15.

COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company currently has operating leases for various buildings, equipment and vehicles. These leases are under non-cancelable operating lease agreements with expiration dates between

November 30, 2020

and

June 30, 2024.

The Company has the option to extend certain leases to

five

ten

-year term(s) and has the right of

first

refusal on any sale.

The Company records lease liabilities within current liabilities or long-term liabilities based upon the length of time associated with the lease payments. The Company records its long-term operating leases as right-of-use assets. Upon initial adoption, using the modified retrospective transition approach,

leases with terms less than

months have been capitalized to the consolidated balance sheet consistent with ASC

842.

Instead, these leases are recognized in the consolidated statement of operations on a straight-line expense throughout the lives of the leases.

None

of the Company's leases contain common area maintenance or security agreements.

The Company has made certain assumptions and judgments when applying ASC

842,

the most significant of which is that the Company elected the package of practical expedients available for transition that allow the Company to

not

reassess whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases and whether previously capitalized initial direct costs would qualify for capitalization under ASC

842.

Additionally, the Company did

not

elect to use hindsight when considering judgments and estimates such as assessments of lessee options to extend or terminate a lease or purchase the underlying asset. The Company has

contingent rent agreements.

Present Value of Leases

(in thousands):	August 31, 2020
Right-of-use assets, net	$	658,788

Current portion of lease liability		386,345
Lease liability, less current portion		272,443
Total lease liability	$	658,788

As of

August 31, 2020,

the weighted-average remaining lease term was

2.02

years. The Company's lease agreements do

not

provide a readily determinable implicit rate nor is it available to the Company from its lessors. Instead, as of

August 31, 2020,

the Company estimates the weighted-average discount rate for its operating leases to be

2.31%

to present value based on the incremental borrowing rate.

Future minimum payments for the next

five

fiscal years and thereafter as of

August 31, 2020

under these long-term operating leases are as follows (in thousands):

Fiscal 2021	$	386,345
Fiscal 2022		208,419
Fiscal 2023		59,993
Fiscal 2024		19,932
Total future minimum lease payments		674,689
Less amount representing interest		(15,901	)
Present value of obligations under operating leases		658,788
Less current portion		(386,345	)
Long-term operating lease obligations	$	272,443

The following table presents future minimum lease payments for the Company's operating leases as of

August 31, 2019

under ASC

840

and is being presented for comparative purposes:

Fiscal 2020	$	286,723
Fiscal 2021		241,035
Fiscal 2022		107,522
Total future minimum rent	$	635,280

Rent expense under these leases was approximately

$131,840

for the year ended

August 31, 2019.

Annual Bonus Plan

August 27, 2020,

the Compensation Committee of the Board of Directors of the Company approved the material terms of an annual bonus plan for the Company's executive officers as well as certain officers and employees for the fiscal year ending

August 31, 2021.

For fiscal

2021,

as in past years, the total amount available under the bonus plan for all plan participants, including executive officers, is dependent upon the Company's earnings before interest, taxes, and other income, as adjusted to take into account amounts to be paid under the bonus plan and certain other adjustments (Adjusted EBITOI). Each plan participant's percentage of the overall bonus pool is based upon the number of plan participants, the individual's annual base salary, and the individual's position and level of responsibility within the company. In the case of each of the Company's executive officer participants,

75%

of the amount of their individual bonus payout will be determined based upon the Company's actual EBITOI for fiscal

2021

compared to a pre-established target EBITOI for fiscal

2021,

and

25%

of the payout will be determined based upon such executive officer's achievement of certain pre-established individual performance objectives. The payment of bonuses under the plan is discretionary, and bonuses

may

be paid to executive officer participants in both cash and shares of NTIC common stock, the exact amount and percentages of which were determined by the Company's Board of Directors, upon recommendation of the Compensation Committee, after the completion of the Company's consolidated financial statements for fiscal

2021.

August 31, 2019,

August 31, 2020.

$1,300,000

was recognized for bonuses for the fiscal year ended

August 31, 2020,

$800,000

of the bonus is comprised of stock options granted to management on

September 1, 2019

and

$500,000

will be paid out in cash and profit sharing subsequent to year end. This is compared to

$2,000,000

recognized for bonuses for the fiscal year ended

August 31, 2019,

$800,000

of the bonus comprised of stock options granted to management on

September 1, 2018

and

$1,200,000

was paid out in cash and profit sharing subsequent to year end.

Concentrations

Five joint ventures (consisting of the Company's joint ventures in the United States, Indonesia, Philippines, Russia and India) accounted for

88.2%

of the Company's trade joint venture receivables as of

August 31, 2020,

and

five

joint ventures (consisting of the Company's joint ventures in South Korea, Thailand, France, Germany and India) accounted for

69.6%

of the Company's trade joint venture receivables as of

August 31, 2019.

Legal Matters

March 23, 2015,

NTIC and NTI Asean LLC, a majority-owned subsidiary of NTIC, filed a lawsuit in Tianjin

Intermediate People's Court against

two

individuals, Tao Meng and Xu Hui, related to breaches of duties and contractual commitments owed to NTI Asean under certain agreements related to NTIC's former joint venture in China, Tianjin Zerust Anti-Corrosion Technologies Ltd. The lawsuit alleges, among other things, that Mr. Tao Meng and Xu Hui have engaged in self-dealing, usurped business opportunities, and received economic benefits that were required to go to Tianjin Zerust. At this point, the Company is

not

able to reasonably estimate the amount of any recovery to NTI Asean, if any.

From time to time, the Company is subject to various other claims and legal actions in the ordinary course of its business. The Company records a liability in its consolidated financial statements for costs related to claims, including future legal costs, settlements, and judgments, where the Company has assessed that a loss is probable, and an amount could be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when

amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is

not

probable or the amount is

not

estimable, or both, if there is a reasonable possibility that material loss

may

have been incurred. In the opinion of management, as of

August 31, 2020,

the amount of liability, if any, with respect to these matters, individually or in the aggregate, will

not

materially affect the Company's consolidated results of operations, financial position, or cash flows.