Q1 2025 --08-31 false 0000875582 false false false false 2 0 0 0 0 0 0 0 0 0000875582 2024-09-01 2024-11-30 thunderdome:item iso4217:USD 0000875582 2023-09-01 2023-11-30 0000875582 country:US 2023-09-01 2023-11-30 0000875582 country:US 2024-09-01 2024-11-30 0000875582 ntic:OtherCountriesMember 2023-09-01 2023-11-30 0000875582 ntic:OtherCountriesMember 2024-09-01 2024-11-30 0000875582 country:IN 2023-09-01 2023-11-30 0000875582 country:IN 2024-09-01 2024-11-30 0000875582 country:BR 2023-09-01 2023-11-30 0000875582 country:BR 2024-09-01 2024-11-30 0000875582 country:CN 2023-09-01 2023-11-30 0000875582 country:CN 2024-09-01 2024-11-30 0000875582 2024-08-31 0000875582 2024-11-30 0000875582 country:US 2024-08-31 0000875582 country:US 2024-11-30 0000875582 ntic:OtherCountriesMember 2024-08-31 0000875582 ntic:OtherCountriesMember 2024-11-30 0000875582 country:CN 2024-08-31 0000875582 country:CN 2024-11-30 xbrli:pure 0000875582 country:SE 2023-09-01 2023-11-30 0000875582 country:SE 2024-09-01 2024-11-30 0000875582 country:KR 2023-09-01 2023-11-30 0000875582 country:KR 2024-09-01 2024-11-30 0000875582 country:CZ 2023-09-01 2023-11-30 0000875582 country:CZ 2024-09-01 2024-11-30 0000875582 country:FR 2023-09-01 2023-11-30 0000875582 country:FR 2024-09-01 2024-11-30 0000875582 country:TH 2023-09-01 2023-11-30 0000875582 country:TH 2024-09-01 2024-11-30 0000875582 country:GB 2023-09-01 2023-11-30 0000875582 country:GB 2024-09-01 2024-11-30 0000875582 country:FI 2023-09-01 2023-11-30 0000875582 country:FI 2024-09-01 2024-11-30 0000875582 country:JP 2023-09-01 2023-11-30 0000875582 country:JP 2024-09-01 2024-11-30 0000875582 country:DE 2023-09-01 2023-11-30 0000875582 country:DE 2024-09-01 2024-11-30 0000875582 country:PL 2023-09-01 2023-11-30 0000875582 country:PL 2024-09-01 2024-11-30 0000875582 ntic:UnaffiliatedCustomersOutsideTheUSAMember 2023-09-01 2023-11-30 0000875582 ntic:UnaffiliatedCustomersOutsideTheUSAMember 2024-09-01 2024-11-30 0000875582 ntic:JointVenturesInWhichTheCompanyIsAShareholderDirectlyAndIndirectlyOutsideTheUSAMember 2023-09-01 2023-11-30 0000875582 ntic:JointVenturesInWhichTheCompanyIsAShareholderDirectlyAndIndirectlyOutsideTheUSAMember 2024-09-01 2024-11-30 0000875582 ntic:InsideTheUSAToUnaffiliatedCustomersMember 2023-09-01 2023-11-30 0000875582 ntic:InsideTheUSAToUnaffiliatedCustomersMember 2024-09-01 2024-11-30 0000875582 ntic:IndirectCostOfGoodsSoldMember 2023-09-01 2023-11-30 0000875582 ntic:IndirectCostOfGoodsSoldMember 2024-09-01 2024-11-30 0000875582 ntic:DirectCostOfGoodsSoldMember ntic:NaturTecMember 2023-09-01 2023-11-30 0000875582 ntic:DirectCostOfGoodsSoldMember ntic:NaturTecMember 2024-09-01 2024-11-30 0000875582 ntic:DirectCostOfGoodsSoldMember ntic:ZERUSTMember 2023-09-01 2023-11-30 0000875582 ntic:DirectCostOfGoodsSoldMember ntic:ZERUSTMember 2024-09-01 2024-11-30 0000875582 ntic:NaturTecMember 2023-09-01 2023-11-30 0000875582 ntic:NaturTecMember 2024-09-01 2024-11-30 0000875582 ntic:ZERUSTMember 2023-09-01 2023-11-30 0000875582 ntic:ZERUSTMember 2024-09-01 2024-11-30 utr:Y 0000875582 us-gaap:RestrictedStockUnitsRSUMember 2024-09-01 2024-11-30 0000875582 us-gaap:RestrictedStockUnitsRSUMember 2024-11-30 iso4217:USD xbrli:shares xbrli:shares 0000875582 us-gaap:RestrictedStockUnitsRSUMember 2024-08-31 0000875582 us-gaap:EmployeeStockOptionMember 2024-09-01 2024-11-30 0000875582 us-gaap:EmployeeStockOptionMember 2024-11-30 0000875582 us-gaap:EmployeeStockOptionMember 2023-09-01 2023-11-30 0000875582 us-gaap:EmployeeStockOptionMember 2023-09-01 2023-11-30 0000875582 us-gaap:EmployeeStockOptionMember 2024-09-01 2024-11-30 0000875582 ntic:ESPPMember 2024-11-30 0000875582 2022-09-01 2022-09-01 0000875582 2023-09-01 2023-09-01 0000875582 ntic:O2024Q1DividendsMember 2023-10-18 2023-10-18 0000875582 ntic:O2024Q1DividendsMember 2023-10-18 0000875582 ntic:O2025Q1DividendsMember 2024-10-16 2024-10-16 0000875582 ntic:O2025Q1DividendsMember 2024-10-16 0000875582 ntic:NTICChinaMember ntic:TermLoanInMayMember 2024-08-31 0000875582 ntic:NTICChinaMember ntic:TermLoanInMayMember 2024-11-30 0000875582 ntic:NTICChinaMember ntic:TermLoanInMayMember 2023-05-30 iso4217:CNY 0000875582 us-gaap:RevolvingCreditFacilityMember ntic:JPMorganChaseBankMember us-gaap:SubsequentEventMember 2025-01-06 2025-01-06 0000875582 us-gaap:RevolvingCreditFacilityMember ntic:JPMorganChaseBankMember 2023-11-30 0000875582 us-gaap:RevolvingCreditFacilityMember ntic:JPMorganChaseBankMember 2024-11-30 0000875582 us-gaap:RevolvingCreditFacilityMember ntic:JPMorganChaseBankMember us-gaap:SubsequentEventMember ntic:AdjustedSOFRRateApplicableMarginMember 2025-01-06 2025-01-06 0000875582 us-gaap:RevolvingCreditFacilityMember ntic:JPMorganChaseBankMember us-gaap:SubsequentEventMember us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember 2025-01-06 2025-01-06 0000875582 us-gaap:RevolvingCreditFacilityMember ntic:JPMorganChaseBankMember us-gaap:SubsequentEventMember 2025-01-06 0000875582 us-gaap:RevolvingCreditFacilityMember ntic:JPMorganChaseBankMember ntic:AdjustedSOFRRateApplicableMarginMember 2023-01-06 2023-01-06 0000875582 us-gaap:RevolvingCreditFacilityMember ntic:JPMorganChaseBankMember 2023-01-06 0000875582 us-gaap:RevolvingCreditFacilityMember ntic:JPMorganChaseBankMember 2024-08-31 0000875582 us-gaap:StandbyLettersOfCreditMember ntic:JPMorganChaseBankMember 2023-01-06 0000875582 ntic:AllOtherMember 2023-09-01 2023-11-30 0000875582 ntic:EXCORMember 2023-09-01 2023-11-30 0000875582 ntic:EXCORAndAllOtherJointVentursMember 2023-09-01 2023-11-30 0000875582 ntic:AllOtherMember 2023-09-01 2023-11-30 0000875582 ntic:EXCORMember 2023-09-01 2023-11-30 0000875582 ntic:EXCORAndAllOtherJointVentursMember 2023-09-01 2023-11-30 0000875582 ntic:AllOtherMember 2024-08-31 0000875582 ntic:EXCORMember 2024-08-31 0000875582 ntic:EXCORAndAllOtherJointVentursMember 2024-08-31 0000875582 ntic:JointVenturesInFranceMember 2024-08-31 0000875582 ntic:EXCORMember 2024-08-31 0000875582 us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember 2024-08-31 0000875582 ntic:AllOtherMember 2024-09-01 2024-11-30 0000875582 ntic:EXCORMember 2024-09-01 2024-11-30 0000875582 ntic:EXCORAndAllOtherJointVentursMember 2024-09-01 2024-11-30 0000875582 ntic:AllOtherMember 2024-09-01 2024-11-30 0000875582 ntic:EXCORMember 2024-09-01 2024-11-30 0000875582 ntic:EXCORAndAllOtherJointVentursMember 2024-09-01 2024-11-30 0000875582 ntic:AllOtherMember 2024-11-30 0000875582 ntic:EXCORMember 2024-11-30 0000875582 ntic:EXCORAndAllOtherJointVentursMember 2024-11-30 0000875582 ntic:AllOtherMember 2024-11-30 0000875582 ntic:EXCORMember 2024-11-30 0000875582 us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember 2024-11-30 0000875582 us-gaap:CustomerRelationshipsMember 2024-08-31 0000875582 ntic:PatentsAndTrademarksMember 2024-08-31 0000875582 us-gaap:CustomerRelationshipsMember 2024-11-30 0000875582 ntic:PatentsAndTrademarksMember 2024-11-30 0000875582 2023-11-30 0000875582 2023-08-31 0000875582 us-gaap:NoncontrollingInterestMember 2024-11-30 0000875582 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-11-30 0000875582 us-gaap:RetainedEarningsMember 2024-11-30 0000875582 us-gaap:AdditionalPaidInCapitalMember 2024-11-30 0000875582 us-gaap:CommonStockMember 2024-11-30 0000875582 us-gaap:NoncontrollingInterestMember 2024-09-01 2024-11-30 0000875582 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-09-01 2024-11-30 0000875582 us-gaap:RetainedEarningsMember 2024-09-01 2024-11-30 0000875582 us-gaap:AdditionalPaidInCapitalMember 2024-09-01 2024-11-30 0000875582 us-gaap:CommonStockMember 2024-09-01 2024-11-30 0000875582 us-gaap:NoncontrollingInterestMember 2024-08-31 0000875582 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-08-31 0000875582 us-gaap:RetainedEarningsMember 2024-08-31 0000875582 us-gaap:AdditionalPaidInCapitalMember 2024-08-31 0000875582 us-gaap:CommonStockMember 2024-08-31 0000875582 us-gaap:NoncontrollingInterestMember 2023-11-30 0000875582 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-11-30 0000875582 us-gaap:RetainedEarningsMember 2023-11-30 0000875582 us-gaap:AdditionalPaidInCapitalMember 2023-11-30 0000875582 us-gaap:CommonStockMember 2023-11-30 0000875582 us-gaap:NoncontrollingInterestMember 2023-09-01 2023-11-30 0000875582 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-09-01 2023-11-30 0000875582 us-gaap:RetainedEarningsMember 2023-09-01 2023-11-30 0000875582 us-gaap:AdditionalPaidInCapitalMember 2023-09-01 2023-11-30 0000875582 us-gaap:CommonStockMember 2023-09-01 2023-11-30 0000875582 us-gaap:NoncontrollingInterestMember 2023-08-31 0000875582 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-08-31 0000875582 us-gaap:RetainedEarningsMember 2023-08-31 0000875582 us-gaap:AdditionalPaidInCapitalMember 2023-08-31 0000875582 us-gaap:CommonStockMember 2023-08-31 0000875582 ntic:IntangibleAssetsExcludingPatentsAndTrademarksMember 2024-08-31 0000875582 ntic:IntangibleAssetsExcludingPatentsAndTrademarksMember 2024-11-30 0000875582 2025-01-10

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to __________________

Commission File Number: 001-11038

____________________

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) | 41-0857886 (I.R.S. Employer Identification No.)

4201 Woodland Road P.O. Box 69 Circle Pines, Minnesota 55014 (Address of principal executive offices) (Zip Code)

(763) 225-6600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common stock, par value $0.02 per share | NTIC | The Nasdaq Stock Market

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ | Accelerated filer ☐
Non-accelerated filer ☒ | Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of January 10, 2025, there were 9,470,507 shares of common stock of the registrant outstanding.

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION

FORM 10-Q

November 30, 2024

TABLE OF CONTENTS

Description |  | Page
PART I—FINANCIAL INFORMATION |
Item 1. | Financial Statements |
| Consolidated Balance Sheets as of November 30, 2024 (unaudited) and August 31, 2024 (audited) | 1
| Consolidated Statements of Operations (unaudited) for the Three Months Ended November 30, 2024 and 2023 | 2
| Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended November 30, 2024 and 2023 | 3
| Consolidated Statements of Equity (unaudited) for the Three Months Ended November 30, 2024 and 2023 | 4
| Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended November 30, 2024 and 2023 | 5
| Notes to Consolidated Financial Statements (unaudited) | 6-15
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16-27
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 28
Item 4. | Controls and Procedures | 29
PART II—OTHER INFORMATION |
Item 1. | Legal Proceedings | 30
Item 1A. | Risk Factors | 30
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 30
Item 3. | Defaults Upon Senior Securities | 30
Item 4. | Mine Safety Disclosures | 30
Item 5. | Other Information | 31
Item 6. | Exhibits | 31
SIGNATURES |  | 33

_________________

This quarterly report on Form 10-Q contains certain forward-looking statements that are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by those sections. For more information, see “Part I. Financial Information – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements.”

i

_________________

As used in this report, references to “NTIC,” the “Company,” “we,” “our” or “us,” unless the context otherwise requires, refer to Northern Technologies International Corporation and its wholly-owned and majority-owned subsidiaries, all of which are consolidated on NTIC’s consolidated financial statements.

As used in this report, references to: (1) “NTIC China” refer to NTIC’s wholly-owned subsidiary in China, NTIC (Shanghai) Co., Ltd.; (2) “NTI Europe” refer to NTIC’s wholly-owned subsidiary in Germany, NTIC Europe GmbH; (3) “Zerust Mexico” refer to NTIC’s wholly-owned subsidiary in Mexico, ZERUST-EXCOR MEXICO, S. de R.L. de C.V.; (4) “Zerust India” refer to NTIC’s wholly-owned subsidiary in India, HNTI Limited (formerly Harita-NTI Limited); and (5)“NTI Asean” refer to NTIC’s majority-owned holding company subsidiary, NTI Asean LLC, which holds investments in certain entities that operate in the Association of Southeast Asian Nations (ASEAN) region.

NTIC’s consolidated financial statements do not include the accounts of any of its joint ventures. Except as otherwise indicated, references in this report to NTIC’s joint ventures do not include any of NTIC’s wholly-owned or majority-owned subsidiaries.

As used in this report, references to “EXCOR” refer to NTIC’s joint venture in Germany, Excor Korrosionsschutz – Technologien und Produkte GmbH.

All trademarks, trade names or service marks referred to in this report are the property of their respective owners.

ii

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF NOVEMBER 30, 2024 (UNAUDITED) AND

AUGUST 31, 2024 (AUDITED)

|  | November 30, 2024 |  |  | August 31, 2024 |
ASSETS |  |  |  |  |  |  |  |
CURRENT ASSETS: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 5,569,834 |  |  | $ | 4,952,184 |
Receivables: |  |  |  |  |  |  |  |
Trade, less allowance for credit losses of $310,000 as of November 30, 2024 and August 31, 2024 |  |  | 16,081,710 |  |  |  | 19,187,079 |
Fees for services provided to joint ventures |  |  | 1,170,328 |  |  |  | 1,235,016 |
Income taxes |  |  | 688,806 |  |  |  | 392,293 |
Inventories, net |  |  | 14,337,384 |  |  |  | 14,390,844 |
Prepaid expenses |  |  | 2,454,288 |  |  |  | 1,421,803 |
Total current assets |  |  | 40,302,350 |  |  |  | 41,579,219 |
PROPERTY AND EQUIPMENT, NET |  |  | 17,053,239 |  |  |  | 16,265,653 |
OTHER ASSETS: |  |  |  |  |  |  |  |
Investments in joint ventures |  |  | 25,492,921 |  |  |  | 25,397,287 |
Deferred income tax, net |  |  | 508,495 |  |  |  | 544,464 |
Intangible assets, net |  |  | 5,573,945 |  |  |  | 5,682,945 |
Goodwill |  |  | 4,782,376 |  |  |  | 4,782,376 |
Operating lease right of use assets |  |  | 324,329 |  |  |  | 424,558 |
Total other assets |  |  | 36,682,066 |  |  |  | 36,831,630 |
Total assets |  | $ | 94,037,655 |  |  | $ | 94,676,502 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |  |  |
Line of credit |  | $ | 4,518,734 |  |  | $ | 4,291,608 |
Term loan |  |  | 2,761,592 |  |  |  | 2,820,835 |
Accounts payable |  |  | 6,559,744 |  |  |  | 6,393,355 |
Income taxes payable |  |  | 256,849 |  |  |  | 327,781 |
Accrued liabilities: |  |  |  |  |  |  |  |
Payroll and related benefits |  |  | 2,710,181 |  |  |  | 3,163,372 |
Other |  |  | 1,094,381 |  |  |  | 574,876 |
Current portion of operating leases |  |  | 217,441 |  |  |  | 325,116 |
Total current liabilities |  |  | 18,118,922 |  |  |  | 17,896,943 |
LONG-TERM LIABILITIES: |  |  |  |  |  |  |  |
Deferred income tax, net |  |  | 1,504,796 |  |  |  | 1,504,796 |
Operating leases, less current portion |  |  | 106,888 |  |  |  | 99,442 |
Total long-term liabilities |  | $ | 1,611,684 |  |  | $ | 1,604,238 |
COMMITMENTS AND CONTINGENCIES (Note 12) |  |  |  |  |  |  |  |
EQUITY: |  |  |  |  |  |  |  |
Preferred stock, no par value; authorized 10,000 shares; none issued and outstanding |  |  | — |  |  |  | — |
Common stock, $0.02 par value per share; authorized 15,000,000 shares as of November 30, 2024 and August 31, 2024; issued and outstanding 9,470,507 and 9,466,980, respectively |  |  | 189,410 |  |  |  | 189,340 |
Additional paid-in capital |  |  | 23,999,854 |  |  |  | 23,615,564 |
Retained earnings |  |  | 53,669,366 |  |  |  | 53,771,211 |
Accumulated other comprehensive loss |  |  | (7,645,298 | ) |  |  | (6,382,124 | )
Stockholders’ equity |  |  | 70,213,332 |  |  |  | 71,193,991 |
Non-controlling interests |  |  | 4,093,717 |  |  |  | 3,981,330 |
Total equity |  |  | 74,307,049 |  |  |  | 75,175,321 |
Total liabilities and equity |  | $ | 94,037,655 |  |  | $ | 94,676,502 |

See notes to consolidated financial statements.

1

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2024 AND 2023

|  | Three Months Ended November 30, |
|  | 2024 |  |  | 2023 |
NET SALES: |  |  |  |  |  |  |  |
Net sales |  | $ | 21,338,393 |  |  | $ | 20,181,675 |
Cost of goods sold |  |  | 13,175,440 |  |  |  | 12,847,401 |
Gross profit |  |  | 8,162,953 |  |  |  | 7,334,274 |
JOINT VENTURE OPERATIONS: |  |  |  |  |  |  |  |
Equity in income from joint ventures |  |  | 1,129,593 |  |  |  | 1,102,241 |
Fees for services provided to joint ventures |  |  | 1,284,119 |  |  |  | 1,248,958 |
Total joint venture operations |  |  | 2,413,712 |  |  |  | 2,351,199 |
OPERATING EXPENSES: |  |  |  |  |  |  |  |
Selling expenses |  |  | 4,267,654 |  |  |  | 3,686,058 |
General and administrative expenses |  |  | 3,858,943 |  |  |  | 3,517,061 |
Research and development expenses |  |  | 1,343,397 |  |  |  | 1,105,921 |
Total operating expenses |  |  | 9,469,994 |  |  |  | 8,309,040 |
OPERATING INCOME |  |  | 1,106,671 |  |  |  | 1,376,433 |
INTEREST INCOME |  |  | 25,567 |  |  |  | 46,442 |
INTEREST EXPENSE |  |  | (120,220 | ) |  |  | (111,138 | )
INCOME BEFORE INCOME TAX EXPENSE |  |  | 1,012,018 |  |  |  | 1,311,737 |
INCOME TAX EXPENSE |  |  | 217,871 |  |  |  | 226,796 |
NET INCOME |  |  | 794,147 |  |  |  | 1,084,941 |
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS |  |  | 233,056 |  |  |  | 189,420 |
NET INCOME ATTRIBUTABLE TO NTIC |  | $ | 561,091 |  |  | $ | 895,521 |
NET INCOME ATTRIBUTABLE TO NTIC PER COMMON SHARE: |  |  |  |  |  |  |  |
Basic |  | $ | 0.06 |  |  | $ | 0.09 |
Diluted |  | $ | 0.06 |  |  | $ | 0.09 |
WEIGHTED AVERAGE COMMON SHARES ASSUMED OUTSTANDING: |  |  |  |  |  |  |  |
Basic |  |  | 9,470,507 |  |  |  | 9,427,588 |
Diluted |  |  | 9,754,209 |  |  |  | 9,706,581 |
CASH DIVIDENDS DECLARED PER COMMON SHARE |  | $ | 0.07 |  |  | $ | 0.07 |

See notes to consolidated financial statements.

2

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2024 AND 2023

|  | Three Months Ended November 30, |
|  | 2024 |  |  | 2023 |
NET INCOME |  | $ | 794,147 |  |  | $ | 1,084,941 |
OTHER COMPREHENSIVE (LOSS) INCOME – FOREIGN CURRENCY TRANSLATION ADJUSTMENT |  |  | (1,383,843 | ) |  |  | 301,319 |
COMPREHENSIVE (LOSS) INCOME |  |  | (589,696 | ) |  |  | 1,386,260 |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS |  |  | (112,387 | ) |  |  | (183,797 | )
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO NTIC |  | $ | (702,083 | ) |  | $ | 1,202,463 |

See notes to consolidated financial statements.

3

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2024 AND 2023

|  | STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Additional |  |  |  |  |  |  | Other |  |  | Non- |  |  |  |  |
|  | Common Stock |  |  | Paid-in |  |  | Retained |  |  | Comprehensive |  |  | Controlling |  |  | Total |
|  | Shares |  |  | Amount |  |  | Capital |  |  | Earnings |  |  | Income Loss |  |  | Interests |  |  | Equity |
BALANCE AT AUGUST 31, 2023 |  |  | 9,424,101 |  |  | $ | 188,482 |  |  | $ | 21,986,767 |  |  | $ | 51,004,427 |  |  | $ | (6,823,403 | ) |  | $ | 4,342,524 |  |  | $ | 70,698,797 |
Stock issued for employee stock purchase plan |  |  | 3,496 |  |  |  | 70 |  |  |  | 40,026 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 40,096 |
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | 350,933 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 350,933 |
Dividend received by non-controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (800,000 | ) |  |  | (800,000 | )
Dividends paid to shareholders |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (659,932 | ) |  |  | — |  |  |  | — |  |  |  | (659,932 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 895,521 |  |  |  | — |  |  |  | 189,420 |  |  |  | 1,084,941 |
Comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 306,942 |  |  |  | (5,623 | ) |  |  | 301,319 |
BALANCE AT NOVEMBER 30, 2023 |  |  | 9,427,597 |  |  | $ | 188,552 |  |  | $ | 22,377,726 |  |  | $ | 51,240,016 |  |  | $ | (6,516,461 | ) |  | $ | 3,726,321 |  |  | $ | 71,016,154 |
BALANCE AT AUGUST 31, 2024 |  |  | 9,466,980 |  |  | $ | 189,340 |  |  | $ | 23,615,564 |  |  | $ | 53,771,211 |  |  | $ | (6,382,124 | ) |  | $ | 3,981,330 |  |  | $ | 75,175,321 |
Stock issued for employee stock purchase plan |  |  | 3,527 |  |  |  | 71 |  |  |  | 42,400 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 42,471 |
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | 341,890 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 341,890 |
Dividends paid to shareholders |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (662,936 | ) |  |  | — |  |  |  | — |  |  |  | (662,936 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 561,091 |  |  |  | — |  |  |  | 233,056 |  |  |  | 794,147 |
Comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,263,174 | ) |  |  | (120,669 | ) |  |  | (1,383,843 | )
BALANCE AT NOVEMBER 30, 2024 |  |  | 9,470,507 |  |  | $ | 189,410 |  |  | $ | 23,999,854 |  |  | $ | 53,669,366 |  |  | $ | (7,645,298 | ) |  | $ | 4,093,717 |  |  | $ | 74,307,049 |

See notes to consolidated financial statements.

