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Item 1. Financial Statements

2026-04-09 compared with 2026-01-08 · 307 added, 199 removed, 526 unchanged (49% of the section changed)

1 unchanged sentence

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF NOVEMBER 30, 2025 (UNAUDITED) AND

AUGUST 31, 2025 (AUDITED)

November 30, 2025

CONSOLIDATED BALANCE SHEETS AS OF FEBRUARY 28, 2026 (UNAUDITED)

AND AUGUST 31, 2025 (AUDITED)

February 28, 2026

August 31, 2025

1 unchanged sentence

Cash and cash equivalents

Trade, less allowance for credit losses of $ 290,493 as of November 30, 2025 and $ 235,000 as of August 31, 2025

Trade, less allowance for credit losses of $ 290,493 as of February 28, 2026 and $ 235,000 as of August 31, 2025

Fees for services provided to joint ventures

30 unchanged sentences

authorized 15,000,000 shares;

issued and outstanding 9,480,688 and 9,475,490 , as of November 30, 2025 and August 31, 2025, respectively

issued and outstanding 9,492,001 and 9,475,490 as of February 28, 2026 and August 31, 2025, respectively

Additional paid-in capital

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2025 AND 2024

Three Months Ended November 30,

FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2026 AND 2025

Three Months Ended February 28,

Six Months Ended February 28,

Cost of goods sold

8 unchanged sentences

Total operating expenses

OPERATING INCOME

OPERATING INCOME (LOSS)

INTEREST INCOME

3 unchanged sentences

NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS

NET INCOME ATTRIBUTABLE TO NTIC

NET INCOME ATTRIBUTABLE TO NTIC PER COMMON SHARE:

NET (LOSS) INCOME ATTRIBUTABLE TO NTIC

NET (LOSS) INCOME ATTRIBUTABLE TO NTIC PER COMMON SHARE:

WEIGHTED AVERAGE COMMON SHARES ASSUMED OUTSTANDING:

3 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2025 AND 2024

Three Months Ended November 30,

FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2026 AND 2025

Three Months Ended February 28,

Six Months Ended February 28,

OTHER COMPREHENSIVE INCOME (LOSS) – FOREIGN CURRENCY TRANSLATION ADJUSTMENT (NET OF TAX)

5 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2025 AND 2024

STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2026 AND 2025

STOCKHOLDERS’ EQUITY – THREE MONTHS ENDED FEBRUARY 28, 2026 AND 2025

Comprehensive

Income (Loss)

BALANCE AT NOVEMBER 30, 2024

Stock-based compensation expense

Dividends paid to stockholders ($ 0.07 per share)

Dividend to non-controlling interest

Other comprehensive loss

BALANCE AT FEBRUARY 28, 2025

BALANCE AT NOVEMBER 30, 2025

Vesting and settlement of restricted stock unit awards

Stock-based compensation expense

Dividends paid to stockholders ($ 0.01 per share)

Dividend to non-controlling interest

Net (loss) income

Other comprehensive income

BALANCE AT FEBRUARY 28, 2026

STOCKHOLDERS’ EQUITY – SIX MONTHS ENDED FEBRUARY 28, 2026 AND 2025

Comprehensive

Income (Loss)

BALANCE AT AUGUST 31, 2024

2 unchanged sentences

Dividends paid to stockholders ($ 0.14 per share)

Comprehensive loss

BALANCE AT NOVEMBER 30, 2024

Dividend to non-controlling interest

Other comprehensive income

BALANCE AT FEBRUARY 28, 2025

BALANCE AT AUGUST 31, 2025

Stock issued for employee stock purchase plan

Vesting and settlement of restricted stock unit awards

Stock-based compensation expense

Dividend received by non-controlling interest

Dividends paid to stockholders ($ 0.02 per share)

Comprehensive loss

BALANCE AT NOVEMBER 30, 2025

Dividend to non-controlling interest

Other comprehensive income (loss)

BALANCE AT FEBRUARY 28, 2026

See notes to consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2025 AND 2024

Three Months Ended November 30,

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2026 AND 2025

Six Months Ended February 28,

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Amortization expense

Loss on disposal of assets

Change in allowance for credit losses

9 unchanged sentences

Accrued liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from the sale of property and equipment

Purchases of property and equipment

6 unchanged sentences

Dividends paid on NTIC common stock

Dividends received by non-controlling interest

Dividends to non-controlling interest

Proceeds from employee stock purchase plan

Net cash used in financing activities

Net cash provided by (used in) financing activities

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

6 unchanged sentences

INTERIM FINANCIAL INFORMATION

In the opinion of management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, which are of a normal recurring nature, and present fairly the consolidated financial position of Northern Technologies International Corporation and its subsidiaries (the Company) as of November 30, 2025 and August 31, 2025, the results of the Company’s operations for the three months ended November 30, 2025 and 2024, the changes in stockholders’ equity for the three months ended November 30, 2025 and 2024 and the Company’s cash flows for the three months ended November 30, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America (U.S.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, which are of a normal recurring nature, and present fairly the consolidated financial position of Northern Technologies International Corporation and its subsidiaries (the Company) as of February 28, 2026 and August 31, 2025 and the results of the Company’s operations for the three and six months ended February 28, 2026 and 2025, the changes in stockholders’ equity for the three and six months ended February 28, 2026 and 2025, and the Company’s cash flows for the six months ended February 28, 2026 and 2025, in conformity with accounting principles generally accepted in the United States of America (U.S.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s annual report on Form 10-K for the fiscal year ended August 31, 2025.

These consolidated financial statements also should be read in conjunction with the “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” section appearing in this report.

Operating results for the three months ended November 30, 2025 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 31, 2026.

The Company identified an immaterial prior period classification error related to the presentation of borrowings and repayments under its revolving line of credit in its consolidated statements of cash flows.

For the three months ended November 30, 2024, the Company had previously presented net proceeds of $ 227,124 as a single line item in the consolidated statements of cash flows.

Operating results for the three and six months ended February 28, 2026 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 31, 2026.

The Company identified immaterial prior period classification errors related to the presentation of borrowings and repayments under its revolving line of credit in its consolidated statements of cash flows and classification of selling expenses and general and administrative expenses in its consolidated statements of operations.

For the six months ended February 28, 2025, the Company had previously presented net proceeds of $ 1,063,056 as a single line item in the consolidated statements of cash flows.

In accordance with Accounting Standards Codification 230, Statement of Cash Flows , the Company has updated the prior period presentation to separately report gross borrowings of $ 16,900,943 and gross repayments of $ 15,837,887 under its line of credit.

This change had no impact on the Company’s total cash flows, financial position, or results of operations for the three months ended November 30, 2024.

The Company has evaluated events occurring after the date of these consolidated financial statements through the date January 8, 2026 for events requiring disclosure in these consolidated financial statements.

For the three and six months ended February 28, 2025, $ 338,214 was reclassified from general and administrative expenses to selling expenses.

These changes had no impact on the Company’s total cash flows, financial position, or results of operations for the three and six months ended February 28, 2025.

The Company has evaluated events occurring after the date of these consolidated financial statements through the date April 9, 2026 for events requiring disclosure in these consolidated financial statements.

NEW SIGNIFICANT ACCOUNTING POLICIES

For the three months ended November 30, 2025, there have been no new significant accounting policies from those disclosed in the Company’s annual report on Form 10-K for the fiscal year ended August 31, 2025.

For the three and six months ended February 28, 2026, there have been no new significant accounting policies from those disclosed in the Company’s annual report on Form 10-K for the fiscal year ended August 31, 2025.

ACCOUNTING PRONOUNCEMENTS

6 unchanged sentences

The Company is evaluating its disclosure approach for ASU 2023-09 and anticipates adopting the standard for the annual period starting September 1, 2025.

In November 2024, the Financial Accounting Standards Board issued ASU No.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

3 unchanged sentences

Inventories consisted of the following:

November 30, 2025

February 28, 2026

August 31, 2025

4 unchanged sentences

Property and equipment, net consisted of the following:

November 30, 2025

February 28, 2026

August 31, 2025

4 unchanged sentences

Property and equipment, net

Depreciation expense was $ 248,190 for the three months ended November 30, 2025, compared to $ 267,155 for the three months ended November 30, 2024.

A portion of assets in process include capitalized software costs incurred until the capitalized software is placed in service.

Once placed in service, these costs are reclassed to intangible assets, net in the consolidated balance sheet.

Depreciation expense was $ 250,618 and $ 498,808 for the three and six months ended February 28, 2026, respectively, compared to $ 251,230 and $ 518,385 for the three and six months ended February 28, 2025, respectively.

INTANGIBLE ASSETS, NET

Intangible assets, net consisted of the following:

As of November 30, 2025

Gross Carrying

As of February 28, 2026

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Patents and trademarks

3 unchanged sentences

As of August 31, 2025

Gross Carrying

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Patents and trademarks

2 unchanged sentences

Total intangible assets, net

Amortization expense related to intangible assets was $ 232,842 and $ 147,720 for the three months ended November 30, 2025 and 2024, respectively.

As of November 30, 2025, future amortization expense related to intangible assets for each of the next five fiscal years and thereafter is estimated as follows:

Amortization expense related to intangible assets was $ 232,930 and $ 465,772 for the three and six months ended February 28, 2026, respectively, compared to $ 158,374 and $ 306,094 for the three and six months ended February 28, 2025, respectively.

As of February 28, 2026, future amortization expense related to intangible assets for each of the next five fiscal years and thereafter is estimated as follows:

Remainder of fiscal 2026

5 unchanged sentences

Financial information from the audited and unaudited financial statements of the Company’s joint ventures in Germany, Excor Korrosionsschutz – Technologien und Produkte GmbH (EXCOR), France, ACOBAL SAS (Acobal), Finland, Zerust OY, and all the Company’s other joint ventures are summarized as follows:

As of November 30, 2025

As of February 28, 2026

Current assets

4 unchanged sentences

NTIC’s share of joint ventures’ undistributed earnings

Three Months Ended November 30, 2025

Three Months Ended February 28, 2026

NTIC’s share of equity in income from joint ventures

NTIC’s dividends received from joint ventures

Six Months Ended February 28, 2026

NTIC’s share of equity in income from joint ventures

NTIC’s dividends received from joint ventures

As of August 31, 2025

5 unchanged sentences

NTIC’s share of joint ventures’ undistributed earnings

Three Months Ended November 30, 2024

Three Months Ended February 28, 2025

NTIC’s share of equity in income from joint ventures

NTIC’s dividends received from joint ventures

Six Months Ended February 28, 2025

NTIC’s share of equity in income from joint ventures

NTIC’s dividends received from joint ventures

CORPORATE DEBT

The Company 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.

Borrowings of $ 9,134,428 and $ 9,329,021 were outstanding under the Credit Facility as of November 30, 2025 and August 31, 2025, respectively.

The Company was in compliance with all debt covenants as of November 30, 2025.

(JPM), which provides the Company 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.

The Company was in compliance with all debt covenants as of February 28, 2026.

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.

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.

4 unchanged sentences

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, respectively.

The weighted average interest rate was 6.04 % and 6.76 % for the six months ended February 28, 2026 and 2025, respectively.

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

7 unchanged sentences

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.

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.

The term loans mature in April 2026 and May 2026, respectively, and the Company expects to amend or extend each loan at maturity on substantially the same terms, although there can be no assurance that it will be able to do so.

The term loan that matures in April 2026 has an annual interest rate of 2.75 % with interest due monthly and principal due at maturity, and the term loan that matures in May 2026 has an annual interest rate of 2.96 % with interest due monthly and principal due at maturity.

Both term loans are secured by an office building owned by NTIC China and the loan agreements contain certain financial and other covenants.

The Company was in compliance with the covenants as of August 31, 2025.

The outstanding balance as of November 30, 2025 for both term loans is a total of USD $ 2,826,615 .

The Company was in compliance with the covenants as of February 28, 2026.

The outstanding balance as of February 28, 2026 for both term loans is a total of USD $ 2,915,919 .

The outstanding balance as of August 31, 2025 for both term loans was a total of USD $ 2,804,695 .

4 unchanged sentences

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 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 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 November 30, 2025.

Natur-Tec India was in compliance with all covenants as of February 28, 2026.

STOCKHOLDERS ’ EQUITY

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 .

During the three months ended November 30, 2025 and 2024, the Company repurchased no shares of its common stock.

During the three months ended November 30, 2025 and 2024, the Company issued 11,313 and no shares of common stock upon the settlement of restricted stock units, respectively.

