UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________ FORM 10-Q (Mark One) or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934‐‐ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2022 For the transition period from ________________ to __________________ Commission File Number: 001-11038 ____________________ NORTHERN TECHNOLOGIES INTERN ...

or UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________ FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 2022 (Exact name of registrant as specified in its charter) Delaware 41-0857886 (I.R.S. Employer Identification No.) (State or other jurisdiction of incorporation or organization) 4201 Woodland Road P.O. Box 69 Circle Pines, Minnesota (Address of principal exec ...

Northern Technologies International Corporation (NASDAQ:NTIC) Q4 2022 Earnings Conference Call November 14, 2022 9:00 AM ET Company Participants Patrick Lynch - Chief Executive Officer Matt Wolsfeld - Chief Financial Officer Conference Call Participants Tim Clarkson - Van Clemens Gus Richard - Northland Capital Markets Operator Good day and thank you for standing by. Welcome to NTIC???s Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker ...

PART I—FINANCIAL INFORMATION Details the company's financial statements, management analysis, market risks, and internal controls [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents NTIC's unaudited consolidated financial statements as of May 31, 2022, covering balance sheets, operations, and cash flows [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$85.2 million** from **$74.4 million**, driven by inventories and intangibles, liabilities also rose Consolidated Balance Sheet Highlights (as of May 31, 2022 vs. August 31, 2021) | Balance Sheet Item | May 31, 2022 | August 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $6,123,269 | $7,680,641 | | Inventories | $13,866,229 | $11,114,207 | | Total current assets | $38,968,265 | $33,747,089 | | Goodwill | $4,782,376 | $0 | | Intangible asset, net | $6,029,650 | $0 | | **Total assets** | **$85,185,397** | **$74,370,879** | | Line of credit | $4,700,000 | $0 | | Total current liabilities | $14,241,487 | $8,516,196 | | **Total liabilities** | **$16,509,727** | **$8,620,298** | | **Total equity** | **$68,675,670** | **$65,750,581** | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Nine-month net sales grew **31.5%** to **$53.9 million**, net income reached **$5.7 million** due to a **$3.95 million** remeasurement gain Consolidated Statements of Operations Summary | Metric | Nine Months Ended May 31, 2022 | Nine Months Ended May 31, 2021 | | :--- | :--- | :--- | | Total net sales | $53,906,973 | $40,980,518 | | Gross profit | $16,929,353 | $13,982,936 | | Operating income | $3,534,770 | $6,063,068 | | Remeasurement gain on acquisition | $3,951,550 | $0 | | Net income attributable to NTIC | $5,676,773 | $4,628,890 | | Diluted EPS | $0.59 | $0.47 | Quarterly Performance (Three Months Ended May 31) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Total net sales | $18,964,921 | $15,418,524 | | Gross profit | $6,242,088 | $5,265,942 | | Operating income | $1,822,936 | $2,578,754 | | Net income attributable to NTIC | $1,000,167 | $2,053,916 | | Diluted EPS | $0.11 | $0.21 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Nine-month operating cash flow was **$1.8 million**, investing used **$6.5 million** for Zerust India, resulting in a **$1.6 million** cash decrease Cash Flow Summary (Nine Months Ended May 31) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,778,094 | $1,053,695 | | Net cash used in investing activities | ($6,531,034) | ($399,780) | | Net cash provided by (used in) financing activities | $2,634,650 | ($1,309,609) | | **Net decrease in cash** | **($1,557,372)** | **($522,109)** | - The acquisition of the Zerust India business was the primary use of cash in investing activities, costing **$5,062,003** net of cash acquired[23](index=23&type=chunk) - The company drew **$4,700,000** from its line of credit, which was a major source of financing cash flow[23](index=23&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, COVID-19 impact, Zerust India acquisition gain, segment sales, and corporate debt - **Business Combination:** The company acquired the remaining **50%** of its Indian joint venture, Zerust India, for **$6.25 million** in cash, effective September 1, 2021. This resulted in the recognition of **$4.8 million** in goodwill, **$6.3 million** in customer relationships, and a remeasurement gain of **$3.95 million**[31](index=31&type=chunk)[34](index=34&type=chunk)[39](index=39&type=chunk) - **COVID-19 Impact:** The company continued to be impacted by shipping issues, supply chain disruptions, longer lead times, and raw material cost increases during the first nine months of fiscal 2022[27](index=27&type=chunk) Segment Net Sales (Nine Months Ended May 31) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | ZERUST® net sales | $41,988,394 | $32,882,882 | | Natur-Tec® net sales | $11,918,579 | $8,097,636 | | **Total net sales** | **$53,906,973** | **$40,980,518** | - **Corporate Debt:** The company has a revolving line of credit with PNC Bank, which was temporarily increased to **$7.0 million**. As of May 31, 2022, **$4.7 million** was outstanding, primarily used to fund the Zerust India acquisition[51](index=51&type=chunk)[53](index=53&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 and nine-month fiscal 2022 performance, covering business overview, financial highlights, results, and liquidity [Business Overview](index=25&type=section&id=Business%20Overview) NTIC operates in ZERUST® corrosion prevention and Natur-Tec® bio-based polymer products, serving industrial and environmental markets - The company's primary business is corrosion prevention, marketed mainly under the ZERUST® brand, with a history of over **45 years**[81](index=81&type=chunk) - A key strategic initiative is the expansion of ZERUST® corrosion prevention technologies into the oil and gas industry[84](index=84&type=chunk) - The Natur-Tec® brand offers a portfolio of bio-based and certified compostable polymer resins and finished products intended to replace conventional plastics[81](index=81&type=chunk)[87](index=87&type=chunk) [Financial Overview and Highlights](index=28&type=section&id=Financial%20Overview%20and%20Highlights) Nine-month consolidated net sales grew **31.5%**, driven by Zerust India acquisition, with net income boosted by a **$3.95 million** gain - Consolidated net sales increased **31.5%** for the nine months ended May 31, 2022, positively affected by the Zerust India acquisition and increased demand[102](index=102&type=chunk) - Equity in income from joint ventures decreased by **36.6%** for the nine-month period, primarily because Zerust India is now a consolidated subsidiary and due to lower gross margins at other joint ventures[102](index=102&type=chunk) - Net income for the nine-month period included a **$3,951,550** gain from the remeasurement of the previously held equity interest in Zerust India[106](index=106&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Nine-month net sales rose **31.5%** to **$53.9 million**, COGS increased to **68.6%**, and equity income from JVs decreased **36.6%** Net Sales by Segment (Nine Months Ended May 31) | Segment | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Total ZERUST® sales | $41,988,394 | $32,882,882 | +27.7% | | Total Natur-Tec® sales | $11,918,579 | $8,097,636 | +47.2% | | **Total net sales** | **$53,906,973** | **$40,980,518** | **+31.5%** | - Cost of goods sold as a percentage of net sales increased to **68.6%** for the nine-month period from **65.9%** in the prior year, primarily due to price increases on raw materials, labor, and shipping[113](index=113&type=chunk) - Equity in income from joint ventures decreased **36.6%** to **$3.7 million** for the nine-month period, mainly because Zerust India is no longer accounted for under the equity method post-acquisition[114](index=114&type=chunk) - Total operating expenses increased by **15.5%** for the nine-month period, with the Zerust India acquisition contributing **$1.7 million** in incremental expenses[102](index=102&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital was **$24.7 million**, with **$4.7 million** outstanding on the credit line, temporarily increased to **$7.0 million** - Working capital was **$24.7 million** as of May 31, 2022, compared to **$25.2 million** as of August 31, 2021[129](index=129&type=chunk) - The company had **$4.7 million** outstanding on its revolving line of credit as of May 31, 2022, primarily used to fund the Zerust India acquisition. The line of credit was temporarily increased from **$5.0 million** to **$7.0 million**[130](index=130&type=chunk) - The company terminated its joint venture in Russia in May 2022, which is not expected to have a material adverse effect on financial results[132](index=132&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency, commodity prices, and interest rates, with key exposures to Euro, Yen, and plastic resins - The company is exposed to foreign currency exchange rate risk, with principal exposures to the Euro, Japanese Yen, Indian Rupee, Chinese Renminbi, South Korean Won, and English Pound against the U.S. Dollar[151](index=151&type=chunk)[165](index=165&type=chunk) - Commodity price exposure exists for raw materials, primarily various plastic resins[152](index=152&type=chunk)[166](index=166&type=chunk) - Interest rate risk is present due to the variable rate on the revolving line of credit, which had an outstanding balance of **$4,700,000** as of May 31, 2022[152](index=152&type=chunk)[166](index=166&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal controls beyond Zerust India integration - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[167](index=167&type=chunk) - No material changes