4

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2024 AND 2023

|  | Three Months Ended November 30, |
|  | 2024 |  |  | 2023 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |
Net income |  | $ | 794,147 |  |  | $ | 1,084,941 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |
Stock-based compensation expense |  |  | 341,890 |  |  |  | 350,933 |
Depreciation expense |  |  | 267,155 |  |  |  | 307,010 |
Amortization expense |  |  | 147,720 |  |  |  | 147,655 |
Equity in income from joint ventures |  |  | (1,129,593 | ) |  |  | (1,102,241 | )
Dividends received from joint ventures |  |  | — |  |  |  | 371,103 |
Deferred income taxes |  |  | 22,755 |  |  |  | 15,335 |
Changes in current assets and liabilities: |  |  |  |  |  |  |  |
Receivables: |  |  |  |  |  |  |  |
Trade |  |  | 2,874,595 |  |  |  | 794,395 |
Fees for services provided to joint ventures |  |  | 64,687 |  |  |  | 75,914 |
Dividends receivable from joint venture |  |  | — |  |  |  | 1,986,027 |
Income taxes |  |  | (344,621 | ) |  |  | (285,866 | )
Inventories |  |  | (73,223 | ) |  |  | 525,559 |
Prepaid expenses and other |  |  | (1,046,973 | ) |  |  | (929,250 | )
Accounts payable |  |  | 195,752 |  |  |  | 270,194 |
Income tax payable |  |  | (19,024 | ) |  |  | 9,594 |
Accrued liabilities |  |  | 299,800 |  |  |  | (544,411 | )
Net cash provided by operating activities |  |  | 2,395,066 |  |  |  | 3,076,892 |
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |
Purchases of property and equipment |  |  | (1,219,616 | ) |  |  | (390,729 | )
Investments in patents |  |  | (38,720 | ) |  |  | (33,142 | )
Net cash used in investing activities |  |  | (1,258,336 | ) |  |  | (423,871 | )
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Net payments on line of credit |  |  | 227,124 |  |  |  | (600,000 | )
Dividends paid on NTIC common stock |  |  | (662,936 | ) |  |  | (659,932 | )
Dividends received by non-controlling interest |  |  | — |  |  |  | (800,000 | )
Proceeds from employee stock purchase plan |  |  | 42,471 |  |  |  | 40,096 |
Net cash used in financing activities |  |  | (393,341 | ) |  |  | (2,019,836 | )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS: |  |  | (125,739 | ) |  |  | 54,673 |
NET INCREASE IN CASH AND CASH EQUIVALENTS |  |  | 617,650 |  |  |  | 687,858 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |  |  | 4,952,184 |  |  |  | 5,406,174 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD |  | $ | 5,569,834 |  |  | $ | 6,094,032 |

See notes to consolidated financial statements.

5

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. | INTERIM FINANCIAL INFORMATION

In the opinion of management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, which are of a normal recurring nature, and present fairly the consolidated financial position of Northern Technologies International Corporation and its subsidiaries (the Company) as of November 30, 2024 and August 31, 2024, the results of the Company’s operations for the three months ended November 30, 2024 and 2023, the changes in stockholders’ equity for the three months ended November 30, 2024 and 2023 and the Company’s cash flows for the three months ended November 30, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP).

These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s annual report on Form 10-K for the fiscal year ended August 31, 2024. These consolidated financial statements also should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section appearing in this report.

Operating results for the three months ended November 30, 2024 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 31, 2025.

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. An adjustment has been made to the Consolidated Statements of Cash Flows for the three months ended November 30, 2023 to reclassify joint venture receivables, tax receivables and tax payables.

The Company evaluates events occurring after the date of the consolidated financial statements, through the date the consolidated financial statements were available to be issued, requiring recording or disclosure in the consolidated financial statements.

2. | NEW SIGNIFICANT ACCOUNTING POLICIES

For the three months ended November 30, 2024, there have been no new significant accounting policies from those disclosed in the Company’s annual report on Form 10-K for the fiscal year ended August 31, 2024.

3. | ACCOUNTING PRONOUNCEMENTS

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 is intended to enhance financial reporting by requiring incremental disclosures for significant segment expenses on an annual and interim basis by public entities required to report segment information in accordance with Accounting Standards Codification Topic 280. The amendments in ASU 2023-07 are to be applied retrospectively to all periods presented in the financial statements and early adoption is permitted. This standard will be applicable to the Company for the 2025 annual period and quarterly periods thereafter. The Company is evaluating its disclosure approach for ASU 2023-07 and anticipates adopting the standard for the year ended August 31, 2025 and filings thereafter.

6

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new guidance is expected to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information by requiring 1) consistent categories and greater disaggregation of information in the rate reconciliation and 2) income taxes paid disaggregated by jurisdiction. The guidance is effective on a prospective basis, although retrospective application and early adoption is permitted. The Company is evaluating its disclosure approach for ASU 2023-09 and anticipates adopting the standard for the annual period starting September 1, 2025.

In March 2024, the Securities and Exchange Commission (SEC) adopted rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires the disclosure of material Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics in annual reports and registration statements. For large-accelerated filers and accelerated filers, disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2025, and January 1, 2026, respectively, subject to legal challenges and the SEC’s voluntary stay of the disclosure requirements. The Company is currently evaluating the impact these rules will have on its consolidated financial statements and related disclosures.

4. | INVENTORIES

Inventories consisted of the following:

|  | November 30, 2024 |  |  | August 31, 2024 |
Production materials |  | $ | 5,543,326 |  |  | $ | 5,513,409 |
Finished goods |  |  | 8,794,058 |  |  |  | 8,877,435 |
|  | $ | 14,337,384 |  |  | $ | 14,390,844 |

5. | PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following:

|  | November 30, 2024 |  |  | August 31, 2024 |
Land |  | $ | 1,238,180 |  |  | $ | 1,238,180 |
Buildings and improvements |  |  | 14,760,250 |  |  |  | 14,760,250 |
Construction in process |  |  | 4,171,288 |  |  |  | 3,086,479 |
Machinery and equipment |  |  | 7,298,297 |  |  |  | 7,276,151 |
|  |  | 27,468,015 |  |  |  | 26,361,060 |
Less accumulated depreciation |  |  | (10,414,776 | ) |  |  | (10,095,407 | )
|  | $ | 17,053,239 |  |  | $ | 16,265,653 |

Depreciation expense was $267,155 for the three months ended November 30, 2024, compared to $307,010 for the three months ended November 30, 2023.

7

6. | INTANGIBLE ASSETS, NET

Intangible assets, net consisted of the following:

|  | As of November 30, 2024 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |
Patents and trademarks |  | $ | 3,498,597 |  |  | $ | (2,896,469 | ) |  | $ | 602,128 |
Customer relationships |  |  | 6,347,000 |  |  |  | (1,375,183 | ) |  |  | 4,971,817 |
Total intangible assets, net |  | $ | 9,845,597 |  |  | $ | (4,271,652 | ) |  | $ | 5,573,945 |

|  | As of August 31, 2024 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |
Patents and trademarks |  | $ | 3,459,877 |  |  | $ | (2,854,532 | ) |  | $ | 605,345 |
Customer relationships |  |  | 6,347,000 |  |  |  | (1,269,400 | ) |  |  | 5,077,600 |
Total intangible assets, net |  | $ | 9,806,877 |  |  | $ | (4,123,932 | ) |  | $ | 5,682,945 |

Amortization expense related to intangible assets was $147,720 and $147,655 for the three months ended November 30, 2024 and 2023, respectively.

As of November 30, 2024, future amortization expense related to intangible assets for each of the next five fiscal years and thereafter is estimated as follows:

Remainder of fiscal 2025 |  | $ | 459,191 |
Fiscal 2026 |  |  | 485,814 |
Fiscal 2027 |  |  | 450,739 |
Fiscal 2028 |  |  | 450,739 |
Fiscal 2029 |  |  | 450,739 |
Thereafter |  |  | 3,276,723 |
Total |  | $ | 5,573,945 |

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.

8

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 November 30, 2024 |
|  | Total |  |  | EXCOR |  |  | All Other |
Current assets |  | $ | 56,703,487 |  |  | $ | 26,050,938 |  |  | $ | 30,652,549 |
Total assets |  |  | 64,773,897 |  |  |  | 31,700,918 |  |  |  | 33,072,979 |
Current liabilities |  |  | 12,976,356 |  |  |  | 2,455,785 |  |  |  | 10,520,571 |
Non-current liabilities |  |  | 300,116 |  |  |  | — |  |  |  | 300,116 |
Joint ventures’ equity |  |  | 51,497,426 |  |  |  | 29,245,133 |  |  |  | 22,252,293 |
NTIC’s share of joint ventures’ equity |  |  | 25,493,228 |  |  |  | 14,622,568 |  |  |  | 10,870,660 |
NTIC’s share of joint ventures’ undistributed earnings |  |  | 24,548,560 |  |  |  | 14,591,663 |  |  |  | 9,956,897 |

|  | Three Months Ended November 30, 2024 |
|  | Total |  |  | EXCOR |  |  | All Other |
Net sales |  | $ | 23,837,010 |  |  | $ | 8,738,814 |  |  | $ | 15,098,196 |
Gross profit |  |  | 10,315,283 |  |  |  | 4,757,686 |  |  |  | 5,557,597 |
Net income |  |  | 2,259,187 |  |  |  | 1,247,500 |  |  |  | 1,011,687 |
NTIC’s share of equity in income from joint ventures |  |  | 1,129,593 |  |  |  | 623,750 |  |  |  | 505,843 |
NTIC’s dividends received from joint ventures |  |  | — |  |  |  | — |  |  |  | — |

|  | As of August 31, 2024 |
|  | Total |  |  | EXCOR |  |  | All Other |
Current assets |  | $ | 56,420,503 |  |  | $ | 26,234,664 |  |  | $ | 30,185,839 |
Total assets |  |  | 64,183,071 |  |  |  | 31,513,288 |  |  |  | 32,669,783 |
Current liabilities |  |  | 12,553,716 |  |  |  | 2,221,726 |  |  |  | 10,331,990 |
Non-current liabilities |  |  | 323,199 |  |  |  | — |  |  |  | 323,199 |
Joint ventures’ equity |  |  | 51,306,156 |  |  |  | 29,291,562 |  |  |  | 22,014,594 |
NTIC’s share of joint ventures’ equity |  |  | 25,397,287 |  |  |  | 14,645,783 |  |  |  | 10,751,504 |
NTIC’s share of joint ventures’ undistributed earnings |  |  | 23,645,685 |  |  |  | 14,614,878 |  |  |  | 9,030,807 |

|  | Three Months Ended November 30, 2023 |
|  | Total |  |  | EXCOR |  |  | All Other |
Net sales |  | $ | 23,560,661 |  |  | $ | 8,420,960 |  |  | $ | 15,139,701 |
Gross profit |  |  | 10,103,800 |  |  |  | 4,375,075 |  |  |  | 5,728,725 |
Net income |  |  | 2,204,482 |  |  |  | 1,026,907 |  |  |  | 1,177,575 |
NTIC’s share of equity in income from joint ventures |  |  | 1,102,241 |  |  |  | 513,453 |  |  |  | 588,788 |
NTIC’s dividends received from joint ventures |  |  | 371,104 |  |  |  | — |  |  |  | 371,104 |

8. | CORPORATE DEBT

On January 6, 2023, the Company entered into a Credit Agreement (the Credit Agreement) with JPMorgan Chase Bank, N.A. (JPM), which provided the Company with a senior secured revolving line of credit (the Credit Facility) of up to $10.0 million, which included a $5.0 million sublimit for standby letters of credit. Borrowings of $4,518,734 and $4,291,608 were outstanding under the Credit Facility as of November 30, 2024 and August 31, 2024, respectively. The Company was in compliance with all covenants under the Credit Agreement as of November 30, 2024.

