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. During the three months ended November 30, 2025, NTIC continued to make strategic investments in its ZERUST® oil and gas sales infrastructure specifically to support ZIS UAE.

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. During the six months ended February 28, 2026, NTIC continued to make strategic investments in its ZERUST® oil and gas sales infrastructure specifically to support ZIS UAE.

Previous wording

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. We recently entered into a preferred supplier agreement with the nation’s leading specialized distributor for a foodservice and industrial packaging company, which we expect to translate into higher Natur-Tec® sales growth in fiscal 2026 compared to fiscal 2025.

Current wording

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. In first quarter of fiscal 2026, we entered into a preferred supplier agreement with the nation’s leading specialized distributor for a foodservice and industrial packaging company, which we expect to translate into higher Natur-Tec® sales growth in fiscal 2026 compared to fiscal 2025.

Previous wording

Highlights of NTIC’s financial results for the three months ended November 30, 2025 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, 2026 include the following, with increases or decreases in each case as compared to the respective prior fiscal year period:

Previous wording

During the three months ended November 30, 2025, NTIC incurred additional costs related to tariffs and expects such costs to continue throughout fiscal 2026. Management has implemented, and expects to continue to implement, proactive measures to mitigate inflationary and supply chain pressures resulting from tariffs through a combination of supplier diversification, regional sourcing initiatives, cost-reduction programs, and manufacturing optimization. Management continues to monitor global trade developments and evaluate opportunities to further reduce its exposure to tariffs by localizing production and developing alternative sourcing options where practicable. With respect to NTIC China, a majority of its production and sales are for local consumption. Accordingly, management believes that NTIC China’s exposure to tariffs, including those imposed by the United States, is limited. However, given the complex and evolving nature of global trade policy, there can be no assurance that tariffs or other trade restrictions will not adversely affect NTIC’s net sales, gross margins, or operating results in future periods. Tariffs have had a particular impact on NTIC’s Natur-Tec® business, which relies on the global procurement of raw materials and finished goods. These factors may affect production economics, customer pricing, and competitive positioning, particularly in markets where NTIC competes with local producers not subject to comparable tariff exposure.

Current wording

During the six months ended February 28, 2026, NTIC incurred additional costs related to tariffs and expects such costs to continue throughout fiscal 2026. Management has implemented, and expects to continue to implement, proactive measures to mitigate inflationary and supply chain pressures resulting from tariffs through a combination of supplier diversification, regional sourcing initiatives, cost reduction programs, and manufacturing optimization. Management continues to monitor global trade developments and evaluate opportunities to further reduce its exposure to tariffs by localizing production and developing alternative sourcing options where practicable. With respect to NTIC China, a majority of its production and sales are for local consumption. Accordingly, management believes that NTIC China’s exposure to tariffs, including those imposed by the United States, is limited. However, given the complex and evolving nature of global trade policy, there can be no assurance that tariffs or other trade restrictions will not adversely affect NTIC’s net sales, gross margins, or operating results in future periods. Tariffs have had a particular impact on NTIC’s Natur-Tec® business, which relies on the global procurement of raw materials and finished goods. These factors may affect production economics, customer pricing, and competitive positioning, particularly in markets where NTIC competes with local producers not subject to comparable tariff exposure.

Previous wording

The following table sets forth NTIC’s results of operations for the three months ended November 30, 2025 and 2024.

Current wording

The following table sets forth NTIC’s results of operations for the three and six months ended February 28, 2026 and February 28, 2025:

Previous wording

Net Sales. NTIC’s consolidated net sales increased 9.2% to $23,308,881 during the three months ended November 30, 2025 compared to $21,338,393 during the three months ended November 30, 2024. This increase was primarily due to increased sales and demand for ZERUST® and Natur-Tec® products.

Current wording

Net Sales. NTIC’s consolidated net sales increased 15.3% and 12.1% to $21,996,785 and $45,305,666 during the three and six months ended February 28, 2026, respectively, compared to $19,072,066 and $40,410,459 during the three and six months ended February 28, 2025, respectively. These increases were primarily due to increased sales and demand for both ZERUST® and Natur-Tec® products during the current year periods.

Previous wording

The following table sets forth NTIC’s net sales by product segment for the three months ended November 30, 2025 and 2024:

Current wording

The following table sets forth NTIC’s net sales by product segment for the three and six months ended February 28, 2026 and February 28, 2025:

Previous wording

During the three months ended November 30, 2025, 74.3% of NTIC’s consolidated net sales were derived from sales of ZERUST® products and services, which increased 11.9% to $17,316,196 during the three months ended November 30, 2025 compared to $15,475,803 during the three months ended November 30, 2024. This increase was primarily due to increased demand for ZERUST® oil and gas products and ZERUST® industrial products.

Current wording

During the three and six months ended February 28, 2026, 75.6% and 74.9% of NTIC’s consolidated net sales, respectively, were derived from sales of ZERUST® products and services, which increased 17.9% and 14.7% to $16,633,456 and $33,949,652, respectively, compared to $14,112,017 and $29,587,820 during the three and six months ended February 28, 2026, respectively. These increases were primarily due to increased demand for ZERUST® oil and gas products and ZERUST® industrial products during the current year periods.

Previous wording

The following table sets forth NTIC’s net sales of ZERUST® products for the three months ended November 30, 2025 and 2024:

Current wording

The following table sets forth NTIC’s net sales of ZERUST® products for the three and six months ended February 28, 2026 and February 28, 2025:

Previous wording

ZERUST® industrial net sales increased during the three months ended November 30, 2025, 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 increased 11.2% and 8.9% during the three and six months ended February 28, 2026, respectively, compared to the same prior fiscal year periods, primarily due to increased demand for North American ZERUST® and NTI China ZERUST® industrial products during the current year periods. 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 58.1% during the three months ended November 30, 2025 compared to the same period last fiscal year primarily due to increased demand, primarily in Brazil. 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. For example, in November 2025, Zerust Brazil secured a three-year offshore oil and gas production asset preservation contract with a leading global engineering, procurement, and construction company to provide advanced corrosion protection solutions for floating production storage and offloading units. The project under this agreement is expected to ramp during fiscal 2026 and run through calendar 2028 with an estimated total value of approximately R$70 million (US$13.1 million). This includes approximately R$40 million (US$7.5 million) in materials and approximately R$30 million (US$5.6 million) in engineering and field services. The amount and timing of revenue anticipated to be generated under this agreement may materially and positively affect NTIC’s future quarterly sales and other operating results.

Current wording

ZERUST® oil and gas net sales increased 72.1% and 65.2% during the three and six months ended February 28, 2026, respectively, compared to the same prior fiscal year periods primarily due to increased demand, primarily in the Middle East and Brazil, during the current year periods. However, the ongoing geopolitical conflict and related disruptions affecting energy markets and shipping routes in the Middle East may increase the volatility of future customer demand, project timing, and order patterns for NTIC’s oil and gas products and services. In addition, 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. For example, in November 2025, Zerust Brazil secured a three-year offshore oil and gas production asset preservation contract with a leading global engineering, procurement, and construction company to provide advanced corrosion protection solutions for floating production storage and offloading units. The project under this agreement is expected to ramp during fiscal 2026 and run through calendar 2028 with an estimated total value of approximately R$70 million (US$13.1 million). This includes approximately R$40 million (US$7.5 million) in materials and approximately R$30 million (US$5.6 million) in engineering and field services. The amount and timing of revenue anticipated to be generated under this agreement may materially and positively affect NTIC’s future quarterly sales and other operating results.

Previous wording

During the three months ended November 30, 2025, 25.7% of NTIC’s consolidated net sales were derived from sales of Natur-Tec® products, compared to 27.5% during the three months ended November 30, 2024. Sales of Natur-Tec® products increased 2.2% to $5,992,685 during the three months ended November 30, 2025 compared to $5,862,590 during the three months ended November 30, 2024 due to timing differences in sales specifically to customers in India. 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, 2026, 24.4% and 25.1% of NTIC’s consolidated net sales, respectively, were derived from sales of Natur-Tec® products, compared to 26.0% and 26.8% during the three and six months ended February 28, 2025, respectively. Sales of Natur-Tec® products increased 8.1% to $5,363,329 during the three months ended February 28, 2026 compared to $4,960,049 during the three months ended February 28, 2025. Sales of Natur-Tec® products increased 4.9% to $11,356,014 during the six months ended February 28, 2026 compared to $10,822,639 during the six months ended February 28, 2025. These increases were primarily due to timing differences in sales specifically to customers in North America. 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 13.3% for the three months ended November 30, 2025 compared to the three months ended November 30, 2024 primarily due to the increase in sales and slightly higher raw material prices. Cost of goods sold as a percentage of net sales increased to 64.0% for the three months ended November 30, 2025 compared to 61.7% for the three months ended November 30, 2024 due primarily to the factors noted above.