During the six months ended February 28, 2026, the Company’s Board of Directors declared cash dividends on the following dates in the following amounts to the following holders of the Company’s common stock:

Declaration Date

October 15, 2025

October 29, 2025

November 12, 2025

January 14, 2026

January 28, 2026

February 11, 2026

During the six months ended February 28, 2025, the Company’s Board of Directors declared cash dividends on the following dates in the following amounts to the following holders of the Company’s common stock:

Declaration Date

October 16, 2024

October 30, 2024

November 13, 2024

January 15, 2025

January 29, 2025

February 12, 2025

During the six months ended February 28, 2026 and 2025, the Company repurchased no shares of its common stock.

During the six months ended February 28, 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 and 2024, respectively, under the Northern Technologies International Corporation Employee Stock Purchase Plan (the ESPP).

The ESPP is compensatory for financial reporting purposes.

As of November 30, 2025, 42,673 shares of common stock remained available for sale under the ESPP.

As of February 28, 2026, 42,673 shares of common stock remained available for sale under the ESPP.

NET INCOME PER COMMON SHARE

1 unchanged sentence

Diluted net income per share assumes the exercise of stock options and the settlement of restricted stock units using the treasury stock method, if dilutive.

The following is a reconciliation of the net income per share computation for the three months ended November 30, 2025 and 2024:

Three Months Ended November 30,

For periods in which the Company reports a net loss, potential common shares are excluded from the computation of diluted net income per share because their effect would be anti-dilutive.

The following is a reconciliation of the net income per share computation for the three and six months ended February 28, 2026 and February 28, 2025:

Three Months Ended February 28,

Six Months Ended February 28,

Net income attributable to NTIC

4 unchanged sentences

Diluted net income per share:

The dilutive impact summarized above relates to the periods when the average market price of the Company’s common stock exceeded the exercise price of the potentially dilutive option securities granted.

Net income per common share was based on the weighted average number of common shares outstanding during the periods when computing basic net income per share.

When dilutive, stock options and restricted stock units are included as equivalents using the treasury stock market method when computing the diluted net income per share.

Excluded from the computation of diluted net income per share for the three months ended November 30, 2025 were options outstanding to purchase 2,085,086 shares of common stock.

Excluded from the computation of diluted net income per share for the three months ended November 30, 2024 were options outstanding to purchase 751,153 shares of common stock.

The dilutive impact summarized above relates to periods in which the average market price of the Company’s common stock exceeded the exercise price of the potentially dilutive option securities granted.

Net income per common share is based on the weighted average number of common shares outstanding during the applicable period.

When dilutive, stock options and restricted stock units are included as equivalents using the treasury stock method in computing diluted net income per common share.

For the three months ended February 28, 2026, potential common shares were excluded from the computation of diluted net income per common share because the Company reported a net loss for the period and the effect of these shares would have been anti-dilutive.

Excluded from the computation of diluted net income per common share for the three and six months ended February 28, 2026 were options outstanding to purchase 477,175 shares of common stock.

Excluded from the computation of diluted net income per common share for the three and six months ended February 28, 2025 were options outstanding to purchase 756,661 shares of common stock.

STOCK-BASED COMPENSATION

1 unchanged sentence

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:

Average Exercise

Number of Options Outstanding

Weighted Average Exercise Price

Outstanding as of August 31, 2025

2 unchanged sentences

Options cancelled

Outstanding as of November 30, 2025

The weighted average per share fair value of options granted during the three months ended November 30, 2025 and 2024 was $ 3.05 and $ 4.95 , respectively.

The weighted average remaining contractual life of the options outstanding as of November 30, 2025 and 2024 was 5.98 years and 6.27 years, respectively.

The Company recognized stock option compensation expense of $ 258,181 and $ 304,930 during the three months ended November 30, 2025 and 2024, respectively.

As of November 30, 2025, there was $ 1,518,441 of unrecognized stock option compensation expense.

Outstanding as of February 28, 2026

The weighted average per share fair value of options granted during the six months ended February 28, 2026 and 2025 was $ 3.05 and $ 4.95 , respectively.

The weighted average remaining contractual life of the options outstanding as of February 28, 2026 and 2025 was 5.74 years and 6.03 years, respectively.

The Company recognized stock option compensation expense of $ 510,251 and $ 602,821 during the six months ended February 28, 2026 and 2025, respectively.

As of February 28, 2026, there was $ 1,266,370 of unrecognized stock option compensation expense.

The amount is expected to be recognized over a period of 2.5 years.

