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Note 7 - Investments in Joint Ventures

12 Months Ended

Aug. 31, 2022

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

7. 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.

The Company considers the Company’s joint venture in Germany, Excor Korrosionsschutz – Technologien und Produkte GmbH (EXCOR) to be individually significant to the Company’s consolidated assets and income as of August 31, 2022 and 2021. Zerust India became a wholly owned subsidiary of the Company effective as of September 1, 2021. Financial information from the audited and unaudited financial statements of EXCOR as well as all the Company’s other joint ventures, are summarized as follows:

		As of August 31, 2022
		Total				EXCOR				OTHER
Current assets		$	52,428,831			$	26,047,914			$	26,380,917
Total assets			55,854,457				27,932,532				27,921,925
Current liabilities			10,981,833				2,943,895				8,037,938
Noncurrent liabilities			1,138,980				-				1,138,980
Joint ventures’ equity			43,733,644				24,988,637				18,745,007
Northern Technologies International Corporation’s share of joint ventures’ equity			21,814,754				12,494,320				9,320,434
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings			21,256,923				12,463,415				8,793,508

		Fiscal Year Ended August 31, 2022
		Total				EXCOR				OTHER
Net sales		$	104,077,748			$	42,853,162			$	61,224,586
Gross profit			41,030,647				20,312,400				20,718,247
Net income			9,302,237				6,487,855				2,814,382
Northern Technologies International Corporation’s share of equity in income of joint ventures			4,725,918				3,236,989				1,488,929
Northern Technologies International Corporation’s dividends received from joint ventures			5,723,176				4,255,200				1,467,976

		As of August 31, 2021
		Total				EXCOR				OTHER⁽¹⁾
Current assets		$	69,394,796			$	33,886,655			$	35,508,141
Total assets			73,814,402				36,211,520				37,602,882
Current liabilities			16,366,398				5,386,377				10,980,021
Noncurrent liabilities			1,455,524				-				1,455,524
Joint ventures’ equity			55,992,480				30,825,144				25,167,336
Northern Technologies International Corporation’s share of joint ventures’ equity			27,623,768				15,412,574				12,211,194
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings			24,702,778				14,697,490				10,005,288

		Fiscal Year Ended August 31, 2021
		Total				EXCOR				OTHER⁽¹⁾
Net sales		$	120,954,550			$	46,522,688			$	74,431,862
Gross profit			53,371,610				25,389,981				27,981,629
Net income			14,921,531				8,798,995				6,122,536
Northern Technologies International Corporation’s share of equity in income of joint ventures			7,465,214				4,400,403				3,064,811
Northern Technologies International Corporation’s dividends received from joint ventures			3,665,365				1,809,900				1,855,465

____________________

(1)	Includes Zerust India since Zerust India was not a consolidated subsidiary of the Company as of August 31, 2021. See Note 3 entitled “Business Combination.”