Current wording

Cost of Goods Sold. Cost of goods sold increased 15.2% and 14.2% during the three and six months ended February 28, 2026, respectively, compared to the three and six months ended February 28, 2025 primarily due to the increase in sales and slightly higher raw material prices. Cost of goods sold as a percentage of net sales were 64.3% and 64.2% for the three and six months ended February 28, 2026, respectively, compared to 64.4% and 63.0% for the three and six months ended February 28, 2025, respectively. The slight decrease for the three-month comparison was primarily due to the increase in sales and the slight increase for the six-month comparison was primarily due to slightly higher raw material prices.

Previous wording

Equity in Income from Joint Ventures. NTIC’s equity in income from joint ventures increased 8.2% to $1,222,116 during the three months ended November 30, 2025 compared to $1,129,593 during the three months ended November 30, 2024 primarily due to a modification of the fees for services plans due to tax planning in the first quarter of fiscal 2026 for two joint ventures which resulted in a decrease in fees for services and an increase in equity in income for both entities. This was partially offset by a decrease in net income at NTIC’s joint venture in Germany, EXCOR. NTIC’s equity in income from joint ventures fluctuates based on net sales and profitability of the joint ventures during the respective periods. Additionally, of the total equity in income from joint ventures, NTIC had equity in income from joint ventures of $518,135 attributable to EXCOR during the three months ended November 30, 2025 compared to $623,750 attributable to EXCOR during the three months ended November 30, 2024. This decrease was due to a decrease in net sales by EXCOR during the three months ended November 30, 2025 compared to the three months ended November 30, 2024. NTIC had equity in income from all other joint ventures of $703,981 during the three months ended November 30, 2025, compared to $505,843 during the three months ended November 30, 2024.

Current wording

Equity in Income from Joint Ventures. NTIC’s equity in income from joint ventures increased 77.3% and 32.7% to $1,100,670 and $2,322,786 during the three and six months ended February 28, 2026, respectively, compared to $620,730 and $1,750,323 during the three and six months ended February 28, 2025, respectively, primarily due to a modification of the fees for services due to tax planning in the six months ended February 28, 2026 for two joint ventures which resulted in a decrease in fees for services and an increase in equity in income for both entities. NTIC’s equity in income from joint ventures fluctuates primarily based on net sales and profitability of the joint ventures during the respective periods. Additionally, of the total equity in income from joint ventures, NTIC had equity in income from joint ventures of $970,355 attributable to EXCOR during the six months ended February 28, 2026, compared to $892,001 attributable to EXCOR during the six months ended February 28, 2025. This increase was due to the modification of fees noted above. NTIC had equity in income from all other joint ventures of $1,352,431 during the six months ended February 28, 2026, compared to $858,322 during the six months ended February 28, 2025.

Previous wording

Fees for Services Provided to Joint Ventures. NTIC recognized fee income for services provided to joint ventures of $1,069,257 during the three months ended November 30, 2025 compared to $1,284,119 during the three months ended November 30, 2024, representing a decrease of 16.7% primarily due to a modification of the fees for services plans due to tax planning in the first quarter of fiscal 2026 for two joint ventures which resulted in a decrease in fees for services and an increase in equity in income for both entities. 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 $24,531,431 during the three months ended November 30, 2025 compared to $23,837,010 for the three months ended November 30, 2024, representing an increase of 2.9%. This increase was primarily due to increases in demand for products at most joint ventures, partially offset by continued decreased demand at NTIC’s joint venture in Germany. 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 $74,081 were attributable to EXCOR during the three months ended November 30, 2025 compared to $206,329 attributable to EXCOR during the three months ended November 30, 2024, only one month of fees for services was recorded prior to modifying the agreement for tax purposes.

