    corrosion.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Dr. Yelena L. Shanina
    has been employed by the Company since April 2002 in the position of Vice
    President and Director of Technical Coordination. Dr. Shanina is a graduate
    of Moscow State University, Chemical Faculty specializing in chemical kinetics.
    After graduating, Dr. Shanina worked as a senior researcher of the Institute
    of Biochemical Physics of the Russian Academy of Sciences. Dr. Shanina has
    authored more than 30 articles in her field. From 1998 until April 2002 Dr.
    Shanina also was responsible for applications engineering for NTIC&#146;s
    Joint Venture in the Russian Federation, MostNIC, providing hands-on technical
    support to MostNIC&#146;s customers with respect to the chemistry and proper
    use of the NTIC industrial packaging formulations developed within the Russian
    Federation, both at our Excor Technical Center in Dresden, Germany, and stemming
    from the United States and Japan.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Ms. Jennifer S. Lynch
    has been employed by the Company as Corporate Secretary since January, 2003.
    Previously she was the Director of Group Programs at the Berlitz Language
    School in Washington, DC. She holds an M.A. in International Relations from
    the Johns Hopkins University School of Advanced International Studies (SAIS).
    Ms. Jennifer S. Lynch is the sister of G. Patrick Lynch and the daughter of
    Philip M. Lynch. </FONT> </p>
</blockquote>
<p> <font size="2" face="Times New Roman, Times, serif"><B>D. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit
  Committee/Audit Committee Financial Expert </B> </font></p>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company has an audit
    committee of the Board of Directors that meets the definition of &#147;audit
    committee&#148; set forth in Section 3a(58)(A) of the Exchange Act. The Audit
    Committee maintains an active role in communication with the Company&#146;s
    independent auditors and with the management of the Company and performs its
    duties and responsibilities set forth in the Audit Committee Charter. The
    Audit Committee for fiscal 2003 consisted of Messrs. Lareau, Vukcevich and
    Stone. The Audit Committee met five times during fiscal 2003. Messrs. Lareau,
    Chenu and Stone currently serve on the Audit Committee and will continue to
    serve as the Audit Committee for fiscal 2004. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Board of Directors
    of the Company has not determined any of the members of the Audit Committee,
    are considered audit committee financial experts, as that term is defined
    in the applicable rules and regulations promulgated under the Securities Exchange
    Act of 1934. The Board of Directors has concluded that the members of the
    Audit Committee are qualified to serve on the Audit Committee by the virtue
    of their experience and qualifications. </FONT> </p>
</blockquote>
<P> <font size="2" face="Times New Roman, Times, serif"><B>E. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compliance
  with Section 16(a) of the Exchange Act</B> </font> </P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Section 16(a) of the Securities
    Exchange Act of 1934, as amended, requires the Company&#146;s directors and
    executive officers and all persons who beneficially own more than 10% of the
    outstanding shares of the Company&#146;s Common Stock to file with the Securities
    and Exchange Commission initial reports of ownership and reports of changes
    in ownership of the Company&#146;s Common Stock. Executive officers, directors
    and greater than 10% beneficial owners are also required to furnish the Company
    with copies of all Section 16(a) forms they file. To the Company&#146;s knowledge,
    based upon a review of the copies of such reports furnished to the Company
    and written representations that no other reports were required, during the
    year ended August 31, 2003, none of the Company&#146;s directors or officers
    or beneficial owners of greater than 10% of the Company&#146;s Common Stock
    failed to file on a timely basis the forms required by Section 16 of the Exchange
    Act. </FONT> </p>
</blockquote>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">42 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_43"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>F.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Code of Ethics </B> </font></P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company has adopted
    a code of ethics that applies to its co-principal executive officers, principal
    financial officer and treasurer, as well as other employees and the Company&#146;s
    directors. </FONT></p>
</blockquote>
<P> <font size="2" face="Times New Roman, Times, serif"><B>Item 10. EXECUTIVE
  COMPENSATION.</B> </font></P>
<P> <font size="2" face="Times New Roman, Times, serif"><B>A. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation
  of Directors</B> </font> </P>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Directors Fees. </I>Each
    person who was a non-employee director for all of fiscal 2003 received an
    annual retainer of $10,000 in fiscal 2003 for services rendered as a director
    of the Company, and each person who was a non-employee director for a portion
    of fiscal 2003 received a portion of such fee. Each non-employee director
    of the Company further received $1,000 for each Board meeting and Strategic
    Planning meeting and $500 for each Committee (e.g. Audit and Compensation)
    meeting attended. The Chairman of the Board does not receive any Board or
    committee meeting fee. The Company pays the premium on a group health insurance
    policy for the Chairman of the Board.</font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Automatic Option
    Grants to Non-Employee Directors. </I>Pursuant to the Company&#146;s 1994
    and 2000 Stock Incentive Plans (the &#147;Plans&#148;), each non-employee
    director of the Company is automatically granted a non-qualified option to
    purchase 2,000 shares of Common Stock (a &#147;Director Option&#148;) on the
    first day of each fiscal year in respect to their past year&#146;s services
    as a non-employee director of the Company. Non-employee directors who are
    elected or appointed to the Board following the first day of the Company&#146;s
    fiscal year receive pro rata portion of 2,000 shares of Common Stock calculated
    by dividing the number of months remaining in the fiscal year at the time
    of election or appointment divided by twelve, which options are granted at
    the end of the relevant fiscal year. </font> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">On September 1, 1998,
    Messrs. Dworkin, Hahn, Lareau, Lynch, Rikuta and Vukcevich each received a
    Director Option to purchase 2,000 shares of Common Stock at an exercise price
    of $6.25 per share, and on September 1, 1999, the same individuals each received
    a Director Option to purchase 2,000 shares of Common Stock at an exercise
    price of $6.5625 per share. Subsequently, Mr. Lynch voluntarily forfeited
    his September 1, 1999 Director Option to purchase 2,000 shares to the Option
    Plan. All of such Director Options granted vest in equal one-third installments
    over a three-year period.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Automatic option grants
    were made pursuant to the Company&#146;s Plan as of September 1, 2000 to Messrs.
    Dworkin, Lareau, Lynch, Rikuta, and Vukcevich, the Company&#146;s non-employee
    directors. Each received a Director Option to purchase 2,000 shares of Common
    Stock at an exercise price of $6.75. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">On February 9, 2001, Ms.
    Kiel-Dixon, Ms. Krishna, Mr. Taylor, and Mr. Stone each received a Director
    Option to purchase 1,000 shares of Common Stock at an exercise price of $5.50
    per share. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Automatic option grants
    were made pursuant to the Company&#146;s Plan as of September 1, 2001 to Mr.
    Lareau, Mr. Lynch, Mr. Rikuta, Mr. Vukcevich, Ms. Kiel-Dixon, Ms. Krishna,
    Mr. Stone, and Mr. Taylor, the Company&#146;s non-employee directors. Each
    received a Director Option to purchase 2,000 shares of Common Stock at an
    exercise price of $5.00. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Automatic option grants
    were made pursuant to the Company&#146;s Plan as of September 1, 2002 to Mr.
    Lareau, Mr. Lynch, Mr. Rikuta, Mr. Vukcevich, Ms. Kiel-Dixon, Ms. Krishna,
    Mr. Stone, Mr. Taylor and Mr. Gencer, the Company&#146;s non-employee directors.
    Each received a Director Option to purchase 2,000 shares of Common Stock at
    an exercise price of $3.34. </FONT></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">43</font>
  </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_44"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Automatic option grants
    were made pursuant to the Company&#146;s Plan as of September 1, 2003 to Mr.
    Lareau, Mr. Lynch, Mr. Meng, Ms. Krishna, Ms. Kiel-Dixon, Mr. Gencer, Mr.
    Chenu, Mr. Stone, and Mr. Taylor, the Company&#146;s non-employee directors.
    Each received a Director Option to purchase 2,000 shares of Common Stock at
    an exercise price of $5.30. </FONT> </p>
</blockquote>
<P> <font size="2" face="Times New Roman, Times, serif"><B>B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary
  of Cash and Certain Other Compensation Paid to Executive Officers </B> </font></P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The following table provides
    summary information concerning cash and non-cash compensation paid or accrued
    by the Company to or on behalf of the Company&#146;s Co-Chief Executive Officers
    and the most highly compensated executive officers of the Company whose cash
    and non-cash salary and bonus exceeded $100,000 in the fiscal year ended August
    31, 2003 (the &#147;Named Executive Officers&#148;). </FONT> </p>
</blockquote>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B>Summary
  Compensation Table</B> </font> </P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR bgcolor="#FFFFFF">
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">Annual&nbsp;Compensation</font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><font size="1" face="Times New Roman, Times, serif"><B>Underlying</B></font></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD WIDTH="100%"><div align="left"><b><font size="1" face="Times New Roman, Times, serif">Name
        and Principal Position</font></b></div></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Year</B></font></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Salary&nbsp;($)</B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Bonus&nbsp;($)<SUP>(1)</SUP></B></font></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Other&nbsp;($)<SUP>(2)</SUP></B></font></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD ALIGN="center"><font size="1" face="Times New Roman, Times, serif"><B>Options
      (#)</B></font></TD>
    <TD>&nbsp;&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Philip
      M. Lynch <SUP>(4)</SUP></FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD><font size="2" face="Times New Roman, Times, serif"><SUP> (3)</SUP></font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%" height="21"><font size="2" face="Times New Roman, Times, serif">Chairman
      of the Board and Co-Chief</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD><font size="2" face="Times New Roman, Times, serif"><SUP> (3)</SUP></font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">Executive
      Officer</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2001</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD><font size="2" face="Times New Roman, Times, serif"><SUP> (3)</SUP></font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Donald
      A. Kubik <SUP>(4)</SUP></FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">5,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">Vice
      Chairman and Chief Technology</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">5,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">Officer</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2001</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">5,250</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">G. Patrick
      Lynch <SUP>(4)</SUP></FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">116,630</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">17,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,607</FONT></TD>
    <TD><font size="2" face="Times New Roman, Times, serif"><SUP> (3)</SUP></font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">President
      and Co-Chief</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">110,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">15,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,850</FONT></TD>
    <TD><font size="2" face="Times New Roman, Times, serif"><SUP> (3)</SUP></font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">Executive
      Officer</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2001</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">100,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,606</FONT></TD>
    <TD><font size="2" face="Times New Roman, Times, serif"><SUP> (3)</SUP></font></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Matthew
      C. Wolsfeld <SUP>(4)</SUP></FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">81,575</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">17,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">3,380</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%"><font size="2" face="Times New Roman, Times, serif">Chief
      Financial Officer</font></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">65,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">15,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">2,275</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">10,000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD width="100%">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2001</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">31,795</FONT></TD>
    <TD><font size="2" face="Times New Roman, Times, serif"><SUP>(5)</SUP></font></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">5,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<br>
<hr width="100%" size="1">
<br>
<TABLE>
  <TR>
    <TD valign="top" width="5%"><FONT size=2 face="Times New Roman, Times, serif">(1)<BR>
      &nbsp;&nbsp;</FONT></TD>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Annually,
      prior to the November Board of Director&#146;s meeting, the Compensation
      Committee recommends bonuses to be paid to the Executive Officers of the
      Company. The Board then considers and, if it deems appropriate, approves
      the bonuses. The annual bonuses are paid in the subsequent year based on
      the services performed in the fiscal year covered in this 10-KSB; an estimated
      accrual is prepared based on the Compensation Committee recommendations
      at the July Board meeting.<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">(2)<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Compensation
      hereunder consists of contributions to the 401(k) plans of the Named Executive
      Officers.<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">(3)<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Does not
      include any commissions payable to Inter Alia Holding Company, an entity
      of which Mr. Philip Lynch and Mr. G. Patrick Lynch are shareholders, under
      a certain Manufacturer&#146;s Representative Agreement. See &#147;Item 12
       &#8212; Certain Relationships and Related Party Transactions.&#148;<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">(4)<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Denotes
      the individual as a member of the Executive Committee.<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">(5)<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">This amount
      represents a partial year as the Company hired Mr. Wolsfeld in February
      of fiscal year 2001.<BR>
      </FONT></td>
  </tr>
</TABLE>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">44 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_45"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Option Grants and Exercises.</B> </font> </P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The following tables summarize
    option grants to, and exercises by, the Company&#146;s Named Executive Officers
    and the potential realizable value of the options held by such persons as
    of August 31, 2003.</FONT> </p>
</blockquote>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B>OPTION
  GRANTS IN LAST FISCAL YEAR</B> </font> </P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Individual
        Grants</font></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="7"> <HR align="center" size=1 noshade> </TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Potential
        Realizable</B></font></div></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Value
        at Assumed</B></font></div></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Percent&nbsp;of&nbsp;Total</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Annual&nbsp;Rates&nbsp;of&nbsp;Stock</B></font></div></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Number
        of</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Options</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5" ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Price
        Appreciation</B></font></div></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Securities</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Granted
        to</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Exercise&nbsp;or</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=5 align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>For
        Option Term (2)</B></font></div></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Underlying</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Employees</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Base
        Price</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Expiration</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5"><HR align="center" size=1 noshade></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%" align="center"><div align="left"><font size="1" face="Times New Roman, Times, serif"><B>Name</B></font></div></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Options&nbsp;Granted&nbsp;(#)(1)</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>in&nbsp;Fiscal&nbsp;Year</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>($/Sh)</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Date</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=2 align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>5%
        </B></font></div></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD colspan=2 align="center"><font size="1" face="Times New Roman, Times, serif"><B>10%</B></font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD>&nbsp;</TD>
    <TD WIDTH="100%"><HR align="left" size=1 noshade></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="5"><HR align="center" size=1 noshade></TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD width="100%">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan=5 align="center">&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD>&nbsp;</TD>
    <TD width="100%"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Philip
        M. Lynch</FONT></div></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">2,000</FONT></div></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">100%</FONT></div></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">3.34</FONT></div></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">9/1/2007</FONT></div></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">1,846
        </FONT></div></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">$&nbsp;&nbsp;</FONT></div></TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">4,078</FONT></TD>
  </TR>
</TABLE>
<br>
<table width="100%" border="0">
  <tr>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(1) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">The options
      were granted under the Company&#146;s Plan and are subject to the terms
      of the Plan.</FONT></td>
  </tr>
  <tr>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(2)</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">These amounts
      represent certain assumed rates of appreciation only. Actual gains, if any,
      on stock option exercises are dependent upon the future performance of the
      Company&#146;s common stock and overall market conditions. The amounts represented
      in this table might not necessarily be realized. </FONT></td>
  </tr>
</table>
<blockquote>
  <p><FONT size=2 face="Times New Roman, Times, serif">The following table provides
    information for the year ended August 31, 2003 as to the individual exercising