On January 6, 2025, the Company and JPM entered into an amendment to the Credit Agreement to extend the maturity date of the Credit Facility from January 6, 2025 to January 5, 2026, reduce the availability under the Credit Facility from $10.0 million to $8.0 million and increase the applicable margin for Adjusted SOFR Rate (as defined below) advances from 2.15% to 2.35%. All other material terms of the Credit Facility and the Credit Agreement remain the same.

9

The principal amount under the Credit Facility, together with all accrued unpaid interest and other amounts owing thereunder, if any, will be payable in full on the January 5, 2026 maturity date, unless the Credit Facility is extended or renewed or terminated earlier.

Borrowings under the Credit Agreement bear interest at a floating rate, at the option of the Company, equal to either the CB Floating Rate or the Adjusted SOFR Rate. The term “CB Floating Rate” means the greater of the Prime Rate in the United States or 2.50%. The term “Adjusted SOFR Rate” means the term secured overnight financing rate for either one, three or six months (depending on the interest period selected by the Company) plus 0.10% per annum. With respect to any borrowings using an Adjusted SOFR Rate, there is an applicable margin of 2.35% applied per annum. There is no applicable margin with respect to borrowings using a CB Floating Rate. The weighted average interest rate was 7.07% and 7.43% for the three months ended November 30, 2024 and 2023.

To secure the Credit Agreement, the Company assigned JPM a continuing security interest in all of its right, title and interest in collateral made up of the assets of the Company.

The Credit Agreement contains customary affirmative and negative covenants, including, among other matters, limitations on the Company’s ability to incur additional debt, grant liens, engage in certain business operations and transactions, make certain investments, modify its organizational documents or form any new subsidiaries, subject to certain exceptions. Further, the Credit Agreement contains a negative covenant that restricts the ability of the Company to redeem or repurchase its common stock or pay dividends if the result of which would cause an event of default under the Credit Agreement. The Credit Agreement also requires the Company to maintain a Fixed Charge Coverage Ratio of at least 1.25 to 1.00. The term “Fixed Charge Coverage Ratio” means the ratio, computed for the Company on a consolidated basis, of net income plus income tax expense, plus amortization expense, plus depreciation expense, plus interest expense, and plus dividends received from joint ventures, minus unfinanced capital expenditures and equity in income from joint ventures, all computed for the twelve month period then ending, to scheduled principal payments made, plus scheduled finance lease payments made, plus interest expense paid, plus income tax expense paid, and plus cash distributions and dividends paid, all computed for the same twelve month period then ending.

The Credit Agreement also contains customary events of default, including, without limitation, payment defaults, material inaccuracy of representations and warranties, covenant defaults, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, breach of any financial covenant and change of control. Upon the occurrence and during the continuance of any event of default, JPM may accelerate the payment of the obligations thereunder and exercise various other customary default remedies.

On each of April 10, 2023 and May 30, 2023, the Company’s wholly-owned subsidiary in China, NTIC China, entered into a loan agreement with China Construction Bank Corporation. Each term loan provided NTIC China with a RMB 10,000,000 (USD $1.45 million). The term loans mature in April 2025 and June 2025, respectively, unless extended. Both term loans have an annual interest rate of 3.25% with interest due monthly. Both term loans are secured by an office building owned by NTIC China and the loan agreements contain certain financial and other covenants. The Company was in compliance with the covenants as of November 30, 2024. The current outstanding balance for both term loans was USD $2,761,592 as of November 30, 2024 and USD $2,820,835 as of August 31, 2024.

9. | STOCKHOLDERS’ EQUITY

On October 16, 2024, the Company’s Board of Directors declared a cash dividend of $0.07 per share of the Company’s common stock, payable on November 13, 2024 to stockholders of record on October 30, 2024. On October 18, 2023, the Company’s Board of Directors declared a cash dividend of $0.07 per share of the Company’s common stock, payable on November 15, 2023 to stockholders of record on November 1, 2023.

10

During the three months ended November 30, 2024 and 2023, the Company repurchased no shares of its common stock.

The Company issued 3,527 and 3,496 shares of common stock on September 1, 2023 and 2022, respectively, under the Northern Technologies International Corporation Employee Stock Purchase Plan (the ESPP). The ESPP is compensatory for financial reporting purposes. As of November 30, 2024, 51,727 shares of common stock remained available for sale under the ESPP.

10. | NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per share assumes the exercise of stock options and the settlement of restricted stock units using the treasury stock method, if dilutive.

The following is a reconciliation of the net income per share computation for the three months ended November 30, 2024 and 2023:

|  | Three Months Ended November 30, |
Numerator: |  | 2024 |  |  | 2023 |
Net income attributable to NTIC |  | $ | 561,091 |  |  | $ | 895,521 |
Denominator: |  |  |  |  |  |  |  |
Basic – weighted shares outstanding |  |  | 9,470,507 |  |  |  | 9,427,588 |
Weighted shares assumed upon exercise of stock options and settlement of restricted stock units |  |  | 283,702 |  |  |  | 278,993 |
Diluted – weighted shares outstanding |  |  | 9,754,209 |  |  |  | 9,706,581 |
Basic net income per share: |  | $ | 0.06 |  |  | $ | 0.09 |
Diluted net income per share: |  | $ | 0.06 |  |  | $ | 0.09 |

The dilutive impact summarized above relates to the periods when the average market price of the Company’s common stock exceeded the exercise price of the potentially dilutive option securities granted. Net income per common share was based on the weighted average number of common shares outstanding during the periods when computing basic net income per share. When dilutive, stock options and restricted stock units are included as equivalents using the treasury stock market method when computing the diluted net income per share. Excluded from the computation of diluted net income per share for the three months ended November 30, 2024 were options outstanding to purchase 751,153 shares of common stock. Excluded from the computation of diluted net income per share for the three months ended November 30, 2023 were options outstanding to purchase 580,869 shares of common stock.

11

11. | STOCK-BASED COMPENSATION

Stock Options

A summary of stock option activities under the Northern Technologies International Corporation 2024 Stock Incentive Plan (2024 Plan), the Northern Technologies International Corporation Amended and Restated 2019 Stock Incentive Plan and the Northern Technologies International Corporation Amended and Restated 2007 Stock Incentive Plan is as follows:

|  | Number of Options Outstanding |  |  | Weighted Average Exercise Price |
Outstanding as of August 31, 2024 |  |  | 1,752,667 |  |  | $ | 11.48 |
Granted |  |  | 245,190 |  |  | $ | 13.26 |
Exercised |  |  | — |  |  |  | — |
Cancelled/Forfeited |  |  | — |  |  |  | — |
Outstanding as of November 30, 2024 |  |  | 1,997,857 |  |  | $ | 11.69 |

The weighted average per share fair value of options granted during the three months ended November 30, 2024 and 2023 was $4.95 and $5.05, respectively. The weighted average remaining contractual life of the options outstanding as of November 30, 2024 and 2023 was 6.27 years and 6.55 years, respectively.

The Company recognized stock option compensation expense of $304,930 and $350,933 during the three months ended November 30, 2024 and 2023, respectively. As of November 30, 2024, there was $1,916,887 of unrecognized stock option compensation expense. The amount is expected to be recognized over a period of 2.75 years.

Restricted Stock Units

Restricted stock units were granted under the 2024 Plan on September 1, 2024 to certain non-employee directors during the three months ended November 30, 2024 and vest in full on the one-year anniversary of the date of grant. A summary of restricted stock unit activity for the three months ended November 30, 2024 is as follows:

|  | Number of Restricted Stock Units |  |  | Weighted Average Grant Date Fair Value |
Outstanding as of August 31, 2024 |  |  | — |  |  | $ | — |
Granted |  |  | 11,313 |  |  |  | 13.14 |
Vested/Settled |  |  | — |  |  |  | — |
Cancelled/Forfeited |  |  | — |  |  |  | — |
Outstanding as of November 30, 2024 |  |  | 11,313 |  |  | $ | 13.14 |

Restricted stock units are valued using the closing stock price on the grant date. The Company recognizes the grant date fair value of the restricted stock units over one year. For the three months ended November 30, 2024, the Company recognized $36,960 in stock-based compensation expense. As of November 30, 2024, there is an unrecognized stock-based compensation expense of $111,692, which is expected to be recognized over 0.75 years.

12

12. | SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

The Company’s chief operating decision maker is its Chief Executive Officer. The Company’s business is organized into two reportable segments: ZERUST® and Natur-Tec®. The Company has been selling its proprietary ZERUST® rust and corrosion inhibiting products and services to the automotive, electronics, electrical, mechanical, military and retail consumer markets for over 50 years and, more recently, has also expanded into the oil and gas industry. The Company also sells a portfolio of proprietary bio-based and compostable (fully biodegradable) polymer resins and finished products under the Natur-Tec® brand.

The following table sets forth the Company’s net sales for the three months ended November 30, 2024 and 2023 by segment:

|  | Three Months Ended November 30, |
|  | 2024 |  |  | 2023 |
ZERUST® net sales |  | $ | 15,475,803 |  |  | $ | 15,405,745 |
Natur-Tec® net sales |  |  | 5,862,590 |  |  |  | 4,775,930 |
Total net sales |  | $ | 21,338,393 |  |  | $ | 20,181,675 |

The following table sets forth the Company’s cost of goods sold for the three months ended November 30, 2024 and 2023 by segment:

|  | November 30, 2024 |  |  | % of Product Sales* |  |  | November 30, 2023 |  |  | % of Product Sales* |
Direct cost of goods sold |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ZERUST® |  | $ | 8,678,706 |  |  |  | 56.1 | % |  | $ | 8,744,024 |  |  |  | 56.8 | %
Natur-Tec® |  |  | 3,689,183 |  |  |  | 62.9 | % |  |  | 3,228,583 |  |  |  | 67.6 | %
Indirect cost of goods sold |  |  | 807,551 |  |  | NA |  |  |  | 874,794 |  |  | NA |
Total net cost of goods sold |  | $ | 13,175,440 |  |  |  |  |  |  | $ | 12,847,401 |  |  |  |  |

* | The percent of product sales is calculated by dividing the direct cost of goods sold for each individual segment category by the net sales for each segment category.

The Company utilizes product net sales and direct and indirect cost of goods sold for each product in reviewing the financial performance of a product type. Further allocation of Company expenses or assets, aside from amounts presented in the tables above, is not utilized in evaluating product performance, nor does such allocation occur for internal financial reporting.

Geographic Information

Net sales by geographic location for the three months ended November 30, 2024 and 2023 were as follows:

|  | Three Months Ended November 30, |
|  | 2024 |  |  | 2023 |
Inside the U.S. to unaffiliated customers |  | $ | 13,088,319 |  |  | $ | 12,097,843 |
Outside the U.S. to: |  |  |  |  |  |  |  |
Joint ventures in which the Company is a shareholder directly and indirectly |  |  | 767,456 |  |  |  | 851,452 |
Unaffiliated customers |  |  | 7,482,618 |  |  |  | 7,232,380 |
|  | $ | 21,338,393 |  |  | $ | 20,181,675 |

13

Net sales by geographic location are based on the location of the customer.

