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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001206774-04-000320.txt : 20040414
<SEC-HEADER>0001206774-04-000320.hdr.sgml : 20040414
<ACCEPTANCE-DATETIME>20040414142307
ACCESSION NUMBER:		0001206774-04-000320
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040229
FILED AS OF DATE:		20040414

FILER:

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

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11038
		FILM NUMBER:		04732595

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

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NORTHERN INSTRUMENTS CORP
		DATE OF NAME CHANGE:	19930328
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>nt71163.htm
<DESCRIPTION>FORM 10QSB
<TEXT>
<html>

<head>
<title></title>
</head>

<body bgcolor="white">




<hr size="4" width="100%" noshade color=black>


<p  align="center"><font size="5" face="Times New Roman"><b>UNITED STATES<br> SECURITIES AND EXCHANGE COMMISSION<br> </b></font>
<font size="3"><b>Washington, D.C.&#160; 20549</b></font></p>

<hr size="2" width="21%" noshade color=black>


<p  align="center">
<font size="5" face="Times New Roman"><b>FORM 10-QSB</b></font></p>

<hr size="2" width="21%" noshade color=black>


<p  align="center">
<font size="3" face="Times New Roman"><b>Quarterly Report Pursuant to Section 13 or 15(d) of<br> The Securities Exchange Act of 1934</b></font></p>
<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="49%" valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman"><b>For the Quarterly Period Ended:</b></font></p>  </td>
  <td width="1%" valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td width="49%" valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman"><b>Commission File Number</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman"><b>February 29, 2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman"><b>1-11038</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  colspan="3"  valign="bottom">
  <p  align="center">
<font size="6" face="Times New Roman"><b>NORTHERN   TECHNOLOGIES INTERNATIONAL CORPORATION</b></font></p>  </td>
 </tr>
 <tr>
  <td  colspan="3"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
 </tr>
 <tr>
  <td  colspan="3"  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>(Exact   name of registrant as specified in its charter)</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  align="center"><font size="2" face="Times New Roman"><b>Delaware</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman"><b>41-0857886</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>(State of   Incorporation)</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>(I.R.S.   Employer Identification Number)</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  colspan="3"  valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman"><b>6680 N. Highway 49, Lino Lakes, MN &#160;55014</b></font></p>  </td>
 </tr>
 <tr>
  <td  colspan="3"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
 </tr>
 <tr>
  <td  colspan="3"  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>(Address   of principal executive offices)</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  colspan="3"  valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman">(651) 784-1250</font></p>  </td>
 </tr>
 <tr>
  <td  colspan="3"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
 </tr>
 <tr>
  <td  colspan="3"  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>(Registrant&#146;s   telephone number)</b></font></p>  </td>
 </tr>
</table>

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



<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="13%">

 <tr>
  <td width="7%" valign="top">
  <p>
<font size="2" face="Times New Roman">Yes&nbsp;&nbsp;</font>
<font size="2" face="Wingdings">x</font></p>  </td>
  <td width="6%" valign="top">
  <p>
<font size="2" face="Times New Roman">No&nbsp;&nbsp;</font>
<font size="2" face="Wingdings">o</font></p>  </td>
 </tr>
</table>




<p>
<font size="2" face="Times New Roman">Indicate the number of shares outstanding of each of the issuer&#146;s classes of common stock, as of the latest practicable date.</font></p>
<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="49%" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Class</b></font></p>  </td>
  <td width="1%" valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td width="49%" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Outstanding   as of April 14, 2004</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman">Common Stock, $0.02 par value</font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman">3,625,692</font></p>  </td>
 </tr>
</table>


<hr size="4" width="100%" noshade color=black>


<div style="page-break-before:always"></div>
<PAGE>
<br>

<p><font size="2" face="Times New Roman"><b>PART I - FINANCIAL INFORMATION</b></font></p>
<p>
<font size="2" face="Times New Roman">ITEM 1 - FINANCIAL STATEMENTS</font></p>
<p>
<font size="2" face="Times New Roman"><b>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARY</b></font></p>
<p style="margin-bottom:0pt">
<font size="2" face="Times New Roman"><b>CONSOLIDATED BALANCE SHEETS (Unaudited)</b></font></p>

<hr size="1" width="100%" noshade color=black>


<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004 </b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>August 31,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td width="72%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="2%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="1%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman"><b>ASSETS</b></font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">CURRENT ASSETS:</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Cash and cash   equivalents</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">132,059</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">283,326</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Investments,   available-for-sale</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">947,734</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,643,939</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Receivables:</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:5em; text-indent:-1em">
<font size="2" face="Times New Roman">Trade excluding   corporate joint ventures, less allowance for doubtful accounts of $11,563</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,469,872</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,278,173</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:5em; text-indent:-1em"><font size="2" face="Times New Roman">Trade corporate joint   ventures</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">361,573</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">292,938</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:5em; text-indent:-1em">
<font size="2" face="Times New Roman">Technical and other   services, corporate joint ventures</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">849,690</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">765,679</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:5em; text-indent:-1em">
<font size="2" face="Times New Roman">Income taxes</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">548,902</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">531,088</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Inventories</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">913,410</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">971,499</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Prepaid expenses</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">273,101</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">125,542</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Deferred income taxes</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">12,000</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">12,000</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:7em; text-indent:-1em">
<font size="2" face="Times New Roman">Total current assets</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">5,508,341</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">5,904,184</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">PROPERTY AND EQUIPMENT, net</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">554,703</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">526,738</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">OTHER ASSETS:</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Investments in   corporate joint ventures:</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:5em; text-indent:-1em">
<font size="2" face="Times New Roman">Industrial chemical</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">6,836,210</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">5,920,644</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:5em; text-indent:-1em"><font size="2" face="Times New Roman">Industrial non-chemical</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">290,786</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">232,277</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Deferred income taxes</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">343,000</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">343,000</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Notes receivable and   foreign deposit</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,277,847</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,177,847</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Note from employee</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">114,962</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">126,043</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Industrial patents, net</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">553,348</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">317,166</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Other</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">189,004</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">198,777</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">9,605,157</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">8,315,754</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">15,668,201</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">14,746,676</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman"><b>LIABILITIES AND STOCKHOLDERS&#146;   EQUITY</b></font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">CURRENT LIABILITIES:</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Accounts payable</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">420,229</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">538,520</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Accrued liabilities:</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:5em; text-indent:-1em"><font size="2" face="Times New Roman">Payroll and related benefits</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">301,450</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">165,326</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:5em; text-indent:-1em">
<font size="2" face="Times New Roman">Other</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">479,484</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">440,155</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:7em; text-indent:-1em"><font size="2" face="Times New Roman">Total current   liabilities</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,201,163</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,144,001</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">DEFERRED GROSS PROFIT</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">25,000</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">25,000</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">COMMITMENTS AND CONTINGENCIES</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">STOCKHOLDERS&#146; EQUITY:</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Preferred stock, no par   value, authorized 10,000 shares, none issued</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Common stock, $0.02 par   value per share; authorized 10,000,000 shares; issued and outstanding   3,625,692 and 3,626,192, respectively</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">72,514</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">72,524</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Additional paid-in   capital</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">4,190,964</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">4,191,964</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Retained earnings</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">9,765,770</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">9,493,742</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Accumulated other   comprehensive income (loss)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">412,790</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(180,555</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:7em; text-indent:-1em">
<font size="2" face="Times New Roman">Total stockholders&#146;   equity</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">14,442,038</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">13,577,675</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">15,668,201</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">14,746,676</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<p>
<font size="2" face="Times New Roman">See notes to consolidated financial statements.</font></p>
<p  align="center">
<font size="2" face="Times New Roman">2</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p>
<font size="2" face="Times New Roman"><b>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARY</b></font></p>
<p style="margin-bottom:0pt">
<font size="2" face="Times New Roman"><b>CONSOLIDATED STATEMENTS OF INCOME (Unaudited)</b></font></p>


<hr size="1" width="100%" noshade color=black>


<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Three   Months Ended</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Six Months   Ended</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   28,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   28,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="2%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="1%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">NORTH AMERICAN OPERATIONS:</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Sales</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">2,543,648</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">2,001,116</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">5,082,405</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,982,187</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Cost of goods sold</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,209,119</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">958,424</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">2,522,232</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,875,016</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Gross profit</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,334,529</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,042,692</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">2,560,173</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">2,107,171</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Operating expenses:</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Selling</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">563,696</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">451,537</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,012,036</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">825,528</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">General and   administrative</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">600,165</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">524,010</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,188,813</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,074,100</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Research, engineering,   and technical support</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">125,795</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">193,820</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">330,259</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">404,530</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,289,656</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,169,367</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">2,531,108</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">2,304,158</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">NORTH AMERICAN OPERATING INCOME (LOSS)</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">44,873</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(126,675</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">29,065</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(196,987</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">CORPORATE JOINT VENTURES AND EUROPEAN HOLDING   COMPANY:</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Equity in income of   industrial chemical corporate joint ventures and European holding company</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">242,395</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">432,606</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">504,908</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">737,412</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Equity in income (loss)   of industrial non-chemical corporate joint ventures</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">4,445</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(4,728</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,334</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(50,349</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Equity in loss of   business consulting corporate joint ventures</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">&#151;&nbsp;&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(23,750</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(6,250</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(47,500</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Fees for technical   support and other services provided to all corporate joint ventures</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">839,214</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">688,518</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,595,143</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,303,524</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Expenses incurred in   support of all corporate joint ventures</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(1,008,118</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(558,215</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(1,585,677</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(1,109,280</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">INCOME FROM ALL CORPORATE JOINT VENTURES AND   EUROPEAN HOLDING COMPANY</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">77,936</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">534,431</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">509,458</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">833,807</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">INTEREST INCOME</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">24,266</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">48,657</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">32,757</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">70,914</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">INCOME BEFORE INCOME TAX EXPENSE</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">147,075</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">456,413</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">571,280</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">707,735</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">INCOME TAX EXPENSE</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">65,000</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">66,000</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">116,000</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">65,000</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">NET INCOME</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">82,075</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">390,413</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">455,280</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">642,735</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">NET INCOME PER COMMON SHARE:</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Basic</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">.02</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">.11</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">.13</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">.18</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Diluted</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">.02</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">.11</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">.13</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">.18</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">WEIGHTED AVERAGE COMMON SHARES ASSUMED OUTSTANDING:</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Basic</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,625,950</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,635,086</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,625,880</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,628,063</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Diluted</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">3,640,015</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">3,636,916</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">3,632,912</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">3,628,978</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<p><font size="2" face="Times New Roman">See notes to consolidated financial statements.</font></p>
<p  align="center">
<font size="2" face="Times New Roman">3</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p>
<font size="2" face="Times New Roman"><b>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARY</b></font></p>

<p style="margin-bottom:0pt">
<font size="2" face="Times New Roman"><b>CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)<br> SIX MONTHS ENDED FEBRUARY 29, 2004 AND FEBRUARY 28, 2003</b></font></p>

<hr size="1" width="100%" noshade color=black>


<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td width="72%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="2%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="1%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">CASH FLOWS FROM OPERATING ACTIVITIES:</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Net income</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">455,280</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">642,735</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Adjustments to   reconcile net income to net cash provided by (used in) operating activities:</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:5em; text-indent:-1em"><font size="2" face="Times New Roman">Depreciation expense</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">80,306</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">95,357</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:5em; text-indent:-1em">
<font size="2" face="Times New Roman">Amortization expense</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">5,853</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">3,769</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:5em; text-indent:-1em">
<font size="2" face="Times New Roman">Equity in (income) loss   from corporate joint ventures:</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:7em; text-indent:-1em"><font size="2" face="Times New Roman">Industrial chemical</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(504,908</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(737,412</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:7em; text-indent:-1em">
<font size="2" face="Times New Roman">Industrial non-chemical</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(1,334</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">50,349</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:7em; text-indent:-1em">
<font size="2" face="Times New Roman">Business consulting</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">6,250</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">47,500</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:5em; text-indent:-1em"><font size="2" face="Times New Roman">Dividends received from   corporate joint ventures</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">652,263</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">375,489</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:5em; text-indent:-1em">
<font size="2" face="Times New Roman">Gain on sale of   equipment</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(5,300</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(3,605</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:5em; text-indent:-1em">
<font size="2" face="Times New Roman">Change in current   assets and liabilities:</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:7em; text-indent:-1em"><font size="2" face="Times New Roman">Receivables:</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:9em; text-indent:-1em">
<font size="2" face="Times New Roman">Trade excluding   corporate joint ventures</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(191,699</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(84,754</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:9em; text-indent:-1em">
<font size="2" face="Times New Roman">Trade corporate joint   ventures</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(68,635</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(27,789</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:9em; text-indent:-1em"><font size="2" face="Times New Roman">Technical and other   services receivables, corporate joint ventures</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(84,011</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,304</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:9em; text-indent:-1em">
<font size="2" face="Times New Roman">Income taxes</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(17,814</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(115,163</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:7em; text-indent:-1em">
<font size="2" face="Times New Roman">Inventories</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">58,089</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(96,563</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:7em; text-indent:-1em"><font size="2" face="Times New Roman">Prepaid expenses and   other</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(147,559</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(209,619</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:7em; text-indent:-1em">
<font size="2" face="Times New Roman">Notes receivable and   foreign deposits</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(100,000</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(811,963</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:7em; text-indent:-1em">
<font size="2" face="Times New Roman">Employee note   receivable</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">11,081</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">63,093</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:7em; text-indent:-1em"><font size="2" face="Times New Roman">Accounts payable</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(118,291</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(235,604</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:7em; text-indent:-1em">
<font size="2" face="Times New Roman">Accrued liabilities</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">175,453</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(10,559</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:11em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:11em; text-indent:-1em"><font size="2" face="Times New Roman">Total adjustments</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(250,256</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(1,820,355</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:11em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:11em; text-indent:-1em">
<font size="2" face="Times New Roman">Net cash provided by   (used in) operating activities</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">205,024</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(1,177,621</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">CASH FLOWS FROM INVESTING ACTIVITIES:</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Sale of investments   available-for-sale</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">696,205</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,616,961</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Proceeds from the sale   of equipment</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">5,300</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,605</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Investment in joint   ventures:</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:9em; text-indent:-1em">
<font size="2" face="Times New Roman">Industrial chemical</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(465,001</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(9,850</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:9em; text-indent:-1em">
<font size="2" face="Times New Roman">Industrial non-chemical</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(61,750</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(63,486</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:9em; text-indent:-1em"><font size="2" face="Times New Roman">Business consulting</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(6,250</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(47,500</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Additions to property</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(108,271</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(126,177</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Partial return of   original investment in European holding company</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">&#151;&nbsp;&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">30,812</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Decrease in other   assets</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">9,773</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">61,600</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Additions to industrial   patents</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(242,035</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(44,390</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:11em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:11em; text-indent:-1em"><font size="2" face="Times New Roman">Net cash (used in)   provided by investing activities</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(172,029</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,421,575</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">CASH FLOWS FROM FINANCING ACTIVITIES:</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Dividend paid to   shareholders</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(181,672</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(309,204</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Repurchase of common   stock</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(2,590</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">(37,486</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:11em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:11em; text-indent:-1em">
<font size="2" face="Times New Roman">Net cash used in   financing activities</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(184,262</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(346,690</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">NET DECREASE IN CASH AND CASH EQUIVALENTS</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(151,267</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(102,736</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">283,326</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">230,274</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">CASH AND CASH EQUIVALENTS AT END OF PERIOD</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">132,059</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">127,538</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<p><font size="2" face="Times New Roman">See notes to consolidated financial statements.</font></p>
<p  align="center">
<font size="2" face="Times New Roman">4</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p>
<font size="2" face="Times New Roman"><b>NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARY</b></font></p>
<p style="margin-bottom:0pt">
<font size="2" face="Times New Roman"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)</b></font></p>

<hr size="1" width="100%" noshade color=black>


<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">1.</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">INTERIM FINANCIAL INFORMATION</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">In the opinion of management, the accompanying   unaudited consolidated financial statements contain all necessary   adjustments, which are of a normal recurring nature, to present fairly the   consolidated financial position of Northern Technologies International   Corporation and Subsidiary (the Company) as of February 29, 2004 and February   28, 2003 and the results of their operations for the three and six months ended   February 29, 2004 and February 28, 2003, and their cash flows for the six   months ended February 29, 2004 and February 28, 2003, in conformity with   accounting principles generally accepted in the United States of America.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">These consolidated financial statements should be   read in conjunction with the consolidated financial statements and related   notes as of and for the year ended August&nbsp;31, 2003 contained in the   Company&#146;s filing on Form&nbsp;10-KSB dated December 11, 2003 and with   Management&#146;s Discussion and Analysis of Financial Condition and Results of   Operations appearing on pages 8 through 12 of this quarterly report.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Certain fiscal year 2003 amounts have been   reclassified to conform to fiscal year 2004 presentations.&#160; These reclassifications had no effect on   stockholders&#146; equity, sales, or net income as previously reported.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">2.</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">STOCK-BASED COMPENSATION</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The Company accounts for its stock option plan using   the intrinsic value method and has adopted the &#147;disclosure only&#148; provision of   SFAS No. 123, as amended in 2002 by SFAS No. 148, <i>Accounting for Stock-Based Compensation - Transition and Disclosure</i>.   No compensation cost has been recognized for the stock options granted under   the stock incentive plan.&#160; Had   compensation cost been determined based upon fair value at the grant date for   the awards under these plans, the Company&#146;s net earnings and earnings per   share would have been as follows:</font></p>  </td>
 </tr>
</table>

<BR>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="90%">

 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Three   Months Ended</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Six Months   Ended</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   28,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   28,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="2%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="1%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Net Income:</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">As reported</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">82,075</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">390,413</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">455,280</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">642,735</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Stock-based   compensation, net of related tax effect</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(17,683</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(20,036</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(41,230</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">(41,593</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Pro forma</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">64,392</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">370,377</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">414,050</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">601,142</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Net Income per common share - basic:</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">As reported</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.02</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.11</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.13</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.18</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Stock-based   compensation, net of related tax effect</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">0.00</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">0.01</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">0.01</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">0.01</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Pro forma</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.02</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.10</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.12</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.17</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Net Income per common share &#150; assuming dilution:</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">As reported</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.02</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.11</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.13</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.18</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p  style="margin-left:3em; text-indent:-1em"><font size="2" face="Times New Roman">Stock-based   compensation, net of related tax effect</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">0.00</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">0.01</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">0.01</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">0.01</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p  style="margin-left:3em; text-indent:-1em">
<font size="2" face="Times New Roman">Pro forma</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.02</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.10</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.12</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">0.17</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>




<p  align="center"><font size="2" face="Times New Roman">5</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">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.&#160; Other than disclosure in this footnote,   the Company does not use these pro forma results for any purpose.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The fair value of each option grant is estimated on   the grant date using the Black-Scholes option-pricing model.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">3.</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">INVENTORIES</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Inventories consist of the following:</font></p>  </td>
 </tr>
</table>

<BR>



<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="90%">

 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>August 31,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td width="72%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="2%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="1%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Production materials</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">325,040</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">187,828</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Finished goods</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">588,370</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">783,671</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">913,410</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">971,499</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<BR>
<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">4.</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">PROPERTY AND EQUIPMENT</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Property and equipment consist of the following:</font></p>  </td>
 </tr>
</table>

<BR>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="90%">

 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>August 31,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td width="72%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="2%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="1%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Land</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">29,097</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">29,097</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Buildings and improvements</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">653,521</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">639,531</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Machinery and equipment</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">925,624</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">831,347</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,608,242</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,499,975</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Less accumulated depreciation</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">1,053,539</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">973,237</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">554,703</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">526,738</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>
<BR>
<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">5.</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">NOTES RECEIVABLE AND FOREIGN DEPOSITS</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Notes receivable and foreign deposits consist of the   following:</font></p>  </td>
 </tr>
</table>

<BR>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="90%">

 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>August 31,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td width="72%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="2%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="1%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Notes receivable from North American operations</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">540,000</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">500,000</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Notes receivable from industrial chemical corporate   joint venture partners</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">292,378</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">232,378</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Foreign deposits</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">445,469 </font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">445,469</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,277,847</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,177,847</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<BR>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">6.</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">INVESTMENTS IN CORPORATE JOINT VENTURES</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">In September 2003 the Company invested an additional   $440,000 in React-NTI LLC, in connection with React-NTI LLC&#146;s acquisition of   React Inc.&#160; React-NTI LLC is an   industrial chemical joint venture formed in fiscal 2003 in which the Company   now has a 75% ownership interest.&#160;   Under the terms of the agreement related to React-NTI LLC, there are   certain matters requiring unanimous approval of the </font></p>  </td>
 </tr>
</table>

<p  align="center">
<font size="2" face="Times New Roman">6</font></p>

<div style="page-break-before:always"></div>
<PAGE>
<br>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">Company and the minority shareholder.&#160; These rights represent substantive   participating rights of the minority shareholder as defined in Emerging   Issues Task Force (EITF) No. 96-16, <i>Investor&#146;s   Accounting for an Investee When the Investor has a Majority of the Voting   Interest but the Minority Shareholder or Shareholders Have Certain Approval   or Veto Rights</i>.&#160;   Accordingly, the Company does not control React-NTI LLC and will   account for its investment under the equity method rather than by   consolidation.&#160; The Company believes   that React-NTI LLC has sufficient equity to finance its activities without   additional subordinated financial support from other parties, and accordingly   does not expect to make additional capital contributions or provide financing   to React-NTI, LLC.&#160; Any future changes   to the LLC agreement or the financial arrangements surrounding this   investment could result in consolidation of
React-NTI LLC in the future.&#160; In connection with its acquisition of   React, Inc., React-NTI LLC has allocated a portion of the purchase price to   intangible assets.&#160; This allocation is   based on a preliminary estimate of the value of identifiable intangible   assets and is subject to adjustment based upon further analysis and appraisal   which could impact the equity in income or loss recorded by the Company   related to amortization of intangible assets deemed to have finite lives.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">In October 2003 the Company invested $6,250 in an   existing business consulting corporate joint venture in the United   States.&#160; The Company has obtained a   25% ownership interest in this company to utilize various government and   military associations.&#160; As the company   has no assets its investment value is $0.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">In January 2004 the Company invested $20,000 in a   new industrial chemical corporate joint venture in Lebanon.&#160; The Company has a 50% ownership interest   in the new entity.&#160; The new entity had   no operations prior to the Company&#146;s investment.&#160; It is anticipated that this is the first installment toward   completed capitalization of an estimated $75,000.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">During the second quarter of 2004, through a series   of transactions utilizing Northern Instruments Corporation LLC as an   investment vehicle, the Company invested $61,750 to increase its ownership   interests in a German GmbH from 30% to 40%.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">7.</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">STOCKHOLDERS&#146; EQUITY</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">During the six months ended February 29, 2004, the   Company repurchased 500 shares of common stock.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">8.</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">SUPPLEMENTAL CASH FLOW INFORMATION</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">During the six months ended February 29, 2004, the   Company declared a cash dividend of $0.05 per share that was paid on December   17, 2003 to shareholders of record on December 3, 2003.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">9.</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">TOTAL COMPREHENSIVE INCOME</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The Company&#146;s total comprehensive income was as   follows:</font></p>  </td>
 </tr>
</table>

<BR>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="90%">

 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <p  align="center"><font size="1" face="Times New Roman"><b>Three   Months Ended</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Six Months   Ended</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   28,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   28,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="2%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="1%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Net income</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">82,075</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">390,413</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">455,280</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">642,735</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Other comprehensive income &#150; foreign currency   translation adjustment</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">144,854</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">231,701</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">593,345</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">174,093</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Total comprehensive income</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">226,929</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">622,114</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">1,048,625</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">$</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">816,828</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <hr size="3" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<p  align="center">
<font size="2" face="Times New Roman">7</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">10.</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">NET INCOME PER SHARE</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Basic net income per share is computed by dividing   net income by the weighted average number of common shares outstanding.&#160; Diluted net income per share assumes the   exercise of stock options using the treasury stock method, if dilutive.</font></p>  </td>
 </tr>
</table>
<p>
<font size="2" face="Times New Roman"><b>ITEM 2 - MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</b></font></p>
<p>
<font size="2" face="Times New Roman"><b>Critical Accounting Policies</b></font></p>
<p>
<font size="2" face="Times New Roman"><i>Sales Originating in North America</i> &#150; Northern Technologies International Corporation and Subsidiary (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.&#160; 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"><i>Cash Equivalents</i> - 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"><i>Investments Available for Sale</i> - 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).&#160; 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.&#160; Realized gains and losses and declines in value deemed to be other-than-temporary on available-for-sale securities are included in other income.&#160; Fair value of the securities is based upon the quoted market price on the last business day of the quarter or fiscal year.&#160; The cost basis for realized gains and losses on available-for-sale securities is determined on a specific identification basis.&#160; At February 29, 2004, the Company&#146;s available-for-sale securities
consisted of corporate debt and certificates of deposit with a cost basis and accrued interest income totaling $947,734, which approximates fair value.</font></p>

<p><font size="2" face="Times New Roman"><i>Inventories</i> - 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"><i>Property and Depreciation</i> - Property and equipment are stated at cost.&#160; Depreciation is computed using the straight-line method based on the estimated service lives of the various assets as follows:</font></p>
<p  align="center">
<font size="2" face="Times New Roman">Buildings and improvements&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 5-20 years<br> Machinery and equipment&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 3-10 years</font></p>
<p>
<font size="2" face="Times New Roman"><i>Investments in Corporate Joint Ventures</i> - Investments in Corporate Joint Ventures are accounted for using the equity method.&#160; 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"><i>Recoverability of Long-Lived Assets</i> - The Company reviews its long-lived assets whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable.&#160; 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.&#160; 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.&#160; An impairment loss would be measured by comparing the </font></p>
<p  align="center">
<font size="2" face="Times New Roman">8</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p>
<font size="2" face="Times New Roman">amount by which the carrying value exceeds the fair value of the asset.&#160; As of February 29, 2004, the Company did not consider any of its assets impaired.</font></p>
<p>
<font size="2" face="Times New Roman"><i>Income Taxes</i> - 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>.&#160; SFAS No. 109 requires an asset and liability approach to financial accounting and reporting for income taxes.&#160; 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.&#160; Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.&#160; 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"><i>Foreign Currency Translation (Accumulated Other Comprehensive Income (Loss))</i> - The functional currency of each international corporate joint venture is the applicable local currency.&#160; 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.&#160; 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"><i>Revenue Recognition</i> - In recognizing revenue, the Company applies the provisions of the Securities and Exchange Commission Staff Accounting Bulletin 101, <i>Revenue Recognition</i>.&#160; 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.&#160; 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"><i>Shipping and Handling</i> - The Company records all amounts billed to customers in a sales transaction related to shipping and handling as sales.&#160; The Company records costs related to shipping and handling in cost of goods sold.&#160; </font></p>
<p>
<font size="2" face="Times New Roman"><i>Use of Estimates</i> - 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.&#160; Actual results could differ from those estimates.</font></p>
<p>
<font size="2" face="Times New Roman"><b>RESULTS OF OPERATIONS</b></font></p>
<p>
<font size="2" face="Times New Roman"><i>General</i> - The Company conducts all foreign transactions based on the U.S. dollar, except for its investments in various foreign corporate joint ventures.&#160; The exchange rate differential relating to investments in foreign corporate joint ventures is accounted for under the requirements of SFAS No.&nbsp;52, <i>Foreign Currency Translation</i>.</font></p>

<p><font size="2" face="Times New Roman">NORTH AMERICAN OPERATIONS</font></p>
<p>
<font size="2" face="Times New Roman"><i>Sales </i>- Sales increased by $542,532 or 27.1% during the second quarter of 2004 from those of the second quarter of 2003.&#160; Net sales increased by $1,100,218 or 27.6% during the six months ended February&nbsp;29, 2004 compared to the six months ended February 28, 2003.&#160; These changes in sales are due to an increase in demand for materials science based industrial packaging products. &#160;</font></p>
<p  align="center">
<font size="2" face="Times New Roman">9</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p>
<font size="2" face="Times New Roman"><i>Cost of Sales</i> - Cost of goods sold as a percentage of net sales were 47.5% and 47.9% for the second quarter of 2004 and 2003, respectively.&#160; The cost of goods sold percentage of net sales was 49.6% and 47.1% for the six months ended February&nbsp;29, 2004 and February&nbsp;28, 2003, respectively.&#160; Variations are due primarily to the mix of product sales and changes in the price of resin.</font></p>
<p>
<font size="2" face="Times New Roman"><i>Operating Expenses</i> - As a percentage of net sales, total operating expenses were 50.7% in the second quarter of fiscal 2004 and 58.4% in the second quarter of fiscal 2003.&#160; Operating expenses were 49.8% and 57.9% of net sales for the six months ended February&nbsp;29, 2004 and for the six months ended February&nbsp;28, 2003.</font></p>
<p>
<font size="2" face="Times New Roman">Operating expense classification percentages of net sales were as follows:</font></p>
<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <p  align="center"><font size="1" face="Times New Roman"><b>Three   Months Ended</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Six Months   Ended</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="5"  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   28,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   29,<br>   2004</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  colspan="2" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>February   28,<br>   2003</b></font></p>  </td>
  <td  valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="2%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="2%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="1%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="10%" valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td width="1%" valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Selling</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">22</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">%</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">23</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">%</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">20</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">%</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">21</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="2" face="Times New Roman">%</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">General and administrative</font></p>  </td>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">24</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">26</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">23</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">27</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Research, engineering, and technical support</font></p>  </td>
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">5</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">10</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">7</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">10</font></p>  </td>
  <td  valign="bottom" >
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<p>
<font size="2" face="Times New Roman"><i>Selling Expenses.</i>&#160; The Company&#146;s selling expenses increased by $112,159 or 24.8% to $563,696 during the second quarter of fiscal 2004 as compared to $451,537 during the same period in fiscal 2003.&#160; The increase in selling expenses during the second quarter of fiscal 2004 was primarily related to the hiring of additional salespeople and associated commission and travel related expenses.&#160; As a percentage of sales, selling expense decreased to 22.2% in the second quarter of fiscal 2004 from 22.6% in the second quarter of fiscal 2003.&#160;&#160; Selling expenses increased by $186,508 or 22.6% to $1,012,036 during the six months ended February&nbsp;29, 2004 compared to the six months ended February 28, 2003 due to the same reasons.&#160; During the six months ended February 29, 2004 selling expense decreased to 19.9% of sales from 20.7% during the six months ended February 28, 2003.&#160; </font></p>