Current wording

Fees for Services Provided to Joint Ventures. NTIC recognized fee income for services provided to joint ventures of $925,899 and $1,995,156 during the three and six months ended February 28, 2026, respectively, compared to $1,070,263 and $2,354,382 during the three and six months ended February 28, 2025, respectively, representing decreases of 13.5% and 15.3%, respectively, primarily due to a modification of the fees for services plans due to tax planning in fiscal 2026 for two joint ventures, which resulted in a decrease in fees for services and an increase in equity in income for both entities. 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, 2026. Net sales at the joint ventures increased 18.6% and 10.0% to $23,483,578 and $48,015,009 during the three and six months ended February 28, 2026, respectively, compared to $19,799,875 and $43,636,885 during the three and six months ended February 28, 2025, respectively. These increases were primarily due to increases in demand for products at most joint ventures. 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 $74,081 were attributable to EXCOR during the six months ended February 28, 2026, as only one month of fees were recorded before the change in fees was made, compared to fees of $408,056 attributable to EXCOR during the six months ended February 28, 2025.

Previous wording

Selling Expenses. NTIC’s selling expenses increased 2.4% for the three months ended November 30, 2025 compared to the same period in fiscal 2025 primarily due to increased personnel expense during the current fiscal year period compared to the same prior fiscal year period. Selling expenses as a percentage of net sales decreased to 18.8% for the three months ended November 30, 2025 compared to 20.0% during the three months ended November 30, 2024 primarily due to increased net sales, partially offset by increased selling expenses.

Current wording

Selling Expenses. NTIC’s selling expenses increased 12.0% and 7.2% for the three and six months ended February 28, 2026, respectively, compared to the same respective periods in fiscal 2025 primarily due to increased personnel expense during the current fiscal year periods compared to the same prior fiscal year periods. Selling expenses as a percentage of net sales decreased to 21.4% and 20.1% for the three and six months ended February 28, 2026, respectively, from 22.1% and 21.0% for the three and six months ended February 28, 2025, respectively, primarily due to increased net sales, partially offset by increased selling expenses.

Previous wording

General and Administrative Expenses. NTIC’s general and administrative expenses increased 7.5% for the three months ended November 30, 2025 compared to the same period in fiscal 2025 primarily due to increased professional services and travel and personnel expenses, which relate in part to increased information technology infrastructure, during the current fiscal year period compared to the same prior fiscal year period. As a percentage of net sales, general and administrative expenses decreased to 17.8% for the three months ended November 30, 2025 from 18.1% for the three months ended November 30, 2024 primarily due to increased net sales, partially offset by increased general and administrative expenses.

Current wording

General and Administrative Expenses. NTIC’s general and administrative expenses increased 8.8% and 8.1% for the three and six months ended February 28, 2026, respectively, compared to the same respective periods in fiscal 2025 primarily due to increased professional services and travel and personnel expenses, which relate in part to increased information technology infrastructure, during the current fiscal year periods compared to the same prior fiscal year periods. As a percentage of net sales, general and administrative expenses decreased to 16.4% and 17.1% for the three and six months ended February 28, 2026, respectively, from 17.4% and 17.8% for the same respective periods in fiscal 2025 primarily due to increased net sales, partially offset by increased general and administrative expenses.

Previous wording

Research and Development Expenses. NTIC’s research and development expenses decreased 9.1% for the three months ended November 30, 2025 compared to the same period in fiscal 2025 primarily due to the transition of expenses from research and development to selling expenses.

Current wording

Research and Development Expenses. NTIC’s research and development expenses decreased 8.8% and 9.0% for the three and six months ended February 28, 2026, respectively, compared to the same respective periods in fiscal 2025 primarily due to the transition of expenses from research and development to selling expenses.

Previous wording

Interest Expense. NTIC’s interest expense increased to $199,966 during the three months ended November 30, 2025 compared to $120,220 during the three months ended November 30, 2024 primarily due to increased outstanding average borrowings during the current fiscal year period.

Current wording

Interest Expense. NTIC’s interest expense increased to $196,651 and $396,617 during the three and six months ended February 28, 2026, respectively, compared to $139,155 and $259,375 during the three and six months ended February 28, 2025, respectively, primarily due to increased outstanding average borrowings during the current fiscal year periods.

Previous wording

Income Before Income Tax Expense. NTIC had income before income tax expense of $770,908 for the three months ended November 30, 2025 compared to income before income tax expense of $1,012,018 for the three months ended November 30, 2024.

Current wording

Income Before Income Tax Expense. NTIC had income before income tax expense of $251,691 and $1,022,599 for the three and six months ended February 28, 2026, respectively, compared to $877,824 and $1,889,842 for the three and six months ended February 28, 2025, respectively.

Previous wording

Income Tax Expense. Income tax expense was $265,029 during the three months ended November 30, 2025 compared to $217,871 during the three months ended November 30, 2024. 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 $75,490 and $340,519 for the three and six months ended February 28, 2026, respectively, compared to $275,197 and $493,068 during the three and six months ended February 28, 2025, 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 $28,322,052 and $27,667,432 as of November 30, 2025 and August 31, 2025, 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 $28,803,395 and $27,667,432 as of February 28, 2026, and August 31, 2025, 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 $237,819, or $0.03 per diluted common share, for the three months ended November 30, 2025 compared to $561,091, or $0.06 per diluted common share, for the three months ended November 30, 2024. This decrease was primarily due to the increase in operating expenses and an increase in interest expense and decreases in joint venture operating income, partially offset by the increase in gross profit, in each case in the current fiscal year period compared to the prior fiscal year period.

Current wording

Net (Loss) Income Attributable to NTIC. Net loss attributable to NTIC was $35,323, or $0.00 per diluted common share, for the three months ended February 28, 2026, compared to net income attributable to NTIC of $434,319, or $0.04 per diluted common share, for the three months ended February 28, 2025. Net income attributable to NTIC decreased to $202,496, or $0.02 per diluted common share, for the six months ended February 28, 2026, compared to $995,410, or $0.10 per diluted common share, for the six months ended February 28, 2025. These decreases in net income attributable to NTIC were primarily due to the decreases in other income, increases in operating expenses, and increases in interest expense, partially offset by the increases in gross profit and increases in joint venture operating income, in each case in the current fiscal year periods compared to the prior fiscal year periods.

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, 2025 compared to the same period in fiscal 2025.

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, 2026 compared to the same respective periods in fiscal 2025.

Previous wording

Sources of Cash and Working Capital.** **NTIC’s working capital, defined as current assets less current liabilities, was $19,441,186 as of November 30, 2025, including $6,389,809 in cash and cash equivalents, $9,134,428 outstanding under NTIC’s line of credit and $2,887,310 of outstanding term loans, current, compared to $20,438,722 as of August 31, 2025, including $7,250,523 in cash and cash equivalents, $9,329,021 outstanding under NTIC’s line of credit, and $2,860,256 of outstanding term loans, current. Reducing debt through positive operating cash flow and improving working capital efficiencies is a strategic focus for fiscal 2026.

Current wording

Sources of Cash and Working Capital. NTIC’s working capital, defined as current assets less current liabilities, was $20,201,756 as of February 28, 2026, including $6,469,750 in cash and cash equivalents, $11,282,291 outstanding under NTIC’s line of credit, and $2,915,919 outstanding under NTIC China’s term loans, current, compared to $20,438,722 as of August 31, 2025, including $7,250,523 in cash and cash equivalents, $9,329,021 outstanding under NTIC’s line of credit, and $2,860,256 of outstanding term loans, current. Reducing debt through positive operating cash flow and improving working capital efficiencies is a strategic focus for fiscal 2026.

Previous wording

Credit Agreement with JPMorgan Chase Bank, N.A.*** ***NTIC is party to a Credit Agreement (as amended, the Credit Agreement) with JPMorgan Chase Bank, N.A. (JPM), which provides NTIC with a senior secured revolving line of credit (the Credit Facility) of up to $10.0 million. The Credit Facility includes a $5.0 million sublimit for standby letters of credit.

Current wording

Credit Agreement with JPMorgan Chase Bank, N.A. NTIC is party to a Credit Agreement (as amended, the Credit Agreement) with JPMorgan Chase Bank, N.A. (JPM), which provides NTIC with a senior secured revolving line of credit (the Credit Facility) of up to $12.0 million, which includes a $5.0 million sublimit for standby letters of credit. Borrowings of $11,282,291 and $9,329,021 were outstanding under the Credit Facility as of February 28, 2026 and August 31, 2025, respectively. NTIC was in compliance with all debt covenants as of February 28, 2026.

Previous wording

On December 17, 2025, the Company and JPM renewed the Company’s Credit Agreement to extend the maturity date of the Credit Facility from January 5, 2026 to February 5, 2027. 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 maturity date unless the Credit Facility is extended or renewed or terminated earlier.

Current wording

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 maturity date, unless the Credit Facility is extended or renewed or terminated earlier.

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 2.35% applied per annum. There is no applicable margin with respect to borrowings using a CB Floating Rate. The weighted average interest rate was 6.25% and 7.07% for the three months ended November 30, 2025 and 2024.

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 2.35% applied per annum. There is no applicable margin with respect to borrowings using a CB Floating Rate. The weighted average interest rate was 6.04% and 6.76% for the six months ended February 28, 2026 and 2025, respectively.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

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 NTIC 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.

Previous wording

Other Credit Arrangements.*** ***On each of April 22, 2025 and May 29, 2025, NTIC’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 $1.41 million). The term loans mature in April 2026 and May 2026, respectively, unless extended. It is anticipated that each term loan will be extended for an additional one-year period. The term loan that matures in April 2026 has an annual interest rate of 2.75% with interest due monthly, and the term loan that matures in May 2026 has an annual interest rate of 2.96% 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, 2025. The outstanding balance as of November 30, 2025 for both term loans is a total of USD $2,826,615.

Current wording

Other Credit Arrangements. On each of April 22, 2025 and May 29, 2025, NTIC’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 $1.41 million). The term loans mature in April 2026 and May 2026, respectively, unless extended. It is anticipated that each term loan will be extended for an additional one-year period. The term loan that matures in April 2026 has an annual interest rate of 2.75% with interest due monthly, and the term loan that matures in May 2026 has an annual interest rate of 2.96% 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, 2026. The outstanding balance as of February 28, 2026 for both term loans was a total of USD $2,915,919.

Previous wording

On August 30, 2025, NTIC’s majority owned subsidiary in India, Natur-Tec India, entered into a Foreign Currency Term Loan Agreement with IDFC FIRST Bank Limited (the Bank). The term loan provides Natur-Tec India with a facility of INR 500 lakhs (USD $600,000) to finance the purchase of land in Chennai, India. The loan was disbursed on August 30, 2025 for INR 461 lakhs (USD $522,545) and is repayable in 85 monthly installments to a US dollar account of USD $7,899 each beginning October 5, 2025 and continuing through September 5, 2032. Borrowings bear interest at a fixed rate of 6.45% per annum. The loan is secured by a lien over Natur-Tec India’s cash deposits with the Bank totaling INR 476 lakhs (USD $539,731), and the related land purchase is expected to be registered in late November 2025. The outstanding balance as of November 30, 2025 was INR 452.6 lakhs (USD $506,461), of which INR 54.2 lakhs (USD $60,695) was classified as current and INR 398.4 lakhs (USD $445,766) as long-term. The term loan contains customary affirmative and negative covenants applicable to Natur-Tec India, including, among other matters, restrictions on incurring additional indebtedness, creating liens, or changing the nature of its business. Natur-Tec India was in compliance with all covenants as of November 30, 2025.

Current wording

On August 30, 2025, NTIC’s majority owned subsidiary in India, Natur-Tec India, entered into a Foreign Currency Term Loan Agreement with IDFC FIRST Bank Limited (the Bank). The term loan provides Natur-Tec India with a facility of INR 500 lakhs (USD $600,000) to finance the purchase of land in Chennai, India. The loan was disbursed on August 30, 2025 for INR 461 lakhs (USD $522,545) and is repayable in 85 monthly installments to a US dollar account of USD $7,899 each beginning October 5, 2025 and continuing through September 5, 2032. Borrowings bear interest at a fixed rate of 6.45% per annum. The loan is secured by a lien over Natur-Tec India’s cash deposits with the Bank totaling INR 476 lakhs (USD $539,731), and the related land purchase, which was registered in November 2025. The outstanding balance as of February 28, 2026 was INR 439.4 lakhs (USD $482,375), of which INR 55.1 lakhs (USD $60,536) was classified as current and INR 384.2 lakhs (USD $421,839) as long-term. The term loan contains customary affirmative and negative covenants applicable to Natur-Tec India, including, among other matters, restrictions on incurring additional indebtedness, creating liens, or changing the nature of its business. Natur-Tec India was in compliance with all covenants as of February 28, 2026.