were made to internal control over financial reporting during the quarter, except for changes to integrate the newly acquired Zerust India business[168](index=168&type=chunk) PART II—OTHER INFORMATION Covers legal proceedings, risk factors, equity sales, and other material information [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions, but management expects no material adverse effect on financial results - The company is subject to various claims and legal actions in the ordinary course of business, but management does not expect them to have a material impact on the company's financial condition[77](index=77&type=chunk)[169](index=169&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) New risks include the Russia-Ukraine conflict, potentially impacting operations, macroeconomic conditions, and oil prices - The ongoing conflict between Russia and Ukraine is identified as a new risk factor that may adversely affect the company's business and results of operations[170](index=170&type=chunk) - The conflict could heighten other risks, including adverse macroeconomic conditions, increased cybersecurity threats, supply chain disruptions, and capital market volatility[171](index=171&type=chunk) - The sale of ZERUST® products to the oil and gas industry is dependent on oil prices, which may be impacted by the Russia-Ukraine conflict and could cause customers to halt projects or decrease capital budgets[172](index=172&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity securities were issued or shares repurchased in Q3 fiscal 2022, with **$2.64 million** remaining for repurchase - No shares were repurchased during the third quarter of fiscal 2022[174](index=174&type=chunk)[175](index=175&type=chunk) - As of May 31, 2022, **$2,640,548** remained available for repurchase under the company's stock repurchase program[176](index=176&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) The company temporarily increased its revolving line of credit from **$5.0 million** to **$7.0 million** until August 16, 2022 - On May 20, 2022, the company's line of credit was temporarily increased from **$5,000,000** to **$7,000,000** until August 16, 2022[180](index=180&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO/CFO certifications, the amended credit note, and Inline XBRL financial statements - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and the Amended and Restated Revolving Line of Credit Note (10.2)[182](index=182&type=chunk)

Financial Data and Key Metrics Changes - Total consolidated net sales increased 23% to nearly $19 million for Q3 2022 compared to Q3 2021, driven by strong demand and contributions from ZERUST India [8][15] - Gross margin for Q3 2022 was 32.9%, the highest this fiscal year, compared to 34.2% in the prior fiscal period [19] - Net income for Q3 2022 was $1 million, or $0.11 per diluted share, down from $2.1 million or $0.21 per share in Q3 2021 [20] Business Line Data and Key Metrics Changes - Natur-Tec's net sales increased by 48.6% to $4.5 million [8] - ZERUST Oil & Gas net sales rose by 47% [8] - ZERUST Industrial net sales increased by 22.9% [8] - Joint ventures' total net sales decreased by 16.8% to $26.6 million due to geopolitical uncertainties and changes in accounting treatment for ZERUST India [9] Market Data and Key Metrics Changes - NTIC China subsidiary's net sales decreased by 10.2% to $3.6 million due to COVID-19 lockdowns [10] - Sales in China were approximately $1 million short of expectations for Q3 2022, but June showed improvement post-lockdown [27] Company Strategy and Development Direction - The company is optimistic about long-term growth in the Natur-Tec bioplastics business, driven by increasing demand for compostable products [13] - NTIC plans to continue addressing inflationary pressures and expects profitability to improve in Q4 2022 [19][22] - The company is focusing on expanding its oil and gas solutions globally, with strong demand across various regions [11][47] Management's Comments on Operating Environment and Future Outlook - Management noted that while economic uncertainty has increased, they believe fiscal 2022 will be a good year for sales and profitability [22] - The easing of COVID-19 restrictions in China is expected to benefit sales in the short term, with a potential for China to become the largest market [10][27] Other Important Information - Total operating expenses for Q3 2022 were $7.1 million, a 12.7% increase due to the ZERUST India acquisition and higher selling expenses [16] - Working capital as of May 31, 2022, was $24.7 million, including $6.1 million in cash [21] Q&A Session Summary Question: Insights on the oil and natural gas business - Management indicated strong demand and greater installations, with more orders from existing and new customers [25] Question: Impact of lockdowns in China - Lockdowns have recently been lifted, and management expects a gradual return to normalcy over the next six months [26] Question: Response to plastic bans in India and California - Management anticipates increased sales due to new legislation, but implementation and enforcement remain concerns [29][30] Question: Competitive position of Natur-Tec - The company differentiates its products by modifying compostable resins for better processing and mechanical properties, attracting large multinational customers [33] Question: Pricing strategy amid inflation - Management is negotiating price increases on a case-by-case basis and has been able to implement them in a timely manner [39][40] Question: Supply chain constraints for Natur-Tec - There were some constraints in Q3, but expectations for Q4 are strong with adequate inventory and raw materials [46] Question: Geographic strength in oil and gas - Management reported strong orders from various regions, including India, the Middle East, and Europe [47]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to __________________ Commission File Number: 001-11038 ____________________ NORTHERN TECHNOLOGIES INTERNAT ...

Financial Data and Key Metrics Changes - Total consolidated net sales increased 31% to a record $16.7 million for the second quarter of fiscal 2022 compared to the same period in the prior fiscal year [8][20] - Net income for the second quarter was $183,000, or $0.02 per diluted share, down from $1.3 million, or $0.13 per diluted share in the prior year [24] - Gross profit as a percentage of net sales decreased to 29.8% from 33.3% due to increased raw material and labor costs [23] Business Line Data and Key Metrics Changes - ZERUST Oil and Gas net sales increased by 60.1%, Natur-Tec net sales increased by 45.3%, and ZERUST Industrial net sales increased by 24.1% [9] - Natur-Tec sales were $3.6 million, reflecting a return to pre-pandemic demand patterns, particularly in North America and India [14] - The joint ventures reported total net sales of $24.6 million, a decrease of 15.3% compared to the same period last fiscal year [10] Market Data and Key Metrics Changes - NTIC China sales decreased by 6.3% to $4.1 million, impacted by COVID-19 related lockdowns [11] - The company anticipates that China will likely become its largest geographic market in the coming years despite current volatility [11] Company Strategy and Development Direction - The company is focused on passing increased costs onto customers to improve profitability, with expectations of noticeable improvements in operating profits during the second half of fiscal 2022 [7] - The company plans to navigate near-term challenges related to expenses, raw materials, and supply chain issues while maintaining a strong outlook for sales growth and profitability [26][27] Management Comments on Operating Environment and Future Outlook - Management noted that inflation has significantly impacted raw material and labor costs, affecting gross margins and operating profits [6][23] - Despite challenges from the Ukraine conflict and ongoing COVID-19 impacts, management believes sales and profitability will improve throughout the remainder of the fiscal year [18][27] Other Important Information - The company declared a quarterly cash dividend of $0.07 per common share payable on February 16, 2022 [26] - The acquisition of ZERUST India has resulted in increased net sales and operating expenses, affecting financial results for the remainder of fiscal 2022 [22] Q&A Session Summary Question: Have you had resistance from clients regarding price increases? - Management indicated that prices are sticking, and clients have agreed to the necessary increases due to rising raw material costs [31] Question: How big could the oil and gas market potentially become? - Management believes they are currently capturing about 3% of the potential market, which has the potential to grow significantly [32] Question: What is the typical customer for Natur-Tec products? - Typical customers include universities, schools, office parks, and stadiums with food waste diversion programs [35] Question: What differentiates Natur-Tec from competitors? - The patented technology allows Natur-Tec to produce products with higher mechanical strength at a lower cost than competitors [37] Question: What is the impact of goodwill and intangible assets on future earnings? - There will be an ongoing amortization expense of about $100,000 per quarter for 15 years due to the acquisition of ZERUST India [38] Question: How has the China business been affected by recent lockdowns? - The business has slowed down significantly, with March revenue down about 30% compared to expectations [52] Question: What is the outlook for supply disruptions in PLA? - Management indicated that supply disruptions are due to delays in starting manufacturing at several PLA plants, with expectations for improvement in two to three quarters [47]

[PART I—FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the quarter ended November 30, 2021, detailing the impact of the Zerust India acquisition [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$83.2 million** driven by the Zerust India acquisition, with total equity rising to **$69.6 million** Consolidated Balance Sheet Highlights (as of Nov 30, 2021 vs. Aug 31, 2021) | Account | November 30, 2021 | August 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $37,265,090 | $33,747,089 | | **Total Assets** | $83,244,745 | $74,370,879 | | **Total Current Liabilities** | $11,389,728 | $8,516,196 | | **Total Liabilities** | $13,613,901 | $8,620,298 | | **Total Equity** | $69,630,844 | $65,750,581 | - The acquisition of Zerust India resulted in the recognition of **$4.8 million** in Goodwill and **$6.3 million** in a net Intangible asset, which were not present on the August 31, 2021 balance sheet[13](index=13&type=chunk) [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Net sales grew **42.4%** to **$18.2 million**, while a **$4.0 million** remeasurement gain from the Zerust India acquisition significantly boosted net income to **$4.5 million** Consolidated Statement of Operations (Three Months Ended Nov 30) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Net Sales | $18,193,413 | $12,779,112 | 42.4% | | Gross Profit | $5,702,930 | $4,465,791 | 27.7% | | Operating Income | $1,266,611 | $1,716,577 | -26.2% | | Remeasurement Gain on Acquisition | $3,951,550 | $0 | N/A | | Net Income Attributable to NTIC | $4,493,759 | $1,262,399 | 256.0% | | Diluted EPS | $0.46 | $0.13 | 253.8% | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$3.3 million**, while investing activities used **$5.4 million** primarily for the Zerust India acquisition Cash Flow Summary (Three Months Ended Nov 30) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,319,024 | $1,601,120 | | Net cash used in investing activities | ($5,429,590) | ($1,177,869) | | Net cash provided by financing activities | $1,834,611 | $36,192 | | **Net increase in cash and cash equivalents** | **$366,924** | **$550,309** | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail the Zerust India acquisition's **$4.0 million** gain, segment sales growth, and the revolving credit facility extension - The company acquired the remaining **50%** ownership of its Indian joint venture, Harita-NTI Limited (Zerust India), for **$6.25 million** in cash, effective September 1, 2021. As a result, Zerust India is now a consolidated subsidiary[27](index=27&type=chunk) - A gain of **$3,951,550** was recognized from remeasuring the previously held **50%** equity interest in Zerust India to its fair value upon acquisition[35](index=35&type=chunk) - On January 4, 2022, the company extended its revolving line of credit with PNC Bank to January 7, 2023. The credit limit will be decreased from **$5.0 million** to **$3.0 million** beginning February 23, 2022[75](index=75&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the **42.4%** net sales increase, segment performance, gross margin pressures, and the impact of the Zerust India acquisition on net income [Business Overview and Recent Acquisition](index=23&type=section&id=Business%20Overview%20and%20Recent%20Acquisition) NTIC's core business segments are ZERUST® and Natur-Tec®, with the recent **$6.25 million** acquisition of Zerust India enhancing its market position - The company's primary business is corrosion prevention (ZERUST®), with a secondary focus on bio-based and compostable plastics (Natur-Tec®)[78](index=78&type=chunk) - The acquisition of the remaining **50%** of Zerust India was completed for **$6.25 million**, funded by cash and borrowings. Zerust India is now a consolidated subsidiary[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - The acquisition added **$2,452,812** in net sales and **$292,528** in net income for the quarter and resulted in a one-time gain of **$3,951,550** from remeasuring the previously held equity interest[89](index=89&type=chunk)[90](index=90&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Consolidated net sales increased **42.4%** to **$18.2 million**, driven by segment growth, though gross margin declined due to higher costs, and equity income decreased due to the Zerust India consolidation Net Sales by Segment (Q1 FY2022 vs Q1 FY2021) | Segment | Q1 FY2022 | Q1 FY2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total ZERUST® sales | $14,423,785 | $10,220,551 | $4,203,234 | 41.1% | | Total Natur-Tec® sales | $3,769,628 | $2,558,561 | $1,211,067 | 47.3% | | **Total net sales** | **$18,193,413** | **$12,779,112** | **$5,414,301** | **42.4%** | - Cost of goods sold as a percentage of net sales increased to **68.7%** from **65.1%** in the prior year, primarily due to price increases on raw materials and higher labor costs[118](index=118&type=chunk) - Equity in income from joint ventures decreased by **24.7%** to **$1.4 million**, mainly because Zerust India is now a consolidated subsidiary and its income is no longer accounted for under the equity method[119](index=119&type=chunk) - Total operating expenses increased by **19.6%** to **$7.1 million**, driven by incremental expenses from the Zerust India acquisition and increased personnel and travel costs[110](index=110&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital stood at **$25.9 million** with **$8.0 million** in cash, and the company utilized **$2.5 million** of its revolving credit facility - Working capital was **$25.9 million** as of November 30, 2021, with cash and cash equivalents of **$8.0 million**[132](index=132&type=chunk) - The company has a revolving line of credit with PNC Bank, which was increased to **$5.0 million**. As of November 30, 2021, **$2.5 million** was outstanding[133](index=133&type=chunk) - A cash dividend of **$0.07 per share** was paid on November 17, 2021. The company had previously suspended its dividend in April 2020 before reinstating it in January 2021[147](index=147&type=chunk) - No shares were repurchased during the quarter. **$2,640,548** remains available for repurchase under the authorized plan[146](index=146&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include unhedged foreign currency exposure, commodity price fluctuations, and variable interest rates on its credit facility - The company is exposed to foreign currency exchange rate risk, with principal exposures to the Euro, Japanese Yen, Indian Rupee, Chinese Renminbi, South Korean Won, and English Pound[168](index=168&type=chunk) - NTIC does not hedge against its foreign currency exchange rate risk[168](index=168&type=chunk) - The company is exposed to commodity price changes, primarily for a variety of plastic resins[169](index=169&type=chunk) - Interest rate risk exists due to borrowings on the revolving line of credit, which bear interest at a variable rate (daily LIBOR plus **2.50%**)[169](index=169&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective, with no material changes to internal controls except for the integration of Zerust India - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[170](index=170&type=chunk) - No material changes were made to internal control over financial reporting, except for changes to begin integrating Zerust India's internal controls[171](index=171&type=chunk) [PART II—OTHER INFORMATION](index=42&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal actions, with management assessing no material impact on financial results - The company is subject to various claims and legal actions in the ordinary course of business[70](index=70&type=chunk) - Management believes that any potential liability from these legal matters will not have a material impact on the company's financial condition[70](index=70&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section is inapplicable as the company qualifies as a smaller reporting company - This item is inapplicable as the company is a smaller reporting company[174](index=174&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity securities were issued, and no shares were repurchased under the stock repurchase program during the quarter - No unregistered sales of equity securities occurred during the three months ended November 30, 2021[175](index=175&type=chunk) - The company did not repurchase any of its shares during the quarter[177](index=177&type=chunk) - As of November 30, 2021, up to **$2,640,548** remained available for repurchase under the company's stock repurchase program[180](index=180&type=chunk) [Other Information](index=43&type=section&id=Item%205.%20Other%20Information) A revision to the Zerust India acquisition's preliminary purchase price allocation was disclosed, impacting goodwill, deferred tax liability, and intangible assets - The preliminary purchase price allocation for the Zerust India acquisition was revised after the Q1 fiscal 2022 earnings release[181](index=181&type=chunk) - The revision resulted in a **$913,000** increase in goodwill, a **$774,000** increase in deferred tax liability, and a **$139,000** decrease in intangible assets compared to the figures in the earnings release[181](index=181&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including loan agreements, CEO/CFO certifications, and Inline XBRL financial statements - Exhibits filed include the Amended and Restated Loan Agreement with PNC Bank, CEO/CFO certifications (Rule 13a-14(a) and Section 906), and Inline XBRL data[183](index=183&type=chunk)

Northern Technologies International Corporation (NASDAQ:NTIC) Q1 2022 Earnings Conference Call January 6, 2022 9:00 AM ET Company Participants Patrick Lynch - President and Chief Executive Officer Matt Wolsfeld - Chief Financial Officer Conference Call Participants Tim Clarkson - Van Clemens Scott Billeadeau - Walrus Partners Gus Richard - Northland Jim Dowling - Jefferies Operator Good day and thank you for standing by. Welcome to the NTIC Conference Call and Webcast. [Operator Instructions] As part of the ...

Part I [Business Overview](index=5&type=section&id=Item%201.%20BUSINESS) NTIC develops and markets ZERUST® corrosion prevention and Natur-Tec® bio-based products globally, expanding into oil and gas and strengthening bioplastics market presence [Overview](index=5&type=section&id=Overview) NTIC operates globally, offering ZERUST® corrosion prevention and Natur-Tec® bio-based products, including specialized solutions for oil and gas - NTIC operates globally in over 65 countries, offering ZERUST® corrosion prevention and Natur-Tec® bio-based products[17](index=17&type=chunk) - ZERUST® products include plastic/paper packaging, liquids, coatings, rust removers, cleaners, diffusers, and engineered solutions for the oil and gas industry[18](index=18&type=chunk) - Natur-Tec® biopolymer resin compounds are certified fully biodegradable and used for various finished products like bags and foodservice items[22](index=22&type=chunk) [Impact of COVID-19 Pandemic and Worldwide Supply Chain Disruptions](index=6&type=section&id=Impact%20of%20COVID-19%20Pandemic%20and%20Worldwide%20Supply%20Chain%20Disruptions) The COVID-19 pandemic and supply chain disruptions negatively impacted NTIC's fiscal 2021 operations and are expected to continue - The COVID-19 pandemic negatively impacted the global economy, disrupted supply chains, and caused financial market volatility[24](index=24&type=chunk) - In fiscal year 2021, NTIC experienced shipping issues (freight container shortages, delays, increased costs) and supply chain issues (longer lead times, raw material cost increases)[24](index=24&type=chunk) - These disruptions are expected to continue in fiscal 2022, potentially having a material adverse effect on NTIC's business, operating results, and financial condition[25](index=25&type=chunk) [NTIC's Subsidiaries and Joint Venture Network](index=6&type=section&id=NTIC%27s%20Subsidiaries%20and%20Joint%20Venture%20Network) NTIC operates through 10 subsidiaries and 18 joint ventures, receiving fees and dividends, with Harita-NTI becoming wholly-owned - NTIC holds ownership interests in **10** operating subsidiaries and participates in **18** active joint venture arrangements across North America, South America, Europe, and Asia[26](index=26&type=chunk)[28](index=28&type=chunk) - Harita-NTI Limited became a wholly-owned subsidiary as of September 1, 2021, and its results will be fully consolidated thereafter[27](index=27&type=chunk)[31](index=31&type=chunk) - NTIC receives funds from joint ventures as fees for services (flat fee or percentage of sales) and dividend distributions, with EXCOR (Germany) being individually significant to consolidated assets and income[30](index=30&type=chunk)[32](index=32&type=chunk) [Products](index=8&type=section&id=Products) ZERUST® sales increased while Natur-Tec® sales decreased in fiscal 2021, with both segments offering diverse product lines Consolidated Net Sales by Product Segment (Fiscal 2021 vs. 2020) | Product Segment | Fiscal 2021 Sales ($) | Fiscal 2020 Sales ($) | Change ($) | Change (%) | | :---------------- | :------------------ | :------------------ | :--------- | :--------- | | ZERUST® Solutions | $45,554,434 | $34,474,535 | $11,079,899 | 32.1% | | Natur-Tec® Products | $10,939,385 | $13,164,156 | $(2,224,771)| (16.9)% | | **Total Net Sales** | **$56,493,819** | **$47,638,691** | **$8,855,128** | **18.6%** | - ZERUST® corrosion prevention solutions include plastic/paper packaging, liquids/coatings, rust removers/cleaners, diffusers, and specialized engineered solutions for the oil and gas industry[35](index=35&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk) - Natur-Tec® bio-based and compostable plastics are manufactured using proprietary technologies, optimized for various applications (film, extrusion, injection molding), and certified biodegradable[22](index=22&type=chunk)[48](index=48&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) [Sales, Marketing, and Distribution](index=12&type=section&id=Sales%2C%20Marketing%2C%20and%20Distribution) NTIC utilizes direct sales, distributors, and international JVs for ZERUST® and Natur-Tec® products, with growth anticipated from plastic bans - ZERUST® products are sold in the U.S. through a direct sales force and independent distributors, with international sales via subsidiaries and joint ventures[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - Sales to the oil and gas industry involve long cycles and strategic partnerships, with direct marketing and trade show participation[63](index=63&type=chunk) - Natur-Tec® products are marketed in North America through distributors and direct sales, and internationally through subsidiaries (India, Sri Lanka, China) and distributors, with anticipated growth due to bans on single-use plastics in India and China[64](index=64&type=chunk)[65](index=65&type=chunk) [Competition](index=13&type=section&id=Competition) NTIC faces regional competition for ZERUST® and established players for Natur-Tec®, competing on innovation, quality, and price - NTIC faces regional competition for ZERUST® products, competing on innovation, quality, reliability, support, service, reputation, and price, leveraging technical innovation and value-added services[67](index=67&type=chunk) - Competition in the oil and gas industry includes established players and new suppliers, with primary barriers to entry being conservatism and complexity of buying organizations[68](index=68&type=chunk) - Natur-Tec® products compete with established companies having greater resources, focusing on performance, brand awareness, distribution, product availability, shelf life, and price, often with lower margins due to price competition and supply constraints for base resins[69](index=69&type=chunk) [Research and Development](index=13&type=section&id=Research%20and%20Development) NTIC's R&D focuses on product improvement, new development, and cost reduction, with projected spending of $4.4-$4.8 million in fiscal 2022 - NTIC's R&D focuses on improving existing products, developing new ones, reducing costs, and enhancing quality assurance, conducted at facilities in Minnesota, Ohio, and Germany[70](index=70&type=chunk) - NTIC anticipates spending between **$4.4 million** and **$4.8 million** on R&D activities in fiscal 2022[71](index=71&type=chunk) [Intellectual Property Rights](index=14&type=section&id=Intellectual%20Property%20Rights) NTIC protects its technology and brands globally through patents, trademarks, and confidentiality agreements for proprietary know-how - NTIC protects its technology through patents and trademarks globally, owning several patents in corrosion inhibiting technologies and other areas, and maintaining an extensive trademark portfolio[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) - Employees, consultants, and advisors with access to confidential information are required to execute confidentiality agreements to protect trade secrets and proprietary know-how[76](index=76&type=chunk) [Manufacturing](index=14&type=section&id=Manufacturing) NTIC's ZERUST® and Natur-Tec® products are manufactured by sub-contractors and in-house, with the company being ISO 9001 certified - ZERUST® products are primarily manufactured by independent sub-contractors under trade secrecy/license agreements, with select liquids and powders produced at NTIC's Minnesota headquarters[77](index=77&type=chunk) - Natur-Tec® resin compounds and finished products are produced in India, China, Malaysia, and the United States, with finished products manufactured by select sub-contractors using NTIC's resins[78](index=78&type=chunk) - NTIC is ISO 9001 certified, ensuring product consistency and providing competitive advantages[79](index=79&type=chunk) [Availability of Raw Materials](index=15&type=section&id=Availability%20of%20Raw%20Materials) Natur-Tec® faces limited raw material suppliers and cost increases, with sole-sourced materials posing supply interruption risks - NTIC typically does not carry excess raw materials, but Natur-Tec® products face limited suppliers for base resins, leading to cost increases and supply issues, exacerbated by COVID-19 and extreme weather in fiscal 2021[80](index=80&type=chunk) - A few raw materials for ZERUST® and Natur-Tec® are sole-sourced, posing a risk of supply interruption if alternative suppliers cannot be found quickly[81](index=81&type=chunk) [Backlog](index=15&type=section&id=Backlog) NTIC's order backlog increased by **$599,000** (16.7%) in fiscal 2021, with sales expected in the first quarter of fiscal 2022 Order Backlog (as of August 31) | Year | Backlog Amount ($) | | :--- | :------------- | | 2021 | $4,192,000 | | 2020 | $3,593,000 | - The backlog increased by **$599,000** (**16.7%**) from fiscal 2020 to fiscal 2021, with sales expected in Q1 fiscal 2022[82](index=82&type=chunk) [Governmental Regulation](index=15&type=section&id=Governmental%20Regulation) ZERUST® and Natur-Tec® products comply with U.S. FDA regulations for food contact materials and packaging - ZERUST® ICT® packaging products are approved by the U.S. FDA for use with metal food containers and processing equipment[83](index=83&type=chunk) - Natur-Tec® resin compounds and finished products comply with FDA regulations for substances used in food packaging materials[83](index=83&type=chunk) [Employees](index=15&type=section&id=Employees) As of August 31, 2021, NTIC had **78** full-time employees in North America and **64** in subsidiaries, with **58** added from Harita-NTI acquisition - As of August 31, 2021, NTIC had **78** full-time employees in North America (sales/marketing, R&D, administration, production) and **64** employees across its wholly-owned/majority-owned subsidiaries in China, Brazil, and India[84](index=84&type=chunk) - Effective September 1, 2021, the acquisition of Harita-NTI Limited added **58** full-time employees in India[84](index=84&type=chunk) [Health, Safety and Environment](index=15&type=section&id=Health%2C%20Safety%20and%20Environment) NTIC is committed to Health, Safety, and Environment (HSE), guided by a policy to ensure quality management and prevent harm - NTIC is committed to HSE, guided by a policy statement to ensure activities align with quality management standards and HSE programs, prevent harm, and protect health and safety[85](index=85&type=chunk)[86](index=86&type=chunk) [Diversity and Inclusion](index=16&type=section&id=Diversity%20and%20Inclusion) NTIC's Human Rights Policy aligns with the UN Global Compact, promoting a discrimination-free environment and diverse workforce - NTIC's Human Rights Policy aligns with the United Nations Global Compact, committing to a discrimination-free environment, equal opportunities, and a diverse workforce[87](index=87&type=chunk) [Education](index=16&type=section&id=Education) NTIC offers educational assistance and training programs to enhance employee knowledge and support work-related education - NTIC offers an educational assistance benefit program for eligible full-time employees pursuing work-related education and arranges training programs to enhance technical, commercial, or financial knowledge[88](index=88&type=chunk) [Compensation and Benefits](index=16&type=section&id=Compensation%20and%20Benefits) NTIC's compensation program aims to attract and retain talent with competitive pay and benefits based on local markets - NTIC's compensation program aims to attract and retain talent with competitive pay and benefits based on local markets and job descriptions, ensuring fair and living wages[89](index=89&type=chunk) [Values and Ethics](index=16&type=section&id=Values%20and%20Ethics) NTIC operates under a Code of Ethics, requiring employees, officers, and directors to uphold honesty and the highest ethical business standards - NTIC operates under a Code of Ethics requiring employees, officers, and directors to uphold honesty, trustworthiness, conscientiousness, and the highest ethical business standards, abiding by applicable laws[90](index=90&type=chunk) [Available Information](index=16&type=section&id=Available%20Information) NTIC makes its annual, quarterly, and current reports available free of charge on its website and through the SEC's website - NTIC, a Delaware corporation, makes its annual, quarterly, and current reports available free of charge on its website and through the SEC's website[91](index=91&type=chunk)[92](index=92&type=chunk) [Forward-Looking Statements](index=17&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to safe harbor provisions, with actual results potentially differing due to various uncertainties - The report contains forward-looking statements subject to safe harbor provisions, addressing future activities, events, or developments related to NTIC's financial condition, operations, and business[94](index=94&type=chunk) - Key uncertainties and factors that could cause actual results to differ include the impact of COVID-19, supply chain disruptions, economic conditions, variability in sales to the oil and gas industry, and risks associated with international operations and joint ventures[94](index=94&type=chunk)[97](index=97&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, as actual results may differ materially due to various described and unanticipated factors[96](index=96&type=chunk) [Information About Our Executive Officers](index=21&type=section&id=INFORMATION%20ABOUT%20OUR%20EXECUTIVE%20OFFICERS) This section provides biographical information for NTIC's executive and corporate officers as of November 15, 2021, detailing their positions and backgrounds Executive Officers (as of November 15, 2021) | Name | Age | Position | | :------------ | :-- | :----------------------------- | | G. Patrick Lynch | 54 | President and Chief Executive Officer | | Matthew C. Wolsfeld | 47 | Chief Financial Officer and Corporate Secretary | Other Corporate Officers (as of November 15, 2021) | Name | Age | Position | | :------------ | :-- | :------------------------------------- | | Vineet R. Dalal | 52 | VP & Director – Global Market Development – Natur-Tec® | | Gautam Ramdas | 48 | VP & Director – Global Market Development – Oil & Gas | | Brian Haglund | 37 | Vice President of Operations – North America | [Risk Factors](index=23&type=page&id=Item%201A.%20RISK%20FACTORS) NTIC faces material risks from global economic weaknesses, COVID-19, supply chain disruptions, JV dependence, competition, international operations, and regulatory compliance - Weakness in global economies, particularly in the U.S., Europe, India, and China, and in the automotive industry, can negatively impact NTIC's business and operating results[109](index=109&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - The COVID-19 pandemic and persistent worldwide supply chain disruptions are expected to continue adversely affecting NTIC's business, increasing costs, and potentially interrupting manufacturing and sales[109](index=109&type=chunk)[115](index=115&type=chunk)[118](index=118&type=chunk) - NTIC's reliance on joint ventures for liquidity and earnings, and on key suppliers for raw materials, exposes it to risks of interrupted supply, increased costs, and fluctuations in equity income[109](index=109&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - International operations carry risks such as foreign currency fluctuations, political instability, trade regulation changes, and difficulties in enforcing intellectual property rights[109](index=109&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[149](index=149&type=chunk) - Intense competition in all product lines, the need for continuous product enhancement, and the inherent risks of expanding into new markets (like oil and gas for ZERUST® and bioplastics for Natur-Tec®) could harm operating results[111](index=111&type=chunk)[151](index=151&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) [Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) This section indicates no unresolved staff comments from the SEC [Properties](index=36&type=section&id=Item%202.%20PROPERTIES) NTIC owns facilities in Minnesota and Ohio, leases international spaces, and NTIC China acquired a new Shanghai headquarters effective February 2022 - NTIC owns its main facilities in Circle Pines, Minnesota, and Beachwood, Ohio, used for offices, production, R&D, laboratory, and warehouse space[190](index=190&type=chunk) - International subsidiaries in Brazil, India, Mexico, and China lease office, warehouse, and laboratory space[191](index=191&type=chunk) - NTIC China acquired an industrial building in Shanghai in July 2021 for approximately **$5.1 million**, with an additional **$1.6 million** anticipated for renovations, to serve as its new corporate headquarters starting February 2022[191](index=191&type=chunk)[273](index=273&type=chunk) [Legal Proceedings](index=36&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) Information on NTIC's legal proceedings is incorporated by reference from Note 15 to its consolidated financial statements - NTIC is subject to various claims and legal actions in the ordinary course of business, with management's opinion that current liabilities will not materially affect financial results[425](index=425&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to NTIC Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) NTIC's common stock trades on Nasdaq, reinstated quarterly dividends in fiscal 2021, and has **$2.64 million** remaining in its stock repurchase program - NTIC's common stock is listed on the Nasdaq Global Market under the symbol 'NTIC'[196](index=196&type=chunk) Cash Dividends Declared (Fiscal 2021) | Declaration Date | Amount ($) | Record Date | Payable Date | | :--------------- | :--------- | :------------- | :------------- | | January 15, 2021 | 0.065 | February 3, 2021 | February 17, 2021 | | April 23, 2021 | 0.065 | May 5, 2021 | May 19, 2021 | | July 21, 2021 | 0.065 | August 4, 2021 | August 18, 2021 | - As of August 31, 2021, **$2,640,548** remained available for repurchase under NTIC's stock repurchase program, with no shares repurchased in fiscal 2021 or 2020[199](index=199&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk) [Reserved](index=37&type=section&id=Item%206.%20%5BRESERVED%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes NTIC's fiscal 2021 financial condition and results, highlighting increased net sales, joint venture income, and net income, while addressing COVID-19 and supply chain impacts [Business Overview](index=38&type=section&id=Business%20Overview) NTIC's core business segments are ZERUST® and Natur-Tec®, with strategic initiatives focused on expanding into oil and gas and strengthening bioplastics distribution - NTIC's core business segments are ZERUST® corrosion prevention and Natur-Tec® bio-based/compostable products, marketed globally through various channels[202](index=202&type=chunk) - Strategic initiatives include expanding ZERUST® into the oil and gas industry and strengthening the Natur-Tec® bioplastics distribution network[206](index=206&type=chunk)[208](index=208&type=chunk) [NTIC's Subsidiaries and Joint Venture Network](index=39&type=section&id=NTIC%27s%20Subsidiaries%20and%20Joint%20Venture%20Network) NTIC operates through 10 consolidated subsidiaries and 19 equity-method joint ventures, generating revenue from fees and dividend distributions - NTIC has **10** operating subsidiaries (fully consolidated, except Harita-NTI Limited from Sept 1, 2021) and **19** active joint ventures, accounted for using the equity method[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - Revenue from joint ventures includes fees for services (flat or percentage of sales) and dividend distributions, with profitability subject to quarterly variability[211](index=211&type=chunk) [Impact of the COVID-19 Pandemic](index=40&type=section&id=Impact%20of%20the%20COVID-19%20Pandemic) The COVID-19 pandemic caused global economic slowdown, supply chain disruptions, and softened demand in fiscal 2021, with impacts expected to persist - The COVID-19 pandemic caused global economic slowdown, supply chain disruptions, and softened demand in various regions and markets during fiscal 2021, adversely affecting operating results and financial condition[213](index=213&type=chunk)[218](index=218&type=chunk) - NTIC implemented safety measures and continued operations as an 'essential business,' though facilities operated at reduced capacity due to social distancing and decreased demand[215](index=215&type=chunk)[216](index=216&type=chunk) - Supply shortages, raw material price increases, and increased shipping costs are expected to persist into fiscal 2022[218](index=218&type=chunk) [Worldwide Supply Chain Disruptions](index=41&type=section&id=Worldwide%20Supply%20Chain%20Disruptions) Supply chain disruptions led to longer lead times, increased raw material and shipping costs in fiscal 2021, with these issues expected to continue - Supply chain disruptions, initiated by COVID-19, continued in fiscal 2021, leading to longer raw material lead times, new supplier searches, and increased raw material costs[220](index=220&type=chunk) - Significantly longer shipping times and higher container prices due to ocean freight capacity issues are expected to continue in fiscal 2022, potentially impacting NTIC's financial results[220](index=220&type=chunk) [Financial Overview](index=41&type=section&id=Financial%20Overview) NTIC's fiscal 2021 saw increased net sales and net income, driven by ZERUST® and joint ventures, despite a decrease in working capital Key Financial Highlights (Fiscal 2021 vs. 2020) | Metric | Fiscal 2021 ($) | Fiscal 2020 ($) | Change ($) | Change (%) | | :-------------------------------------- | :--------------- | :--------------- | :------------- | :--------- | | Consolidated Net Sales | $56,493,819 | $47,638,691 | $8,855,128 | 18.6% | | ZERUST® Sales | $45,554,434 | $34,474,535 | $11,079,899 | 32.1% | | Natur-Tec® Sales | $10,939,385 | $13,164,156 | $(2,224,771) | (16.9)% | | Cost of Goods Sold (% of Net Sales) | 65.4% | 66.4% | -1.0% | | | Equity in Income from Joint Ventures | $7,465,214 | $4,270,327 | $3,194,887 | 74.8% | | Total Operating Expenses | $24,679,626 | $23,324,453 | $1,355,173 | 5.8% | | Net Income (Loss) Attributable to NTIC | $6,281,238 | $(1,337,709) | $7,618,947 | N/A | | Diluted EPS | $0.64 | $(0.15) | $0.79 | N/A | | Working Capital (as of Aug 31) | $25,230,893 | $27,104,746 | $(1,873,853) | (6.9)% | - The increase in net income was primarily due to increased global demand from COVID-19 recovery and higher income from joint venture operations[226](index=226&type=chunk) - Working capital decreased due to property and equipment purchases, partially offset by increased dividends from joint ventures and receivable collections[227](index=227&type=chunk)[257](index=257&type=chunk) [Sales and Expense Components](index=42&type=section&id=Sales%20and%20Expense%20Components) NTIC's sales are categorized by direct and joint venture channels, with revenue recognized upon shipment and expenses including COGS, JV income, and operating costs - Net sales are categorized into 'excluding joint ventures' (direct/distributor sales) and 'to joint ventures,' with revenue recognized primarily upon product shipment[229](index=229&type=chunk)[230](index=230&type=chunk) - Cost of goods sold primarily reflects third-party vendor invoices or direct labor, overhead, raw materials for manufactured products, with Natur-Tec® having lower margins than ZERUST® industrial products[231](index=231&type=chunk) - Equity in income from joint ventures represents NTIC's share of JV profitability, subject to quarterly variability, while fees for services provided to JVs are based on licensing agreements, often a percentage of JV net sales[233](index=233&type=chunk)[234](index=234&type=chunk) - Operating expenses include selling, general and administrative, and research and development costs, with R&D expenses recognized as incurred[235](index=235&type=chunk)[236](index=236&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) NTIC's fiscal 2021 results show significant increases in net sales and income, driven by ZERUST® growth, while Natur-Tec® sales declined Consolidated Statements of Operations Summary (Fiscal 2021 vs. 2020) | Metric | Fiscal 2021 ($) | Fiscal 2020 ($) | Change ($) | Change (%) | | :-------------------------------------- | :--------------- | :--------------- | :------------- | :--------- | | Net sales, excluding joint ventures | $53,470,623 | $45,666,045 | $7,804,578 | 17.1% | | Net sales, to joint ventures | $3,023,196 | $1,972,646 | $1,050,550 | 53.5% | | Cost of goods sold | $36,920,814 | $31,609,274 | $5,311,540 | 16.8% | | Equity in income from joint ventures | $7,465,214 | $4,270,327 | $3,194,887 | 74.8% | | Fees for services provided to joint ventures | $5,964,260 | $4,612,885 | $1,351,375 | 29.3% | | Selling expenses | $12,016,974 | $10,656,689 | $1,360,285 | 12.8% | | General and administrative expenses | $8,262,173 | $8,688,309 | $(426,136) | (4.9)% | | Research and development expenses | $4,400,479 | $3,979,455 | $421,024 | 10.6% | | Income before income tax expense | $8,458,642 | $1,739,875 | $6,718,767 | 386.2% | | Income tax expense | $1,461,905 | $2,674,635 | $(1,212,730) | (45.3)% | | Net income (loss) attributable to NTIC | $6,281,238 | $(1,337,709) | $7,618,947 | N/A | - Total ZERUST® net sales increased **32.1%** to **$45.55 million** in fiscal 2021, driven by increased demand across all geographies, despite decreased demand from the automotive industry due to microchip shortages[242](index=242&type=chunk) - Natur-Tec® sales decreased **16.9%** to **$10.94 million**, primarily due to reduced demand from the apparel industry and large bioplastics users (e.g., college campuses, restaurants) impacted by the COVID-19 pandemic[245](index=245&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) NTIC's liquidity includes working capital, cash, and an increased **$5.0 million** revolving credit line, with significant capital expenditures in fiscal 2021 Working Capital and Cash Position (as of August 31) | Metric | August 31, 2021 ($) | August 31, 2020 ($) | | :----------------------------------- | :-------------- | :-------------- | | Working Capital | $25,230,893 | $27,104,746 | | Cash and Cash Equivalents | $7,680,641 | $6,403,032 | | Available for Sale Securities | $4,634 | $5,544,722 | - NTIC's revolving line of credit with PNC Bank was increased from **$3.0 million** to **$5.0 million** as of August 31, 2021, with no outstanding amounts[258](index=258&type=chunk)[379](index=379&type=chunk) Cash Flows from Operating Activities | Fiscal Year | Net Cash Provided by Operating Activities ($) | | :---------- | :-------------------------------------- | | 2021 | $2,892,940 | | 2020 | $4,912,070 | - Capital expenditures for fiscal 2021 totaled **$5,532,750**, primarily for the acquisition of real estate and a building in China, with **$2.2-$2.5 million** projected for fiscal 2022 for renovations and equipment[273](index=273&type=chunk)[275](index=275&type=chunk) [Inflation and Seasonality](index=49&type=section&id=Inflation%20and%20Seasonality) Inflation has historically had minimal impact on NTIC, but the business now experiences seasonality, with Q2 net sales adversely affected by holidays and winter - Inflation has historically had little effect on NTIC, but the business now experiences some seasonality[277](index=277&type=chunk) - Net sales in the second fiscal quarter are adversely affected by the Chinese New Year, North American holiday season, and lower winter temperatures globally reducing corrosion[277](index=277&type=chunk) [Market Risk](index=49&type=section&id=Market%20Risk) NTIC is exposed to market risks from foreign currency exchange rates, commodity prices (plastic resins), and interest rates, impacting net income - NTIC is exposed to market risks from foreign currency exchange rates (Euro, Yen, Rupee, Renminbi, Won, Pound vs. USD), commodity prices (plastic resins), and interest rates (LIBOR-based revolving credit line)[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) - Foreign currency fluctuations can impact reported net income, but changes in equity income from joint ventures are reflected as translation adjustments[279](index=279&type=chunk) [Related Party Transactions](index=49&type=section&id=Related%20Party%20Transactions) NTIC's joint ventures are considered related parties, with sales and fees for services reported separately and recognized upon product shipment - NTIC's joint ventures are considered related parties, with sales to JVs and fees for services provided to JVs reported separately on financial statements[281](index=281&type=chunk) - Fees for services are based on licensing agreements, either a flat fee or a percentage of JV sales, and are recognized when products are shipped from JV facilities[283](index=283&type=chunk) [Off-Balance Sheet Arrangements](index=50&type=section&id=Off-Balance%20Sheet%20Arrangements) NTIC has no off-balance sheet arrangements with unconsolidated entities, thus not materially exposed to related financing or market risks - NTIC does not have relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements, thus not materially exposed to related financing, liquidity, market, or credit risks[285](index=285&type=chunk) [Critical Accounting Policies and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) NTIC's critical accounting policies include consolidation, JV investments, revenue recognition, and income taxes, relying on management estimates and assumptions - Critical accounting policies include Principles of Consolidation, Investments in Joint Ventures (equity method, annual impairment assessment), Revenue Recognition (five-step model, control transfer at shipment), Accounts Receivable (allowance for doubtful accounts), Recoverability of Long-Lived Assets, Foreign Currency Translation, Stock-Based Compensation, Inventory Valuation (lower of cost or net realizable value), and Income Taxes (asset and liability method, deferred tax assets/liabilities, valuation allowance)[286](index=286&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk)[291](index=291&type=chunk)[293](index=293&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk)[299](index=299&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) - Management's estimates and assumptions in these areas are based on available information, but actual results may differ significantly[286](index=286&type=chunk)[368](index=368&type=chunk) [Recent Accounting Pronouncements](index=53&type=section&id=Recent%20Accounting%20Pronouncements) NTIC is evaluating ASU No. 2016-13 regarding credit losses, while other recent pronouncements are not expected to have a material impact - NTIC is evaluating the impact of ASU No. 2016-13 (Measurement of Credit Losses on Financial Instruments), effective for fiscal years beginning after December 15, 2022[369](index=369&type=chunk) - Other recently issued or proposed accounting pronouncements are not expected to have a material impact on NTIC's financial position or operating results[370](index=370&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) NTIC is exposed to market risks from foreign currency, commodity prices (plastic resins), and interest rates, which can impact net income and product costs - NTIC's primary market risks include foreign currency exchange rates (Euro, Yen, Rupee, Renminbi, Won, Pound vs. USD), commodity prices (plastic resins), and interest rates (LIBOR + **2.50%** on its revolving credit line)[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - Fluctuations in foreign currency exchange rates can lead to declines in reported net income, though equity in income from joint ventures is reflected as a translation adjustment[307](index=307&type=chunk) [Financial Statements and Supplementary Data](index=55&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents NTIC's audited consolidated financial statements for fiscal years 2021 and 2020, including balance sheets, income statements, cash flows, and detailed accounting notes [Report of Independent Registered Public Accounting Firm](index=62&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Baker Tilly US, LLP issued an unqualified opinion on NTIC's fiscal 2021 and 2020 consolidated financial statements, conforming to U.S. GAAP and PCAOB standards - Baker Tilly US, LLP audited NTIC's consolidated financial statements for fiscal years ended August 31, 2021 and 2020, expressing an unqualified opinion that they present fairly, in all material respects, the financial position and results of operations in conformity with U.S. GAAP[313](index=313&type=chunk) - The audit was conducted in accordance with PCAOB standards, and no critical audit matters were identified[315](index=315&type=chunk)[317](index=317&type=chunk) [Consolidated Balance Sheets](index=63&type=section&id=Consolidated%20Balance%20Sheets) NTIC's consolidated balance sheets show an increase in total assets and equity, driven by property and equipment and joint venture investments Consolidated Balance Sheet Highlights (as of August 31) | Asset/Liability/Equity | 2021 ($) | 2020 ($) | | :--------------------- | :----------- | :----------- | | Total Current Assets | 33,747,089 | 33,202,350 | | Property and Equipment, Net | 11,821,458 | 7,110,789 | | Investments in Joint Ventures | 27,623,768 | 24,090,826 | | Total Assets | 74,370,879 | 66,074,488 | | Total Current Liabilities | 8,516,196 | 6,097,604 | | Total Equity | 65,750,581 | 59,704,441 | - Total assets increased by **$8.29 million** (**12.5%**) from 2020 to 2021, primarily driven by increases in property and equipment and investments in joint ventures[319](index=319&type=chunk) - Total current liabilities increased by **$2.42 million** (**39.7%**) from 2020 to 2021, mainly due to higher accounts payable and accrued payroll[319](index=319&type=chunk) [Consolidated Statements of Operations](index=64&type=section&id=Consolidated%20Statements%20of%20Operations) NTIC's consolidated statements of operations reflect a return to net income in fiscal 2021, driven by increased sales and joint venture profitability Consolidated Statements of Operations (Fiscal 2021 vs. 2020) | Metric | 2021 ($) | 2020 ($) | | :-------------------------------------- | :--------------- | :--------------- | | Total Net Sales | 56,493,819 | 47,638,691 | | Gross Profit | 19,573,005 | 16,029,417 | | Total Joint Venture Operations | 13,429,474 | 8,883,212 | | Total Operating Expenses | 24,679,626 | 23,324,453 | | Operating Income | 8,322,853 | 1,588,176 | | Income Before Income Tax Expense | 8,458,642 | 1,739,875 | | Net Income (Loss) Attributable to NTIC | 6,281,238 | (1,337,709) | | Diluted EPS | 0.64 | (0.15) | - NTIC returned to a net income of **$6.28 million** in fiscal 2021, a significant improvement from a net loss of **$1.34 million** in fiscal 2020, driven by increased sales and joint venture profitability[320](index=320&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=65&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) NTIC's comprehensive income significantly improved in fiscal 2021, despite a negative foreign currency translation adjustment Consolidated Statements of Comprehensive Income (Loss) (Fiscal 2021 vs. 2020) | Metric | 2021 ($) | 2020 ($) | | :-------------------------------------- | :--------------- | :--------------- | | Net Income (Loss) | 6,996,737 | (934,760) | | Other Comprehensive Income (Loss) – Foreign Currency Translation Adjustment | (92,562) | 1,150,138 | | Comprehensive Income (Loss) Attributable to NTIC | 6,166,646 | (154,969) | - Comprehensive income attributable to NTIC significantly improved to **$6.17 million** in fiscal 2021 from a loss of **$0.15 million** in fiscal 2020, despite a negative foreign currency translation adjustment[321](index=321&type=chunk) [Consolidated Statements of Equity](index=66&type=section&id=Consolidated%20Statements%20of%20Equity) NTIC's total equity increased by **$6.05 million** (10.1%) in fiscal 2021, primarily due to net income and stock option exercises Consolidated Statements of Equity Highlights (as of August 31) | Metric | 2021 ($) | 2020 ($) | | :-------------------------------------- | :--------------- | :--------------- | | Common Stock | 183,696 | 182,000 | | Additional Paid-in Capital | 18,736,268 | 17,415,043 | | Retained Earnings | 46,973,092 | 42,472,810 | | Accumulated Other Comprehensive Loss | (3,525,030) | (3,410,438) | | Total Stockholders' Equity | 62,368,026 | 56,659,415 | | Non-Controlling Interests | 3,382,555 | 3,045,026 | | Total Equity | 65,750,581 | 59,704,441 | - Total equity increased by **$6.05 million** (**10.1%**) in fiscal 2021, primarily due to net income and stock option exercises, partially offset by dividends paid[323](index=323&type=chunk) [Consolidated Statements of Cash Flows](index=67&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) NTIC's net cash from operating activities decreased in fiscal 2021, while net cash used in investing activities significantly declined, leading to a doubled cash increase Consolidated Statements of Cash Flows (Fiscal 2021 vs. 2020) | Cash Flow Activity | 2021 ($) | 2020 ($) | | :-------------------------------------- | :--------------- | :--------------- | | Net Cash Provided by Operating Activities | 2,892,940 | 4,912,070 | | Net Cash Used in Investing Activities | (103,316) | (2,784,682) | | Net Cash Used in Financing Activities | (1,522,209) | (1,518,005) | | Net Increase in Cash and Cash Equivalents | 1,277,609 | 546,274 | - Net cash provided by operating activities decreased in fiscal 2021, while net cash used in investing activities significantly decreased due to lower purchases of available-for-sale securities and property/equipment[324](index=324&type=chunk) - The net increase in cash and cash equivalents more than doubled in fiscal 2021 to **$1.28 million**[324](index=324&type=chunk) [Notes to Consolidated Financial Statements](index=68&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail NTIC's business segments, joint ventures, credit facilities, and income tax, with JVs contributing significantly to equity income - NTIC's business segments are ZERUST® and Natur-Tec®, with **18** active joint ventures accounted for using the equity method, and **10** consolidated subsidiaries[325](index=325&type=chunk)[326](index=326&type=chunk)[328](index=328&type=chunk) - Investments in joint ventures are assessed for impairment annually, with EXCOR (Germany) being individually significant[354](index=354&type=chunk)[376](index=376&type=chunk) - Total net sales of NTIC's joint ventures increased **39.0%** to **$120.95 million** in fiscal 2021, contributing **$7.47 million** in equity income to NTIC[248](index=248&type=chunk)[377](index=377&type=chunk) - NTIC's revolving line of credit with PNC Bank was increased to **$5.0 million**, with no outstanding balance as of August 31, 2021, and the company was in compliance with all debt covenants[379](index=379&type=chunk) - Income tax expense was **$1.46 million** in fiscal 2021 (**17.3%** effective rate) compared to **$2.67 million** in fiscal 2020 (**153.7%** effective rate), with a valuation allowance recorded against domestic deferred tax assets[253](index=253&type=chunk)[407](index=407&type=chunk)[408](index=408&type=chunk)[412](index=412&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=81&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) This section states no changes in or disagreements with accountants on accounting and financial disclosure matters [Controls and Procedures](index=81&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) NTIC's management concluded that disclosure controls and internal control over financial reporting were effective as of August 31, 2021 - NTIC's disclosure controls and procedures were deemed effective as of August 31, 2021, ensuring timely and accurate reporting of information required by the Securities Exchange Act of 1934[435](index=435&type=chunk) - Management concluded that NTIC's internal control over financial reporting was effective as of August 31, 2021, based on the COSO framework[439](index=439&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended August 31, 2021[442](index=442&type=chunk) [Other Information](index=82&type=section&id=Item%209B.%20OTHER%20INFORMATION) This item states no other information to report [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=82&type=section&id=Item%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item states no disclosures regarding foreign jurisdictions that prevent inspections Part III [Directors, Executive Officers and Corporate Governance](index=83&type=section&id=Item%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information on NTIC's directors, executive officers, corporate governance, and annual bonus plan is incorporated by reference from its definitive proxy statement - Information on directors, executive officers, corporate governance, and audit committee is incorporated by reference from NTIC's proxy statement[447](index=447&type=chunk)[448](index=448&type=chunk)[450](index=450&type=chunk) - NTIC has a Code of Ethics applicable to its principal executive, financial, and accounting officers, as well as other employees and directors[448](index=448&type=chunk) - The annual bonus plan for fiscal 2022 is tied to Adjusted EBITOI and individual performance objectives, with payouts potentially in cash and common stock[422](index=422&type=chunk) [Executive Compensation](index=83&type=section&id=Item%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation is incorporated by reference from NTIC's definitive proxy statement [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=83&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section incorporates security ownership information from NTIC's proxy statement and details securities authorized under equity compensation plans - As of August 31, 2021, **1,426,651** shares were issuable upon exercise of outstanding options under equity compensation plans, with a weighted-average exercise price of **$9.30**[455](index=455&type=chunk) - A total of **954,178** shares remained available for future issuance under equity compensation plans, including **879,356** shares under the 2019 Stock Incentive Plan and **74,822** under the Employee Stock Purchase Plan[455](index=455&type=chunk)[456](index=456&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=85&type=section&id=Item%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information on certain relationships, related transactions, and director independence is incorporated by reference from NTIC's definitive proxy statement [Principal Accountant Fees and Services](index=85&type=section&id=Item%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information regarding principal accountant fees and services, including audit and tax fees, and audit committee pre-approval policies, is incorporated by reference Part IV [Exhibit and Financial Statement Schedules](index=86&type=section&id=Item%2015.%20EXHIBIT%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists financial statements from Item 8, notes the omission of schedules for smaller reporting companies, and provides a comprehensive list of exhibits - NTIC's consolidated financial statements are included in Item 8 of this report[460](index=460&type=chunk) - All financial statement schedules are omitted because NTIC is a smaller reporting company[461](index=461&type=chunk) - The section includes a list of exhibits, such as the Restated Certificate of Incorporation, Amended and Restated Bylaws, various stock incentive plans, executive employment agreements, and the Amended and Restated Loan Agreement with PNC Bank[464](index=464&type=chunk)[466](index=466&type=chunk)[468](index=468&type=chunk)[469](index=469&type=chunk) [Form 10-K Summary](index=96&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY) This item indicates no Form 10-K summary is provided