    of options and the potential realizable value of the options held by the Named
    Executive Officers as of August 31, 2003. </FONT></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif"><B>Aggregated
    Option Exercises in Fiscal 2003 and</B></font> <br>
    <font size="2" face="Times New Roman, Times, serif"><B>Fiscal 2003 Year-End
    Option Values</B></font> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR bgcolor="#FFFFFF">
    <TD width="114"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="16"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="81"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="16"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="24"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="23"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="16"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="67"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="17"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="81"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="16"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" colspan=7><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Value
        of Unexercised</font></b></div></TD>
    <TD width="1"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="right" COLSPAN="3"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Number
        of Unexercised</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" COLSPAN="7"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>In-the-Money
        Options</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right" colspan=3><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Options
        at August 31, 2003(#)</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" colspan=7><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>at
        August 31, 2003 (1)</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="3"><HR align="center" size=1 noshade></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="7"><HR align="center" size=1 noshade></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Shares</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="11"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="52"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="29"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="42"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="6"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="4"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="24"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="right"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="right"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Acquired</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="right" COLSPAN="2"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Value</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Name</font></b></div></TD>
    <TD align="right"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>on
        Exercise (#)</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="right" colspan=2><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Realized</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Exercisable</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Unexercisable</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" colspan=2><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Exercisable</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" colspan=4><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Unexercisable</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR>
    <TD><HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="2"><HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="2"><HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD COLSPAN="4"><HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Philip M. Lynch</FONT></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD colspan="2" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">4,000</FONT></div></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">4,000</FONT></div></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD colspan="2" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">210</FONT></div></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD colspan="4" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">4,320</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Donald A. Kubik</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">2,667</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan="4"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">G. Patrick Lynch</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">2,000</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">1,000</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan="4"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#FFFFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Matthew C. Wolsfeld</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">3,333</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">6,667</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">2,470</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">$</FONT><FONT size=2 face="Times New Roman, Times, serif">4,930</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<br>
<table border="0">
  <tr valign="top">
    <td><FONT size=2 face="Times New Roman, Times, serif">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      </FONT></td>
    <td><FONT size=2 face="Times New Roman, Times, serif">Value is calculated
      as the excess of the fair market value of the Common Stock on August 31,
      2003 over the exercise price of the options. On August 31, 2003, the fair
      market value of the Common Stock was $5.30 per share. </FONT></td>
  </tr>
</table>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">45 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_46"></A> </font>
<P> <font size="2" face="Times New Roman, Times, serif"><B>Item 11. SECURITY OWNERSHIP
  OF CERTAIN BENEFICIAL OWNERS AND </B> </font><font size="2" face="Times New Roman, Times, serif"><B>MANAGEMENT.
  </B> </font></P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The following table sets
    forth information regarding the beneficial ownership of the Common Stock of
    the Company as of December 11, 2003, unless otherwise noted (a) by each stockholder
    who is known by the Company to own beneficially more than 5% of the outstanding
    Common Stock, not including Institutional investors and/or Mutual Funds, (b)
    by each director, (c) by each Named Executive Officer and other officers,
    and (d) by all executive officers, officers and directors of the Company as
    a group.</FONT> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=3 align="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">Shares
      of Common Stock (1)</font></b></TD>
    <TD align="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan=3 align="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">Number
      of Unexercised</font></b></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD WIDTH="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Name</font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1"></font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">Amount</font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">Percent&nbsp;of&nbsp;Class&nbsp;(2)</font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">Exercisable</font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">Unexercisable</font></b></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF"><HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD bgcolor="#FFFFFF"><HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1"></font></b></TD>
    <TD bgcolor="#FFFFFF"><HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1"></font></b></TD>
    <TD bgcolor="#FFFFFF"><HR noshade size=1></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1"></font></b></TD>
    <TD bgcolor="#FFFFFF"><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD WIDTH="100%" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center" bgcolor="#FFFFFF"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Inter Alia
      Holding Company (3)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">911,668</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">25.06%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Dr. Donald
      A. Kubik</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">110,508</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">3.04%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2667</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Richard
      G. Lareau</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">35,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0.96%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">6000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">4000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Mark Stone
      (4)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">10,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0.27%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">1334</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3666</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Dr. Mehmet
      Gencer</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">4,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0.11%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">667</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3333</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Elsie F.
      Gilles</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3,352</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0.09%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3667</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">1333</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Philip
      M. Lynch (5)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">2,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0.05%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">4000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">4000</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">G. Patrick
      Lynch (5)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">1,700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0.05%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Matthew
      C. Wolsfeld</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">1,524</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0.05%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3334</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">6666</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Prof. Efim
      Ya. Lyublinski</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">1,101</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0.04%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Irina Roytman
      (6)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">650</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0.02%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">4666</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3334</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Stephan
      Taylor</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">*</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">1334</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3666</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Ursula
      Kiel-Dixon</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">*</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">1334</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3666</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Prof. Aradhna
      Krishna</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">*</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">1334</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">3666</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Dr. Yelena
      L. Shanina</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">*</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Jennifer
      S. Lynch (5)</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">*</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Pierre
      Chenu</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">*</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%"><FONT size=2 face="Times New Roman, Times, serif">Tao Meng</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD align="center">&#8212;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">*</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="FFFFFF">
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">Directors
      and executive officers as a</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR bgcolor="#66FFFF">
    <TD width="100%" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">group (18
      persons) (7)</FONT></TD>
    <TD align="center" bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">1,081,503</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="right" bgcolor="#FFFFFF"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">29.70%</FONT></div></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">33,337</FONT></TD>
    <TD bgcolor="#FFFFFF">&nbsp;</TD>
    <TD align="center" bgcolor="#FFFFFF"><FONT size=2 face="Times New Roman, Times, serif">37,330</FONT></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<br>
<TABLE>
  <TR>
    <TD valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD valign="top"><FONT size=2 face="Times New Roman, Times, serif">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">All of
      the shares owned or held by individuals or entities possessing sole voting
      and investment power with respect to such shares. These amounts do not include
      any exercisable options.<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(2)</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Based on
      3,626,192 shares of Common Stock outstanding as of December 11, 2003.<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(3)<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Includes
      911,668 shares held of record by Inter Alia Holding Company, 16210 Parkland
      Drive Shaker Heights, Ohio 44120, a financial and management consulting
      firm of which Mr. Philip M. Lynch, the Chairman of the Board of Directors
      and the Co-Chief Executive Officer of the Company, Mr. G. Patrick Lynch,
      President and the Co-Chief Executive Officer of the Company and Ms. Jennifer
      S. Lynch are shareholders.<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(4)</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Includes
      10,000 shares held jointly with his wife, Margery Stone.<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(5)</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Does not
      include 911,688 shares held of record or beneficially owned by Inter Alia
      Holding Company, of which Mr. Philip M. Lynch, Ms. Jennifer S. Lynch and
      Mr. G. Patrick Lynch are shareholders.<BR>
      </FONT></td>
  </tr>
</TABLE>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">46 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_47"></A> </font>
<TABLE>
  <TR>
    <td valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <TD valign="top"><FONT size=2 face="Times New Roman, Times, serif">(6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Includes
      350 shares held jointly with her husband, Alexander Roytman.<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(7)<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Includes
      911,668 shares held of record by Inter Alia Holding Company, a financial
      and management consulting firm of which Mr. Philip M. Lynch, the Chairman
      of the Board of Directors and the Co-Chief Executive Officer of the Company,
      Mr. G. Patrick Lynch, President and the Co-Chief Executive Officer of the
      Company and Ms. Jennifer S. Lynch are shareholders.<BR>
      </FONT></td>
  </tr>
</TABLE>
<P><font size="2" face="Times New Roman, Times, serif"><B>Equity Compensation
  Plan Information.</B></font></P>
<P><FONT size=2 face="Times New Roman, Times, serif">The following table summarizes
  the Company&#146;s equity compensation plan information as of August 31, 2003:</FONT></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom" bgcolor="#FFFFff">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Number
        of Securities Remaining</font></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Available
        for Future Issuance</B></font></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFff">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Number
        of Securities to</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Under
        Equity Compensation</B></font></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>be
        Issued upon Exercise</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Weighted
        Average Exercise Price</B></font></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD ALIGN="center"><div align="center"><font size="1" face="Times New Roman, Times, serif"><B>Plans
        (Excluding Securities</B></font></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFff">
    <TD><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Plan
        Category</font></b></div></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">of
        Outstanding Options</font></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">of
        Outstanding Options ($)</font></b></div></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD align="center"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Reflected
        in the First Column)</font></b></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD><HR align="left" size=1 noshade></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD><div align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div></TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Equity
        compensation plans</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">approved
        by security holders</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><div align="left"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;1994
        Stock Option Plan</font></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">35,321</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">6.82</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><div align="left"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2000
        Stock option Plan</font></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">83,000</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">4.79</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">117,000</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Equity
        compensation plans</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#66FFFF">
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">not
        approved by security holders</FONT></div></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">0</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD>&nbsp;</TD>
    <TD><HR align="center" size=1 noshade></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom" bgcolor="#FFFFFF">
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Total</FONT></div></TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">118,321</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">5.39</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">117,000</FONT></div></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>
<P><font size="2" face="Times New Roman, Times, serif"><B>Item 12. CERTAIN RELATIONSHIPS
  AND RELATED PARTY TRANSACTIONS.</B> </font> </P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">On October 1, 1976, the
    Company entered into a Manufacturer&#146;s Representative Agreement with The
    Saxxon Organization, Incorporated (the &#147;Agreement&#148;). The Agreement
    has no expiration date and may be terminated by either party upon 60 days
    written notice. Effective January 9, 1980, the Agreement was assigned by Saxxon
    to Inter Alia Holding Company, a financial and management consulting firm
    of which Philip M. Lynch, the Chairman of the Board of Directors of the Company,
    is an officer and director. Under the Agreement, Inter Alia Holding Company
    (or the &#147;Representative&#148;) is entitled to commissions from the Company
    on the net proceeds of sales of the Company&#146;s product generated by Inter
    Alia Holding Company. The Representative acts as an independent manufacturer&#146;s
    representative of the Company. It has a non-exclusive worldwide right to offer
    for sale and solicit orders for the Company&#146;s products in accordance
    with prices determined by the Company. The Representative is responsible for
    all of its own operating expenses with no entitlement for reimbursement from
    the Company for this activity. The Representative has not effected any sales
    within the United States. The Representative has developed sales outside the
    United States, which resulted in commissions of approximately $51,882, $66,420
    and $52,544, for the fiscal years ended August 31, 2003, 2002 and 2001, respectively.