Restricted Stock Units

Restricted stock units (RSUs) were granted under the 2024 Plan to certain non-employee directors during the three months ended November 30, 2025 and vest in full on the one-year anniversary of the date of grant.

A summary of RSU activity for the three months ended November 30, 2025 is as follows:

Average Grant

Date Fair Value

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 for the six months ended February 28, 2026 is as follows:

Number of RSUs

Weighted Average Grant Date Fair Value

Outstanding as of August 31, 2025

1 unchanged sentence

RSUs cancelled

Outstanding as of November 30, 2025

Outstanding as of February 28, 2026

RSUs are valued using the closing stock price on the grant date.

The Company recognizes the grant date fair value of the RSUs over the vesting term, or one year.

The Company recognized RSU stock-based compensation expense of $ 52,621 and $ 36,960 during the three months ended November 30, 2025 and 2024, respectively.

As of November 30, 2025, there was $ 157,793 in unrecognized stock-based compensation expense relating to outstanding RSUs, which is expected to be recognized over a period of 0.75 years.

The Company recognized RSU stock-based compensation expense of $ 104,263 and $ 73,513 during the six months ended February 28, 2026 and 2025, respectively.

As of February 28, 2026, there was $ 106,151 in unrecognized stock-based compensation expense relating to outstanding RSUs, which is expected to be recognized over a period of 0.50 years.

SEGMENT AND GEOGRAPHIC INFORMATION

7 unchanged sentences

There are no intersegment sales, and no operating segments have been aggregated.

The following table presents the Company’s net sales by segment for the three months ended November 30, 2025 and 2024, respectively:

Three Months Ended November 30,

The following table presents the Company’s net sales by segment for the three and six months ended February 28, 2026 and 2025, respectively:

Three Months Ended February 28,

Six Months Ended February 28,

ZERUST® net sales

1 unchanged sentence

Total net sales

The following table sets forth the Company’s cost of goods sold by segment for the three months ended November 30, 2025 and 2024, respectively:

November 30, 2025

November 30, 2024

The following table sets forth the Company’s cost of goods sold by segment for the three and six months ended February 28, 2026 and 2025, respectively:

Three Months Ended February 28,

Six Months Ended February 28,

% of Product Sales

Direct cost of goods sold

1 unchanged sentence

Total net cost of goods sold

The following table sets forth the Company’s gross profit by segment for the three months ended November 30, 2025 and 2024, respectively:

Three Months Ended November 30,

The following table sets forth the Company’s gross profit by segment for the three and six months ended February 28, 2026 and 2025, respectively:

Three Months Ended February 28,

Six Months Ended February 28,

ZERUST® gross profit

18 unchanged sentences

Geographic Information

Net sales by geographic location for the three months ended November 30, 2025 and 2024, respectively, were as follows:

Three Months Ended November 30,

Net sales by geographic location for the three and six months ended February 28, 2026 and 2025 were as follows:

Three Months Ended February 28,

Six Months Ended February 28,

Inside the U.S.

5 unchanged sentences

No single customer accounted for more than 10% of consolidated revenue.

Fees for services provided to joint ventures by geographic location as a percentage of total fees for services provided to joint ventures during the three months ended November 30, 2025 and 2024, respectively, were as follows:

Three Months Ended November 30,

% of Total Fees

Joint Ventures

% of Total Fees for

Services Provided

to Joint Ventures

Fees for services provided to joint ventures by geographic location as a percentage of total fees for services provided to joint ventures during the three and six months ended February 28, 2026 and 2025, respectively, were as follows:

Three Months Ended February 28,

% of Total Fees for Services Provided to Joint Ventures

United Kingdom

Czech Republic

Six Months Ended February 28,

% of Total Fees for Services Provided to Joint Ventures

United Kingdom

Czech Republic

Sales to the Company’s joint ventures are included in the foregoing segment and geographic information;

3 unchanged sentences

The geographical distribution of total property and equipment and net sales, which are based on the geographical location of the customer, is as follows:

November 30, 2025

February 28, 2026

August 31, 2025

1 unchanged sentence

Total property and equipment, net

Three Months Ended November 30,

Three Months Ended February 28,

United States

Total net sales

Six Months Ended February 28,

United States

Total net sales

Long-lived assets consist of property and equipment.

9 unchanged sentences

The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that material loss may have been incurred.