Fees for services provided to joint ventures by geographic location as a percentage of total fees for services provided to joint ventures during the three months ended November 30, 2024 and 2023 were as follows:

|  | Three Months Ended November 30, |
|  | 2024 |  |  | % of Total Fees for Services Provided to Joint Ventures |  |  | 2023 |  |  | % of Total Fees for Services Provided to Joint Ventures |
Poland |  | $ | 220,010 |  |  |  | 17.1 | % |  | $ | 198,017 |  |  |  | 15.9 | %
Germany |  |  | 206,329 |  |  |  | 16.1 | % |  |  | 205,643 |  |  |  | 16.5 | %
Japan |  |  | 148,538 |  |  |  | 11.6 | % |  |  | 136,081 |  |  |  | 10.9 | %
Finland |  |  | 131,460 |  |  |  | 10.2 | % |  |  | 103,744 |  |  |  | 8.3 | %
United Kingdom |  |  | 116,226 |  |  |  | 9.1 | % |  |  | 63,149 |  |  |  | 5.1 | %
Thailand |  |  | 94,165 |  |  |  | 7.3 | % |  |  | 79,438 |  |  |  | 6.4 | %
France |  |  | 79,064 |  |  |  | 6.2 | % |  |  | 121,966 |  |  |  | 9.8 | %
Czech Republic |  |  | 72,631 |  |  |  | 5.7 | % |  |  | 77,812 |  |  |  | 6.2 | %
South Korea |  |  | 67,701 |  |  |  | 5.3 | % |  |  | 74,957 |  |  |  | 6.0 | %
Sweden |  |  | 66,928 |  |  |  | 5.2 | % |  |  | 110,536 |  |  |  | 8.9 | %
Other |  |  | 81,067 |  |  |  | 6.3 | % |  |  | 77,615 |  |  |  | 6.2 | %
|  | $ | 1,284,119 |  |  |  | 100.0 | % |  | $ | 1,248,958 |  |  |  | 100.0 | %

The geographical distribution of total property and equipment and net sales is as follows:

|  | At November 30, 2024 |  |  | At August 31, 2024 |
China |  | $ | 5,453,786 |  |  | $ | 5,627,202 |
Other |  |  | 1,212,917 |  |  |  | 1,217,400 |
United States |  |  | 10,386,536 |  |  |  | 9,421,051 |
Total property and equipment, net |  | $ | 17,053,239 |  |  | $ | 16,265,653 |

|  | Three Months Ended November 30, |
|  | 2024 |  |  | 2023 |
China |  | $ | 3,994,769 |  |  | $ | 3,678,523 |
Brazil |  |  | 1,385,194 |  |  |  | 1,529,623 |
India |  |  | 6,045,735 |  |  |  | 5,180,391 |
Other |  |  | 2,430,077 |  |  |  | 2,560,757 |
United States |  |  | 7,482,618 |  |  |  | 7,232,381 |
Total net sales |  | $ | 21,338,393 |  |  | $ | 20,181,675 |

Long-lived assets consist of property and equipment. These assets are periodically reviewed to assure the net realizable value from the estimated future production based on forecasted sales exceeds the carrying value of the assets.

Sales to the Company’s joint ventures are included in the foregoing segment and geographic information; however, sales by the Company’s joint ventures to other parties are not included. The foregoing segment and geographic information represents only sales recognized directly by the Company and sold in that geographic territory.

All joint venture operations, including equity in income, fees for services and related dividends, are primarily related to ZERUST® products and services.

14

13. | COMMITMENTS AND CONTINGENCIES

Legal Matters

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 no 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 November 30, 2024, 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.

14. | SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosures of cash flow information consisted of:

|  | Three Months Ended November 30, |
|  | 2024 |  |  | 2023 |
Cash paid for interest |  | $ | 120,220 |  |  | $ | 111,138 |

15. | INCOME TAXES

Income tax expense for the three months ended November 30, 2024 was $217,871 compared to $226,796 for the three months ended November 30, 2023. The expense was largely due to foreign operations. The Company has federal and state tax credit carry forwards, net operating loss carry forwards and foreign tax carry forwards. The Company has recorded a full valuation allowance against the U.S. deferred tax assets as of November 30, 2024 and August 31, 2024.

15

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis provides material historical and prospective disclosures intended to enable investors and other users to assess NTIC’s financial condition and results of operations. Statements that are not historical are forward-looking and involve risks and uncertainties discussed under the heading “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward-Looking Statements” in this report and under “Part 1. Item 1A. Risk Factors” in our annual report on Form 10-K for the fiscal year ended August 31, 2024. The following discussion of the results of the operations and financial condition of NTIC should be read in conjunction with NTIC’s consolidated financial statements and the related notes thereto included under the heading “Part I. Item 1. Financial Statements.”

Business Overview

NTIC develops and markets proprietary, environmentally beneficial products and services in over 65 countries either directly or via a network of subsidiaries, joint ventures, independent distributors, and agents. NTIC’s primary business is corrosion prevention marketed mainly under the ZERUST® brand. NTIC has been selling its proprietary ZERUST® products and services to the automotive, electronics, electrical, mechanical, military, and retail consumer markets for over 50 years and, more recently, has also expanded into the oil and gas industry. Additionally, NTIC markets and sells a portfolio of proprietary bio-based and certified compostable (fully biodegradable) polymer resin compounds and finished products under the Natur-Tec® brand. These sustainable packaging products are intended to reduce NTIC’s customers’ carbon footprint and provide environmentally sound waste disposal options.

NTIC’s ZERUST® rust and corrosion inhibiting products include plastic and paper packaging, liquids, coatings, rust removers, cleaners, and diffusers as well as engineered solutions designed specifically for the oil and gas industry. NTIC also offers worldwide, on-site, technical consulting for rust and corrosion prevention issues. In North America, NTIC sells its ZERUST® corrosion prevention solutions through a network of independent distributors and agents supported by a direct sales force.

Internationally, NTIC sells its ZERUST® corrosion prevention solutions through its wholly-owned subsidiary in China, NTIC (Shanghai) Co., Ltd. (NTIC China), its wholly-owned subsidiary in India, HNTI Limited (Zerust India), its majority-owned joint venture holding company for NTIC’s joint venture investments in the Association of Southeast Asian Nations (ASEAN) region, NTI Asean LLC (NTI Asean), and certain majority-owned and wholly-owned subsidiaries, and joint venture arrangements in North America, Europe, and Asia. NTIC also sells products directly to its European joint venture partners through its wholly-owned subsidiary in Germany, NTIC Europe GmbH (NTI Europe).

One of NTIC’s strategic initiatives is to expand into and penetrate other markets for its ZERUST® corrosion prevention technologies. Consequently, for the past several years, NTIC has focused significant sales and marketing efforts on the oil and gas industry, as the infrastructure that supports that industry is typically constructed using metals that are highly susceptible to corrosion. NTIC believes that its ZERUST® corrosion prevention solutions will minimize maintenance downtime on critical oil and gas industry infrastructure, extend the life of such infrastructure, and reduce the risk of environmental pollution due to leaks caused by corrosion.

NTIC markets and sells its ZERUST® rust and corrosion prevention solutions to customers in the oil and gas industry in a continuously increasing number of countries either directly, through its subsidiaries, or through its joint venture partners and other strategic partners. The sale of ZERUST® corrosion prevention solutions to customers in the oil and gas industry typically involves long sales cycles, often including multi-year trial periods with each customer and a slow integration process thereafter.

Natur-Tec® bio-based and compostable plastics are manufactured using NTIC’s patented and/or proprietary technologies and are intended to replace conventional petroleum-based plastics. The Natur-Tec® biopolymer resin compound portfolio includes formulations that have been optimized for a variety of applications, including blown-film extrusion, coatings, injection molding, thermoforming, profile extrusion and engineered plastics. These resin compounds are certified to be fully biodegradable in a commercial composting environment and are currently being used to produce finished products, including can liners, shopping and grocery bags, lawn and leaf bags, branded apparel packaging bags and accessories, and various foodservice items, such as disposable cutlery, drinking straws, food-handling gloves, and coated paper products. In North America, NTIC markets its Natur-Tec® resin compounds and finished products primarily through a network of regional and national distributors as well as independent agents. NTIC continues to see significant opportunities for finished bioplastic products and, therefore, continues to strengthen and expand its North American distribution network for finished Natur-Tec® bioplastic products.

16

Internationally, NTIC sells its Natur-Tec® resin compounds and finished products both directly and through its wholly-owned subsidiary in China and majority-owned subsidiaries in India and Sri Lanka, and through distributors and certain joint ventures.

Financial Overview

NTIC’s management, including its chief executive officer, who is NTIC’s chief operating decision maker, reports and manages NTIC’s operations in two reportable business segments based on products sold, customer base and distribution center: ZERUST® products and services and Natur-Tec® products.

Highlights of NTIC’s financial results for the three months ended November 30, 2024 include the following, with increases or decreases in each case as compared to the prior fiscal year quarterly period:

| ● | NTIC’s consolidated net sales increased 5.7% during the three months ended November 30, 2024 compared to the three months ended November 30, 2023 primarily due to increased sales and demand for Natur-Tec® products and, to a significantly lesser extent, ZERUST® products. During the three months ended November 30, 2024, 72.5% of NTIC’s consolidated net sales were derived from sales of ZERUST® products and services and 27.5% of NTIC’s consolidated net sales were derived from sales of Natur-Tec® products.

| ● | Cost of goods sold as a percentage of net sales decreased to 61.7% during the three months ended November 30, 2024, compared to 63.7% during the three months ended November 30, 2023 primarily as a result of lower raw material prices overall and savings associated with the insourcing of various finished goods production.

| ● | NTIC’s joint venture operating income increased 2.7% to $2,413,712 during the three months ended November 30, 2024 compared to $2,351,199 during the three months ended November 30, 2023. This increase was primarily due to increases in equity in income from joint ventures and fees for services provided to joint ventures, both of which were driven primarily by increased sales at the majority of the joint ventures. Net sales at the joint ventures, which are not consolidated with NTIC’s net sales, increased 1.2% to $23,837,010 during the three months ended November 30, 2024, compared to $23,560,661 for the three months ended November 30, 2023.

| ● | NTIC’s total operating expenses increased 14.0% to $9,469,994 during the three months ended November 30, 2024 compared to $8,309,040 for the three months ended November 30, 2023. This increase was primarily due to strategic investments in ZERUST® oil and gas sales infrastructure and, to a lesser extent, increased personnel expenses, including due to new hires and benefits, and increased travel and professional fees.

| ● | NTIC incurred net income attributable to NTIC of $561,091, or $0.06 per diluted common share, for the three months ended November 30, 2024 compared to $895,521, or $0.09 per diluted common share, for the three months ended November 30, 2023.

17

Results of Operations

The following table sets forth NTIC’s results of operations for the three months ended November 30, 2024 and 2023.

|  | Three Months Ended November 30, |
|  | 2024 |  |  | % of Net Sales |  |  | 2023 |  |  | % of Net Sales |  |  | $ Change |  |  | % Change |
Net sales |  | $ | 21,338,393 |  |  |  | N/A |  |  | $ | 20,181,675 |  |  |  | N/A |  |  | $ | 1,156,718 |  |  |  | 5.7 | %
Cost of goods sold |  |  | 13,175,440 |  |  |  | 61.7 | % |  |  | 12,847,401 |  |  |  | 63.7 | % |  |  | 328,039 |  |  |  | 2.6 | %
Equity in income from joint ventures |  |  | 1,129,593 |  |  |  | N/A |  |  |  | 1,102,241 |  |  |  | N/A |  |  |  | 27,352 |  |  |  | 2.5 | %
Fees for services provided to joint ventures |  |  | 1,284,119 |  |  |  | N/A |  |  |  | 1,248,958 |  |  |  | N/A |  |  |  | 35,161 |  |  |  | 2.8 | %
Selling expenses |  |  | 4,267,654 |  |  |  | 20.0 | % |  |  | 3,686,058 |  |  |  | 18.3 | % |  |  | 581,596 |  |  |  | 15.8 | %
General and administrative expenses |  |  | 3,858,943 |  |  |  | 18.1 | % |  |  | 3,517,061 |  |  |  | 17.4 | % |  |  | 341,882 |  |  |  | 9.7 | %
Research and development expenses |  |  | 1,343,397 |  |  |  | 6.3 | % |  |  | 1,105,921 |  |  |  | 5.5 | % |  |  | 237,476 |  |  |  | 21.5 | %

Net Sales. NTIC’s consolidated net sales increased 5.7% to $21,338,393 during the three months ended November 30, 2024 compared to the three months ended November 30, 2023. This increase was primarily due to increased sales and demand for Natur-Tec® and, to a significantly lesser extent, ZERUST® products.

The following table sets forth NTIC’s net sales by product segment for the three months ended November 30, 2024 and 2023:

|  | Three Months Ended November 30, |
|  | 2024 |  |  | 2023 |  |  | $ Change |  |  | % Change |
Total ZERUST® sales |  | $ | 15,475,803 |  |  | $ | 15,405,745 |  |  | $ | 70,058 |  |  |  | 0.5 | %
Total Natur-Tec® sales |  |  | 5,862,590 |  |  |  | 4,775,930 |  |  |  | 1,086,660 |  |  |  | 22.8 | %
Total net sales |  | $ | 21,338,393 |  |  | $ | 20,181,675 |  |  | $ | 1,156,718 |  |  |  | 5.7 | %

During the three months ended November 30, 2024, 72.5% of NTIC’s consolidated net sales were derived from sales of ZERUST® products and services, which increased 0.5% to $15,475,803 during the three months ended November 30, 2024 compared to $15,405,745 during the three months ended November 30, 2023. This slight increase was primarily a result of increased demand in North America for ZERUST® oil and gas products and ZERUST® industrial products.

The following table sets forth NTIC’s net sales of ZERUST® products for the three months ended November 30, 2024 and 2023:

|  | Three Months Ended November 30, |
|  | 2024 |  |  | 2023 |  |  | $ Change |  |  | % Change |
ZERUST® industrial net sales |  | $ | 13,962,252 |  |  | $ | 13,903,431 |  |  | $ | 58,821 |  |  |  | 0.4 | %
ZERUST® oil & gas net sales |  |  | 1,513,551 |  |  |  | 1,502,314 |  |  |  | 11,237 |  |  |  | 0.7 | %
Total ZERUST® net sales |  | $ | 15,475,803 |  |  | $ | 15,405,745 |  |  | $ | 70,058 |  |  |  | 0.5 | %

ZERUST® industrial net sales increased during the three months ended November 30, 2024, compared to the same prior fiscal year period, primarily due to increased demand for North American ZERUST® industrial products. Overall, demand for ZERUST® products and services depends heavily on the overall health of the markets in which NTIC sells its products, including the automotive, construction, agriculture, and mining markets in particular.

18

ZERUST® oil and gas net sales increased 0.4% during the three months ended November 30, 2024 compared to the same period last fiscal year primarily due to increased demand. NTIC anticipates that its sales of ZERUST® products and services into the oil and gas industry will continue to remain subject to significant volatility from quarter to quarter as sales are recognized. Demand for oil and gas products around the world depends primarily on market acceptance and the reach of NTIC’s distribution network. Because of the typical size of individual orders and overall size of NTIC’s net sales derived from sales of oil and gas products, the timing of one or more orders can materially affect NTIC’s quarterly sales compared to prior fiscal year quarters.

During the three months ended November 30, 2024, 27.5% of NTIC’s consolidated net sales were derived from sales of Natur-Tec® products, compared to 23.7% during the three months ended November 30, 2023. Sales of Natur-Tec® products increased 22.8% to $5,862,590 during the three months ended November 30, 2024 compared to $4,775,930 during the three months ended November 30, 2023 due to increased global demand. The market for biodegradable plastics is expanding worldwide, driven by increasing environmental awareness, regulatory support for sustainable materials, and growing demand for eco-friendly alternatives. As consumers and industries seek to reduce plastic waste, biodegradable plastics offer a viable solution, particularly in sectors like packaging, agriculture, and consumer goods. This trend is further supported by government policies promoting sustainable practices and by advances in biodegradable technology, which make these materials more accessible and cost-effective.

Cost of Goods Sold. Cost of goods sold increased 2.6% for the three months ended November 30, 2024 compared to the three months ended November 30, 2023 primarily as a result of lower raw material prices overall and the continued effect of cost containment measures. Cost of goods sold as a percentage of net sales decreased to 61.7% for the three months ended November 30, 2024 compared to 63.7% for the three months ended November 30, 2023 due primarily to the lower raw material prices and the insourcing of various finished goods production. NTIC has taken certain actions to address inflationary pressures and pass on related cost increases to its customers and some improvements from these actions, as well as some improvements in gross margin, were realized during the three months ended November 30, 2024.

Equity in Income from Joint Ventures. NTIC’s equity in income from joint ventures increased 2.5% to $1,129,593 during the three months ended November 30, 2024 compared to $1,102,241 during the three months ended November 30, 2023. NTIC’s equity in income from joint ventures fluctuates based on net sales and profitability of the joint ventures during the respective periods. Of the total equity in income from joint ventures, NTIC had equity in income from joint ventures of $623,750 attributable to EXCOR during the three months ended November 30, 2024 compared to $513,453 attributable to EXCOR during the three months ended November 30, 2023. This increase was due to a slight increase in net sales by EXCOR compared to the prior fiscal year period. NTIC had equity in income from all other joint ventures of $505,843 during the three months ended November 30, 2024, compared to $588,788 during the three months ended November 30, 2023.

Fees for Services Provided to Joint Ventures. NTIC recognized fee income for services provided to joint ventures of $1,284,119 during the three months ended November 30, 2024 compared to $1,248,958 during the three months ended November 30, 2023, representing an increase of 2.8%, or $35,161. Fee income for services provided to joint ventures is traditionally a function of the sales made by NTIC’s joint ventures; however, at various joint ventures, the fee income for services is a fixed amount that does not fluctuate with the change in sales experienced by certain joint ventures during the three months ended November 30, 2024, specifically EXCOR. Net sales at the joint ventures increased to $23,837,010 during the three months ended November 30, 2024 compared to $23,560,661 for the three months ended November 30, 2023, representing an increase of 1.2%. This increase was primarily a result of increased demand during the three months ended November 30, 2024 at NTIC’s joint venture in Germany primarily, as described above. Net sales of NTIC’s joint ventures are not included in NTIC’s product sales and are not included in NTIC’s consolidated financial statements. Of the total fee income for services provided to joint ventures, fees of $206,329 were attributable to EXCOR during the three months ended November 30, 2024 compared to $205,643 attributable to EXCOR during the three months ended November 30, 2023.

19

Selling Expenses. NTIC’s selling expenses increased 15.8% for the three months ended November 30, 2024 compared to the same period in fiscal 2024 primarily as a result of increased personnel expense during the current fiscal year period compared to the same prior fiscal year period due primarily to an expansion in the ZERUST® oil and gas sales team. Selling expenses as a percentage of net sales increased to 20.0% for the three months ended November 30, 2024 compared to 18.3% during the three months ended November 30, 2023 primarily due to increased selling expenses, as noted above, and partially offset by increased net sales.

General and Administrative Expenses. NTIC’s general and administrative expenses increased 9.7% for the three months ended November 30, 2024 compared to the same period in fiscal 2024 primarily due to increased professional services and travel and personnel expenses during the current fiscal year period compared to the same prior fiscal year period. As a percentage of net sales, general and administrative expenses increased to 18.1% for the three months ended November 30, 2024 from 17.4% for the three months ended November 30, 2023 primarily due to increased general and administrative expenses, as noted above, and partially offset by increased net sales.

Research and Development Expenses. NTIC’s research and development expenses increased 21.5% for the three months ended November 30, 2024 compared to the same period in fiscal 2024 primarily due to the continued investment into new product development. As these initiatives transition into commercialization, the costs will shift from research and development expenses to selling expenses, reflecting our advancement toward bringing these innovations to market.

Interest Income. NTIC’s interest income decreased to $25,567 during the three months ended November 30, 2024 compared to $46,442 during the three months ended November 30, 2023 primarily due to changes in the invested cash balances and rate of return at various subsidiaries.

Interest Expense. NTIC’s interest expense increased to $120,220 during the three months ended November 30, 2024 compared to $111,138 during the three months ended November 30, 2023 primarily due to increased outstanding average borrowings during the current fiscal year period.

Income Before Income Tax Expense. NTIC had income before income tax expense of $1,012,018 for the three months ended November 30, 2024 compared to income before income tax expense of $1,311,737 for the three months ended November 30, 2023.

Income Tax Expense. Income tax expense was $217,871 during the three months ended November 30, 2024 compared to $226,796 during the three months ended November 30, 2023. Income tax expense was calculated based on management’s estimate of NTIC’s annual effective income tax rate.

NTIC considers the earnings of certain foreign joint ventures to be indefinitely invested outside the United States on the basis of estimates that NTIC’s future domestic cash generation will be sufficient to meet future domestic cash needs. As a result, U.S. income and foreign withholding taxes have not been recognized on the cumulative undistributed earnings of $24,548,560 and $23,465,685 as of November 30, 2024 and August 31, 2024, respectively. To the extent undistributed earnings of NTIC’s joint ventures are distributed in the future, they are not expected to result in any material additional income tax liability after the application of foreign tax credits.

Net Income Attributable to NTIC. Net income attributable to NTIC decreased to $561,091, or $0.06 per diluted common share, for the three months ended November 30, 2024 compared to $895,521, or $0.09 per diluted common share, for the three months ended November 30, 2023. This decrease was primarily due to the increase in operating expenses, partially offset by the increase in gross profit and income from our joint venture operations.

NTIC anticipates that its earnings will continue to be adversely affected to some extent by inflation and worldwide supply chain disruptions, among other factors. Additionally, NTIC anticipates that its quarterly net income will continue to remain subject to significant volatility primarily due to the financial performance of its subsidiaries and joint ventures, sales of its ZERUST® products and services into the oil and gas industry, and sales of its Natur-Tec® bioplastics products, which sales fluctuate more on a quarterly basis than the traditional ZERUST® business.

20

Other Comprehensive Income – Foreign Currency Translations Adjustment. The changes in the foreign currency translations adjustment were due to the fluctuation of the U.S. dollar compared to the Euro and other foreign currencies during the three months ended November 30, 2024 compared to the same period in fiscal 2024.

Liquidity and Capital Resources

Sources of Cash and Working Capital. NTIC’s working capital, defined as current assets less current liabilities, was $22,183,428 as of November 30, 2024, including $5,569,834 in cash and cash equivalents, $4,518,734 outstanding under NTIC’s line of credit and $2,761,592 outstanding under NTIC China’s term loans, compared to $23,682,276 as of August 31, 2024, including $4,952,184 in cash and cash equivalents, $4,291,608 outstanding under NTIC’s line of credit and $2,820,835 outstanding under NTIC China’s term loans.

NTIC believes that a combination of its existing cash and cash equivalents, available for sale securities, forecasted cash flows from future operations, anticipated distributions of earnings, anticipated fees to NTIC for services provided to its joint ventures, and funds available through existing or anticipated financing arrangements will be adequate to fund its existing operations, investments in new or existing joint ventures or subsidiaries, capital expenditures, debt repayments, cash dividends, and any stock repurchases for at least the next 12 months. During the remainder of fiscal 2025, NTIC expects to continue to invest through its use of working capital in Zerust India, NTIC China, NTI Europe, its joint ventures, research and development, marketing efforts, resources for the application of its corrosion prevention technology in the oil and gas industry, and its Natur-Tec® bio-plastics business, although the amounts of these various investments are not known at this time.

NTIC also expects to use some of its capital resources to acquire remaining ownership interests of joint ventures not owned by NTIC as they become available or appropriate and for the formation of one or more new subsidiaries to assume the operations of a joint venture. Some of these joint venture transitions may materially impact NTIC’s results of operations for a particular reporting period.

NTIC traditionally has used the cash generated from its operations, distributions of earnings from joint ventures and fees for services provided to its joint ventures to fund NTIC’s new technology investments and capital contributions to new and existing subsidiaries and joint ventures. NTIC’s joint ventures traditionally have operated with little or no debt and have been self-financed with minimal initial capital investment and minimal additional capital investment from their respective owners. Therefore, NTIC believes there is limited exposure by NTIC’s joint ventures that could materially impact their respective operations and/or liquidity.

In order to take advantage of new product and market opportunities to expand its business and increase its revenues and assist with joint venture transitions, NTIC may decide to finance such opportunities by additional borrowings under its revolving line of credit or raising additional financing through the issuance of debt or equity securities. There is no assurance that any financing transaction will be available on terms acceptable to NTIC or at all or that any financing transaction will not be dilutive to NTIC’s current stockholders.

Credit Agreement with JPMorgan Chase Bank, N.A. On January 6, 2023, NTIC entered into a Credit Agreement (the Credit Agreement) with JPMorgan Chase Bank, N.A. (JPM), which provided NTIC with a senior secured revolving line of credit (the Credit Facility) of up to $10.0 million, and replaced NTIC’s prior loan agreement. The Credit Facility included a $5.0 million sublimit for standby letters of credit. Borrowings of $4,518,734 were outstanding under the Credit Facility as of November 30, 2024. The Company was in compliance with all covenants under the Credit Agreement as of November 30, 2024.

21

On January 6, 2025, the Company and JPM entered into an amendment to the Credit Agreement to extend the maturity date of the Credit Facility from January 6, 2025 to January 5, 2026, reduce the availability under the Credit Facility from $10.0 million to $8.0 million and increase the applicable margin for Adjusted SOFR Rate (as defined below) advances from 2.15% to 2.35%. All other material terms of the Credit Facility and the Credit Agreement remain the same.

The principal amount under the Credit Facility, together with all accrued unpaid interest and other amounts owing thereunder, if any, will be payable in full on the January 5, 2026 maturity date, unless the Credit Facility is extended or renewed or terminated earlier. It is anticipated that the Credit Facility will be renewed each year for one additional year for the immediate foreseeable future.