<p><font size="2" face="Times New Roman"><i>General and Administrative Expenses.</i>&#160; The Company&#146;s general and administrative expenses increased by $76,155 or 14.5% to $600,165 during the second quarter of fiscal 2004 as compared to $524,010 during the same period in fiscal 2003.&#160; The increase is attributable to increases in insurance, outside auditing and accrued management bonus offset by decreases in legal expenses.&#160; As a percentage of sales, general and administrative expenses decreased to 23.6% in the second quarter of fiscal 2004 from 26.2% in the second quarter of fiscal 2003.&#160;&#160; General and administrative expenses increased by $114,713 or 10.7% to $1,188,813 during the six months ended February&nbsp;29, 2004 compared to the six months ended February 28, 2003 due to the same reasons. During the six months ended February 29, 2004 general and administrative expenses decreased to 23.4% of sales from 27.0% during the six months ended February 28, 2003.&#160;
</font></p>
<p>
<font size="2" face="Times New Roman"><i>Research, Engineering, and Technical Support Expenses.</i>&#160; The Company&#146;s research, engineering, and technical support expenses decreased by $68,025 or 35.1% to $125,795 during the second quarter of fiscal 2004 as compared to $193,820 during the same period in fiscal 2003.&#160; The decrease in research, engineering, and technical support expenses during the second quarter of fiscal 2004 was primarily related to decreases in salary expense and technical consulting expense, due to a number of employees being realigned from technical support to corporate joint venture support.&#160; As a percentage of sales, research, engineering, and technical support expenses decreased to 5.0% in the second quarter of fiscal 2004 from 9.7% in the second quarter of fiscal 2003.&#160; Research, engineering, and technical support expenses decreased by $74,271 or 18.4% to $330,259 during the six months ended February&nbsp;29, 2004 compared to the six months ended February
28, 2003 due to the same reasons. During the six months ended February 29, 2004 research, engineering, and </font></p>
<p  align="center">
<font size="2" face="Times New Roman">10</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p>
<font size="2" face="Times New Roman">technical support expenses decreased to 6.5% of sales from 10.2% during the six months ended February 28, 2003.&#160; </font></p>

<p><font size="2" face="Times New Roman">CORPORATE JOINT VENTURES AND EUROPEAN HOLDING COMPANY </font></p>
<p>
<font size="2" face="Times New Roman"><i>Corporate Joint Ventures and European Holding Company </i>- Net earnings from corporate joint ventures and European holding company were $77,936 and $509,458 for the three and six months ended February&nbsp;29, 2004, respectively, compared to $534,431 and $833,807 for the three and the six months ended February&nbsp;28, 2003.&#160; This decrease is due to significant increases in expenses incurred in support of corporate joint ventures and decreases in equity in income being offset by increases in the fees for technical services.&#160; Specific increases in fees for technical services include the salaries of rededicated employees to Corporate Joint Venture technical support and new product development, increases in legal and external consulting expense.</font></p>
<p>
<font size="2" face="Times New Roman">The Company sponsors a worldwide Corporate Joint Venture conference approximately every three years in which all of its Corporate Joint Ventures are invited to participate.&#160; 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 late in 2004 and there is $285,725 of deferred royalty income recorded within other accrued liabilities at February 29, 2004, related to this conference.&#160; The deferred income is expected to be recognized in income in 2004 when the conference is held.&#160; 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">The Company incurred direct expenses related to Corporate Joint Ventures and the European holding company of $1,008,118 and $1,585,677 in three and six months ended February 29, 2004 and $558,215 and $1,109,280 in the three and six months ended February 28, 2003. These expenses include: consulting, travel, 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.&#160; Increases related to the three and six months ended February 29, 2004 as compared to three and six months ended February 28, 2003 are attributable to increase in management and coordinator salaries, legal expense and external consulting services.</font></p>

<p><font size="2" face="Times New Roman">INCOME TAX</font></p>
<p>
<font size="2" face="Times New Roman"><i>Income Taxes</i> - Income tax expense for the three and six months ended February 29, 2004 and February 28, 2003 was calculated based on management&#146;s estimate of the Company&#146;s annual effective income tax rate.&#160; The Company&#146;s annual effective income tax rate for fiscal&nbsp;2004 is lower than the statutory rate primarily due to the Company&#146;s equity in income of corporate joint ventures being recognized based on after-tax earnings of these entities.&#160; To the extent joint ventures&#146; undistributed earnings are distributed to the Company, it is not expected to result in any material additional income tax liability after the application of foreign tax credits.</font></p>
<p>
<font size="2" face="Times New Roman">LIQUIDITY AND CAPITAL RESOURCES</font></p>
<p>
<font size="2" face="Times New Roman">At February 29, 2004, the Company&#146;s working capital was $4,307,178, including $132,059 in cash and cash equivalents and $947,734 in investments available for sale, compared to a working capital of $4,760,183, including $283,326 in cash and cash equivalents and $1,643,939 in investments available for sale at August 31, 2003.</font></p>
<p>
<font size="2" face="Times New Roman">Cash flows provided by (used in) operations for the six months ended February 29, 2004 and February 28, 2003 were $205,024 and ($1,177,621), respectively.&#160; The net cash provided by operations for the six months </font></p>
<p  align="center">
<font size="2" face="Times New Roman">11</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p>
<font size="2" face="Times New Roman">ended February 29, 2004 resulted principally from net income being partially offset by the noncash equity income of industrial chemical joint ventures, and uses of cash for increases in operating assets more than offsetting net increases in operating liabilities.&#160; During the six months ended February 2003, the Company made a $445,469 deposit relating to a legal case involving potential trademark infringement against a competitor in Europe.&#160; The Company expects that the amount will be fully recoverable at the conclusion of the prosecution of the competitor.&#160; The net cash used in operations for the six months ended February 28, 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.&#160; </font></p>