In the opinion of management, as of November 30, 2025, the amount of liability, if any, with respect to these matters, individually or in the aggregate, will not materially affect the Company’s consolidated results of operations, financial position or cash flows.

In the opinion of management, as of February 28, 2026, the amount of liability, if any, with respect to these matters, individually or in the aggregate, will not materially affect the Company’s consolidated results of operations, financial position or cash flows.

SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosures of cash flow information consisted of:

Three Months Ended November 30,

Three Months Ended February 28,

Six Months Ended February 28,

Cash paid for interest

Income tax expense for the three months ended November 30, 2025 was $ 265,029 compared to $ 217,871 for the three months ended November 30, 2024.

Cash paid for taxes

Income tax expense for the three and six months ended February 28, 2026 was $ 75,490 and $ 340,519 , respectively, compared to $ 275,197 and $ 493,068 , respectively, for the three and six months ended February 28, 2025.

The expense was largely due to foreign operations.

1 unchanged sentence

The Company has recorded a full valuation allowance against the U.S.

deferred tax assets as of November 30, 2025 and August 31, 2025.

deferred tax assets as of February 28, 2026 and August 31, 2025.

OTHER INCOME – EMPLOYEE RETENTION CREDIT

During the three and six months ended February 28, 2025, the Company received $ 1,139,756 in cash as a result of Employee Retention Credits (ERC), which are refundable tax credits against certain employment taxes initially made available under the Coronavirus Aid, Relief, and Economic Security Act.

The ERC was received in cash and was claimed under the suspension test criteria based on the Company’s determination that it met the eligibility requirements.

In accordance with the Company’s accounting policy, the ERC payments have been recognized as Other Income in the period in which the cash was received, as the Company determined that all relevant criteria for recognition had been met.

The ERC represents a one-time benefit and does not constitute recurring operational revenue.

Additionally, the Company earned $ 181,529 in interest income related to the ERC payments, which was recorded as Interest Income during the three and six months ended February 28, 2025.

The ERC payments of $ 1,139,756 are recorded as Other Income in the condensed consolidated statements of operations, while the interest income of $ 181,529 is recorded separately under Interest Income in the condensed consolidated statements of operations for the three and six months ended February 28, 2025.

No ERC income or related interest income was recognized during the three and six months ended February 28, 2026.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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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.

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.

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.

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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.

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.

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

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ZERUST® products and services and Natur-Tec® products.

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:

NTIC’s consolidated net sales increased 9.2% primarily due to increased sales and demand for ZERUST® and Natur-Tec® products.

74.3% of NTIC’s consolidated net sales were derived from sales of ZERUST® products and services, which increased 11.9%.

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:

NTIC’s consolidated net sales increased 15.3% and 12.1% 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 increased sales and demand for ZERUST® and Natur-Tec® products.

During the six months ended February 28, 2026, 74.9% of NTIC’s consolidated net sales were derived from sales of ZERUST® products and services, which increased 14.7%.

25.1% of NTIC’s consolidated net sales were derived from sales of Natur-Tec® products, which increased 4.9%.

Cost of goods sold as a percentage of net sales increased to 64.0% from 61.7% primarily due to slightly higher raw material prices and discounts on selling prices.

NTIC’s total income from joint venture operations decreased 5.1% to $2,291,373 in the three months ended November 30, 2025, compared to $2,413,712 during the three months ended November 30, 2024 primarily due to a slight increase in operating expenses at the joint ventures.

Net sales at NTIC’s joint ventures, which are not consolidated with NTIC’s net sales, increased 2.9% to $24,531,431 in the three months ended November 30, 2025, compared to $23,837,010 during the three months ended November 30, 2024.

NTIC’s total operating expenses increased 2.9% to $9,741,367 during the three months ended November 30, 2025 compared to $9,469,994 for the three months ended November 30, 2024.

This small increase was primarily due to strategic investments in ZERUST® oil and gas marketing and sales efforts, including personnel expenses and the corresponding benefits, as well as increased travel and professional fees.

NTIC earned net income attributable to NTIC of $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.

During the three months ended November 30, 2025, NTIC incurred additional costs related to tariffs and expects such costs to continue throughout fiscal 2026.

Cost of goods sold as a percentage of net sales decreased slightly to 64.3% during the three months ended February 28, 2026, compared to 64.4% during the three months ended February 28, 2025, and increased to 64.2% during the six months ended February 28, 2026, compared to 63.0% during the prior fiscal year period.

