Northern Technologies International Corp 10-K for FY2021

Northern Technologies International Corp (NTIC)

10-K 2021-11-19 For: 2021-08-31

Added on April 06, 2026

About this 10-K

Northern Technologies International Corp filed this 10-K on November 19, 2021, covering the fiscal year ended August 31, 2021 (FY2021).

Headline figures

Fiscal year ended August 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $56.49M; up 18.6% from $47.64M a year earlier
Net income: $6.28M; compared with a net loss of $1.34M a year earlier
Diluted EPS: $0.64; compared with -$0.15 a year earlier

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

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

		Page

PART I		1
Item 1.	BUSINESS	1
INFORMATION ABOUT OUR EXECUTIVE OFFICERS		15
Item 1A.	RISK FACTORS	17
Item 1B.	UNRESOLVED STAFF COMMENTS	36
Item 2.	PROPERTIES	36
Item 3.	LEGAL PROCEEDINGS	36
Item 4.	MINE SAFETY DISCLOSURES	36
PART II		37
Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	37
Item 6.	[RESERVED]	37
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	38
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	54
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	55
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	81
Item 9A.	CONTROLS AND PROCEDURES	81
Item 9B.	OTHER INFORMATION	82
Item 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	82
PART III		83
Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	83
Item 11.	EXECUTIVE COMPENSATION	83
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	83
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	85
Item 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	85
PART IV		86
Item 15.	EXHIBIT AND FINANCIAL STATEMENT SCHEDULES	86
Item 16.	FORM 10-K SUMMARY	90

Subsidiary Name	Country	NTIC Percent (%) Ownership
NTIC (Shanghai) Co., Ltd	China	100%
NTI Asean LLC	United States	60%
Zerust Prevenção de Corrosão S.A.	Brazil	85%
ZERUST-EXCOR MEXICO, S. de R.L. de C.V	Mexico	100%
Harita-NTI Limited	India	100%
Natur-Tec India Private Limited	India	75%
Natur Tec Lanka (Pvt) Ltd	Sri Lanka⁽¹⁾	75%
NTIC Europe GmbH	Germany	100%
Zerust Singapore Pte Ltd	Singapore⁽²⁾	60%
Zerust Vietnam Co. Ltd	Vietnam⁽²⁾	60%

Joint Venture Name	Country	NTIC Percent (%) Ownership
TAIYONIC LTD.	Japan	50%
ACOBAL SAS	France	50%
EXCOR KORROSIONSSCHUTZ – TECHNOLOGIEN ….UND PRODUKTE GMBH	Germany	50%
ZERUST AB	Sweden	50%
MOSTNIC-ZERUST	Russia	50%
ZERUST OY	Finland	50%
ZERUST (U.K.) LTD.	United Kingdom	50%
EXCOR-ZERUST S.R.O.	Czech Republic	50%
EXCOR SP. Z.O.O.	Poland	50%
ZERUST A.Ş.	Turkey	50%
ZERUST CONSUMER PRODUCTS, LLC	United States	50%
ZERUST – DNEPR	Ukraine	50%
KOREA ZERUST CO., LTD.	South Korea⁽¹⁾	30%
ZERUST-NIC (TAIWAN) CORP.	Taiwan⁽¹⁾	30%
PT. CHEMINDO – NTIA	Indonesia⁽¹⁾	30%
ZERUST SPECIALTY TECH CO. LTD.	Thailand⁽¹⁾	30%
CHONG WAH-NTIA SDN. BHD.	Malaysia⁽¹⁾	30%
NTIA ZERUST PHILIPPINES, INC.	Philippines⁽¹⁾	30%

Name	Age	Position with NTIC
G. Patrick Lynch	54	President and Chief Executive Officer

Matthew C. Wolsfeld	47	Chief Financial Officer and Corporate Secretary

Declaration Date	Amount	Record Date	Payable Date
January 15, 2021	$0.065	February 3, 2021	February 17, 2021
April 23, 2021	$0.065	May 5, 2021	May 19, 2021
July 21, 2021	$0.065	August 4, 2021	August 18, 2021

	Fiscal 2021		% of Net Sales			Fiscal 2020		% of Net Sales			$ Change			% Change
Net sales, excluding joint ventures	$	53,470,623		94.6	%	$	45,666,045		95.9	%	$	7,804,578			17.1	%
Net sales, to joint ventures		3,023,196		5.4	%		1,972,646		4.1	%		1,050,550			53.5	%
Cost of goods sold		36,920,814		65.4	%		31,609,274		66.4	%		5,311,540			16.8	%
Equity in income from joint ventures		7,465,214		13.2	%		4,270,327		9.0	%		3,194,887			74.8	%
Fees for services provided to joint ventures		5,964,260		10.6	%		4,612,885		9.7	%		1,351,375			29.3	%
Selling expenses		12,016,974		21.3	%		10,656,689		22.4	%		1,360,285			12.8	%
General and administrative expenses		8,262,173		14.6	%		8,688,309		18.2	%		(426,136	)		(4.9	)%
Research and development expenses		4,400,479		7.8	%		3,979,455		8.4	%		421,024			10.6	%

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Rent obligations	$	399,334	$	282,966	$	116,368	$	---	$	---
Total	$	399,334	$	282,966	$	116,368	$	---	$	---

	Page

Report of Independent Registered Public Accounting Firm	56
Consolidated Balance Sheets as of August 31, 2021 and 2020	57
Consolidated Statements of Operations for the years ended August 31, 2021 and 2020	58
Consolidated Statements of Comprehensive Income (Loss) for the years ended August 31, 2021 and 2020	59
Consolidated Statements of Equity for the years ended August 31, 2021 and 2020	60
Consolidated Statements of Cash Flows for the years ended August 31, 2021 and 2020	61
Notes to Consolidated Financial Statements	62-80

	August 31, 2021			August 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	7,680,641		$	6,403,032
Available for sale securities		4,634			5,544,722
Receivables:
Trade excluding joint ventures, less allowance for doubtful accounts of $382,000 as of August 31, 2021 and $90,000 as of August 31, 2020		11,128,805			8,072,212
Trade joint ventures		624,808			475,900
Fees for services provided to joint ventures		1,505,127			927,286
Income taxes		386,574			19,907
Inventories		11,114,207			10,961,796
Prepaid expenses		1,302,293			797,495
Total current assets		33,747,089			33,202,350

PROPERTY AND EQUIPMENT, NET		11,821,458			7,110,789

OTHER ASSETS:
Investments in joint ventures		27,623,768			24,090,826
Deferred income taxes		92,554			209,729
Patents and trademarks, net		709,572			802,006
Operating lease right of use asset		376,438			658,788
Total other assets		28,802,332			25,761,349
Total assets	$	74,370,879		$	66,074,488

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	4,290,972		$	3,205,241
Income taxes payable		178,923			310,922
Accrued liabilities:
Payroll and related benefits		2,879,468			1,314,978
Other		894,497			880,118
Current portion of operating lease		272,336			386,345
Total current liabilities		8,516,196			6,097,604
LONG-TERM LIABILITIES:
Operating lease, less current portion		104,102			272,443
Total long-term liabilities		104,102			272,443

COMMITMENTS AND CONTINGENCIES (Note 15)

EQUITY:
Preferred stock, no par value; authorized 10,000 shares; none issued and outstanding		—			—
Common stock, $0.02 par value per share; authorized 15,000,000 shares as of August 31, 2021 and August 31, 2020; issued and outstanding 9,184,811 and 9,099,990, respectively		183,696			182,000
Additional paid-in capital		18,736,268			17,415,043
Retained earnings		46,973,092			42,472,810
Accumulated other comprehensive loss		(3,525,030	)		(3,410,438	)
Stockholders’ equity		62,368,026			56,659,415
Non-controlling interests		3,382,555			3,045,026
Total equity		65,750,581			59,704,441
Total liabilities and equity	$	74,370,879		$	66,074,488

	2021			2020
NET SALES:
Net sales, excluding joint ventures	$	53,470,623		$	45,666,045
Net sales, to joint ventures		3,023,196			1,972,646
Total net sales		56,493,819			47,638,691
Cost of goods sold		36,920,814			31,609,274
Gross profit		19,573,005			16,029,417

JOINT VENTURE OPERATIONS:
Equity in income from joint ventures		7,465,214			4,270,327
Fees for services provided to joint ventures		5,964,260			4,612,885
To Total joint venture operations		13,429,474			8,883,212

OPERATING EXPENSES:
Selling expenses		12,016,974			10,656,689
General and administrative expenses		8,262,173			8,688,309
Research and development expenses		4,400,479			3,979,455
Total operating expenses		24,679,626			23,324,453

OPERATING INCOME		8,322,853			1,588,176

INTEREST INCOME		151,875			167,733
INTEREST EXPENSE		(16,086	)		(16,034	)

INCOME BEFORE INCOME TAX EXPENSE		8,458,642			1,739,875

INCOME TAX EXPENSE		1,461,905			2,674,635

NET INCOME (LOSS)		6,996,737			(934,760	)

NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		715,499			402,949

NET INCOME (LOSS) ATTRIBUTABLE TO NTIC	$	6,281,238		$	(1,337,709	)

NET INCOME (LOSS) ATTRIBUTABLE TO NTIC PER COMMON SHARE:
Basic	$	0.69		$	(0.15	)
Diluted	$	0.64		$	(0.15	)

WEIGHTED AVERAGE COMMON SHARES ASSUMED OUTSTANDING:
Basic		9,116,472			9,096,981
Diluted		9,874,139			9,096,981

CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.20		$	0.13

	STOCKHOLDERS’ EQUITY
											Accumulated
					*Additional*						*Other*			*Non-*
	*Common Stock*				*Paid-in*			*Retained*			*Comprehensive*			*Controlling*			*Total*
	*Shares*		*Amount*		*Capital*			*Earnings*			*Loss*			*Interests*			*Equity*

BALANCE AT AUGUST 31, 2019		9,086,816	$	181,736	$	16,013,338		$	44,992,719		$	(4,593,178	)	$	3,074,679		$	59,669,294
Stock options exercised		6,823		137		(137	)		—			—			—			—
Stock issued for employee stock purchase plan		6,351		127		64,068			—			—			—			64,195
Stock option expense		—		—		1,337,774			—			—			—			1,337,774
Dividends paid to stockholders		—-		—		—			(1,182,200	)		—-			—			(1,182,200	)
Dividend received by non-controlling interest		—		—		—			—			—			(400,000	)		(400,000	)
Net income (loss)		—		—		—			(1,337,709	)		—			402,949			(934,760	)
Other comprehensive income (loss)		—		—		—			—			1,182,740			(32,602	)		1,150,138
BALANCE AT AUGUST 31, 2020		9,099,990	$	182,000	$	17,415,043		$	42,472,810		$	(3,410,438	)	$	3,045,026		$	59,704,441
Stock options exercised		74,950		1,499		582,915			—			—			—			584,414
Stock issued for employee stock purchase plan		9,871		197		74,136			—			—			—			74,333
Stock option expense		—		—		664,174			—			—			—			664,174
Dividends paid to stockholders		—-		—		—			(1,780,956	)		—-			—			(1,780,956	)
Dividend received by non-controlling interest		—		—		—			—			—			(400,000	)		(400,000	)
Net income		—		—		—			6,281,238			—			715,499			6,996,737
Other comprehensive income (loss)		—		—		—			—			(114,592	)		22,030			(92,562	)
BALANCE AT AUGUST 31, 2021		9,184,811	$	183,696	$	18,736,268		$	46,973,092		$	(3,525,030	)	$	3,382,555		$	65,750,581

	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	6,996,737		$	(934,760	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation		664,174			1,337,774
Depreciation expense		905,299			836,601
Amortization expense		203,088			231,624
Change in allowance for doubtful accounts		262,000			25,000
Equity in income from joint ventures		(7,465,214	)		(4,270,327	)
Dividends received from joint ventures		3,665,365			5,672,099
Loss on disposal of property and patents		-			173,810
Deferred income taxes		114,620			1,424,529
Changes in current assets and liabilities:
Receivables:
Trade, excluding joint ventures		(3,030,655	)		1,680,611
Trade, joint ventures		(148,908	)		348,573
Fees for services provided to joint ventures		(577,841	)		340,714
Income taxes		(362,438	)		424,002
Inventories		58,314			(435,712	)
Prepaid expenses and other		(487,771	)		279,312
Accounts payable		866,597			(1,229,510	)
Income tax payable		(160,231	)		302,641
Accrued liabilities		1,389,804			(1,294,911	)
Net cash provided by operating activities		2,892,940			4,912,070

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of property and equipment		-			2,190
Purchase of available for sale securities		(800,000	)		(4,000,000	)
Proceeds from the sale of available for sale securities		6,340,088			2,020,536
Purchases of property and equipment		(5,532,750	)		(711,412	)
Investments in patents		(110,654	)		(95,996	)
Net cash used in investing activities		(103,316	)		(2,784,682	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend received by non-controlling interest		(400,000	)		(400,000	)
Dividends paid on NTIC common stock		(1,780,956	)		(1,182,200	)
Proceeds from employee stock purchase plan		74,333			64,195
Proceeds from exercise of stock options		584,414			—
Net cash used in financing activities		(1,522,209	)		(1,518,005	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		10,194			(63,109	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		1,277,609			546,274
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		6,403,032			5,856,758

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	7,680,641		$	6,403,032

Buildings and improvements (in years)			5				-				30
Machinery and equipment (in years)			3				-				10

	August 31, 2021		August 31, 2020
Production materials	$	4,453,688	$	3,866,791
Finished goods		6,660,519		7,095,005
	$	11,114,207	$	10,961,796

	August 31, 2021			August 31, 2020
Land	$	310,365		$	310,365
Buildings and improvements		13,149,258			8,167,783
Machinery and equipment		5,453,679			4,940,912
		18,913,302			13,419,060
Less accumulated depreciation		(7,091,844	)		(6,308,271	)
	$	11,821,458		$	7,110,789

	August 31, 2021			August 31, 2020
Patents and trademarks	$	3,018,507		$	2,907,852
Less accumulated amortization		(2,308,935	)		(2,105,846	)
	$	709,572		$	802,006

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

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

	As of August 31, 2020
	Total		EXCOR		FRANCE		FINLAND		INDIA		THAILAND		OTHER
Current assets	$	55,825,418	$	25,742,619	$	4,099,160	$	1,955,879	$	4,010,855	$	4,022,399	$	15,994,506
Total assets		60,295,587		28,449,772		4,873,484		2,261,147		4,242,660		4,055,451		16,413,073
Current liabilities		11,002,867		2,424,565		2,073,710		415,496		1,007,529		993,332		4,088,235
Noncurrent liabilities		365,274		—		—		—		32,999		—		332,275
Joint ventures’ equity		48,927,446		26,025,207		2,799,774		1,845,651		3,202,132		3,062,119		11,992,563
Northern Technologies International Corporation’s share of joint ventures’ equity		24,090,826		13,012,606		1,399,887		922,814		1,603,013		1,531,060		5,621,446
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings		21,855,747		12,981,701		1,399,887		902,814		738,191		1,429,060		4,404,094

	Fiscal Year Ended August 31, 2020
	Total		EXCOR		FRANCE		FINLAND		INDIA		THAILAND		OTHER
Net sales	$	87,030,062	$	32,546,402	$	8,133,294	$	3,088,865	$	5,481,303	$	6,471,831	$	31,308,367
Gross profit		39,532,750		18,739,471		3,061,433		1,916,001		2,498,196		2,046,478		11,271,171
Net income		8,545,473		5,266,541		473,137		419,728		697,349		503,884		1,184,834
Northern Technologies International Corporation’s share of equity in income of joint ventures		4,270,327		2,622,423		237,490		209,972		349,218		253,192		598,032
Northern Technologies International Corporation’s dividends received from joint ventures		5,672,099		4,675,850		—		325,635		261,220		160,074		249,320

Numerator:	August 31, 2021		August 31, 2020
Net income (loss) attributable to NTIC	$	6,281,238	$	(1,337,709	)

Denominator:
Basic-weighted shares outstanding		9,116,472		9,096,981
Weighted shares assumed upon exercise of stock options		757,667		-
Diluted – weighted shares outstanding		9,874,139		9,096,981

Basic net income (loss) per share:	$	0.69	$	(0.15	)
Diluted net income (loss) per share:	$	0.64	$	(0.15	)

	Fiscal Year 2021			Fiscal Year 2020
Dividend yield		1.65	%		2.41	%
Expected volatility		45.4	%		45.2	%
Expected life of option (in years)		10			10
Weighted average risk-free interest rate		0.77	%		1.40	%

	Number of Shares (#)			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at August 31, 2019		839,173		$	9.13
Options granted		300,770			10.87
Options exercised		(11,975	)		5.13
Options terminated		—			—

Outstanding at August 31, 2020		1,127,968		$	9.63
Options granted		419,874			8.24
Options exercised		(77,645	)		8.18
Options terminated		(43,546	)		9.63

Outstanding at August 31, 2021		1,426,651		$	9.30	$	10,514,418

Exercisable at August 31, 2021		1,022,802		$	9.72	$	7,108,474

	Fiscal 2021		Fiscal 2020
ZERUST® net sales	$	45,554,434	$	34,474,535
Natur-Tec® net sales		10,939,385		13,164,156
Total net sales	$	56,493,819	$	47,638,691

	Fiscal 2021		Fiscal 2020
Direct cost of goods sold
ZERUST®	$	26,028,555	$	18,717,684
Natur-Tec®		7,717,429		10,168,051
Indirect cost of goods sold		3,174,830		2,723,539
Total net cost of goods sold	$	36,920,814	$	31,609,274

	Fiscal Year Ended August 31,
	2021		2020
Inside the U.S.A. to unaffiliated customers	$	22,039,456	$	20,218,213
Outside the U.S.A. to:
Joint ventures in which the Company is a shareholder directly and indirectly		3,023,196		1,972,646
Unaffiliated customers		31,431,167		25,447,832
	$	56,493,819	$	47,638,691

	Fiscal 2021		% of Total Fees for Services Provided to Joint Ventures			Fiscal 2020		% of Total Fees for Services Provided to Joint Ventures
Germany	$	920,902		15.4	%	$	843,752		18.3	%
Japan		826,403		13.9	%		628,889		13.6	%
Poland		798,570		13.4	%		553,198		12.0	%
Sweden		528,755		8.9	%		372,017		8.1	%
France		435,032		7.3	%		310,661		6.7	%
Thailand		399,563		6.7	%		328,452		7.1	%
India		392,074		6.6	%		250,976		5.4	%
Czech Republic		377,395		6.3	%		270,032		5.9	%
South Korea		317,042		5.3	%		266,703		5.8	%
United Kingdom		316,786		5.3	%		255,121		5.5	%
Finland		298,663		5.0	%		256,375		5.6	%
Indonesia		122,513		2.1	%		99,543		2.2	%
Other		230,562		3.8	%		177,167		3.8	%
	$	5,964,260		100.0	%	$	4,612,885		100.0	%

	At August 31, 2021		At August 31, 2020
China	$	5,110,071	$	376,088
Other		453,199		172,833
United States		6,258,188		6,561,868
Total long-lived assets	$	11,821,458	$	7,110,789

	August 31,
	2021			2020
Accrued compensation	$	539,300		$	173,500
Inventory costs		55,100			64,000
Other accrued expenses		103,100			74,900
Lease liability		84,300			147,500
Goodwill and other intangible assets		453,000			581,200
Stock-based compensation		466,300			397,300
Foreign tax credit carryforward		4,893,300			5,790,500
Other credit and loss carryforwards		5,243,100			4,824,200
Total deferred tax assets		11,837,500			12,053,100
Valuation allowance		(11,447,500	)		(11,561,700	)
Total deferred tax assets after valuation allowance		390,000			491,400
Property and equipment		(7,300	)		(50,700	)
Right-of-use asset		(84,300	)		(147,500	)
Unremitted foreign earnings		(154,900	)		—
Other		(50,900	)		(83,400	)
Total deferred tax liabilities		(297,400	)		(281,600	)
Net deferred tax assets	$	92,600		$	209,800

	August 31, 2021		August 31, 2020
Right-of-use assets, net	$	376,438	$	658,788

Current portion of lease liability		272,336		386,345
Lease liability, less current portion		104,102		272,443
Total lease liability	$	376,438	$	658,788

Fiscal 2022		272,336
Fiscal 2023		84,353
Fiscal 2024		26,700
Fiscal 2025		-
Total future minimum lease payments		383,389
Less amount representing interest		(6,951	)
Present value of obligations under operating leases		376,438
Less current portion		(272,336	)
Long-term operating lease obligations	$	104,102

	Fiscal Year Ended August 31,
	2021		2020
Cash paid during the year for income tax	$	895,646	$	1,099,635
Cash paid during the year for interest		16,086		16,034

(1)	Amount includes 706,007 shares of NTIC common stock issuable upon the exercise of stock options outstanding as of August 31, 2021 under the Northern Technologies International Corporation Amended and Restated 2007 Stock Incentive Plan and 720,644 shares of NTIC common stock issuable upon the exercise of stock options outstanding as of August 31, 2021 under the Northern Technologies International Corporation Amended and Restated 2019 Stock Incentive Plan.

(2)	Excludes employee stock purchase rights accruing under the Northern Technologies International Corporation Employee Stock Purchase Plan. Under such plan, each eligible employee may purchase up to 2,000 shares of NTIC common stock at semi-annual intervals on February 28th or 29th (as the case may be) and August 31st each year at a purchase price per share equal to 90% of the lower of (i) the closing sales price per share of NTIC common stock on the first day of the offering period or (ii) the closing sales price per share of NTIC common stock on the last day of the offering period.

(3)	Amount includes 879,356 shares available as of August 31, 2021 for future issuance under Northern Technologies International Corporation Amended and Restated 2019 Stock Incentive Plan and 74,822 shares available at August 31, 2021 for future issuance under the Northern Technologies International Corporation Employee Stock Purchase Plan.