Borrowings under the Credit Agreement bear interest at a floating rate, at the option of NTIC, equal to either the CB Floating Rate or the Adjusted SOFR Rate. The term “CB Floating Rate” means the greater of the Prime Rate in the United States or 2.50%. The term “Adjusted SOFR Rate” means the term secured overnight financing rate for either one, three or six months (depending on the interest period selected by NTIC) plus 0.10% per annum. With respect to any borrowings using an Adjusted SOFR Rate, there is an applicable margin of 2.15% applied per annum. There is no applicable margin with respect to borrowings using a CB Floating Rate. The weighted average interest rate was 7.07% and 7.43% for the three months ended November 30, 2024 and 2023.

To secure the Credit Agreement, the Company assigned to JPM a continuing security interest in all of its right, title and interest in collateral made up of the assets of the Company.

The Credit Agreement contains customary affirmative and negative covenants, including, among other matters, limitations on NTIC’s ability to incur additional debt, grant liens, engage in certain business operations and transactions, make certain investments, modify its organizational documents or form any new subsidiaries, subject to certain exceptions. Further, the Credit Agreement contains a negative covenant that restricts the ability of NTIC to redeem or repurchase its common stock or pay dividends if the result of which would cause an event of default under the Credit Agreement. The Credit Agreement also requires the Company to maintain a Fixed Charge Coverage Ratio of at least 1.25 to 1.00. The term “Fixed Charge Coverage Ratio” means the ratio, computed for NTIC on a consolidated basis, of net income plus income tax expense, plus amortization expense, plus depreciation expense, plus interest expense, and plus dividends received from joint ventures, minus unfinanced capital expenditures and equity in income from joint ventures, all computed for the twelve month period then ending, to scheduled principal payments made, plus scheduled finance lease payments made, plus interest expense paid, plus income tax expense paid, and plus cash distributions and dividends paid, all computed for the same twelve month period then ending.

The Credit Agreement also contains customary events of default, including, without limitation, payment defaults, material inaccuracy of representations and warranties, covenant defaults, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, breach of any financial covenant and change of control. Upon the occurrence and during the continuance of any event of default, JPM may accelerate the payment of the obligations thereunder and exercise various other customary default remedies.

Other Credit Arrangements. On each of April 10, 2023 and May 30, 2023, the Company’s wholly-owned subsidiary in China, NTIC China, entered into a loan agreement with China Construction Bank Corporation. Each term loan provided NTIC China with a RMB 10,000,000 (USD $1.45 million). The term loans mature in April 2025 and June 2025, respectively, unless extended. Both term loans have an annual interest rate of 3.25% with interest due monthly. Both term loans are secured by an office building owned by NTIC China and the loan agreements contain certain financial and other covenants. NTIC was in compliance with the covenants as of November 30, 2024. The current outstanding balance as of November 30, 2024 for both term loans is a total of USD $2,761,592.

Uses of Cash and Cash Flow. Net cash provided by operating activities during the three months ended November 30, 2024 was $2,395,066 which resulted principally from a decrease in trade receivables and technical fee receivables, NTIC’s net income, an increase in accounts payable, depreciation and amortization expense, and stock-based compensation, partially offset by equity in income from joint ventures and an increase in inventory and prepaid expenses. Net cash provided by operating activities during the three months ended November 30, 2023 was $3,076,892, which resulted principally from a decrease in dividends receivable from joint venture and trade receivables, NTIC’s net income, dividends received from joint ventures, a decrease in inventories, depreciation and amortization expense, and stock-based compensation, partially offset by equity in income from joint ventures and an increase in prepaid expenses and other, technical fee receivables and accounts payable.

22

NTIC’s cash flows from operations are impacted by significant changes in certain components of NTIC’s working capital, including inventory turnover and changes in receivables and payables. NTIC considers internal and external factors when assessing the use of its available working capital, specifically when determining inventory levels and credit terms of customers. Key internal factors include existing inventory levels, stock reorder points, customer forecasts and customer requested payment terms. Key external factors include the availability of primary raw materials and sub-contractor production lead times. NTIC’s typical contractual terms for trade receivables, excluding joint ventures, are traditionally 30 days and 90 days for trade receivables from its joint ventures. Before extending unsecured credit to customers, excluding NTIC’s joint ventures, NTIC reviews customers’ credit histories and will establish an allowance for uncollectible accounts based upon factors surrounding the credit risk of specific customers and other information. Accounts receivable over 30 days are considered past due for most customers. NTIC does not accrue interest on past due accounts receivable. If accounts receivables in excess of the provided allowance are determined uncollectible, they are charged to selling expense in the period that the determination is made. Accounts receivable are deemed uncollectible based on NTIC exhausting reasonable efforts to collect. NTIC’s typical contractual terms for receivables for services provided to its joint ventures are 90 days. NTIC records receivables for services provided to its joint ventures on an accrual basis, unless circumstances exist that make the collection of the balance uncertain, in which case the fee income will be recorded on a cash basis until there is consistency in payments. This determination is handled on a case-by-case basis.

NTIC experienced a decrease in trade receivables and inventory as of November 30, 2024 compared to August 31, 2024. Trade receivables, as of November 30, 2024 decreased $3,105,369 compared to August 31, 2024, primarily related to timing differences of sales.

Outstanding trade receivables, decreased an average of 6 days to an average of 69 days from balances outstanding from these customers as of November 30, 2024 from an average of 75 days as of August 31, 2024.

Outstanding receivables for services provided to joint ventures as of November 30, 2024 decreased $64,688 compared to August 31, 2024, and the average days to pay increased an average of 7 days to an average of 83 days from an average of 76 days as of August 31, 2024.

Net cash used in investing activities for the three months ended November 30, 2024 was $1,258,336, which was primarily the result of the purchases of property and equipment, and investments in patents. Net cash used in investing activities for the three months ended November 30, 2023 was $423,871, which was primarily the result of the purchases of property and equipment, and investments in patents.

Net cash used in financing activities for the three months ended November 30, 2024 was $393,341, which resulted from dividends paid to shareholders, partially offset by borrowings under the line of credit, and proceeds from NTIC’s employee stock purchase plan. Net cash used in financing activities for the three months ended November 30, 2023 was $2,019,836, which resulted from dividends paid to shareholders, the repayment of borrowings under the line of credit, and dividends received by non-controlling interests, partially offset by proceeds from NTIC’s employee stock purchase plan.

Share Repurchase Plan. On January 15, 2015, NTIC’s Board of Directors authorized the repurchase of up to $3,000,000 in shares of NTIC common stock through open market purchases or unsolicited or solicited privately negotiated transactions. This program has no expiration date but may be terminated by NTIC’s Board of Directors at any time. As of November 30, 2024, up to $2,640,548 in shares of NTIC common stock remained available for repurchase under NTIC’s stock repurchase program. No repurchases occurred during the three months ended November 30, 2024.

23

Cash Dividends. On October 16, 2024, the Company’s Board of Directors declared a cash dividend of $0.07 per share of the Company’s common stock, payable on November 13, 2024 to stockholders of record on October 30, 2024. On October 18, 2023, the Company’s Board of Directors declared a cash dividend of $0.07 per share of the Company’s common stock, payable on November 15, 2023 to stockholders of record on November 1, 2023. The declaration of future dividends is not guaranteed and will be determined by NTIC’s Board of Directors in light of conditions then existing, including NTIC’s earnings, financial condition, cash requirements, restrictions in financing agreements, business conditions and other factors.

Capital Expenditures and Commitments. NTIC spent $1,219,616 on capital expenditures during the three months ended November 30, 2024, which related primarily to facility improvements to the warehouse facility NTIC purchased during fiscal 2023 and the installation of a new Enterprise Resource Planning (ERP) software system and associated equipment. NTIC expects to spend an aggregate of approximately $1,600,000 to $2,100,000 on capital expenditures during fiscal 2025, which it expects will relate primarily to the purchase of new equipment and facility improvements.

Inflation and Seasonality

Inflation in the United States and abroad historically has had minimal effect on NTIC and did not adversely affect NTIC’s gross margins during the first quarter of fiscal 2025. NTIC believes there is some seasonality in its business. NTIC anticipates its net sales in the second fiscal quarter may be adversely affected by the long Chinese New Year, the North American holiday season and overall less corrosion taking place at lower winter temperatures worldwide.

Market Risk

NTIC is exposed to some market risk stemming from changes in foreign currency exchange rates, commodity prices and interest rates.

Because the functional currency of NTIC’s foreign operations and investments in its foreign joint ventures is the applicable local currency, NTIC is exposed to foreign currency exchange rate risk arising from transactions in the normal course of business. NTIC’s principal exchange rate exposure is with the Euro, the Japanese Yen, the Indian Rupee, the Chinese Renminbi, the South Korean Won, and the English Pound against the U.S. Dollar. NTIC’s fees for services provided to joint ventures and dividend distributions from these foreign entities are paid in foreign currencies and, thus, fluctuations in foreign currency exchange rates could result in declines in NTIC’s reported net income. Since NTIC’s investments in its joint ventures are accounted for using the equity method, any changes in foreign currency exchange rates would be reflected as a foreign currency translation adjustment and would not change NTIC’s equity in income from joint ventures reflected in its consolidated statements of operations. NTIC does not hedge against its foreign currency exchange rate risk.

Some raw materials used in NTIC’s products are exposed to commodity price changes. The primary commodity price exposures are with a variety of plastic and bioplastic resins.

Any outstanding advances under NTIC’s Credit Facility with JPM bear interest at a floating rate, at the option of NTIC, equal to either the CB Floating Rate or the Adjusted SOFR Rate, as defined above. Borrowings of $4,518,734 were outstanding under the Credit Facility as of November 30, 2024.

24

Both term loans undertaken by NTIC China with China Construction Bank Corporation have an annual interest rate of 3.25% with interest due monthly. The current outstanding balance as of November 30, 2024 for both term loans is a total of USD $2,761,592.

Critical Accounting Policies and Estimates

There have been no material changes to NTIC’s critical accounting policies and estimates from the information provided in “Part II. Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” included in NTIC’s annual report on Form 10-K for the fiscal year ended August 31, 2024.

Recent Accounting Pronouncements

See Note 2 to NTIC’s consolidated financial statements for a discussion of recent accounting pronouncements.

Forward-Looking Statements

This quarterly report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to the safe harbor created by those sections. In addition, NTIC or others on NTIC’s behalf may make forward-looking statements from time to time in oral presentations, including telephone conferences and/or web casts open to the public, in press releases or reports, on NTIC’s Internet web site, or otherwise. All statements other than statements of historical facts included in this report or expressed by NTIC orally from time to time that address activities, events, or developments that NTIC expects, believes, or anticipates will or may occur in the future are forward-looking statements, including, in particular, the statements about NTIC’s plans, objectives, strategies, and prospects regarding, among other things, NTIC’s financial condition, results of operations and business, operating results and financial condition, and the outcome of contingencies, such as legal proceedings. NTIC has identified some of these forward-looking statements in this report with words like “believe,” “can,” “may,” “could,” “would,” “might,” “forecast,” “possible,” “potential,” “project,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate,” “approximate,” “outlook,” or “continue” or the negative of these words or other words and terms of similar meaning. The use of future dates is also an indication of a forward-looking statement. Forward-looking statements may be contained in the notes to NTIC’s consolidated financial statements and elsewhere in this report, including under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements are based on current expectations about future events affecting NTIC and are subject to uncertainties and factors that affect all businesses operating in a global market as well as matters specific to NTIC. These uncertainties and factors are difficult to predict, and many of them are beyond NTIC’s control. The following are some of the uncertainties and factors known to us that could cause NTIC’s actual results to differ materially from what NTIC has anticipated in its forward-looking statements:

| ● | The effect of current worldwide economic conditions, including in particular in the United States, Europe, India and China, and in the automotive industry, and the effect of inflation, recessionary indicators and any turmoil and disruption in the global credit, financial and banking markets or the perception of adverse conditions on NTIC’s business and the business of NTIC’s customers, suppliers, vendors and other third parties with whom NTIC conducts business;

| ● | The effect of slowdowns within the automotive industry on NTIC’s business and the evolution of the automotive industry towards electric vehicles;

| ● | The effect of changes to trade regulation, quotas, duties, or tariffs, caused by the changing U.S. and geopolitical environments or otherwise;

