NORTHERN TECHNOLOGIES INTERNATIONAL CORP

Previous wording

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.

Current wording

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.

Previous wording

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:

Current wording

Highlights of NTIC’s financial results for the three and six months ended February 28, 2025 include the following, with increases or decreases in each case as compared to the respective prior fiscal year period:

Previous wording

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

Current wording

The following table sets forth NTIC’s results of operations for the three and six months ended February 28, 2025 and February 29, 2024.

Previous wording

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.

Current wording

Net Sales. NTIC’s consolidated net sales decreased 8.5% and 1.5% to $19,072,066 and $40,410,459 during the three and six months ended February 28, 2025, respectively, compared to the three and six months ended February 29, 2024. These decreases were primarily due to decreased sales and demand for ZERUST® products, partially offset by an increase in sales of Natur-Tec® products during the six months ended February 28, 2025.

Previous wording

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

Current wording

The following table sets forth NTIC’s net sales by product segment for the three and six months ended February 28, 2025 and February 29, 2024:

Previous wording

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.

Current wording

During the three and six months ended February 28, 2025, 74.0% and 73.2% of NTIC’s consolidated net sales, respectively, were derived from sales of ZERUST® products and services, which decreased 7.3% and 3.4% to $14,112,017 and $29,587,820, respectively, compared to $15,218,095 and $30,623,840 during the three and six months ended February 29, 2024, respectively. These decreases were primarily a result of decreased demand for ZERUST® oil and gas products, and to a lesser extent, ZERUST® industrial products.

Previous wording

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

Current wording

The following table sets forth NTIC’s net sales of ZERUST® products for the three and six months ended February 28, 2025 and February 29, 2024:

Previous wording

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.

Current wording

ZERUST® industrial net sales decreased 3.7% and 1.6% during the three and six months ended February 28, 2025, respectively compared to the same prior fiscal year periods, primarily due to decreased 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.

Previous wording

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.

Current wording

ZERUST® oil and gas net sales decreased 28.5% and 16.5% during the three and six months ended February 28, 2025, respectively, compared to the same prior fiscal year periods primarily due to decreased 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.

Previous wording

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.

Current wording

During the three and six months ended February 28, 2025, 26.0% and 26.8% of NTIC’s consolidated net sales, respectively, were derived from sales of Natur-Tec® products, compared to 27.0% and 25.4% during the three and six months ended February 29, 2024, respectively. Sales of Natur-Tec® products decreased 11.8% to $4,960,049 during the three months ended February 28, 2025 compared to $5,624,443 during the three months ended February 29, 2024. Sales of Natur-Tec® products increased 4.1% to $10,822,639 during the six months ended February 28, 2025 compared to $10,400,373 during the six months ended February 29, 2024. The decrease for the three-month comparison was primarily due to a combination of timing and seasonal variations in demand in Asia, and a temporary reduction in shipments to a major resin customer due to onetime tooling changes. The increase for the six-month comparison was primarily due to higher demand for apparel packaging from major brands in India, and the launch of new customer applications. 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.

Previous wording

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.

Current wording

Cost of Goods Sold. Cost of goods sold decreased 1.8% and increased 0.4% for the three and six months ended February 28, 2025, respectively, compared to the three and six months ended February 29, 2024 primarily as a result of the fluctuations in corresponding sales. Cost of goods sold as a percentage of net sales increased to 64.4% and 63.0% for the three and six months ended February 28, 2025, respectively, compared to 60.0% and 61.8% for the three and six months ended February 29, 2024, respectively, primarily due to higher raw material prices overall.

Previous wording

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.

Current wording

Equity in Income from Joint Ventures. NTIC’s equity in income from joint ventures decreased 47.3% and 23.2% to $620,730 and $1,750,323 during the three and six months ended February 28, 2025, respectively, compared to $1,177,990 and $2,280,231 during the three and six months ended February 29, 2024, respectively. NTIC’s equity in income from joint ventures fluctuates based on the net sales and profitability of its joint ventures during the respective periods. Of the total equity in income from joint ventures, NTIC had equity in income from joint ventures of $892,001 attributable to EXCOR during the six months ended February 28, 2025, compared to $1,204,335 attributable to EXCOR during the six months ended February 29, 2024. This decrease was due to a decrease in net sales by EXCOR compared to the same prior year fiscal period. NTIC had equity in income from all other joint ventures of $858,322 during the six months ended February 28, 2025, compared to $1,075,896 during the six months ended February 29, 2024.

Previous wording

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.

Current wording

Fees for Services Provided to Joint Ventures. NTIC recognized fee income for services provided to joint ventures of $1,070,263 and $2,354,382 during the three and six months ended February 28, 2025, respectively, compared to $1,303,059 and $2,552,017 during the three and six months ended February 29, 2024, respectively, representing decreases of 17.9% and 7.7%, respectively. 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 and six months ended February 28, 2025, specifically EXCOR. Net sales at the joint ventures decreased 15.7% and 7.2% to $19,799,875 and $43,636,885 during the three and six months ended February 28, 2025, respectively, compared to $23,479,980 and $47,040,641 during the three and six months ended February 29, 2024, respectively. These decreases were primarily a result of decreased demand during the current fiscal year periods 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 $408,056 were attributable to EXCOR during the six months ended February 28, 2025, compared to fees of $412,383 attributable to EXCOR during the six months ended February 29, 2024.

Previous wording

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.

Current wording

Selling Expenses. NTIC’s selling expenses decreased 6.4% during the three months ended February 28, 2025 compared to the same prior fiscal year period and increased 4.1% during the six months ended February 28, 2025 compared to the same prior fiscal year period. The decrease for the three-month comparison was due primarily to cost savings initiatives put in place in North America and at various subsidiaries. The increase for the six-month comparison was due primarily to increased personnel expense in the current fiscal year period as a result of an expansion in the ZERUST® oil and gas sales team. As a percentage of net sales, selling expenses increased to 20.3% and 20.1% for the three and six months ended February 28, 2025, respectively, from 19.7% and 19.1% for the three and six months ended February 29, 2024, respectively, due primarily to decreased net sales, as described above.

Previous wording

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.

Current wording

General and Administrative Expenses. NTIC’s general and administrative expenses increased 13.0% and 11.3% for the three and six months ended February 28, 2025, respectively, compared to the same respective periods in fiscal 2024 due primarily to increased professional services and travel and personnel expenses during the current fiscal year periods compared to the same prior fiscal year periods. As a percentage of net sales, general and administrative expenses increased to 19.2% and 18.6% for the three and six months ended February 28, 2025, respectively, from 15.5% and 16.5% for the same respective periods in fiscal 2024 primarily due to increased general and administrative expenses and decreased net sales, as described above.

Previous wording

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.

Current wording

Research and Development Expenses. NTIC’s research and development expenses increased 3.8% and 12.1% for the three and six months ended February 28, 2025, respectively, compared to the same respective periods in fiscal 2024 primarily due to continued investment in 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.

Previous wording

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.

Current wording

Interest Income. NTIC’s interest income increased to $210,156 and $235,723 during the three and six months ended February 28, 2025, respectively, compared to $29,210 and $75,652 during the three and six months ended February 29, 2024, respectively, primarily due to $181,529 in interest income earned on delayed IRS payments related to Employee Retention Credit (ERC) claims, as described in Note 16 to NTIC’s consolidated financial statements, and changes in the invested cash balances and rate of return at various subsidiaries.

Previous wording

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.

Current wording

Interest Expense. NTIC’s interest expense increased to $139,155 and $259,375 during the three and six months ended February 28, 2025, respectively, compared to $77,758 and $188,896 during the three and six months ended February 29, 2024, respectively, due primarily to increased average outstanding borrowings during the current fiscal year periods.

Previous wording

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.

Current wording

Income Before Income Tax Expense. NTIC had income before income tax expense of $877,824 and $1,889,842 for the three and six months ended February 28, 2025, respectively, compared to $2,157,723 and $3,469,460 for the three and six months ended February 29, 2024, respectively.

Previous wording

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.

Current wording

Income Tax Expense. Income tax expense was $275,197 and $493,068 for the three and six months ended February 28, 2025, respectively, compared to $289,195 and $515,991 during the three and six months ended February 29, 2024, respectively. Income tax expense was calculated based on management’s estimate of NTIC’s annual effective income tax rate.

Previous wording

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.

Current wording

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 $24,096,958 and $23,465,685 as of February 28, 2025, 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.

Previous wording

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.

Current wording

Net Income Attributable to NTIC. Net income attributable to NTIC decreased to $434,319, or $0.04 per diluted common share, for the three months ended February 28, 2025, compared to $1,701,169, or $0.17 per diluted common share, for the three months ended February 29, 2024. Net income attributable to NTIC decreased to $995,410, or $0.10 per diluted common share, for the six months ended February 28, 2025, compared to $2,596,690, or $0.27 per diluted common share, for the six months ended February 29, 2024. These decreases were primarily due to the decrease in gross profit as a result of a decrease in sales and decreases in income from our joint venture operations, partially offset by the one-time ERC payment.

Previous wording

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.

Current wording

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 and six months ended February 28, 2025 compared to the same respective periods in fiscal 2024.

Previous wording

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.

Current wording

Sources of Cash and Working Capital. NTIC’s working capital, defined as current assets less current liabilities, was $21,416,426 as of February 28, 2025, including $5,090,630 in cash and cash equivalents, $5,354,664 outstanding under NTIC’s line of credit, and $2,746,121 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.

Previous wording

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.

Current wording

NTIC also expects to use some of its capital resources to acquire the 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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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 6.76% and 7.44% for the six months ended February 28, 2025 and February 29, 2024.

Previous wording

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.

Current wording

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 February 28, 2025. The current outstanding balance as of February 28, 2025 for both term loans is a total of USD $2,746,121.

Previous wording

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.

Current wording

Uses of Cash and Cash Flow. Net cash provided by operating activities during the six months ended February 28, 2025 was $3,198,741, which resulted principally from changes in assets and liabilities and NTIC’s net income, dividends received from joint ventures, depreciation and amortization expense, and stock-based compensation, partially offset by equity in income from joint ventures. Net cash provided by operating activities during the six months ended February 29, 2024 was $5,643,007, which resulted principally from changes in assets and liabilities and NTIC’s net income, dividends received from joint ventures, dividend receivables from joint ventures, depreciation and amortization expense, and stock-based compensation, partially offset by equity in income from joint ventures.

Previous wording

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.

Current wording

NTIC experienced a decrease in trade receivables as of February 28, 2025, compared to August 31, 2024. Trade receivables as of February 28, 2025, decreased $3,768,524 compared to August 31, 2024, primarily related to timing differences of sales.

Previous wording

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.

Current wording

Outstanding trade receivables decreased an average of 3 days to an average of 72 days from balances outstanding from these customers as of February 28, 2025 from an average of 75 days as of August 31, 2024.

Previous wording

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.

Current wording

Outstanding receivables for services provided to joint ventures as of February 28, 2025 decreased $277,796 compared to August 31, 2024, and the average days to pay increased an average of 4 days to an average of 80 days from an average of 76 days as of August 31, 2024.

Previous wording

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.

Current wording

Net cash used in investing activities for the six months ended February 28, 2025 was $2,580,757, which was primarily the result of investments in intangibles and purchases of property and equipment. Net cash used in investing activities for the six months ended February 29, 2024 was $1,505,927, which was primarily the result of the purchases of property and equipment and investments in patents.

Previous wording

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.

Current wording

Net used in financing activities for the six months ended February 28, 2025 was $320,345, which resulted from dividends paid to shareholders and dividends received by non-controlling interests, partially offset by borrowings under the line of credit and proceeds from NTIC’s employee stock purchase plan. Net used in financing activities for the six months ended February 29, 2024 was $4,762,201, 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.

Previous wording

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.

Current wording

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 February 28, 2025, 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 six months ended February 28, 2025.

Previous wording

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.

Current wording

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. On April 10, 2025, NTIC announced that it has determined to temporarily adjust its quarterly dividend to $0.01 per share effective with its fiscal 2025 third quarter dividend in light of the current global environment.

Previous wording

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.

Current wording

Capital Expenditures and Commitments. NTIC spent $2,600,757 on capital expenditures during the six months ended February 28, 2025, 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 $600,000 to $800,000 on capital expenditures during the remainder of fiscal 2025, which it expects will relate primarily to final implementation of the ERP software and the purchase of new equipment and facility improvements.

Previous wording

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.

Current wording

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 half of fiscal 2025. NTIC believes there is some seasonality in its business. NTIC’s net sales in the second fiscal quarter were adversely affected by the long Chinese New Year, the North American holiday season and overall less corrosion taking place at lower winter temperatures worldwide.

Previous wording

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.

Current wording

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 $5,354,664** **were outstanding under the Credit Facility as of February 28, 2025.

Previous wording

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.

Current wording

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 February 28, 2025 for both term loans is a total of USD $2,746,121.