The increase for the six-month comparison was primarily due to slightly higher raw material prices and discounts on selling prices.

NTIC’s total income from joint venture operations increased 19.8% and 5.2% to $2,026,569 and $4,317,942 during the three and six months ended February 28, 2026, respectively, compared to $1,690,993 and $4,104,705 during the three and six months ended February 28, 2025, respectively, primarily due to an increase in sales at NTIC’s joint ventures.

Net sales at NTIC’s joint ventures, which are not consolidated with NTIC’s net sales, 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.

NTIC’s total operating expenses increased 7.7% and 5.2% to $9,501,681 and $19,243,048 during the three and six months ended February 28, 2026, respectively, compared to $8,819,510 and $18,289,504 for the three and six months ended February 28, 2025, respectively.

These increases were primarily due to strategic investments in ZERUST® oil and gas marketing and sales efforts, including personnel expenses and the corresponding benefits, as well as increased travel and professional fees.

NTIC’s 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.

NTIC earned net income attributable to NTIC of $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.

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.

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Results of Operations

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

Three Months Ended November 30,

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

Three Months Ended February 28,

Cost of goods sold

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Research and development expenses

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.

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

Three Months Ended November 30,

Six Months Ended February 28,

Cost of goods sold

Equity in income from joint ventures

Fees for services provided to joint ventures

Selling expenses

General and administrative expenses

Research and development expenses

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.

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:

Three Months Ended February 28,

Six Months Ended February 28,

Total ZERUST® sales

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Total net sales

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.

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

Three Months Ended November 30,

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.

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:

Three Months Ended February 28,

ZERUST® industrial net sales

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Total ZERUST® net sales

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.

Six Months Ended February 28,

ZERUST® industrial net sales

ZERUST® oil & gas net sales

Total ZERUST® net sales

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.

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.

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.

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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.

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.

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.

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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.

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.

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.

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.

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.

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 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 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 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.

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.

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.

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.

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.

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.

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.

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.

Interest Income .

NTIC’s interest income increased to $37,242 during the three months ended November 30, 2025 compared to $25,567 during the three months ended November 30, 2024 primarily due to changes in the invested cash balances and rate of return at various subsidiaries.

NTIC’s interest income decreased to $65,568 and $102,810 during the three and six months ended February 28, 2026, respectively, compared to $210,156 and $235,723 during the three and six months ended February 28, 2025, respectively, primarily due to interest income recognized during the prior-year periods related to the payment of the employee retention credit (ERC), which did not repeat in the current year periods, as well as changes in invested cash balances and rates of return at various subsidiaries.

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.

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.

Other Income .

NTIC recognized $1,139,756 in other income during the three and six months ended February 28, 2025 due to the receipt of the ERC payment.

No other income was recognized during the current fiscal year periods.

The ERC income was recognized upon receipt of a cash payment in accordance with applicable accounting guidance and was claimed under the suspension test criteria, as described in Note 1 to NTIC’s consolidated financial statements for the fiscal year ended August 31, 2025.

The ERC payment was a one-time event and does not represent recurring operational revenue.

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.

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.

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 $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.

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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.

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.

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.

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.

NTIC anticipates that its earnings will continue to be adversely affected to some extent by inflation and worldwide supply chain disruptions, among other factors.

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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.

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.

Liquidity and Capital Resources

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.

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.

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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.

Borrowings of $9,134,428 were outstanding under the Credit Facility as of November 30, 2025.

The Company was in compliance with all covenants under the Credit Agreement as of November 30, 2025.

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.

(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.

On December 17, 2025, NTIC and JPM renewed NTIC’s Credit Agreement to extend the maturity date of the Credit Facility from January 5, 2026 to February 5, 2027.

On January 30, 2026, NTIC 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.

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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.

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.

The weighted average interest rate was 6.04% and 6.76% for the six months ended February 28, 2026 and 2025, respectively.

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.

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 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.

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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.

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.

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).

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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 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.

Natur-Tec India was in compliance with all covenants as of November 30, 2025.

Natur-Tec India was in compliance with all covenants as of February 28, 2026.

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.

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.

NTIC’s cash flows from operations are impacted by significant changes in certain components of NTIC’s working capital, including inventory turnover and changes in receivables and payables.

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This determination is handled on a case-by-case basis.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Share Repurchase Plan .