Previous wording

Uses of Cash and Cash Flow. Net cash provided by operating activities during the three months ended November 30, 2025 was $341,908 which resulted principally from NTIC’s net income, an increase in accounts payable, dividends received from joint ventures, depreciation and amortization expense, and stock-based compensation, and was partially offset by equity in income from joint ventures, and decreases in accounts receivable, income taxes, inventory and prepaid expenses. Net cash provided by operating activities during the three months ended November 30, 2024 was $2,395,066, which resulted principally from decreases in trade receivables and technical fee receivables, NTIC’s net income, increases in accounts payable, depreciation and amortization expense, and stock-based compensation, and was partially offset by equity in income from joint ventures and increases in inventory and prepaid expenses.

Current wording

Uses of Cash and Cash Flow. Net cash used in operating activities during the six months ended February 28, 2026 was $1,381,780, which resulted principally from equity in income from joint ventures and changes in assets and liabilities, partially offset by NTIC’s net income, dividends received from joint ventures, depreciation and amortization expense, and stock-based compensation. 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.

Previous wording

NTIC experienced a decrease in trade receivables and an increase in inventory as of November 30, 2025 compared to August 31, 2025. Trade receivables as of November 30, 2025 decreased $241,153 compared to August 31, 2025, primarily related to timing differences of sales and collections.

Current wording

NTIC experienced a decrease in trade receivables and an increase in inventory as of February 28, 2026, compared to August 31, 2025. Trade receivables decreased by $409,239, primarily due to the timing of sales and collections, while inventory increased by $981,547, primarily due to the timing of purchases, production and sales.

Previous wording

Outstanding trade receivables increased by an average of 2 days to an average of 78 days from balances outstanding from these customers as of November 30, 2025 from an average of 76 days as of August 31, 2025.

Current wording

Outstanding trade receivables decreased an average of 2 days to an average of 74 days from balances outstanding from these customers as of February 28, 2026 from an average of 76 days as of August 31, 2025.

Previous wording

Outstanding receivables for services provided to joint ventures as of November 30, 2025 decreased $44,067 compared to August 31, 2025, and the average days to pay increased an average of 15 days to an average of 88 days from an average of 73 days as of August 31, 2025.

Current wording

Outstanding receivables for services provided to joint ventures as of February 28, 2026 decreased $180,375 compared to August 31, 2025, and the average days to pay increased an average of 14 days to an average of 87 days from an average of 73 days as of August 31, 2025.

Previous wording

Net cash used in investing activities for the three months ended November 30, 2025 was $821,624, which was primarily the result of the purchases of property and equipment. 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.

Current wording

Net cash used in investing activities for the six months ended February 28, 2026 was $1,043,667, 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 28, 2025 was $2,580,757, which was primarily the result of investments in intangibles and purchases of property and equipment.

Previous wording

Net cash used in financing activities for the three months ended November 30, 2025 was $383,751, which resulted from repayments under the line of credit, 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 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.

Current wording

Net cash provided by financing activities for the six months ended February 28, 2026 was $1,554,521, primarily due to borrowings under the line of credit and proceeds from NTIC’s employee stock purchase plan, partially offset by repayments on the line of credit, dividends paid to shareholders and dividends paid to non-controlling interests. 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.

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, 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 three months ended November 30, 2025.

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, 2026, 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, 2026.

Previous wording

Cash Dividends. On October 15, 2025, the Company’s Board of Directors declared a cash dividend of $0.01 per share of the Company’s common stock, payable on November 12, 2025 to stockholders of record on October 29, 2025. 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. 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 financial agreements, business conductions 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 financial agreements, business conditions, and other factors.