    In light of the Company&#146;s own domestic sales effort and its distributor
    network within the United States, the Company does not anticipate the Representative
    developing any sales within the United States. Additionally, the Company&#146;s
    expanding international joint venture program may also limit opportunities
    abroad for the Representative. Thus, the Company does not anticipate that
    the Representative will develop any significant sales volume for the Company
    in the future.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company paid reimbursement
    for travel and related Company expenses of $421,000, $240,000, and $249,000
    for the year ended August 31, 2003, 2002 and 2001, respectively, to Inter</FONT>
  </p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">47</font></p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_48"></A> </font>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Alia Holding Company of
    which the Company&#146;s Co-Chief Executive Officer and Chairman of the Board
    is an officer and director. Such reimbursements of travel and related expenses
    were not related to the functions of Inter Alia Holding Company as representative,
    but rather were paid in respect to the conduct of business for and on behalf
    of the Company. Mr. G. Patrick Lynch, President and Co-Chief Executive Officer
    of the Company, and Ms. Jennifer S. Lynch are also shareholders of Inter Alia
    Holding Company.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">On May 31, 2002, the Company
    made a loan of $50,000 to Atagencer LLC, a limited liability corporation that
    is principally owned by Dr. Mehmet Gencer, a member of the Company&#146;s
    Board of Directors. This loan was evidenced by a promissory note held by the
    Company and the outstanding principal balance bore interest at a rate of 2%
    per annum. The note was due five years from the date of issuance<I>. </I>The
    loan was made to Atagencer LLC to enable it to obtain a 25% share in Fibro
    NTI Joint Stock Company in Turkey, of which NTIC is a 50% owner. This note
    was paid in full in July 2003. Additionally, Atagencer LLC entered into a
    consulting agreement in 2001, prior to Dr. Gencer becoming a director in 2002,
    to provide consulting services to the Company. During fiscal 2003 and 2002,
    the Company paid $96,000 and $79,000, respectively, for these services. </FONT>
  </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">On June 30, 2002, the
    Company made a loan of &not;125,000 to Mutec Instruments GmbH. This loan is
    evidenced by a promissory note held by the Company and the outstanding principal
    balance bears interest at a rate of 6.55% per annum. The note is due to the
    Company ten years from the date of the note<I>. </I>NTIC currently owns 30%
    of the company. The proceeds of the loan will be used by Mutec Instruments
    GmbH to obtain capital equipment and finance operations.</FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">On June 1, 2003, the Company
    made a loan of $25,000 to Tao Meng, who subsequently became a member of the
    Company&#146;s Board of Directors on July 15, 2003. The loan is evidenced
    by a promissory note held by the Company which bears interest at a rate of
    2% per annum. The note is due to the Company five years from the date of issuance<I>.
    </I>The loan was obtained by Tao Meng to obtain a 25% share in Tianjin ZERUST
    Ltd. in China, of which NTIC is a 25% owner.</FONT> </p>
</blockquote>
<p> <font size="2" face="Times New Roman, Times, serif"><B>Item 13. EXHIBITS AND
  REPORTS ON FORM 8-K.</B> </font> </p>
<P> <font size="2" face="Times New Roman, Times, serif"><B>(a) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits</B>
  </font> </P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">Reference is made to the
    Exhibit Index hereinafter contained, at page 45 of this Report. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">A copy of any exhibits
    listed or referred to herein will be furnished at a reasonable cost to any
    person who is a stockholder upon receipt from any such person of a written
    request for any such exhibit. Such request should be sent to: Mr. Matthew
    Wolsfeld, 6680 N. Highway 49, Lino Lakes, Minnesota 55014 Attn: Stockholder
    Information. </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The following is a list
    of each management contract or compensatory plan or arrangement required to
    be filed as an exhibit to this Annual Report on Form 10-KSB pursuant to Item
    13(a): </FONT> </p>
</blockquote>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">48 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_49"></A> </font>
<TABLE>
  <TR>
    <TD valign="top" width="5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD valign="top" width="5%"><FONT size=2 face="Times New Roman, Times, serif">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Form of
      Incentive Stock Option Agreement for 1994 Stock Incentive Plan (incorporated
      by reference to Exhibit 10.1 to the Company&#146;s Annual Report on Form
      10-KSB for the fiscal year ended August 31, 1993).<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top" width="3%">&nbsp;</td>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">B.<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Form of
      Non-Qualified Stock Option Agreement for 1994 Stock Incentive Plan (incorporated
      by reference to Exhibit 10.2 to the Company&#146;s Annual Report on Form
      10-KSB for the fiscal year ended August 31, 1993).<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top" width="3%">&nbsp;</td>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">C.<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">1994 Stock
      Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company&#146;s
      Annual Report on Form 10-KSB for the year ended August 31, 1993).<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top" width="3%">&nbsp;</td>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">D.<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">2000 Stock
      Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company&#146;s
      Annual Report on Form 10-KSB for the year ended August 31, 2000).<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top" width="3%">&nbsp;</td>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">E.<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Form of
      Incentive for Stock Option Agreement for 2000 Stock Incentive Plan (incorporated
      by reference to Exhibit 10.5 to the Company&#146;s Annual Report on Form
      10-KSB for the year ended August 31, 2000).<BR>
      </FONT></td>
  </tr>
  <tr>
    <td valign="top" width="3%">&nbsp;</td>
    <td valign="top" width="3%"><FONT size=2 face="Times New Roman, Times, serif">F.<BR>
      &nbsp;&nbsp;</FONT></td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Form of
      Non-Qualified Stock Option Agreement for 2000 Stock Incentive Plan (incorporated
      by reference to Exhibit 10.6 to the Company&#146;s Annual Report on Form
      10-KSB for the year ended August 31, 2000).<BR>
      </FONT></td>
  </tr>
</TABLE>
<P align="left"><font size="2" face="Times New Roman, Times, serif"><B>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Reports on Form 8-K </B> </font></P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">The Company did not file
    any Current Reports on Form 8-K during the fourth quarter of fiscal 2003.