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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.

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.

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.

During the six months ended February 28, 2026, NTIC’s Board of Directors declared cash dividends on the following dates in the following amounts to the following holders of NTIC’s common stock:

Declaration Date

October 15, 2025

October 29, 2025

November 12, 2025

January 14, 2026

January 28, 2026

February 11, 2026

During the six months ended February 28, 2025, NTIC’s Board of Directors declared cash dividends on the following dates in the following amounts to the following holders of NTIC’s common stock:

Declaration Date

October 16, 2024

October 30, 2024

November 13, 2024

January 15, 2025

January 29, 2025

February 12, 2025

Capital Expenditures and Commitments .

NTIC spent $821,624 on capital expenditures during the three months ended November 30, 2025, which related primarily to investments in land at a planned new facility for Natur Tec India in Chenai, India.

NTIC expects to spend an aggregate of approximately $2,000,000 to $2,500,000 on capital expenditures during fiscal 2026, which it expects will relate primarily to construction of new buildings and warehouses in India and Brazil, as well as the purchase of new equipment and facility improvements in the United States.

NTIC spent $1,006,298 on capital expenditures during the six months ended February 28, 2026, which related primarily to investments in land at a planned new facility for Natur-Tec India in Chennai, India.

NTIC expects to spend an aggregate of approximately $1,200,000 to $1,500,000 on capital expenditures during the remainder of fiscal 2026, which it expects will relate primarily to construction of new buildings and warehouses in India and Brazil, as well as the purchase of new equipment and facility improvements in the United States.

Inflation and Seasonality

Inflation in the United States and abroad historically has had minimal effect on NTIC and did not adversely affect NTIC’s gross margins during the first quarter of fiscal 2026.

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 2026.

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.

NTIC believes its net sales in the second fiscal quarter were and may continue to 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.

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

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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 $9,134,428 were outstanding under the Credit Facility as of November 30, 2025.

Borrowings of $11,282,291 were outstanding under the Credit Facility as of February 28, 2026.

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, 2025 for both term loans is a total of USD $2,826,615.

The Foreign Currency Term Loan taken out with IDFC FIRST Bank Limited (the Bank) has an interest at a fixed rate of 6.45% per annum.

The current outstanding balance as of November 30, 2025 was INR 452.6 lakhs (USD $506,461).

The current outstanding balance as of February 28, 2026 for both term loans is a total of USD $2,915,919.

The Foreign Currency Term Loan taken out with IDFC FIRST Bank Limited bears interest at a fixed rate of 6.45% per annum.

The outstanding balance as of February 28, 2026 was INR 439.4 lakhs (USD $482,375).

Critical Accounting Policies and Estimates

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The following are some of the uncertainties and factors known to us that could cause NTIC’s actual results to differ materially from what NTIC has anticipated in its forward-looking statements:

The effect the U.S.-Israel-Iran conflict, which has had immediate and substantial effects on global trade, energy markets and financial markets;

The effect of changes to trade regulation, quotas, duties, or tariffs, caused by the changing U.S.

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

The effects of the ongoing war between Russia and Ukraine and sanctions against Russia by U.S.

The effects of the ongoing war between Russia and Ukraine, conflicts in the Middle East and sanctions against Russia by U.S.

and European governments on energy prices, which have adversely affected our joint venture sales, and on commodity price fluctuations, which have decreased our margins and the margins of our joint ventures and resulted in decreased joint venture profitability, which will likely continue through the end of fiscal 2026;

Oil prices, which may affect sales of NTIC’s ZERUST® products and services to the oil and gas industry, and which may be impacted by the ongoing war between Russia and Ukraine and the conflicts in the Middle East;

NTIC’s operations in China and the risks associated therewith, including trade or other issues that may result from increasing tensions between the U.S.

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NTIC’s reliance upon suppliers;

Zerust Brazil’s ability to perform and realize revenue and other benefits under its three-year offshore oil and gas production asset preservation contract with a global engineering, procurement, and construction company;

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

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

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

For more information regarding these and other uncertainties and factors that could cause NTIC’s actual results to differ materially from what NTIC has anticipated in its forward-looking statements or otherwise could materially adversely affect its business, financial condition or operating results, see NTIC’s annual report on Form 10-K for the fiscal year ended August 31, 2025 under the heading “ Part I.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements