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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction of incorporation or organization)
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41-0857886
(I.R.S. Employer Identification No.)
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4201 Woodland Road
P.O. Box 69
Circle Pines, Minnesota
55014
(Address of principal executive offices) (Zip code)
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Large accelerated filer
o
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Accelerated filer
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Non-accelerated filer (Do not check if a smaller reporting company)
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Smaller reporting company
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Description
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Page
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ITEM
1.
|
FINANCIAL STATEMENTS
|
NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF FEBRUARY 28, 2015 (UNAUDITED)
AND AUGUST 31, 2014 (AUDITED)
|
NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2015 AND 2014
|
NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2015 AND 2014
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
February 28,
2015
|
February 28,
2014
|
February 28,
2015
|
February 28,
2014
|
|||||||||||||
NET (LOSS) INCOME
|
$ | (58,465 | ) | $ | 1,384,069 | $ | 1,405,631 | $ | 2,688,487 | |||||||
OTHER COMPREHENSIVE (LOSS) INCOME – FOREIGN CURRENCY
TRANSLATION ADJUSTMENT
|
(1,980,209 | ) | 84,038 | (3,256,425 | ) | 605,611 | ||||||||||
COMPREHENSIVE (LOSS) INCOME
|
(2,038,674 | ) | 1,468,107 | (1,850,794 | ) | 3,294,098 | ||||||||||
COMPREHENSIVE INCOME
ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
|
(142,134 | ) | 334,607 | 242,557 | 793,206 | |||||||||||
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO NTIC
|
$ | (1,896,540 | ) | $ | 1,133,500 | $ | (2,093,351 | ) | $ | 2,500,892 |
NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2015 AND 2014
|
Six Months Ended
|
||||||||
February 28,
2015
|
February 28,
2014
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$ | 1,405,631 | $ | 2,688,487 | ||||
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||
Stock-based compensation
|
261,159 | 236,623 | ||||||
Depreciation expense
|
245,432 | 217,620 | ||||||
Amortization expense
|
43,833 | 42,819 | ||||||
Loss on disposal of assets
|
13,847 | 2,178 | ||||||
Equity in income from joint ventures
|
(3,081,332 | ) | (2,823,199 | ) | ||||
Dividends received from joint ventures
|
2,696,963 | 5,217,878 | ||||||
Increase in allowance for doubtful accounts
|
— | 20,000 | ||||||
Changes in current assets and liabilities:
|
||||||||
Receivables:
|
||||||||
Trade, excluding joint ventures
|
(166,033 | ) | 64,392 | |||||
Trade, joint ventures
|
166,554 | 322,902 | ||||||
Fees for services provided to joint ventures
|
1,128,841 | (370,026 | ) | |||||
Income taxes
|
(300,735 | ) | (209,797 | ) | ||||
Inventories
|
(102,370 | ) | (246,686 | ) | ||||
Prepaid expenses and other
|
(127,367 | ) | (500,213 | ) | ||||
Accounts payable
|
(558,041 | ) | (578,103 | ) | ||||
Income tax payable
|
14,644 | (835 | ) | |||||
Accrued liabilities
|
(1,248,986 | ) | (330,206 | ) | ||||
Net cash provided by operating activities