<p><font size="2" face="Times New Roman">Net cash used in investing activities for the six months ended February 29, 2004 was $172,029, which resulted from the sales of investments offset by investments in corporate joint ventures and additions to property and equipment and industrial patents.&#160; Net cash provided by investing activities for the six months ended February 28, 2003 was $1,421,575, which resulted from the sale of investments and from the partial return of the Company&#146;s original investment in European holding company partially offset by investments in international joint ventures, additions to patents and additions to property and equipment.&#160; </font></p>
<p>
<font size="2" face="Times New Roman">Net cash used in financing activities for the six months ended February 29, 2004 was $184,262, which resulted primarily from the payment of dividends to shareholders.&#160; Net cash used in financing activities for the six months ended February 28, 2003 was $346,690, which resulted from the repurchase of common stock and the payment of dividends to shareholders.</font></p>
<p>
<font size="2" face="Times New Roman">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>
<font size="2" face="Times New Roman">The Company has no long-term debt and no material capital lease commitments as of February 29, 2004; 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">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">Inflation in the U.S. historically has had little effect on the Company. </font></p>
<p>
<font size="2" face="Times New Roman"><b>Recently Issued Accounting Pronouncements</b></font></p>
<p>
<font size="2" face="Times New Roman">In January 2003,&nbsp;the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46 (FIN 46), <i>Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51</i>.&#160; In December 2003, the FASB issued FIN 46R, <i>Consolidation of Variable Interest Entities, </i>a revision of FIN 46 which addresses consolidation by business enterprises where equity investors do not bear the residual economic risks and rewards.&#160; These entities have been commonly referred to as &#147;special purpose entities.&#148;&#160; The provisions of FIN 46R are effective for interests in variable interest entities (VIE) as of the first interim, or annual, period ending after December 15, 2004 except for VIEs considered special-purpose entities.&#160; The Company is in the process of evaluating the impact this will have on the consolidated financial statements of the Company.&#160; </font></p>

<p><font size="2" face="Times New Roman">In May 2003, the FASB issued SFAS No. 150, <i>Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.&#160; </i>This Statement requires that certain financial instruments previously accounted for as equity under previous guidance be classified as liabilities in statements of financial position.&#160; SFAS No. 150 became effective for all financial instruments entered into or modified after May 31, 2003 and otherwise effective at the beginning of the first interim period beginning after June 15, 2003.</font></p>
<p  align="center">
<font size="2" face="Times New Roman">12</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p>
<font size="2" face="Times New Roman">The adoption of SFAS No. 150 did not have an impact on the Company&#146;s results of operations or financial position.</font></p>
<p>
<font size="2" face="Times New Roman"><b>Disclosure of the Control Environment</b></font></p>
<p>
<font size="2" face="Times New Roman">As of February 29, 2004, 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 &amp; 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).&#160; Based upon that evaluation the Company, as well as its Chairman of the Board &amp; Chief Executive Officer and Chief Financial Officer, concluded that the Company&#146;s disclosure controls and procedures need improvement to be considered effective.&#160; We continue to evaluate methods to improve our internal controls and procedures and the 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 any material misstatements in our consolidated financial statements contained in this Form 10-QSB.</font></p>
<p>
<font size="2" face="Times New Roman"><b>PART II - OTHER INFORMATION</b></font></p>
<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="90%" valign="top">
  <p><font size="2" face="Times New Roman">ITEM 1 - LEGAL PROCEEDINGS:</font></p>  </td>
  <td width="9%" valign="top">
  <p>
<font size="2" face="Times New Roman">None</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">ITEM 2 - CHANGES IN SECURITIES:</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">None</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">ITEM 3 - DEFAULTS UPON SENIOR SECURITIES:</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">None</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY   HOLDERS:</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<p>
<font size="2" face="Times New Roman">The Annual Meeting of Stockholders of the Company (Annual Meeting) was held on January 30, 2004.&#160; The election of directors was voted on and approved by the Company&#146;s stockholders at the Annual Meeting.&#160; There were 3,615,918 shares of common stock entitled to vote at the meeting and a total of 3,100,590 shares or 85.7% were represented at the meeting.&#160; </font></p>
<p>
<font size="2" face="Times New Roman">The tabulation of votes is set forth as follows:</font></p>



<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="90%">

 <tr>
  <td width="75%" valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="10%" valign="bottom">
  <p align="center">
<font size="1" face="Times New Roman"><b>For</b></font></p>  </td>
  <td width="2%" valign="bottom">
  <p  align="center"><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td width="10%" valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Withheld</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Philip M. Lynch</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">2,548,357</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">552,233</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Dr. Donald A. Kubik</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,081,802</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">18,788</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Richard G. Lareau</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">3,077,002</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">23,588</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Ursula-Kiel-Dixon</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,074,867</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">25,723</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Mark J. Stone</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">3,077,002</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">23,588</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Stephan C. Taylor</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,081,802</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">18,788</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Dr. Mehmet A. Gencer</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">3,077,002</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">23,588</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Pierre Chenu</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,077,002</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">23,588</font></p>  </td>
 </tr>
 <tr bgcolor="#cceeff">
  <td  valign="bottom" >
  <p style="margin-left:1em; text-indent:-1em">
<font size="2" face="Times New Roman">Tao Meng</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">3,081,802</font></p>  </td>
  <td  valign="bottom" >
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom" >
  <p  align=right>
<font size="2" face="Times New Roman">18,788</font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p style="margin-left:1em; text-indent:-1em"><font size="2" face="Times New Roman">Dr. Sunggyu Lee</font></p>  </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">3,081,802</font></p>  </td>
  <td  valign="bottom">
  <p  align=right><font size=1 face="Times New Roman">&nbsp;</font></p> </td>
  <td  valign="bottom">
  <p  align=right>
<font size="2" face="Times New Roman">18,788</font></p>  </td>
 </tr>
</table>

<BR>


<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="90%" valign="top">
  <p>
<font size="2" face="Times New Roman">ITEM 5 - OTHER INFORMATION:</font></p>  </td>
  <td width="9%" valign="top">
  <p>
<font size="2" face="Times New Roman">None</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<p  align="center">
<font size="2" face="Times New Roman">13</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman"><b>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">None; however the written statements of our   applicable officers, as required pursuant to 18 U.S.C. Section 1350, as   adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,   accompanied the filing of this report as correspondence to the Securities and   Exchange Commission.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman"><b>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reports   on Form 8-K</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The Company did not file any Current Reports on Form   8-K during the six months ended February 29, 2004.</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<p>
<font size=1 face="Times New Roman">&nbsp;</font></p>
<p>
<font size="2" face="Times New Roman"><b>SIGNATURE PAGE</b></font></p>
<p>
<font size="2" face="Times New Roman">Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</font></p>
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<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="50%" valign="bottom">
  <p>
<font size="2" face="Times New Roman">N<small>ORTHERN</small> T<small>ECHNOLOGIES</small> I<small>NTERNATIONAL</small> C<small>ORPORATION</small></font></p>  </td>
 </tr>

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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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<font size="2" face="Times New Roman"><img src="image001.gif"></font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">Date:&#160; April 14, 2004</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
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  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Matthew C. Wolsfeld, CPA<br>   Chief Financial Officer</b></font></p>  </td>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">(Mr. Wolsfeld is the Principal   Financial and Accounting Officer and has been duly authorized to sign on   behalf of the registrant.)</font></p>  </td>
 </tr>
</table>

<p  align="center">
<font size="2" face="Times New Roman">14</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p  align="center">
<font size="2" face="Times New Roman"><b>CERTIFICATION PURSUANT TO SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002</b></font></p>
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  <p>
<font size="2" face="Times New Roman">I, Philip M. Lynch, certify   that:</font></p>  </td>
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  <td  colspan="2" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I   have reviewed this quarterly report on Form 10-QSB of Northern Technologies   International Corporation;</font></p>  </td>
 </tr>
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  <td  colspan="2" valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p>
<font size="2" face="Times New Roman">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
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  <td  colspan="2" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
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  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
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  <td  colspan="2" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
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  <td  colspan="2" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <td width="4%" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
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  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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   second 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>  </td>
 </tr>
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  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">5.   &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
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  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
</table>

<BR>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

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  <td width="58%" valign="bottom">
  <p>
<font size="2" face="Times New Roman">Date:&#160; April 14, 2004</font></p>  </td>
  <td width="41%" valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman"><img src="image002.gif"></font></p>  </td>
 </tr>
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  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
 </tr>
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  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Philip M. Lynch</b></font></p>  </td>
 </tr>
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  <td  valign="bottom">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Chairman of the Board of Directors &amp;<br>   Chief Executive Officer</b></font></p>  </td>
 </tr>
</table>

<p  align="center">
<font size="2" face="Times New Roman">15</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>

<p  align="center">
<font size="2" face="Times New Roman"><b>CERTIFICATION PURSUANT TO SECTION 302(A) OF THE SARBANES-OXLEY ACT OF 2002</b></font></p>
<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

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  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">I, Matthew C. Wolsfeld,   certify that:</font></p>  </td>
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  <td  colspan="2" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
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  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I   have reviewed this quarterly report on Form 10-QSB of Northern Technologies   International Corporation;</font></p>  </td>
 </tr>
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  <td  colspan="2" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
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  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
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  <td  colspan="2" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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 <tr>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
 <tr>
  <td  colspan="2" valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
 <tr>
  <td  colspan="2" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td width="4%" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="95%" valign="top">
  <p>
<font size="2" face="Times New Roman">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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   second 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>  </td>
 </tr>
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  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  colspan="2" valign="top">
  <p>
<font size="2" face="Times New Roman">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
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  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>  </td>
 </tr>
</table>

<BR>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="60%" valign="bottom">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="40%" valign="bottom">
  <p  align="center">
<font size="2" face="Times New Roman"><img src="image001.gif"></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p>
<font size="2" face="Times New Roman">Date:&#160; April 14, 2004</font></p>  </td>
  <td  valign="bottom">
  <hr size="1" width="100%" noshade color=black>

  </td>
 </tr>
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  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Matthew C. Wolsfeld, CPA</b></font></p>  </td>
 </tr>
 <tr>
  <td  valign="bottom">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="bottom">
  <p  align="center">
<font size="1" face="Times New Roman"><b>Chief Financial Officer</b></font></p>  </td>
 </tr>
</table>

<p  align="center">
<font size="2" face="Times New Roman">16</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>


<p align="left">
<b>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</b></p>

<p>
<font size="2" face="Times New Roman">In connection with the Quarterly Report of Northern Technologies International Corporation (the &#147;Company&#148;) on Form 10-QSB for the period ending February 29, 2004 as filed with the Securities and Exchange Commission on the date hereof (the &#147;Report&#148;), I, Philip M. Lynch, Chairman of the Board and 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 align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="5%" valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="5%" valign="top">
  <p>
<font size="2" face="Times New Roman">(1)</font></p>  </td>
  <td width="90%" valign="top">
  <p>
<font size="2" face="Times New Roman">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">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">(2)</font></p>  </td>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">The information contained in   the Report fairly presents, in all material respects, the financial condition   and results of operations of the Company.</font></p>  </td>
 </tr>
</table>

<BR>

<table align="center"  border="0" style="border-collapse:collapse" cellspacing="0"  cellpadding="0"  width="100%">

 <tr>
  <td width="49%" valign="top">
  <p  align="center">
<font size="2" face="Times New Roman"><img src="image002.gif"></font></p>  </td>
  <td width="2%" valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td width="49%" valign="top">
  <p>
<font size="2" face="Times New Roman">Chairman of the Board of Directors   &amp; Chief Executive Officer (principal executive officer)</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <hr size="1" width="100%" noshade color=black>

  </td>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p align="center">
<font size="1" face="Times New Roman"><b>Philip M. Lynch</b></font></p>  </td>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">Lino Lakes, Minnesota</font></p>  </td>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>

 <tr>
  <td  valign="top">
  <p>
<font size="2" face="Times New Roman">April 14, 2004</font></p>  </td>
  <td  valign="top">
  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
  <td  valign="top">
  <p>
<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
 </tr>
</table>

<p  align="center"><font size="2" face="Times New Roman">17</font></p>
<div style="page-break-before:always"></div>
<PAGE>
<br>


<p align="left">
<b>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</b></p>

<p><font size="2" face="Times New Roman">In connection with the Quarterly Report of Northern Technologies International Corporation (the &#147;Company&#148;) on Form 10-QSB for the period ending February 29, 2004 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>
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<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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<font size="2" face="Times New Roman">(1)</font></p>  </td>
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<font size="2" face="Times New Roman">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>
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<font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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<font size="2" face="Times New Roman">(2)</font></p>  </td>
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<font size="2" face="Times New Roman">The information contained in   the Report fairly presents, in all material respects, the financial condition   and results of operations of the Company.</font></p>  </td>
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<BR>

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<font size="2" face="Times New Roman"><img src="image001.gif"></font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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<font size="2" face="Times New Roman">Chief Financial Officer   (principal financial officer and principal accounting officer)</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p  align="center"><font size="1" face="Times New Roman"><b>Matthew C. Wolsfeld, CPA</b></font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="2" face="Times New Roman">Lino Lakes, Minnesota</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="2" face="Times New Roman">April 14, 2004</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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  <p><font size="1" face="Times New Roman">&nbsp;</font></p>  </td>
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<p  align="center"><font size="2" face="Times New Roman">18</font></p>

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