    </FONT> </p>
</blockquote>
<P> <font size="2" face="Times New Roman, Times, serif"><B>Item 14. PRINCIPAL
  ACCOUNTANT FEES AND SERVICES.</B> </font></P>
<blockquote>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Audit Fees. </I>Audit
    fees billed by Deloitte &amp; Touche LLP for services rendered in auditing
    the Company&#146;s financial statements for fiscal 2003 and 2002 and reviewing
    the financial statements included in the Company&#146;s quarterly reports
    on Form 10-Q for fiscal years 2003 and 2002 totaled $93,930 and $87,775, respectively.</font>
  </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>Financial Information
    System Design and Implementation Fees. </I> Deloitte &amp; Touche LLP did
    not bill the Company for any financial information systems design and implementation
    services during fiscal year 2003 or 2002. </font> </p>
  <p> <font size="2" face="Times New Roman, Times, serif"><I>All Other Fees. </I>Fees
    billed by Deloitte &amp; Touche LLP for all other non-audit services, including
    tax-related services, provided during fiscal 2003 and 2002 totaled $56,387
    and $74,700, respectively. </font></p>
  <p align="center"><font size="2" face="Times New Roman, Times, serif">49</font>
  </p>
</blockquote>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_50"></A> </font>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B>SIGNATURES
  </B> </font></P>
<P> <FONT size=2 face="Times New Roman, Times, serif">Pursuant to the requirements
  of Section 13 or 15 of the Securities 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 border=0 cellspacing=0 cellpadding=0>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">NORTHERN
        TECHNOLOGIES INTERNATIONAL CORPORATION</FONT></div></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
  </TR>
  <TR>
    <TD><FONT size=2 face="Times New Roman, Times, serif">December&nbsp;11,&nbsp;2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
    <TD align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">/s/
        Philip M. Lynch</FONT></div></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR align="left" size=1 noshade></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Philip
        M. Lynch</FONT></div></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Chairman
        and Co-Chief Executive Officer</FONT></div></TD>
  </TR>
</TABLE>
<P> <FONT size=2 face="Times New Roman, Times, serif">Pursuant to the requirements
  of the Securities Exchange Act of 1934, this Report has been signed below by
  the following persons on behalf of the Registrant on December 11, 2003 in the
  capacities indicated.</FONT> </P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="top">
    <TD align="center"><font size="1" face="Times New Roman, Times, serif"><B>Name</B></font></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD colspan="2" align="center"><font size="1" face="Times New Roman, Times, serif"><B>Title</B></font></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><HR noshade size=1></TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD colspan="2" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Philip M. Lynch</FONT></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD colspan="2" rowspan="2"><FONT size=2 face="Times New Roman, Times, serif">Co-Chief
      Executive Officer and Chairman of the</FONT><FONT size=2 face="Times New Roman, Times, serif">
      Board of Directors <br>
      (principal executive officer)</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Philip M. Lynch</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ G. Patrick Lynch</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" rowspan="2"><FONT size=2 face="Times New Roman, Times, serif">President
      and Co-Chief Executive Officer<br>
      (principal</FONT><FONT size=2 face="Times New Roman, Times, serif"> executive
      officer)</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">G. Patrick Lynch</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Matthew C. Wolsfeld,
      CPA</FONT></TD>
    <TD><br> </TD>
    <TD colspan="2" rowspan="2"><FONT size=2 face="Times New Roman, Times, serif">Chief
      Financial Officer <br>
      (principal financial officer </FONT><FONT size=2 face="Times New Roman, Times, serif">and
      principal accounting officer)</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Matthew C. Wolsfeld,
      CPA</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Donald A. Kubik,
      Ph.D.</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" rowspan="2"><FONT size=2 face="Times New Roman, Times, serif">Chief
      Technology Officer and Vice Chairman of the</FONT><FONT size=2 face="Times New Roman, Times, serif">
      Board of Directors; Director</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Donald A. Kubik, Ph.D.</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Richard G. Lareau</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Director</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Richard G. Lareau</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Dr. Mehmet A. Gencer</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Director</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Dr. Mehmet A. Gencer</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Mark J. Stone</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Director</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Mark J. Stone</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Stephan C. Taylor</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Director</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Stephan C. Taylor</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Ursula Kiel-Dixon</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Director</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Ursula Kiel-Dixon</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Prof. Aradhna Krishna</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Director</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Prof. Aradhna Krishna</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Pierre Chenu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Director</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Pierre Chenu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">/s/ Tao Meng</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Director</FONT></TD>
  </TR>
  <TR valign="top">
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Tao Meng</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
  </TR>
</TABLE>
<P align="center"> <FONT size=2 face="Times New Roman, Times, serif">50</FONT>
</P>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_51"></A> </font>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B>NORTHERN
  TECHNOLOGIES INTERNATIONAL CORPORATION</B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B>EXHIBIT INDEX TO ANNUAL
  REPORT ON FORM 10-KSB </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B>FOR THE YEAR ENDED AUGUST
  31, 2003 </B> </font></P>
<TABLE border=0 cellpadding=0 cellspacing=0>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD><b><FONT size=1 face="Times New Roman, Times, serif">Item&nbsp;No.</FONT></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="37%" align="center"><b><FONT size=1 face="Times New Roman, Times, serif">Item</FONT></b></TD>
    <TD align="center"><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="48%" align="center"><div align="left"><b><FONT size=1 face="Times New Roman, Times, serif">Method&nbsp;of&nbsp;Filing</FONT></b></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD><HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="37%"><HR noshade size=1></TD>
    <TD><b><font size="1" face="Times New Roman, Times, serif"></font></b></TD>
    <TD width="48%"><HR noshade size=1></TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">3.1</FONT></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Certificate
        of Incorporation</FONT></div></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Incorporated
        by reference to Exhibit 3.1 contained in the Registration Statement on
        Form 10 (File No. 0-19331).</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">3.2</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Bylaws</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Filed
        herewith electronically. Can be furnished upon request.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">10.1</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Form
        of Incentive Stock Option Agreement for 1994 Stock Incentive Plan</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Incorporated
        by reference to Exhibit 10.1 to the Company&#146;s Annual Report on Form
        10-KSB for the fiscal year ended August 31, 1993.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">10.2</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Form
        of Non-Qualified Stock Option Agreement for 1994 Stock Incentive Plan</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Incorporated
        by reference to Exhibit 10.2 to the Company&#146;s Annual Report on Form
        10-KSB for the fiscal year ended August 31, 1993.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">10.3</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">1994
        Stock Incentive Plan</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Incorporated
        by reference to Exhibit 10.3 to the Company&#146;s Annual Report on Form
        10-KSB for the year ended August 31, 1993.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">10.4</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">2000
        Stock Incentive Plan</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Incorporated
        by reference to Exhibit 10.4 to the Company&#146;s Annual Report on Form
        10-KSB for the year ended August 31, 2000.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">10.5</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Form
        of Incentive Stock Option Agreement for 2000 Stock Incentive Plan</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Incorporated
        by reference to Exhibit 10.5 to the Company&#146;s Annual Report on Form
        10-KSB for the year ended August 31, 2000.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">10.6</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Form
        of Non-Qualified Stock Option Agreement for 2000 Stock Incentive Plan</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Incorporated
        by reference to Exhibit 10.6 to the Company&#146;s Annual Report on Form
        10-KSB for the year ended August 31, 2000.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">21.1</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Subsidiaries
        of the Registrant</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Filed
        herewith electronically.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">23.1</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Independent
        Auditors&#146; Consent</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Filed
        herewith electronically.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">24.1</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="left"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Certification
        of Financial Statements</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Filed
        herewith electronically.</FONT></div></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center">&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center">&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><FONT size=2 face="Times New Roman, Times, serif">31.1</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="37%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Co-Principal
        Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002</FONT></div></TD>
    <TD align="center">&nbsp;</TD>
    <TD width="48%" align="center"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">Filed
        herewith electronically.</FONT></div></TD>
  </TR>
</TABLE>
<p align="center"><font size="2" face="Times New Roman, Times, serif">51</font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_52"></A> </font>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="top" bgcolor="#66FFFF">
    <TD width="6%"><div align="left"><FONT size=2 face="Times New Roman, Times, serif">31.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></div></TD>
    <TD width="3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="37%"><FONT size=2 face="Times New Roman, Times, serif">Co-Principal Executive
      Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002</FONT></TD>
    <TD width="6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="48%"><FONT size=2 face="Times New Roman, Times, serif">Filed herewith electronically.</FONT></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">31.3</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Principal Financial
      Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Filed herewith electronically.</FONT></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">32.1</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Co-Principal Executive
      Officer Certification Pursuant to Section 906 ofthe Sarbanes-Oxley Act of
      2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Filed herewith electronically.</FONT></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">32.2</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Co-Principal Executive
      Officer Certification Pursuant to Section 906 ofthe Sarbanes-Oxley Act of
      2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Filed herewith electronically.</FONT></TD>
  </TR>
  <TR valign="top" bgcolor="#FFFFFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="top" bgcolor="#66FFFF">
    <TD><div align="left"><FONT size=2 face="Times New Roman, Times, serif">32.3</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Principal Financial
      Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Filed herewith electronically.</FONT></TD>
  </TR>
</TABLE>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">52 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_53"></A> </font>
<P align="right"> <font size="2" face="Times New Roman, Times, serif"><B>EXHIBIT
  3.2</B> </font></P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B>AMENDED
  AND RESTATED </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B>BYLAWS </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B>OF </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B>NORTHERN TECHNOLOGIES
  INTERNATIONAL CORPORATION </B> </font><br>
  <FONT size="2" face="Times New Roman, Times, serif">A Delaware Corporation </FONT>
  <br>
  <font size="2" face="Times New Roman, Times, serif"><B>(As approved November
  14, 2003)</B> </font> </P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>ARTICLE
  </U>I </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B><U>OFFICES</U> </B></font></P>
<P align="left"><FONT size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT size="2" face="Times New Roman, Times, serif">Section
  1. The registered office of the Corporation in the State of Delaware shall be
  in the City of Wilmington, County of New Castle, State of Delaware. The name
  of The Corporation&#146;s registered agent at such address shall be The Corporation
  Trust Company. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  2. The Corporation may also have offices at such other places, both within and
  without the State of Delaware, as the Board of Directors may from time to time
  determine or the business of the corporation may require. </FONT> </P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>ARTICLE
  </U>II </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B><U>MEETINGS OF STOCKHOLDERS</U>
  </B> </font></P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  1. <U>Place and Time of Annual Meeting</U>. An annual meeting of the stockholders
  shall be held for the purpose of electing directors and conducting such other
  business as may come before the meeting. The date, time and place of the annual
  meeting shall be determined by resolution of the Board of Directors. </FONT>
</P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  2. <U>Special Meetings</U>. Special meetings of the stockholders, for any purpose
  or purposes, unless otherwise prescribed by statute or by the Certificate of
  Incorporation, may be called by the President and shall be called by the president
  or secretary at the request in writing of stockholders owning a majority in
  the amount of the entire capital stock of the corporation issued and outstanding
  and entitled to vote. Such request shall state the purpose or purposes of the
  proposed meeting. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  3. <U>Notice</U>. Written or printed notice of every annual or special meeting
  of the stockholders, stating the place, date, time, and, in the case of special
  meetings, the purpose or purposes, of such meeting, shall be given to each stockholder
  entitled to vote at such meeting not less than ten, nor more than sixty, days
  before the date of the meeting. All such notices shall be delivered, either
  personally or by mail, and if mailed, such notice shall be deemed to be delivered
  when deposited in the United States mail addressed to the stockholder at his
  or her address as it appears on the records of the corporation, with postage
  prepaid. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  4. <U>Waiver of Notice</U>. Whenever any notice is required to be given under
  the provisions of the statutes or of the Certificate of Incorporation or of
  these Bylaws, a waiver thereof in writing, signed by the person or persons entitled
  to said notice, whether before or after the time stated therein, shall be deemed
  equivalent thereto. </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">53 </font>
</p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_54"></A> </font>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  5. <U>Stockholders List</U>. The officer having charge of the stock ledger of
  the corporation shall make, at least ten days before every meeting of the stockholders,
  a complete list of the stockholders entitled to vote at such meeting arranged
  in alphabetical order, specifying the address of and the number of shares registered
  in the name of each stockholder. Such list shall be open to the examination
  of any stockholder, for any purpose germane to the meeting, during ordinary
  business hours, for a period of at least ten days prior to the meeting, either
  at a place within the city where the meeting is to be held, which place shall
  be specified in the notice of the meeting or, if not so specified, at the place
  where the meeting is to be held. The list shall also be produced and kept at
  the time and place of the meeting during the whole time thereof, and may be
  inspected by any stockholder who is present. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  6. <U>Quorum</U>. The holders of a majority of the stock issued and outstanding
  and entitled to vote thereat, present in person or represented by proxy, shall
  constitute a quorum at all meetings of the stockholders except as otherwise
  provided by statute or by the certificate of incorporation. If a quorum is not
  present, the holders of the shares present in person or represented by proxy
  at the meeting, and entitled to vote thereat, shall have the power, by the affirmative
  vote of the holders of a majority of such shares, to adjourn the meeting to
  another time and/or place. Unless the adjournment is for more than thirty days
  or unless a new record date is set for the adjourned meeting, no notice of the
  adjourned meeting need be given to any stockholder provided that the time and
  place of the adjourned meeting were announced at the meeting at which the adjournment
  was taken. At the adjourned meeting the corporation may transact any business
  which might have been transacted at the original meeting. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  7. <U>Vote Required</U>. When a quorum is present or represented at any meeting,
  the vote of the holders of a majority of the stock having voting power present
  in person or represented by proxy shall decide any question brought before such
  meeting, unless the question is one upon which by express provisions of an applicable
  statute or of the certificate of incorporation a different vote is required,
  in which case such express provision shall govern and control the decision of
  such question.</FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  8. <U>Voting Rights</U>. Every stockholder shall at every meeting of the stockholders
  be entitled to one vote in person or by proxy for each share of the capital
  stock having voting power held by such stockholder, except that no proxy shall
  be voted after three years from its date, unless such proxy provides for a longer
  period. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  9. <U>Informal Action</U>. Any action required to be taken at any annual or
  special meeting of stockholders of the corporation, or any action which may
  be taken at any annual or special meeting of such stockholders, may be taken
  without a meeting, without prior notice and without a vote, if a consent in
  writing, setting forth the action so taken, shall be signed by the holders of
  outstanding stock having not less than the minimum number of votes that would
  be necessary to authorize or take such action at a meeting at which all shares
  entitled to vote thereon were present and voted. Prompt notice of the taking
  of the corporate action without a meeting by less than unanimous written consent
  shall be given to those stockholders who have not consented in writing. Any
  action taken pursuant to such written consent of the stockholders shall have
  the same force and effect as if taken by the stockholders at a meeting thereof.
  </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  10. <U>Business to be Conducted</U>. (A) At any annual meeting of stockholders,
  only such business shall be conducted, and only such proposals shall be acted
  on, as are properly brought before the meeting. In order for business to be
  properly brought before the meeting, the business must be either (1) specified
  in the notice of meeting (or any supplement thereto) given by or at the direction
  of the Board of Directors; (2) otherwise properly brought before the meeting
  by or at the </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">54 </font>
</p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_55"></A> </font>
<P> <FONT size="2" face="Times New Roman, Times, serif">direction of the Board
  of Directors, or (3) otherwise properly brought before the meeting by a stockholder.
  In addition to any other applicable requirements, for business to be properly
  brought before an annual meeting by a stockholder, the stockholder must have
  given timely notice thereof in writing to the Secretary of the Corporation.
  To be timely, a stockholder&#146;s notice must be delivered to or mailed and
  received at the principal executive offices of the corporation, not less than
  90 days nor more than 120 days prior to the meeting; <U>provided</U>, <U>however,</U>
  that in the event that less than 100 days&#146; notice or prior public disclosure
  of the date of the meeting is given or made to stockholders, notice by the stockholder
  to be timely must be so received not later than the close of business on the
  10<SUP>th</SUP> day following the day on which such notice of the date of the
  annual meeting was mailed or such public disclosure was made, whichever first
  occurs. A stockholder&#146;s notice to the Secretary shall set forth as to each
  matter the stockholder proposes to bring before the annual meeting (a) a brief
  description of the business desired to be brought before the annual meeting
  and the reasons for conducting such business at the annual meeting, (b) the
  name and record address of the stockholder proposing such business, (c) the
  class and number of shares of the Corporation which are beneficially owned by
  the stockholder, and (d) any material interest of the stockholder in such business.
  </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)
  Notwithstanding anything in these bylaws to the contrary, no business shall
  be conducted at the annual meeting except in accordance with the procedures
  set forth in this Section 10 of Article II, <U>provided</U>, <U>however,</U>
  that nothing in this Section 10 of Article II shall be deemed to preclude discussion
  by any stockholder of any business properly brought before the annual meeting.
  </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)
  The chairman of the annual meeting shall, if the facts warrant, determine and
  declare to the meeting that business was not properly brought before the meeting
  in accordance with the provisions of this Section 10 of Article II, and if the
  chairman should so determine, he or she shall so declare to the meeting and
  any such business not properly brought before the meeting shall not be transacted.
  </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)
  At any special meeting of the stockholders, only such business shall be conducted
  as shall have been brought before the meeting by or at the direction of the
  Board of Directors. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  11. <U>Stockholder Nomination of Directors</U>. Not less than 90 days nor more
  than 120 days prior to the date of the annual meeting, any stockholder who intends
  to make a nomination at the annual meeting shall deliver a notice to the Secretary
  of the corporation setting forth (A) as to each nominee whom the stockholder
  proposes to nominate for election or reelection as a director, (1) the name,
  age, business address and residence address of the nominee, (2) the principal
  occupation or employment of the nominee, (3) the class and number of shares
  of capital stock of the corporation which are beneficially owned by the nominee
  and (4) any other information concerning the nominee that would be required,
  under the rules of he Securities and Exchange Commission, in a proxy statement
  soliciting proxies of the election of such nominee; and (B) as to the stockholder
  giving the notice, (1) the name and record address of the stockholder and (2)
  the class and number of shares of capital stock of the corporation which are
  beneficially owned by the stockholder; <U>provided</U>, <U>however,</U> that
  in the event that less than 100 days&#146; notice or prior public disclosure
  of the date of the annual meeting is given or made to stockholders, notice by
  the stockholder to be time must be so delivered not later than the close of
  business on the 10<SUP>th</SUP> day following the day on which such notice of
  the date of the meeting was mailed or such public disclosure was made, whichever
  first occurs. Such notice shall include a signed consent to serve as director
  of the corporation, if elected, of each such nominee. The corporation may require
  any proposed nominee to furnish such other information as may reasonably be
  required by the corporation to determine the eligibility of such proposed nominee
  to serve as a director of the corporation. </FONT> </P>
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</p>
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<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>ARTICLE
  III</U> </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B><U>DIRECTORS</U> </B>
  </font></P>
<P align="left"> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  1. <U>Number, Election and Term of Office</U>. The Board of Directors shall
  consist of one or more directors, the number thereof to be determined from time
  to time by resolution of the Board of Directors; provided, however, that until
  the Board of Directors determines to increase or decrease the size of the Board
  of Directors to a greater or smaller number of directors on or after the date
  these Amended and Restated Bylaws are adopted, the Board of Directors shall
  consist of ten (10) directors. The directors shall be elected at the annual
  meeting of the stockholders, except as provided in Section 4 of this Article
  III, and each director elected shall hold office until the next annual meeting
  of stockholders or until a successor is duly elected and qualified or until
  his or her earlier death, resignation or removal as hereinafter provided. </FONT>
</P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  2. <U>Management By Board of Directors</U>. The business of the Corporation
  shall be managed by its Board of Directors, which may exercise all such powers
  of the Corporation and do all such lawful acts and things as are not by statute
  or by Certificate of Incorporation or by these Bylaws directed or required to
  be exercised or done by the stockholders. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  3. <U>Removal</U>. Any director or the entire board of directors may be removed
  at any time, with or without cause, by the holders of a majority of the shares
  of stock of the corporation then entitled to vote at an election of directors,
  except as otherwise provided by statute. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  4. <U>Vacancies</U>. Vacancies and newly created directorships resulting from
  any increase in the authorized number of directors may be filled by a majority
  of the directors then in office though less than a quorum, and each director
  so chosen shall hold office until the next annual election or until a successor
  is duly elected and qualified or until his or her earlier death, resignation
  or removal as hereinafter provided. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  5. <U>Annual Meetings</U>. The annual meeting of each newly elected board of
  directors shall be held without other notice than this bylaw immediately after,
  and at the same place as, the annual meeting of stockholders. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  6. <U>Other Meetings and Notice</U>. Regular meetings, other than the annual
  meeting, of the board of directors may be held without notice at such time and
  at such place as shall from time to time be determined by the board. Special
  meetings of the board of directors may be called by or at the request of the
  President on at least twenty-four hours&#146; notice to each director, either
  personally, by telephone, by mail, or by telegraph; in like manner and on like
  notice the president must call a special meeting on the written request of a
  majority of directors. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  7. <U>Quorum</U>. A majority of the total number of directors shall constitute
  a quorum for the transaction of business. The vote of a majority of directors
  present at a meeting at which a quorum is present shall be the act of the board
  of directors. If a quorum shall not be present at any meeting of the board of
  directors, the directors present thereat may adjourn the meeting from time to
  time, without notice other than announcement at the meeting, until a quorum
  shall be present. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  8. <U>Committees</U>. The board of directors may, by resolution passed by a
  majority of the whole board, designate one or more committees, each committee
  to consist of one or more of the directors of the corporation which to the extent
  provided in such resolution shall have and may exercise the powers of the board
  of directors in the management and affairs of the corporation except as otherwise
  limited by statute. The board of directors may designate one or more directors
  as </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">56 </font>
</p>
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<P> <FONT size="2" face="Times New Roman, Times, serif">alternate members of any
  committee. Such committee or committees shall have such name or names as may
  be determined from time to time by resolution adopted by the board of directors.
  Each committee shall keep regular minutes of its meetings and report the same
  to the board of directors when required. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  9. <U>Committee Rules</U>. Each committee of the board of directors may fix
  its own rules of procedure and shall hold its meetings as provided by such rules,
  except as may otherwise be provided by the resolution of the board of directors
  designating such committee, but in all cases the presence of at least a majority
  of the members of such committee shall be necessary to constitute a quorum.
  In the event that a member and that member&#146;s alternate, if alternates are
  designated by the board of directors as provided in Section 8 of this Article
  III, of such committee is/are absent or disqualified, the member or members
  thereof present at any meeting and not disqualified from voting, whether or
  not such member or members constitute a quorum, may unanimously appoint another
  member of the board of directors to act at the meeting in place of any such
  absent or disqualified members. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  10. <U>Informal Action</U>. Any action permitted to be taken at any meeting
  of the board of directors, or of any committee thereof, may be taken without
  a meeting if all members of the board or committee, as the case may be, consent
  thereto in writing, and the writing or writings are filed with the minutes of
  proceedings of the board or committee. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  11. <U>Compensation</U>. The directors may be paid for expenses of attendance
  at each meeting of the board of directors and may be paid a fixed sum for attendance
  at each meeting of the board of directors or a stated salary. No such payment
  shall preclude any director from serving the corporation in any other capacity
  and receiving compensation therefor. Members of committees designated by the
  board of directors may be allowed like compensation for attending committee
  meetings. </FONT> </P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>ARTICLE
  IV</U> </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B><U>OFFICERS</U> </B>
  </font></P>
<P align="left"> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  1. <U>Number</U>. The officers of the corporation shall be chosen by the board
  of directors and shall consist of a Chairman of the Board, president, one or
  more co-chief executive officers, one or more vice presidents, a secretary,
  a chief financial officer, a treasurer, and such other officers and assistant
  officers as may be deemed necessary or desirable by the board of directors.
  In its discretion, the board of directors may choose not to fill any office
  for any period as it may deem advisable, except the offices of president and
  secretary. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  2. <U>Election and Term of Office</U>. The officers of the corporation shall
  be elected annually by the board of directors at the first meeting of the board
  of directors held after each annual meeting of stockholders. If the election
  of officers shall not be held at such meeting, such election shall be held as
  soon thereafter as conveniently may be. Vacancies may be filled or new offices
  created and filled at any meeting of the board of directors. Each officer shall
  hold office until the next annual meeting of the board of directors or until
  a successor is duly elected and qualified or until his or her earlier death,
  resignation or removal as hereinafter provided. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  3. <U>Removal</U>. Any officer or agent elected or appointed by the board of
  directors may be removed by the board of directors whenever in its judgment
  the best interests of the corporation would be served thereby, but such removal
  shall be without prejudice of the contract rights, if any, of the person so
  removed. </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">57 </font>
</p>
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<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  4. <U>Vacancies</U>. A vacancy in any office because of death, resignation,
  removal, disqualification or otherwise, may be filled by the board of directors
  for the unexpired portion of the term by a majority vote of the directors then
  in office. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  5. <U>Compensation</U>. Compensation of all officers shall be fixed by the board
  of directors, and no officer shall be prevented from receiving such compensation
  by virtue of the fact that he is also a director of the corporation. </FONT>
</P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  6. <U>Chairman of the Board</U>. The Chairman of the Board of Directors shall
  preside at all meetings of the shareholders and Board of Directors and shall
  have such other power and perform such additional duties as may from time to
  time be assigned to him by the Board of Directors. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  7. <U>The President</U>. The President shall be the chief executive officer
  of the corporation; shall, in the absence of the Chairman of the Board, preside
  at all meetings of the stockholders; shall have general and active management
  of the business of the corporation; and shall see that all orders and resolutions
  of the board of directors are carried into effect. He shall execute bonds, mortgages
  and other contracts in the name of the corporation, except where required or
  permitted by law to be otherwise signed and executed, except where the signing
  and execution thereof shall be expressly delegated by the board of directors
  to some other officer or agent of the corporation. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  8. <U>Co-Chief Executive Officer</U>. The board of directors may elect a co-chief
  executive officer, who shall have all of the authority, duties and responsibilities
  of the chief executive officer set forth in Section 7 above. The co-chief executive
  officers may act singly or jointly, and all references in these Bylaws to &#147;chief
  executive officer&#148; shall be deemed to apply with full force and effect
  to any co-chief executive officer. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  9. <U>The Vice Presidents</U>. The Vice President, or if there shall be more
  than one, the Vice Presidents in the order determined by the Board of Directors,
  shall, in the absence or disability of the President, perform the duties and
  exercise the powers of the President and shall perform such other duties and
  have such other powers as the Board of Directors may from time to time prescribe.
  </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  10. <U>The Secretary and Assistant Secretaries</U>. The secretary shall attend
  all meetings of the board of directors and all meetings of the stockholders
  and record all the proceedings of the meetings of the Corporation and of the
  board of directors in a book to be kept for that purpose and shall perform like
  duties for the standing committees when required. The secretary shall give,
  or cause to be given, notice of all meetings of the stockholders and special
  meetings of the board of directors and shall perform such other duties as may
  be prescribed by the board of directors or president, under whose supervision
  he or she shall be. The board of directors may give general authority to any
  officer to affix the seal of the Corporation and to attest the affixing by his
  signature. The assistant secretary, or if there be more than one, the assistant
  secretaries in the order determined by the board of directors, shall, in the
  absence or disability of the secretary, perform the duties and exercise the
  powers of the secretary and shall perform such other duties and have such other
  powers as the board of directors may from time to time prescribe. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  11. <U>The Chief Financial Officer</U>. The Chief Financial Officer shall keep
  accurate financial records for the Corporation; render to the Chief Executive
  Officer and the Board of </FONT> </P>
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</p>
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<P> <FONT size="2" face="Times New Roman, Times, serif">Directors, whenever requested,
  an account of all transactions by the Chief Financial Officer and of the financial
  condition of the Corporation; and prepare and sign, where required, reports
  of the financial condition of the Corporation submitted from time to time to
  the stockholders and such financial reports as may be required to be filed under
  the rules of the Securities and Exchange Commission or any securities exchange
  upon which shares of the Corporation&#146;s capital stock may be listed. </FONT>
</P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  12. <U>The Treasurer and Assistant Treasurers</U>. The Treasurer shall have
  charge and custody of and be responsible for all funds and securities of the
  Corporation; receive and give receipts for monies due and payable to the corporation
  from any source whatsoever; deposit all such monies in the name of the Corporation
  for safekeeping in appropriate banks, trust companies and or other depositories;
  and in general perform all of the duties incident to the office of the Treasurer
  and such other duties as from time to time may be assigned by the Board of Directors
  or by the President, the Co-Chief Executive Officer or the Chief Financial Officer.
  </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
  Assistant Treasurer shall have such powers and shall perform such duties as
  may be assigned by the Board of Directors, the President, Co-Chief Executive
  officer or the Treasurer from time to time. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  13. <U>Other Officers, Assistant Officers and Agents</U>. Officers, assistant
  officers and agents, if any, other than those whose duties are provided for
  in these bylaws, shall have such authority and perform such duties as may from
  time to time be prescribed by resolution of the board of directors. </FONT>
</P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>ARTICLE
  V </U></B> </font><u><br>
  <font size="2" face="Times New Roman, Times, serif"><B>CERTIFICATES OF STOCK
  </B> </font></u></P>
<P align="left"> <FONT size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  1. <U>Form</U>. Every holder of stock in the corporation shall be entitled to
  have a certificate, signed by, or in the name of the corporation by the president
  and the treasurer or an assistant treasurer, or the secretary or an assistant
  secretary of the corporation, certifying the number of shares owned by him or
  her in the corporation. Where a certificate is signed (1) by a transfer agent
  or an assistant transfer agent other than the corporation or its employee or
  (2) by a registrar, other than the corporation or its employee, the signature
  of the president, treasurer, assistant treasurer, secretary, or assistant secretary
  may be facsimile. In case any officer or officers who have signed, or whose
  facsimile signature or signatures have been used on, any such certificate or
  certificates shall cease to be such officer or officers of the corporation whether
  because of death, resignation or otherwise before such certificate or certificates
  have been delivered by the corporation, such certificate or certificates may
  nevertheless be issued and delivered as though the person or persons who signed
  such certificate or certificates or whose facsimile signature or signatures
  have been used thereon had not ceased to be such officer or officers of the
  corporation. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  2. <U>Lost Certificates</U>. The board of directors may direct a new certificate
  or certificates to be issued in place of any certificate or certificates theretofore
  issued by the corporation alleged to have been lost, stolen, or destroyed, upon
  the making of an affidavit of that fact by the person claiming the certificate
  of stock to be lost, stolen, or destroyed. When authorizing such issue of a
  new certificate or certificates, the board of directors may, in its discretion
  and as a condition precedent to the issuance thereof, require the owner of such
  lost, stolen, or destroyed certificate or certificates, or his or her legal
  representative, to give the corporation a bond in such sum as it may direct
  as indemnity against any claim that may be made against the corporation with
  respect to the certificate alleged to have been lost, stolen, or destroyed.
  </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">59 </font>
</p>
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<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  3. <U>Fixing a Record Date</U>. The board of directors may fix in advance a
  date, not more than sixty nor less than ten days preceding the date of any meeting
  of stockholders, or the date for the payment of any dividend, or the date for
  the allotment of rights, or the date when any change or conversion or exchange
  of capital stock shall go into effect, or a date in connection with obtaining
  such consent, as a record date for the determination of the stockholders entitled
  to notice of, and to vote at, any such meeting, and any adjournment thereof,
  or entitled to receive payment of any such dividend, or to any such allotment
  of rights, or to exercise the rights in respect to any such change, conversion,
  or exchange of capital stock, or to give such consent, and in such case such
  stockholders and only such stockholders as shall be stockholders of record on
  the date so fixed shall be entitled to such notice of, and to vote at, such
  meeting and any adjournment thereof, or to receive payments of such dividend,
  or to receive such allotment or rights, or to exercise such rights, or to give
  such consents, as the case may be notwithstanding any transfer of any stock
  on the books of the corporation after any such record date fixed as aforesaid.
  If no record date is fixed, the time for determining stockholders shall be at
  the close of business, on the day next preceding the day on which notice is
  given, or if notice is waived, at the close of business on the day next preceding
  the day on which the meeting is held. The time for determining stockholders
  for any other purpose shall be at the close of business on the date on which
  the board of directors adopts the resolution relating thereto. A determination
  of stockholders shall apply to any adjournment of the meeting; provided, however,
  that the board of directors may fix a new record date for the adjourned meeting.
  </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  4. <U>Registered Stockholders</U>. The corporation shall be entitled to recognize
  the exclusive right of a person registered on its books as the owner of shares
  to receive dividends, and to vote as such owner, and to hold liable for calls
  and assessments a person registered on its books as the owner of shares, and
  shall not be bound to recognize any equitable or other claim to or interest
  in such share or shares on the part of the other person, whether or not it shall
  have express or other notice thereof, except as otherwise provided by the laws
  of Delaware. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  5. <U>Stock Certificates and Legend</U>. If the corporation shall be authorized
  to issue more than one class of stock or more than one series of any class,
  the powers, designations, preferences and relative, participating, optional
  or other special rights of each class of stock or series thereof and the qualifications,
  limitations or restrictions of such preferences and/or rights shall be set forth
  in full or summarized on the face or back of the certificate which the corporation
  shall issue to represent such class or series of stock, provided that, except
  as otherwise provided in Section 202 of the General Corporation Law of Delaware,
  in lieu of the foregoing requirements, there may be set forth on the face or
  back of the certificate which the corporation shall issue to represent such
  class or series of stock, a statement that the corporation will furnish without
  charge to each stockholder who so requests the powers, designations, preferences
  and relative, participating, optional or other special rights of each class
  of stock or series thereof and the qualifications, limitations or restrictions
  of such preferences and/or rights. </FONT> </P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>ARTICLE
  VI</U> </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B><U>GENERAL PROVISIONS</U>
  </B> </font></P>
<P align="left"> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  1. <U>Dividends</U>. Dividends upon the capital stock of the corporation, subject
  to the provisions of the certificate of incorporation, if any, may be declared
  by the board of directors at any regular or special meeting, pursuant to law.
  Dividends may be paid in cash, in property, or in shares of the capital stock,
  subject to the provisions of the certificate of incorporation. Before payment
  of any dividend, there may be set aside out of any funds of the corporation
  available for dividends such sum or sums as the directors from time to time,
  in their absolute discretion, think proper as a reserve </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">60 </font>
</p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_61"></A> </font>
<P> <FONT size="2" face="Times New Roman, Times, serif">or reserves to meet contingencies,
  or for equalizing dividends, or for repairing or maintaining any property of
  the corporation, or for such other purpose as the directors shall think in the
  best interest of the corporation, and the directors may modify or abolish any
  such reserve in the manner in which it was created. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  2. <U>Checks</U>. All checks or demands for money and notes of the Corporation
  shall be signed by such officer or officers or such other person or persons
  as the board of directors may from time to time designate. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  3. <U>Fiscal Year</U>. The fiscal year of the corporation shall be fixed by
  resolution of the board of directors. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  4. <U>Seal</U>. The corporation will not have a corporate seal. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  5. <U>Securities Owned By Corporation</U>. Voting securities in any other corporation
  held by the corporation shall be voted by the president or any vice president,
  unless the board of directors specifically confers authority to vote with respect
  thereto, which may be general or confined to specific instances, upon some other
  person or officer. Any person authorized to vote securities shall have the power
  to appoint proxies, with general power of substitution. </FONT> </P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>ARTICLE
  VII</U> </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B><U>INDEMNITY</U> </B>
  </font></P>
<P align="left"> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  1. <U>Indemnification Rights</U>. To the maximum extent permitted by law, the
  corporation shall indemnify any Eligible Person (as defined below) (including
  such person&#146;s heirs, executors and personal representatives) against any
  and all Amounts (as defined below) incurred or imposed in connection with, or
  which result from, any Proceeding (as defined below) (other than a proceeding
  initiated by such person) in which such person is or may become involved by
  reason of being an Eligible Person. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  2. <U>Advancement of Expenses</U>. In connection with any Proceeding, the corporation
  may advance Expenses (as defined below) to any Eligible Person upon receipt
  of an undertaking by or on behalf of such person to repay such advance if it
  shall ultimately be determined that such person is not entitled to indemnification
  by the corporation. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  3. <U>Rights Not Exclusive</U>. The rights provided in this Article may not
  be determined exclusive of any other right or rights to which any Eligible Person
  may be entitled under any agreement, vote of stockholders or otherwise. </FONT>
</P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
  4. <U>Definitions</U>. For purposes of this Article: </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)
  &#147;Amounts&#148; shall include judgments, penalties, fines, amounts paid
  in settlement and Expenses. </FONT> </P>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)
  &#147;Corporation&#148; shall mean the corporation and any corporation at least
  a majority of whose voting securities have ordinary voting power for the election
  of directors (other than securities having such voting power only by reason
  of the occurrence of a contingency) which is, at the time of alleged events
  giving rise to the Proceeding, owned by the corporation and/or one or more of
  its majority-owed subsidiaries. </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">61 </font>
</p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_62"></A> </font>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)
  &#147;Eligible Person&#148; shall mean: </FONT> </P>
<blockquote>
  <p> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)
    A director, officer or employee of the corporation; or </FONT> </p>
  <p> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)
    A director, officer or employee of the corporation who at the specific written
    request or resolution of the Board of Directors of the corporation is, at
    the time either of the Proceeding and/or the alleged events giving rise to
    the Proceeding, serving as a director, officer or employee of any other company,
    partnership, joint venture, trust, employee benefit plan or other enterprise;
    or </FONT> </p>
  <p> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)
    A fiduciary or co-fiduciary of an employee benefit plan of the Corporation
    as those terms are defined in the Employee Retirement Income Security Act
    of 1974. </FONT> </p>
</blockquote>
<p> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)
  &#147;Expenses&#148; shall mean all reasonable attorneys&#146; fees and all
  other disbursements or expenses of the types customarily incurred in connection
  with prosecuting, defending, preparing to prosecute or defend, investigating
  or preparing to be a witness in a Proceeding. </FONT> </p>
<P> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E)
  &#147;Proceeding&#148; shall include any actual, threatened or completed action,
  suit, arbitration, alternative dispute resolution mechanism, investigation,
  administrative hearing or other formal claim that could result or has resulted
  in personal liability, whether civil, criminal, administrative or investigative.
  </FONT> </P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>ARTICLE
  VIII</U> </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B><U>INDEMNIFICATION AGREEMENTS</U>
  </B> </font></P>
<P align="left"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  corporation shall have the express authority to enter into such agreements as
  the Board of Directors deems appropriate for the indemnification of present
  of future directors and officers of the corporation, entity or enterprise with
  whom such person is serving at the express written request of the corporation.
  </font> </P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>ARTICLE
  IX</U> </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B><U>AMENDMENTS</U> </B>
  </font></P>
<P align="left"> <FONT size="2" face="Times New Roman, Times, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These
  bylaws may be adopted, amended, altered, or repealed at any meeting of the board
  of directors by majority vote. The fact that the power to adopt, amend, alter
  or repeal the bylaws has been conferred upon the board of directors shall not
  divest the stockholders of the same powers. </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">62 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_63"></A> </font>
<P align="right"> <font size="2" face="Times New Roman, Times, serif"><B>Exhibit
  21.1</B> </font></P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B>SUBSIDIARIES
  OF THE REGISTRANT</B> </font></P>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">State
        or Other</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Jurisdiction
        of</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Names
        Under Which</FONT></div></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Incorporation
        or</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Subsidiary
        Does</FONT></div></TD>
  </TR>
  <TR>
    <TD><div align="center"><font size="2" face="Times New Roman, Times, serif">Name
        of Subsidiary</font></div></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Organization</FONT></div></TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Ownership
        Interest</FONT></div></TD>
    <TD align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="right"><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Business</FONT></div></TD>
  </TR>
  <TR>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
  </TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR>
    <TD><FONT size=2 face="Times New Roman, Times, serif">NTI Facilities, Inc.</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Ohio</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">100%</FONT></div></TD>
    <TD>&nbsp;</TD>
    <TD><div align="center"><FONT size=2 face="Times New Roman, Times, serif">Same</FONT></div></TD>
  </TR>
</TABLE>
<P align="right">&nbsp; </P>
<P align="right"><font size="2" face="Times New Roman, Times, serif"><B>Exhibit
  23.1 </B> </font></P>
<P> <font size="2" face="Times New Roman, Times, serif"><B>INDEPENDENT AUDITORS&#146;
  CONSENT </B> </font></P>
<P> <FONT size=2 face="Times New Roman, Times, serif">We consent to the incorporation
  by reference in Registration Statements No. 333-33931 and No. 333-32596 of Northern
  Technologies International Corporation on Form S-8 of our report dated December
  11, 2003, appearing in the Annual Report on Form 10-KSB of Northern Technologies
  International Corporation for the fiscal year ended August 31, 2003. </FONT>
</P>
<P> <FONT size=2 face="Times New Roman, Times, serif">/s/ Deloitte &amp; Touche
  LLP </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">Minneapolis, Minnesota <br>
  December 11, 2003 </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">63 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_64"></A> </font>
<P align="right"> <font size="2" face="Times New Roman, Times, serif"><B>EXHIBIT
  31.1 </B> </font></P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B><U>CERTIFICATION
  PURSUANT TO SECTION 302(A) OF THE SARBANES-OXLEY</U> </B> </font><br>
  <font size="2" face="Times New Roman, Times, serif"><B><U>ACT OF 2002</U> </B>
  </font></P>
<P align="left"> <FONT size=2 face="Times New Roman, Times, serif">I, Philip M.
  Lynch, certify that: </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">1.&nbsp;I have reviewed
  this annual report on Form 10-KSB of Northern Technologies International Corporation;
  </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">2. Based on my knowledge,
  this report does not contain any untrue statement of a material fact or omit
  to state a material fact necessary to make the statements made, in light of
  the circumstances under which such statements were made, not misleading with
  respect to the period covered by this report; </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">3. Based on my knowledge,
  the financial statements, and other financial information included in this report,
  fairly present in all material respects the financial condition, results of
  operations and cash flows of the small business issuer as of, and for, the periods
  presented in this report; </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">4. The small business issuer&#146;s
  other certifying officers and I are responsible for establishing and maintaining
  disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
  and 15d-15(e)) for the small business issuer and have: </FONT> </P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(a) Designed such disclosure
    controls and procedures, or caused such disclosure controls and procedures
    to be designed under our supervision, to ensure that material information
    relating to the small business issuer, including its consolidated subsidiaries,
    is made known to us by others within those entities, particularly during the
    period in which this report is being prepared; </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(b) Evaluated the effectiveness
    of the small business issuer&#146;s disclosure controls and procedures and
    presented in this report our conclusions about the effectiveness of the disclosure
    controls and procedures, as of the end of the period covered by this report
    based on such evaluation; and </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(c) Disclosed in this
    report any change in the small business issuer&#146;s internal control over
    financial reporting that occurred during the small business issuer&#146;s
    fourth quarter that has materially affected, or is reasonably likely to materially
    affect, the small business issuer&#146;s internal control over financial reporting;
    and </FONT> </p>
</blockquote>
<p> <FONT size=2 face="Times New Roman, Times, serif">5. The small business issuer&#146;s
  other certifying officers and I have disclosed, based on our most recent evaluation
  of internal controls over financial reporting, to the small business issuer&#146;s
  auditors and the audit committee of the small business issuer&#146;s board of
  directors (or persons performing the equivalent function): </FONT> </p>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(a) All significant deficiencies
    and material weaknesses in the design or operation of internal controls over
    financial reporting which are reasonably likely to adversely affect the small
    business issuer&#146;s ability to record, process, summarize and report financial
    information; and </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(b) Any fraud, whether
    or not material, that involves management or other employees who have a significant
    role in the small business issuer&#146;s internal controls over financial
    reporting.</FONT></p>
</blockquote>
<TABLE width="100%" border=0 cellspacing=0 cellpadding=0>
  <TR valign="bottom">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Date: December 11, 2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><font size="2" face="Times New Roman, Times, serif"><img src="g13692_42-69x64x1.jpg" border=0></font></TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD><hr width="100%" size="1" noshade></TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Philip M. Lynch</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Chairman of the Board
      of Directors and</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Co-Chief Executive Officer</FONT></TD>
  </TR>
</TABLE>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">64 </font></p>
<HR noshade align="center" width="100%" size=2>
<p><font size="2" face="Times New Roman, Times, serif"><A name="page_65"></A>
  </font> </p>
<P align="right"> <font size="2" face="Times New Roman, Times, serif"><B>Exhibit
  31.2</B> </font> </P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B>CERTIFICATION
  PURSUANT TO SECTION 302(A) OF THE SARBANES-OXLEY ACT OF </B> </font><font size="2" face="Times New Roman, Times, serif"><B>2002
  </B> </font></P>
<P> <FONT size=2 face="Times New Roman, Times, serif">I, G. Patrick Lynch, certify
  that: </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">1.&nbsp;I have reviewed
  this annual report on Form 10-KSB of Northern Technologies International Corporation;
  </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">2. Based on my knowledge,
  this report does not contain any untrue statement of a material fact or omit
  to state a material fact necessary to make the statements made, in light of
  the circumstances under which such statements were made, not misleading with
  respect to the period covered by this report; </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">3. Based on my knowledge,
  the financial statements, and other financial information included in this report,
  fairly present in all material respects the financial condition, results of
  operations and cash flows of the small business issuer as of, and for, the periods
  presented in this report; </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">4. The small business issuer&#146;s
  other certifying officers and I are responsible for establishing and maintaining
  disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
  and 15d-15(e)) for the small business issuer and have: </FONT> </P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(a) Designed such disclosure
    controls and procedures, or caused such disclosure controls and procedures
    to be designed under our supervision, to ensure that material information
    relating to the small business issuer, including its consolidated subsidiaries,
    is made known to us by others within those entities, particularly during the
    period in which this report is being prepared; </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(b) Evaluated the effectiveness
    of the small business issuer&#146;s disclosure controls and procedures and
    presented in this report our conclusions about the effectiveness of the disclosure
    controls and procedures, as of the end of the period covered by this report
    based on such evaluation; and </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(c) Disclosed in this
    report any change in the small business issuer&#146;s internal control over
    financial reporting that occurred during the small business issuer&#146;s
    fourth quarter that has materially affected, or is reasonably likely to materially
    affect, the small business issuer&#146;s internal control over financial reporting;
    and </FONT> </p>
</blockquote>
<P> <FONT size=2 face="Times New Roman, Times, serif">5. The small business issuer&#146;s
  other certifying officers and I have disclosed, based on our most recent evaluation
  of internal controls over financial reporting, to the small business issuer&#146;s
  auditors and the audit committee of the small business issuer&#146;s board of
  directors (or persons performing the equivalent function): </FONT> </P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(a) All significant deficiencies
    and material weaknesses in the design or operation of internal controls over
    financial reporting which are reasonably likely to adversely affect the small
    business issuer&#146;s ability to record, process, summarize and report financial
    information; and </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(b) Any fraud, whether
    or not material, that involves management or other employees who have a significant
    role in the small business issuer&#146;s internal controls over financial
    reporting. </FONT> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD width="50%"><FONT size=2 face="Times New Roman, Times, serif">Date: December
      11, 2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><font size="2" face="Times New Roman, Times, serif"><img src="g13692_42-69x65x1.jpg" width="233" height="57" border=0></font></div></TD>
  </TR>
  <TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">G. Patrick Lynch</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">President and Co-Chief
      Executive Officer</FONT></TD>
  </TR>
</TABLE>
<p align="center"><font size="2" face="Times New Roman, Times, serif">65 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_66"></A> </font>
<P align="right"> <font size="2" face="Times New Roman, Times, serif"><B>Exhibit
  31.3</B> </font></P>
<P align="center"> <font size="2" face="Times New Roman, Times, serif"><B>CERTIFICATION
  PURSUANT TO SECTION 302(A) OF THE SARBANES-OXLEY ACT OF </B></font><font size="2" face="Times New Roman, Times, serif"><B>2002
  </B> </font></P>
<P> <FONT size=2 face="Times New Roman, Times, serif">I, Matthew C. Wolsfeld,
  certify that: </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">1.&nbsp;I have reviewed
  this annual report on Form 10-KSB of Northern Technologies International Corporation;
  </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">2. Based on my knowledge,
  this report does not contain any untrue statement of a material fact or omit
  to state a material fact necessary to make the statements made, in light of
  the circumstances under which such statements were made, not misleading with
  respect to the period covered by this report; </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">3. Based on my knowledge,
  the financial statements, and other financial information included in this report,
  fairly present in all material respects the financial condition, results of
  operations and cash flows of the small business issuer as of, and for, the periods
  presented in this report; </FONT> </P>
<P> <FONT size=2 face="Times New Roman, Times, serif">4. The small business issuer&#146;s
  other certifying officers and I are responsible for establishing and maintaining
  disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
  and 15d-15(e)) for the small business issuer and have: </FONT> </P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(a) Designed such disclosure
    controls and procedures, or caused such disclosure controls and procedures
    to be designed under our supervision, to ensure that material information
    relating to the small business issuer, including its consolidated subsidiaries,
    is made known to us by others within those entities, particularly during the
    period in which this report is being prepared; </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(b) Evaluated the effectiveness
    of the small business issuer&#146;s disclosure controls and procedures and
    presented in this report our conclusions about the effectiveness of the disclosure
    controls and procedures, as of the end of the period covered by this report
    based on such evaluation; and </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(c) Disclosed in this
    report any change in the small business issuer&#146;s internal control over
    financial reporting that occurred during the small business issuer&#146;s
    fourth quarter that has materially affected, or is reasonably likely to materially
    affect, the small business issuer&#146;s internal control over financial reporting;
    and </FONT> </p>
</blockquote>
<P> <FONT size=2 face="Times New Roman, Times, serif">5. The small business issuer&#146;s
  other certifying officers and I have disclosed, based on our most recent evaluation
  of internal controls over financial reporting, to the small business issuer&#146;s
  auditors and the audit committee of the small business issuer&#146;s board of
  directors (or persons performing the equivalent function): </FONT> </P>
<blockquote>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(a) All significant deficiencies
    and material weaknesses in the design or operation of internal controls over
    financial reporting which are reasonably likely to adversely affect the small
    business issuer&#146;s ability to record, process, summarize and report financial
    information; and </FONT> </p>
  <p> <FONT size=2 face="Times New Roman, Times, serif">(b) Any fraud, whether
    or not material, that involves management or other employees who have a significant
    role in the small business issuer&#146;s internal controls over financial
    reporting. </FONT> </p>
</blockquote>
<TABLE width="100%" border=0 cellpadding=0 cellspacing=0>
  <TR valign="bottom">
    <TD><FONT size=2 face="Times New Roman, Times, serif">Date: &nbsp;December
      11, 2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center"><div align="left"><font size="2" face="Times New Roman, Times, serif"><img src="g13692_42-69x66x1.jpg" width="158" height="82"></font></div></TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><HR noshade size=1></TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Matthew C. Wolsfeld,
      CPA</FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">Chief Financial Officer</FONT></TD>
  </TR>
</TABLE>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">66</font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_67"></A> </font>
<P align="right"> <font size="2" face="Times New Roman, Times, serif"><B>Exhibit
  32.1</B> </font> </P>
<P> <font size="2" face="Times New Roman, Times, serif"><B>CERTIFICATION PURSUANT
  TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
  ACT OF 2002 </B> </font></P>
<P> <FONT size=2 face="Times New Roman, Times, serif">In connection with the Annual
  Report of Northern Technologies International Corporation (the &#147;Company&#148;)
  on Form 10-KSB for the period ending August 31, 2003 as filed with the Securities
  and Exchange Commission on the date hereof (the &#147;Report&#148;), I, Philip
  M. Lynch, Co-Chief Executive Officer of the Company, certify, pursuant to 18
  U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002, that, to the best of my knowledge and belief: </FONT> </P>
<TABLE border=0 cellspacing=0 cellpadding=0>
  <TR valign="top">
    <TD align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(1</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">The Report fully complies
      with the requirements of Section 13(a) or 15(d) of the Securities</FONT><FONT size=2 face="Times New Roman, Times, serif">
      Exchange Act of 1934; and</FONT></TD>
  </TR>
  <TR valign="top">
    <TD align="right">&nbsp;</TD>
    <TD align="right"><FONT size=2 face="Times New Roman, Times, serif">(2</FONT></TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT size=2 face="Times New Roman, Times, serif">The information contained
      in the Report fairly presents, in all material respects, the financial</FONT><FONT size=2 face="Times New Roman, Times, serif">
      condition and results of operations of the Company.</FONT></TD>
  </TR>
</TABLE>
<br>
<table width="100%" border="0">
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif"><img src="g13692_42-69x67x1.jpg" width="137" height="41" border=0></font></td>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td colspan="2"><FONT size=2 face="Times New Roman, Times, serif">Chairman
      of the Board of Directors and Co-Chief <br>
      Executive Officer (principal executive officer) </FONT> </td>
  </tr>
  <tr valign="top">
    <td><hr size="1" noshade></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><FONT size=2 face="Times New Roman, Times, serif">Philip M. Lynch</FONT></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<P align="left"><FONT size=2 face="Times New Roman, Times, serif">Lino Lakes,
  Minnesota <br>
  December 11, 2003 </FONT> </P>
<p align="center"><font size="2" face="Times New Roman, Times, serif">67 </font></p>
<HR noshade align="center" width="100%" size=2>
<p><font size="2" face="Times New Roman, Times, serif"><A name="page_68"></A>
  </font></p>
<p align="right"><font size="2" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Exhibit
  32.2</B></font></p>
<p align="left"><font size="2" face="Times New Roman, Times, serif"><B>CERTIFICATION
  PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
  SARBANES-OXLEY ACT OF 2002</B></font></p>
<p align="left"><FONT size=2 face="Times New Roman, Times, serif">In connection
  with the Annual Report of Northern Technologies International Corporation (the
  &#147;Company&#148;) on Form 10-KSB for the period ending August 31, 2003 as
  filed with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;),
  I, G. Patrick Lynch, Co-Chief Executive Officer of the Company, certify, pursuant
  to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002, that, to the best of my knowledge and belief:</FONT></p>
<TABLE>
  <tr>
    <td valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(1)</FONT></td>
    <td valign="top" colspan="2"><p><FONT size=2 face="Times New Roman, Times, serif">The
        Report fully complies with the requirements of Section 13(a) or 15(d)
        of the Securities Exchange Act of 1934; and</FONT></p></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(2) </FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td valign="top" colspan="2"><FONT size=2 face="Times New Roman, Times, serif">
      The information contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations of the Company.<BR>
      </FONT></td>
  </tr>
</TABLE>
<br>
<table width="100%" border="0">
  <tr valign="top">
    <td><font size="2" face="Times New Roman, Times, serif"><img src="g13692_42-69x68x1.jpg" width="193" height="52"></font></td>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td>&nbsp;</td>
    <td><FONT size=2 face="Times New Roman, Times, serif">President and Co-Chief
      Executive Officer <br>
      (principal executive officer) </FONT></td>
  </tr>
  <tr valign="top">
    <td><hr align="left" size="1" noshade></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><FONT size=2 face="Times New Roman, Times, serif">G. Patrick Lynch</FONT></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<P><font size="2" face="Times New Roman, Times, serif"> </font><FONT size=2 face="Times New Roman, Times, serif"><BR>
  </FONT><FONT size=2 face="Times New Roman, Times, serif">Lino Lakes, Minnesota
  <br>
  December 11, 2003 </FONT> </P>
<p align="center"> <font size="2" face="Times New Roman, Times, serif">68 </font></p>
<HR noshade align="center" width="100%" size=2>
<font size="2" face="Times New Roman, Times, serif"><A name="page_69"></A> </font>
<P align="right"><font size="2" face="Times New Roman, Times, serif"> </font><font size="2" face="Times New Roman, Times, serif"><B>Exhibit
  32.3</B> </font> </P>
<P> <font size="2" face="Times New Roman, Times, serif"><B>CERTIFICATION PURSUANT
  TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
  ACT OF 2002 </B> </font></P>
<P> <FONT size=2 face="Times New Roman, Times, serif"> In connection with the
  Annual Report of Northern Technologies International Corporation (the &#147;Company&#148;)
  on Form 10-KSB for the period ending August 31, 2003 as filed with the Securities
  and Exchange Commission on the date hereof (the &#147;Report&#148;), I, Matthew
  C. Wolsfeld, Chief Financial Officer of the Company, certify, pursuant to 18
  U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002, that, to the best of my knowledge and belief: </FONT></P>
<TABLE>
  <tr>
    <td valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></td>
    <td valign="top" colspan="2"><FONT size=2 face="Times New Roman, Times, serif">The
      Report fully complies with the requirements of Section 13(a) or 15(d) of
      the Securities Exchange Act of 1934; and</FONT></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top" colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">(2)</FONT></td>
    <td valign="top" colspan="2"><FONT size=2 face="Times New Roman, Times, serif">
      The information contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations of the Company.</FONT></td>
  </tr>
</TABLE>
<br>
<table width="100%" border="0">
  <tr>
    <td valign="top"><img src="sig.jpg" width="148" height="74"></td>
    <td valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td valign="top"><FONT size=2 face="Times New Roman, Times, serif">Chief Financial
      Officer (principal financial officer <br>
      and principal accounting officer) </FONT></td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td valign="top"><font size="2" face="Times New Roman, Times, serif">Matthew C. Wolsfeld,
      CPA</font></td>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<P><FONT size=2 face="Times New Roman, Times, serif">Lino Lakes, Minnesota <br>
  December 11, 2003 </FONT> </P>
<p align="center"><font size="2" face="Times New Roman, Times, serif">69 </font>
</p>
<p>&nbsp; </p>
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end

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