|
392,041 | 3,753,836 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds from the sale of investment in joint ventures
|
— | 245,594 | ||||||
Proceeds from the sale of available for sale securities
|
1,994,781 | — | ||||||
Additions to property and equipment
|
(897,582 | ) | (325,051 | ) | ||||
Additions to patents
|
(106,707 | ) | (121,351 | ) | ||||
Net cash provided by (used in) investing activities
|
990,492 | (200,808 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repayment of note payable
|
— | (933,414 | ) | |||||
Investment by non-controlling interest
|
— | 30,866 | ||||||
Dividend received by non-controlling interest
|
(560,000 | ) | — | |||||
Proceeds from employee stock purchase plan
|
22,620 | 21,255 | ||||||
Proceeds from exercise of stock options
|
99,450 | 7,650 | ||||||
Net cash used in financing activities
|
(437,930 | ) | (873,643 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH:
|
(56,231 | ) | 2,484 | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
888,372 | 2,681,869 | ||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
2,477,017 | 4,314,258 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 3,365,389 | $ | 6,996,127 |
NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
February 28, 2015
|
August 31, 2014
|
|||||||
Production materials
|
$ | 1,375,679 | $ | 1,242,649 | ||||
Finished goods
|
4,605,756 | 4,718,750 | ||||||
$ | 5,981,435 | $ | 5,961,399 |
February 28, 2015
|
August 31, 2014
|
|||||||
Land
|
$ | 310,365 | $ | 310,365 | ||||
Buildings and improvements
|
6,195,154 | 5,695,268 | ||||||
Machinery and equipment
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3,622,514 | 3,713,145 | ||||||
10,128,033 | 9,718,778 | |||||||
Less accumulated depreciation
|
(3,036,605 | ) | (3,240,791 | ) | ||||
$ | 7,091,428 | $ | 6,477,987 |
February 28, 2015
|
August 31, 2014
|
|||||||
Patents and trademarks
|
$ | 2,394,546 | $ | 2,287,840 | ||||
Less accumulated amortization
|
(1,133,972 | ) | (1,090,140 | ) | ||||
$ | 1,260,574 | $ | 1,197,700 |
At February 28, 2015
|
||||||||||||
Total
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EXCOR
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All Other
|
||||||||||
Current assets
|
$ | 46,802,727 | $ | 19,669,250 | $ | 27,133,477 | ||||||
Total assets
|
50,375,058 | 21,662,648 | 28,712,410 | |||||||||
Current liabilities
|
12,347,251 | 2,837,566 | 9,509,685 | |||||||||
Noncurrent liabilities
|
1,080,425 | — | 1,080,425 | |||||||||
Joint ventures’ equity
|
36,947,382 | 18,825,082 | 18,122,300 | |||||||||
Northern Technologies International Corporation’s share of joint ventures’ equity
|
18,377,038 | 9,412,543 | 8,964,499 | |||||||||
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings
|
$ | 16,252,890 | $ | 9,381,638 | $ | 6,871,252 |
At August 31, 2014 | ||||||||||||||||
Total
|
EXCOR
|
Tianjin Zerust
|
All Other
|
|||||||||||||
Current assets
|
$ | 61,491,957 | $ | 24,361,157 | $ | 9,774,680 | $ | 27,356,120 | ||||||||
Total assets
|
65,466,964 | 26,652,165 | 9,793,803 | 29,020,996 | ||||||||||||
Current liabilities
|
17,542,634 | 3,512,143 | 4,438,380 | 9,592,111 | ||||||||||||
Noncurrent liabilities
|
1,929,488 | — | 868,377 | 1,061,111 | ||||||||||||
Joint ventures’ equity
|
45,994,842 | 23,140,022 | 4,487,046 | 18,367,775 | ||||||||||||
Northern Technologies International Corporation’s share of joint ventures’ equity
|
22,961,989 | 11,570,013 | 2,243,524 | 9,148,452 | ||||||||||||
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings
|
$ | 20,540,523 | $ | 11,539,108 | $ | 2,193,524 | $ | 6,807,891 |
Six Months Ended February 28, 2015
|
||||||||||||||||
Total
|
EXCOR
|
Tianjin Zerust
|
All Other
|
|||||||||||||
Net sales
|
$ | 52,178,238 | $ | 18,383,653 | $ | 3,735,457 | $ | 30,059,128 | ||||||||
Gross profit
|
25,540,546 | 9,766,973 | 1,783,673 | 13,989,900 | ||||||||||||
Net income
|
6,152,182 | 3,924,547 | 265,648 | 1,961,987 | ||||||||||||
Northern Technologies International Corporation’s
share of equity in income of joint ventures
|
$ | 3,081,331 | $ | 1,962,047 | $ | 132,824 | $ | 986,460 |
Six Months Ended February 28, 2014
|
||||||||||||||||
Total
|
EXCOR
|
Tianjin Zerust
|
All Other
|
|||||||||||||
Net sales
|
$ | 58,050,376 | $ | 18,963,579 | $ | 8,257,630 | $ | 30,829,167 | ||||||||
Gross profit
|
27,600,668 | 10,072,948 | 3,834,419 | 13,693,301 | ||||||||||||
Net income
|
5,479,724 | 3,763,017 | 553,963 | 1,162,744 | ||||||||||||
Northern Technologies International Corporation’s share of equity in income of joint ventures
|
$ | 2,823,199 | $ | 1,881,705 | $ | 276,948 | $ | 664,546 |
Investment
|
||||
Equity method investment – August 31, 2014
|
$ | 2,243,524 | ||
Equity in earnings – six months ended
February 28, 2015
|
132,824 | |||
Reclassification of translation gains on foreign currency translation
|
(492,660 | ) | ||
Investment at carrying value – February 28, 2015
|
$ | 1,883,688 |
Options Exercised
|
Exercise Price
|
|||||||
18,000 | $7.65 | |||||||
2,333 | $10.20 |
Options Exercised
|
Exercise Price
|
|||||||
1,000
|
$7.65 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
Numerators:
|
February 28, 2015
|
February 28, 2014
|
February 28, 2015
|
February 28, 2014
|
||||||||||||
Net (loss) income attributable to NTIC
|
$ | (128,644 | ) | $ | 1,025,044 | $ | 876,621 | $ | 1,883,630 | |||||||
Denominator:
|
||||||||||||||||
Basic – weighted shares outstanding
|
4,522,514 | 4,434,837 | 4,516,311 | 4,434,770 | ||||||||||||
Weighted shares assumed upon exercise of stock options
|
- | 144,766 | 139,481 | 131,333 | ||||||||||||
Diluted – weighted shares outstanding
|
4,522,514 | 4,579,603 | 4,655,792 | 4,566,103 | ||||||||||||
Basic earnings (loss) per share:
|
$ | (0.03 | ) | $ | 0.23 | $ | 0.20 | $ | 0.42 | |||||||
Diluted earnings (loss) per share:
|
$ | (0.03 | ) | $ | 0.22 | $ | 0.19 | $ | 0.41 |
Six Months Ended
|
||||||||
February 28, 2015
|
February 28, 2014
|
|||||||
Dividend yield
|
0.00 | % | 0.00 | % | ||||
Expected volatility
|
46.6 | % | 47.3 | % | ||||
Expected life of option (in years)
|
10 | 10 | ||||||
Average risk-free interest rate
|
1.63 | % | 1.36 | % |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
February 28, 2015
|
February 28, 2014
|
February 28, 2015
|
February 28, 2014
|
|||||||||||||
Inside the U.S.A. to unaffiliated customers
|
61.4 | % | 62.1 | % | 64.3 | % | 66.6 | % | ||||||||
Outside the U.S.A to:
|
||||||||||||||||
Joint ventures in which the Company is a shareholder directly and indirectly
|
16.9 | % | 12.9 | % | 14.1 | % | 11.7 | % | ||||||||
Unaffiliated customers
|
21.7 | % | 25.0 | % | 21.6 | % | 21.7 | % | ||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Three Months Ended
|
||||||||||||||||
February 28,
2015
|
% of Total Fees for Services Provided to Joint Ventures
|
February 28,
2014
|
% of Total Fees for Services Provided to Joint Ventures
|
|||||||||||||
Germany
|
$ | 202,633 | 20.4 | % | $ | 263,556 | 12.8 | % | ||||||||
Thailand
|
156,519 | 15.7 | % | 130,441 | 6.3 | % | ||||||||||
Japan
|
124,202 | 12.5 | % | 167,410 | 8.2 | % | ||||||||||
Poland
|
116,612 | 11.7 | % | 152,518 | 7.4 | % | ||||||||||
United Kingdom
|
115,000 | 11.6 | % | 79,935 | 3.9 | % | ||||||||||
France
|
76,518 | 7.7 | % | 122,972 | 6.0 | % | ||||||||||
India
|
73,971 | 7.4 | % | 166,858 | 8.1 | % | ||||||||||
Sweden
|
72,297 | 7.3 | % | 92,223 | 4.5 | % | ||||||||||
Finland
|
52,693 | 5.3 | % | 76,537 | 3.7 | % | ||||||||||
China
|
— | 0.0 | % | 523,451 | 25.4 | % | ||||||||||
Other
|
4,415 | 0.4 | % | 281,770 | 13.7 | % | ||||||||||
$ | 994,860 | 100.0 | % | $ | 2,057,671 | 100.0 | % |
Six Months Ended
|
||||||||||||||||
February 28,
2015
|
% of Total Fees for Services Provided to Joint Ventures
|
February 28,
2014
|
% of Total Fees for Services Provided to Joint Ventures
|
|||||||||||||
Germany
|
440,954 | 14.1 | % | 527,111 | 12.6 | % | ||||||||||
Thailand
|
297,152 | 9.5 | % | 282,999 | 6.8 | % | ||||||||||
Japan
|
284,544 | 9.1 | % | 340,691 | 8.2 | % | ||||||||||
Poland
|
287,836 | 9.2 | % | 317,085 | 7.6 | % | ||||||||||
United Kingdom
|
211,371 | 6.8 | % | 154,632 | 3.7 | % | ||||||||||
France
|
209,898 | 6.7 | % | 251,075 | 6.0 | % | ||||||||||
India
|
143,262 | 4.6 | % | 166,858 | 4.0 | % | ||||||||||
Sweden
|
159,217 | 5.1 | % | 202,193 | 4.8 | % | ||||||||||
Finland
|
146,215 | 4.7 | % | 181,740 | 4.4 | % | ||||||||||
China
|
$ | 516,139 | 16.5 | % | $ | 1,111,633 | 26.7 | % | ||||||||
Other
|
431,942 | 13.7 | % | 631,302 | 15.2 | % | ||||||||||
$ | 3,128,530 | 100.0 | % | $ | 4,167,319 | 100.0 | % |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
February 28, 2015
|
February 28, 2014
|
February 28, 2015
|
February 28, 2014
|
|||||||||||||
ZERUST® sales
|
$ | 5,783,985 | $ | 5,555,051 | $ | 12,022,056 | $ | 11,304,064 | ||||||||
Natur-Tec™ sales
|
944,724 | 663,957 | 1,920,748 | 1,224,044 | ||||||||||||
Total net sales
|
$ | 6,728,709 | $ | 6,219,008 | $ | 13,942,804 | $ | 12,528,108 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||||||||||
February 28, 2015
|
% of Product Sales*
|
February 28, 2014
|
% of Product Sales*
|
February 28, 2015
|
% of Product Sales*
|
February 28, 2014
|
% of Product Sales*
|
|||||||||||||||||||||||||
Direct cost of goods sold
|
||||||||||||||||||||||||||||||||
ZERUST®
|
$ | 3,171,103 | 54.8 | % | $ | 2,965,790 | 53.4 | % | $ | 6,509,691 | 54.1 | % | $ | 6,047,554 | 53.5 | % | ||||||||||||||||
Natur-Tec®
|
719,048 | 76.1 | % | 490,573 | 73.9 | % | 1,501,623 | 78.2 | % | 940,037 | 76.8 | % | ||||||||||||||||||||
Indirect cost of goods sold
|
767,589 | — | 595,470 | — | 1,453,037 | — | 1,222,273 | — | ||||||||||||||||||||||||
Total net cost of goods sold
|
$ | 4,657,740 | $ | 4,051,833 | $ | 9,464,351 | $ | 8,209,864 |
*
|
The percent of segment sales is calculated by dividing the direct cost of goods sold for each individual segment category by the net sales for each segment category.
|
As of
February 28, 2015
|
As of
August 31, 2014
|
|||||||
Brazil
|
$ | 1,065,105 | $ | 1,429,054 | ||||
China
|
1,268,072 | — | ||||||
India
|
359,992 | 363,894 | ||||||
United States
|
47,411,333 | 52,264,827 | ||||||
Total assets
|
$ | 50,104,502 | $ | 54,057,775 |
Six Months Ended
|
||||||||
February 28, 2015
|
February 28, 2014
|
|||||||
Brazil
|
$ | 1,418,236 | $ | 1,153,012 | ||||
China
|
20,732 | — | ||||||
India
|
416,772 | 168,779 | ||||||
United States
|
12,087,064 | 11,206,317 | ||||||
Total net sales
|
$ | 13,942,804 | $ | 12,528,108 |
Six Months Ended
|
||||||||
February 28, 2015
|
February 28, 2014
|
|||||||
Brazil
|
$ | (41,559 | ) | $ | (145,955 | ) | ||
China
|
(358,168 | ) | — | |||||
India
|
(9,246 | ) | 5,800 | |||||
United States
|
2,184,424 | 3,307,688 | ||||||
Total operating income
|
$ | 1,775,451 | $ | 3,167,533 |
Fair Value Measurements
Using Inputs Considered as
|
||||||||||||||||
Fair Value as of
February 28, 2015
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Available for sale securities
|
$ | 3,524,985 | $ | 3,524,985 | $ | — | $ | — |
Fair Value Measurements
Using Inputs Considered as
|
||||||||||||||||
Fair Value as of
August 31, 2014
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Available for sale securities
|
$ | 5,519,766 | $ | 5,519,766 | $ | — | $ | — |
Three Months Ended
|
||||||||||||||||||||||||
February 28, 2015
|
% of
Net Sales
|
February 28, 2014
|
% of
Net Sales
|
$
Change
|
%
Change
|
|||||||||||||||||||
Net sales, excluding joint ventures
|
$ | 5,995,543 | 89.1 | % | $ | 5,527,366 | 88.9 | % | $ | 468,177 | 8.5 | % | ||||||||||||
Net sales, to joint ventures
|
733,166 | 10.9 | % | 691,642 | 11.1 | % | 41,524 | 6.0 | % | |||||||||||||||
Cost of goods sold
|
4,657,740 | 69.2 | % | 4,051,833 | 65.2 | % | 605,907 | 15.0 | % | |||||||||||||||
Equity in income of joint ventures
|
1,474,649 | 21.9 | % | 1,395,451 | 22.4 | % | 79,198 | 5.7 | % | |||||||||||||||
Fees for services provided to joint ventures
|
994,860 | 14.8 | % | 2,057,671 | 33.1 | % | (1,062,811 | ) | (51.7 | %) | ||||||||||||||
Selling expenses
|
1,339,441 | 19.9 | % | 1,291,316 | 20.8 | % | 48,125 | 3.7 | % | |||||||||||||||
General and administrative expenses
|
1,552,861 | 23.1 | % | 1,209,933 | 19.5 | % | 342,928 | 28.3 | % | |||||||||||||||
Expenses incurred in support of joint ventures
|
656,127 | 9.8 | % | 366,469 | 5.9 | % | 289,658 | 79.0 | % | |||||||||||||||
Research and development expenses
|
854,256 | 12.7 | % | 1,099,345 | 17.7 | % | (245,089 | ) | (22.3 | %) |
Six Months Ended
|
||||||||||||||||||||||||
February 28, 2015
|
% of
Net Sales
|
February 28, 2014
|
% of
Net Sales
|
$
Change
|
%
Change
|
|||||||||||||||||||
Net sales, excluding joint ventures
|
$ | 12,476,534 | 89.5 | % | $ | 11,132,384 | 88.9 | % | $ | 1,344,150 | 12.1 | % | ||||||||||||
Net sales, to joint ventures
|
1,466,270 | 10.5 | % | 1,395,724 | 11.1 | % | 70,546 | 5.1 | % | |||||||||||||||
Cost of goods sold
|
9,464,351 | 67.9 | % | 8,209,864 | 65.5 | % | 1,254,487 | 15.3 | % | |||||||||||||||
Equity in income of joint ventures
|
3,081,332 | 22.1 | % | 2,823,199 | 22.5 | % | 258,133 | 9.1 | % | |||||||||||||||
Fees for services provided to joint ventures
|
3,128,530 | 22.4 | % | 4,167,319 | 33.3 | % | (1,038,789 | ) | (24.9 | %) | ||||||||||||||
Selling expenses
|
2,734,328 | 19.6 | % | 2,610,202 | 20.8 | % | 124,126 | 4.8 | % | |||||||||||||||
General and administrative expenses
|
3,091,123 | 22.2 | % | 2,597,429 | 20.7 | % | 493,694 | 19.0 | % | |||||||||||||||
Expenses incurred in support of joint ventures
|
1,183,244 | 8.5 | % | 695,733 | 5.6 | % | 487,511 | 70.1 | % | |||||||||||||||
Research and development expenses
|
1,904,169 | 13.7 | % | 2,237,865 | 17.9 | % | (333,696 | ) | (14.9 | %) |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
February 28, 2015
|
February 28, 2014
|
February 28, 2015
|
February 28, 2014
|
|||||||||||||
ZERUST® sales
|
$ | 5,783,985 | $ | 5,555,051 | $ | 12,022,056 | $ | 11,304,064 | ||||||||
Natur-Tec® sales
|
944,724 | 663,957 | 1,920,748 | 1,224,044 | ||||||||||||
Total net sales
|
$ | 6,728,709 | $ | 6,219,008 | $ | 13,942,804 | $ | 12,528,108 |
Three Months Ended
|
||||||||||||||||
February 28,
2015
|
February 28,
2014
|
$
Change
|
%
Change
|
|||||||||||||
ZERUST® industrial net sales
|
$ | 4,674,429 | $ | 4,463,169 | $ | 211,260 | 4.7 | % | ||||||||
ZERUST® joint venture net sales
|
733,166 | 689,772 | 43,394 | 6.3 | % | |||||||||||
ZERUST® oil & gas net sales
|
376,390 | 402,110 | (25,720 | ) | (6.4 | %) | ||||||||||
Total ZERUST® net sales
|
$ | 5,783,985 | $ | 5,555,051 | $ | 228,934 | 4.1 | % |
Six Months Ended
|
||||||||||||||||
February 28,
2015
|
February 28,
2014
|
$
Change
|
%
Change
|
|||||||||||||
ZERUST® industrial net sales
|
$ | 9,677,204 | $ | 9,120,008 | $ | 557,196 | 6.1 | % | ||||||||
ZERUST® joint venture net sales
|
1,466,270 | 1,391,336 | 74,934 | 5.4 | % | |||||||||||
ZERUST® oil & gas net sales
|
878,582 | 792,720 | 85,862 | 10.8 | % | |||||||||||
Total ZERUST® net sales
|
$ | 12,022,056 | $ | 11,304,064 | $ | 717,992 | 6.4 | % |
·
|
The establishment of NTIC China, the termination of the joint venture agreements with Tianjin Zerust, the pending litigation against Mr. Tao Meng and the anticipated liquidation of Tianjin Zerust and the effect on NTIC’s business and future operating results;
|
·
|
The effect of current worldwide economic conditions, the European sovereign debt crisis and turmoil and disruption in the global credit and financial markets on NTIC’s business;
|
·
|
The health of the U.S. automotive industry on NTIC’s business;
|
·
|
NTIC’s dependence on the success of its joint ventures and fees and dividend distributions that NTIC receives from them;
|
·
|
NTIC’s relationships with its joint ventures and its ability to maintain those relationships, especially in light of anticipated succession planning issues;
|
·
|
NTIC’s dependence upon sales by Zerust Brazil to Petroleo Brasileiro S.A. (Petrobras), an oil company located in Brazil, and the effect of such sales on NTIC’s quarterly operating results, including in particular its net sales and margins;
|
·
|
The variability in NTIC’s sales of ZERUST® products and services into oil and gas industry and Natur-Tec
®
products and NTIC’s equity income of joint ventures, which variability in sales and equity in income of joint venture in turn, subject NTIC’s earnings to quarterly fluctuations;
|
·
|
Risks associated with NTIC’s international operations and exposure to fluctuations in foreign currency exchange rates and import duties and taxes;
|
·
|
Fluctuations in the cost and availability of raw materials, including resins and other commodities;
|
·
|
The success of and risks associated with NTIC’s emerging new businesses and products and services, including in particular NTIC’s ability and the ability of NTIC’s joint ventures to sell ZERUST® products and services into oil and gas industry and Natur-Tec
®
products and the often lengthy and extensive sales process involved in selling such products and services;
|
·
|
NTIC’s ability to introduce new products and services that respond to changing market conditions and customer demand;
|
·
|
Market acceptance of NTIC’s existing and new products, especially in light of existing and new competitive products;
|
·
|
Maturation of certain existing markets for NTIC’s ZERUST
®
products and services and NTIC’s ability to grow market share and succeed in penetrating other existing and new markets;
|
·
|
Increased competition, especially with respect to NTIC’s ZERUST
®
products and services, and the effect of such competition on NTIC’s and its joint ventures’ pricing, net sales and margins;
|
·
|
NTIC’s reliance upon and its relationships with its distributors, independent sales representatives and joint ventures;
|
·
|
NTIC’s reliance upon suppliers, including in particular its single supply source for its base bioplastics resins;
|
·
|
The costs and effects of complying with laws and regulations and changes in tax, fiscal, government and other regulatory policies, including rules relating to environmental, health and safety matters;
|
·
|
The transition of the manufacturing of certain select ZERUST
®
rust and corrosion inhibiting products in house at NTIC’s corporate headquarters location in Circle Pines, Minnesota;
|
·
|
Unforeseen product quality or other problems in the development, production and usage of new and existing products;
|
·
|
Unforeseen production expenses incurred in connection with new customers and new products;
|
·
|
Loss of or changes in executive management or key employees;
|
·
|
Ability of management to manage around unplanned events;
|
·
|
Future litigation;
|
·
|
NTIC’s reliance on its intellectual property rights and the absence of infringement of the intellectual property rights of others;
|
·
|
Fluctuations in NTIC’s effective tax rate; and
|
·
|
NTIC’s reliance upon its management information systems.
|
ITEM
3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM
4.
|
CONTROLS AND PROCEDURES
|
ITEM
1.
|
LEGAL PROCEEDINGS
|
ITEM
1A.
|
RISK FACTORS
|
ITEM
2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM
3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM
4.
|
MINE SAFETY DISCLOSURES
|
ITEM
5.
|
OTHER INFORMATION
|
ITEM
6.
|
E
XHIBITS
|
Exhibit No.
|
Description
|
|
10.1
|
Letter dated January 8, 2015 to Northern Technologies International Corporation from PNC Bank, National Association (filed herewith)
|
|
31.1
|
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
31.2
|
Certification of Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
|
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
|
|
101
|
The following materials from NTIC’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets, (ii) the unaudited Consolidated Statements of Operations, (iii) the unaudited Consolidated Statements of Comprehensive Income (Loss), (iv) the unaudited Consolidated Statements of Cash Flows, and (v) Notes to Condensed Financial Statements (filed herewith)
|
Date: April 9, 2015
|
Matthew C. Wolsfeld, CPA
|
Exhibit No.
|
Description
|
Method of Filing
|
10.1
|
Letter dated January 8, 2015 to Northern Technologies International Corporation from PNC Bank, National Association
|
Filed herewith
|
31.1
|
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
31.2
|
Certification of Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Furnished herewith
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Furnished herewith
|
101
|
The following materials from Northern Technologies International Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets, (ii) the unaudited Consolidated Statements of Operations, (iii) the unaudited Consolidated Statements of Comprehensive Income (Loss), (iv) the unaudited Consolidated Statements of Cash Flows, and (v) Notes to Condensed Financial Statements
|
Filed herewith
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Northern Technologies International Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
Date: April 9, 2015 | ||
G. Patrick Lynch
President and Chief Executive Officer
(principal executive officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Northern Technologies International Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
Date: April 9, 2015 | ||
Matthew C. Wolsfeld, CPA
Chief Financial Officer and Corporate Secretary
(principal financial officer)
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
G. Patrick. Lynch
President and Chief Executive Officer
(principal executive officer)
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Matthew C. Wolsfeld, CPA
Chief Financial Officer and Corporate Secretary
(principal financial officer and principal accounting
officer)
|