25

| ● | The effect of worldwide disruption in supply issues on NTIC’s business, operating results and financial condition;

| ● | The effect of disruptions to distribution channels for NTIC’s products and disruptions to our customers, suppliers and subcontractors, as well as the global economy and financial markets;

| ● | The effects of ongoing wars and sanctions against Russia by U.S. and European governments on commodity price fluctuations, which have decreased our margins and the margins of our joint ventures and resulted in decreased joint venture profitability, which will likely continue through the end of fiscal 2025;

| ● | NTIC’s operations in China and the risks associated therewith, including trade or other issues that may result from increasing tensions between the U.S. and China, including the implementation of higher tariffs;

| ● | Variability in NTIC’s sales of ZERUST® products and services to the oil and gas industry and Natur-Tec® products and NTIC’s equity income of joint ventures, which variability in sales and equity in income from joint ventures, in turn, subject NTIC’s earnings to quarterly fluctuations;

| ● | Risks associated with NTIC’s international operations and exposure to fluctuations in foreign currency exchange rates, import duties, taxes, and tariffs;

| ● | NTIC’s dependence on the success of its joint ventures and fees and dividend distributions that NTIC receives from them;

| ● | NTIC’s relationships with its joint ventures and its ability to maintain those relationships, especially in light of anticipated succession planning issues, and risks associated with possible future acquisitions of the remaining ownership interests of certain joint ventures;

| ● | Fluctuations in the cost and availability of raw materials, including resins and other commodities, due to supply chain disruptions and the impact of government sanctions;

| ● | The success of and risks associated with NTIC’s emerging new businesses and products and services, including in particular NTIC’s ability and the ability of NTIC’s joint ventures to sell ZERUST® products and services to the oil and gas industry and Natur-Tec® products and the often lengthy and extensive sales process involved in selling such products and services;

| ● | NTIC’s ability to introduce new products and services that respond to changing market conditions and customer demand;

| ● | Market acceptance of NTIC’s existing and new products, especially in light of existing and new competitive products;

| ● | Maturation of certain existing markets for NTIC’s ZERUST® products and services and NTIC’s ability to grow market share and succeed in penetrating other existing and new markets;

| ● | Increased competition, especially with respect to NTIC’s ZERUST® products and services, and the effect of such competition on NTIC’s and its joint ventures’ pricing, net sales, and margins;

| ● | The enforcement or lack thereof of rules and regulations favorable to the market for biodegradable plastics;

26

| ● | NTIC’s reliance upon and its relationships with its distributors, independent sales representatives, and joint ventures;

| ● | NTIC’s reliance upon suppliers;

| ● | Oil prices, which may affect sales of NTIC’s ZERUST® products and services to the oil and gas industry, and which may be impacted by ongoing wars, including the war between Russia and Ukraine;

| ● | The costs and effects of complying with laws and regulations and changes in tax, fiscal, government, and other regulatory policies, including rules relating to environmental, health, and safety matters;

| ● | Unforeseen product quality or other problems in the development, production, and usage of new and existing products;

| ● | Unforeseen production expenses incurred in connection with new customers and new products;

| ● | Loss of or changes in executive management or key employees and the need to hire and train local support in a timely manner in order to support customer needs;

| ● | Ability of management to manage around unplanned events;

| ● | Pending and future litigation;

| ● | NTIC’s reliance on its intellectual property rights and the absence of infringement of the intellectual property rights of others;

| ● | Changes in applicable laws or regulations and NTIC’s failure to comply with applicable laws, rules, and regulations;

| ● | Changes in generally accepted accounting principles and the effect of new accounting pronouncements;

| ● | Fluctuations in NTIC’s effective tax rate;

| ● | The effect of extreme weather conditions on NTIC’s operating results; and

| ● | NTIC’s reliance upon its management information systems and risks associated with its recent implementation of a new Enterprise Resource Planning system.

For more information regarding these and other uncertainties and factors that could cause NTIC’s actual results to differ materially from what NTIC has anticipated in its forward-looking statements or otherwise could materially adversely affect its business, financial condition or operating results, see NTIC’s annual report on Form 10-K for the fiscal year ended August 31, 2024 under the heading “Part I. Item 1A. Risk Factors.”

All forward-looking statements included in this report are expressly qualified in their entirety by the foregoing cautionary statements. NTIC wishes to caution readers not to place undue reliance on any forward-looking statement that speaks only as of the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results due to the uncertainties and factors described above and others that NTIC may consider immaterial or does not anticipate at this time. Although NTIC believes that the expectations reflected in its forward-looking statements are reasonable, NTIC does not know whether its expectations will prove correct. NTIC’s expectations reflected in its forward-looking statements can be affected by inaccurate assumptions NTIC might make or by known or unknown uncertainties and factors, including those described above. The risks and uncertainties described above are not exclusive, and further information concerning NTIC and its business, including factors that potentially could materially affect its financial results or condition, may emerge from time to time. NTIC assumes no obligation to update, amend, or clarify forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. NTIC advises you, however, to consult any further disclosures NTIC makes on related subjects in its annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K that NTIC files with or furnishes to the Securities and Exchange Commission.

27

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

NTIC is exposed to some market risk stemming from changes in foreign currency exchange rates, commodity prices and interest rates.

Because the functional currency of NTIC’s foreign operations and investments in its foreign joint ventures is the applicable local currency, NTIC is exposed to foreign currency exchange rate risk arising from transactions in the normal course of business. NTIC’s principal exchange rate exposure is with the Euro, the Japanese Yen, the Indian Rupee, the Chinese Renminbi, the South Korean Won, and the English Pound against the U.S. Dollar. NTIC’s fees for services provided to joint ventures and dividend distributions from these foreign entities are paid in foreign currencies, and, thus, fluctuations in foreign currency exchange rates could result in declines in NTIC’s reported net income. Since NTIC’s investments in its joint ventures are accounted for using the equity method, any changes in foreign currency exchange rates would be reflected as a foreign currency translation adjustment and would not change NTIC’s equity in income from joint ventures reflected in its consolidated statements of operations. NTIC does not hedge against its foreign currency exchange rate risk.

Some raw materials used in NTIC’s products are exposed to commodity price changes. The primary commodity price exposures are with a variety of plastic resins.

With respect to interest rate risk, any outstanding advances under NTIC’s Credit Facility with JPM bear interest at a floating rate, at the option of NTIC, equal to either the CB Floating Rate or the Adjusted SOFR Rate, as defined above. Borrowings of $4,518,734 were outstanding under the Credit Facility as of November 30, 2024. Both term loans undertaken by NTIC China with China Construction Bank Corporation have an annual interest rate of 3.25% with interest due monthly. The current outstanding balance as of November 30, 2024 for both term loans is a total of USD $2,761,592.

28

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

NTIC maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to provide reasonable assurance that information required to be disclosed by NTIC in the reports it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to NTIC’s management, including NTIC’s principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. NTIC’s management evaluated, with the participation of its Chief Executive Officer and its Chief Financial Officer, the effectiveness of the design and operation of NTIC’s disclosure controls and procedures as of the end of the period covered in this report. Based on that evaluation, NTIC’s Chief Executive Officer and Chief Financial Officer concluded that NTIC’s disclosure controls and procedures were effective as of the end of such period to provide reasonable assurance that information required to be disclosed in the reports that NTIC files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to NTIC’s management, including NTIC’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in NTIC’s internal control over financial reporting that occurred during the quarter ended November 30, 2024 that has materially affected or is reasonably likely to materially affect NTIC’s internal control over financial reporting.

29

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 12 to NTIC’s consolidated financial statements in Part I. Item 1. Financial Statements of this report.

ITEM 1A. RISK FACTORS

This Item 1A. is inapplicable to NTIC as a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Equity Securities

During the three months ended November 30, 2024, NTIC did not issue any shares of its common stock or other equity securities of NTIC that were not registered under the Securities Act of 1933, as amended.

Issuer Purchases of Equity Securities

The following table shows NTIC’s first quarter of fiscal 2024 stock repurchase activity.

Period |  | Total Number of Shares (or Units) Purchased |  |  | Average Price Paid Per Share (or Unit) |  |  | Total Number of Shares (or Units) Purchased As Part of Publicly Announced Plans or Programs |  |  | Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
September 1, 2024 through September 30, 2024 |  |  | 0 |  |  | $ | 0 |  |  |  | 0 |  |  |  | (1) |
October 1, 2024 through October 31, 2024 |  |  | 0 |  |  | $ | 0 |  |  |  | 0 |  |  |  | (1) |
November 1, 2024 through November 30, 2024 |  |  | 0 |  |  | $ | 0 |  |  |  | 0 |  |  |  | (1) |
Total |  |  | 0 |  |  | $ | 0 |  |  |  | 0 |  |  |  | (1)(2) |

__________________

(1) | On January 15, 2015, NTIC’s Board of Directors authorized the repurchase of up to $3,000,000 in shares of NTIC common stock through open market purchases or unsolicited or solicited privately negotiated transactions. This program has no expiration date but may be terminated by NTIC’s Board of Directors at any time.

(2) | As of November 30, 2024, up to $2,640,548 in shares of NTIC common stock remained available for repurchase under NTIC’s stock repurchase program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

30

ITEM 5. OTHER INFORMATION

Credit Agreement

On January 6, 2025, the Company and JPM entered into an amendment to the Credit Agreement to extend the maturity date of the Credit Facility from January 6, 2025 to January 5, 2026, reduce the availability under the Credit Facility from $10.0 million to $8.0 million and increase the applicable margin for Adjusted SOFR Rate (as defined below) advances from 2.15% to 2.35%. All other material terms of the Credit Facility and the Credit Agreement remain the same.

The foregoing represents only a summary of the material terms of the amendment to the Credit Agreement, does not purport to be complete and is qualified in its entirety by reference to the complete text of the amendment to the Credit Agreement and new Line of Credit Note, which are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this quarterly report on Form 10-Q, and are incorporated by reference herein.

Rule 10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications

During the three months ended November 30, 2024, none of our directors or “officers” (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of SEC Regulation S-K.

Material Changes to the Procedures by Which Security Holders May Recommend Nominees to the Registrant's Board of Directors

On November 14, 2024, NTIC’s Board of Directors approved and adopted Third Amended and Restated Bylaws (the “Amended and Restated Bylaws”) incorporating certain amendments, including amendments in response to recent developments in Delaware law. The Amended and Restated Bylaws became effective immediately upon their approval and adoption by the Board of Directors. The amendments reflected in the Amended and Restated Bylaws include, among other changes: (i) limiting certain disclosure requirements to bring forth a stockholder proposal or director nomination to the stockholder giving notice, any beneficial owners of such stockholder and stockholders who are known to financially support such stockholder proposal or director nomination; and (ii) incorporating other non-substantive, conforming changes.

The foregoing summary of the Amended and Restated Bylaws is qualified in its entirety by reference to the complete text of the Amended and Restated Bylaws, as approved, adopted, and effective on November 14, 2024, which is filed as Exhibit 3.1 to this quarterly report on Form 10-Q and incorporated by reference herein.

ITEM 6. EXHIBITS

The following exhibits are being filed or furnished with this quarterly report on Form 10-Q:

Exhibit No. |  | Description
3.1 |  | Third Amended and Restated Bylaws of Northern Technologies International Corporation (incorporated by reference to Exhibit 3.2 to NTIC’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024 (File No. 001-11038))
10.1 |  | Second Amendment to Credit Agreement, dated as of January 6, 2025, between JPMorgan Chase Bank, N.A. and Northern Technologies International Corporation (filed herewith)
10.2 |  | Line of Credit Note, dated January 6, 2025, between Northern Technologies International Corporation and JPMorgan Chase Bank, N.A. (filed herewith)

31

Exhibit No. |  | Description
31.1 |  | Certification of President and Chief Executive Officer pursuant to SEC Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2 |  | Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1 |  | Certification of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101 |  | The following materials from NTIC’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2024, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets, (ii) the unaudited Consolidated Statements of Operations, (iii) the unaudited Consolidated Statements of Comprehensive Income , (iv) the unaudited Consolidated Statements of Equity, (v) the unaudited Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements (filed herewith)
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
| /s/ Matthew C. Wolsfeld
Date: January 10, 2025 | Matthew C. Wolsfeld, CPA
| Chief Financial Officer
| (Principal Financial and Accounting Officer and
| Duly Authorized to Sign on Behalf of the Registrant)

33