Financial Analysis

13. COMMITMENTS AND CONTINGENCIES From time to time, the Company is subject to various claims and legal actions in the ordinary course of its business. The Company records a liability in its consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, where the Company has assessed that a loss is probable, and an amount could be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that material loss may have been incurred. In the opinion of management, as of May 31, 2026, the amount of liability, if any, with respect to these matters, individually or in the aggregate, will not materially affect the Companys consolidated results of operations, financial position or cash flows. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"8. CORPORATE DEBT The Company is party to a Credit Agreement (as amended, the Credit Agreement) with JPMorgan Chase Bank, N.A. (JPM), which provides the Company with a senior secured revolving line of credit (the Credit Facility) of up to $12.0 million (as amended below), which includes a $5.0 million sublimit for standby letters of credit. Borrowings of $11,763,555 and $9,329,021 were outstanding under the Credit Facility as of May 31, 2026 and August 31, 2025, respectively. On December 17, 2025, the Company and JPM renewed the Companys Credit Agreement to extend the maturity date of the Credit Facility from January 5, 2026 to February 5, 2027. On January 30, 2026, the Company and JPM entered into an amendment to the Credit Agreement, which increased the availability under the Credit Facility from $10.0 million to $12.0 million. 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. Borrowings under the Credit Agreement bear interest at a floating rate, at the option of the Company, equal to either the CB Floating Rate or the Adjusted SOFR Rate. The term ""CB Floating Rate"" means the greater of the Prime Rate in the United States or 2.50%. The term ""Adjusted SOFR Rate"" means the term secured overnight financing rate for either one, three or six months (depending on the interes …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

11. STOCK-BASED COMPENSATION Stock Options A summary of stock option activities under the Northern Technologies International Corporation 2024 Stock Incentive Plan (2024 Plan), the Northern Technologies International Corporation Amended and Restated 2019 Stock Incentive Plan and the Northern Technologies International Corporation Amended and Restated 2007 Stock Incentive Plan is as follows: Number of Options Outstanding Weighted Average Exercise Price Outstanding as of August 31, 2025 1,923,138 $ 11.86 Options granted 251,301 $ 7.42 Options exercised Options cancelled Outstanding as of May 31, 2026 2,174,439 $ 11.34 The weighted average per share fair value of options granted during the nine months ended May 31, 2026 and 2025 was $3.05 and $4.95, respectively. The weighted average remaining contractual life of the options outstanding as of May 31, 2026 and 2025 was 5.48 years and 5.77 years, respectively. The Company recognized stock option compensation expense of $257,671 and $767,922 and $304,510 and $907,330 during the three and nine months ended May 31, 2026 and 2025, respectively. As of May 31, 2026, there was $1,008,699 of unrecognized stock option compensation expense. The amount is expected to be recognized over a period of 2.25 years. Restricted Stock Units Restricted stock units (RSUs) were granted on September 1, 2025 under the 2024 Plan to certain non-employee directors and vest in full on the one-year anniversary of the date of grant. A summary of RSU activity fo …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

15. INCOME TAXES Income tax expense for the three and nine months ended May 31, 2026 was $392,802 and $733,321, respectively, compared to $410,461 and $903,529, respectively, for the three and nine months ended May 31, 2025. The expense was largely due to foreign operations. The Company has federal and state tax credit carry forwards, net operating loss carry forwards and foreign tax carry forwards. The Company has recorded a full valuation allowance against the U.S. deferred tax assets as of May 31, 2026 and August 31, 2025.

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12. SEGMENT AND GEOGRAPHIC INFORMATION Segment Information The Companys chief operating decision maker (CODM) is its Chief Executive Officer. The Companys business is organized into two reportable segments: ZERUST and Natur-Tec. The Company has been selling its proprietary ZERUST rust and corrosion inhibiting products and services to the automotive, general industrial, mechanical, mining, agricultural, and retail consumer markets for over 50 years and, more recently, has also expanded into the oil and gas industry. The Company also sells a portfolio of proprietary bio-based and compostable (fully biodegradable) polymer resins and finished products under the Natur-Tec brand. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in the Companys annual report on Form 10-K for the fiscal year ended August 31, 2025. There are no intersegment sales, and no operating segments have been aggregated. The following table presents the Companys net sales by segment for the three and nine months ended May 31, 2026 and 2025, respectively: Three Months Ended May 31, Nine Months Ended May 31, 2026 2025 2026 2025 ZERUST net sales $ 18,145,611 $ 15,728,637 $ 52,095,200 $ 45,316,457 Natur-Tec net sales 6,070,051 5,779,926 17,426,065 16,602,565 Total net sales $ 24,215,662 $ 21,508,563 $ 69,521,265 $ 61,919,022 The following table sets forth the Companys cost of goods sold by segment for the three and nine months ended May 31, 20 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

2. SIGNIFICANT ACCOUNTING POLICIES Assets Held for Sale The Company classifies a property as held for sale when all of the criteria set forth in the Accounting Standards Codification (ASC) Topic 360: Property, Plant and Equipment (ASC 360) have been met. The criteria are as follows: (i) management, having the authority to approve the action, commits to a plan to sell the property; (ii) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets; (iii) an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; (iv) the sale of the property is probable and is expected to be completed within one year; (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. At the time the Company classifies a property as held for sale, the Company ceases recording depreciation and amortization. A property classified as held for sale is measured and reported at the lower of: (i) its carrying amount or (ii) its estimated fair value, less estimated costs to sell. Properties classified as held for sale are presented separately in the consolidated balance sheet. Other than the addition of the accounting policy for assets held for …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

9. STOCKHOLDERS EQUITY During the nine months ended May 31, 2026, the Companys Board of Directors declared cash dividends on the following dates in the following amounts to the following holders of the Companys common stock: Declaration Date Amount Record Date Payable Date October 15, 2025 $ 0.01 October 29, 2025 November 12, 2025 January 14, 2026 $ 0.01 January 28, 2026 February 11, 2026 On April 24, 2026, the Company announced the suspension of its quarterly cash dividend on its common stock, beginning with its quarterly cash dividend for the third quarter of fiscal 2026, to focus on the reduction of its outstanding debt. Therefore, the Company did not declare a cash dividend during the quarter ended May 31, 2026. During the nine months ended May 31, 2025, the Companys Board of Directors declared cash dividends on the following dates in the following amounts to the following holders of the Companys common stock: Declaration Date Amount Record Date Payable Date October 16, 2024 $ 0.07 October 30, 2024 November 13, 2024 January 15, 2025 $ 0.07 January 29, 2025 February 12, 2025 April 16, 2025 $ 0.01 April 30, 2025 May 14, 2025 During the nine months ended May 31, 2026 and 2025, the Company repurchased no shares of its common stock. During the nine months ended May 31, 2026 and 2025, the Company issued 11,313 and no shares of common stock upon the settlement of restricted stock units, respectively. The Company issued 5,198 and 3,527 shares of common stock on September 1, 2025 …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing