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Note 6 - Investments in Joint Ventures

9 Months Ended

May 31, 2021

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

6.         INVESTMENTS IN JOINT VENTURES

The consolidated financial statements of the Company’s foreign joint ventures are initially prepared using the accounting principles accepted in the respective joint ventures’ countries of domicile. Amounts related to foreign joint ventures reported in the below tables and the accompanying consolidated financial statements have subsequently been adjusted to conform with U.S. GAAP in all material respects. All material profits on sales recorded that remain on the consolidated balance sheet from the Company to its joint ventures and from joint ventures to other joint ventures have been eliminated for financial reporting purposes.

Financial information from the audited and unaudited financial statements of the Company’s joint venture in Germany, Excor Korrosionsschutz – Technologien und Produkte GmbH (EXCOR), and all the Company’s other joint ventures are summarized as follows:

		As of May 31, 2021
		Total				EXCOR				All Other
Current assets		$	68,123,606			$	30,658,702			$	37,464,904
Total assets			72,216,965				33,027,046				39,189,919
Current liabilities			16,369,403				3,570,261				12,799,142
Noncurrent liabilities			1,225,790				—				1,225,790
Joint ventures’ equity			54,621,772				29,456,785				25,164,987
Northern Technologies International Corporation’s share of joint ventures’ equity			26,937,857				14,728,395				12,209,462
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings			24,702,778				14,697,490				10,005,288

		Three Months Ended May 31, 2021
		Total				EXCOR				All Other
Net sales		$	31,959,539			$	12,103,263			$	19,856,276
Gross profit			14,280,775				6,863,786				7,416,989
Net income			4,051,518				2,068,326				1,983,192
Northern Technologies International Corporation’s share of equity in income from joint ventures			2,033,536				1,039,576				993,960
Northern Technologies International Corporation’s dividends received from joint ventures			181,952				—				181,952

		Nine Months Ended May 31, 2021
		Total				EXCOR				All Other
Net sales		$	87,795,284			$	32,196,843			$	55,598,441
Gross profit			39,802,014				18,661,980				21,140,034
Net income			11,540,949				6,351,721				5,189,228
Northern Technologies International Corporation’s share of equity in income from joint ventures			5,779,260				3,182,691				2,596,569
Northern Technologies International Corporation’s dividends received from joint ventures			3,505,455				1,809,900				1,695,555

		As of August 31, 2020
		Total				EXCOR				All Other
Current assets		$	55,825,418			$	25,742,619			$	30,082,799
Total assets			60,295,587				28,449,772				31,845,815
Current liabilities			11,002,867				2,424,565				8,578,302
Noncurrent liabilities			365,274				—				365,274
Joint ventures’ equity			48,927,446				26,025,207				22,902,239
Northern Technologies International Corporation’s share of joint ventures’ equity			24,090,826				13,012,606				11,078,220
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings			21,855,747				12,981,701				8,874,046

		Three Months Ended May 31, 2020
		Total				EXCOR				All Other
Net sales		$	18,782,233			$	7,753,631			$	11,028,602
Gross profit			8,647,784				4,478,739				4,169,045
Net income			1,610,524				1,071,899				538,625
Northern Technologies International Corporation’s share of equity in income from joint ventures			811,787				536,540				275,247
Northern Technologies International Corporation’s dividends received from joint ventures			89,227				—				89,227

		Nine Months Ended May 31, 2020
		Total				EXCOR				All Other
Net sales		$	68,531,897			$	26,102,046			$	42,429,851
Gross profit			31,107,491				15,066,309				16,041,182
Net income			6,920,047				4,492,254				2,427,793
Northern Technologies International Corporation’s share of equity in income from joint ventures			3,466,581				2,246,930				1,219,651
Northern Technologies International Corporation’s dividends received from joint ventures			5,648,153				4,675,850				972,303

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- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-URI http://asc.fasb.org/topic&trid=2196965

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