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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OFTHE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: May 31, 2002

Commission File Number 1-11038

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION(Exact name of registrant as specified in its charter)

| | Delaware
(State of Incorporation) |  | 41-0857886
(I.R.S. Employer 
Identification Number) | 
| | --------------------------------- |  | --------------------------------------------------- | 

6680 N. Highway 49, Lino Lakes, MN 55014(Address of principal executive offices)

(651) 784-1250(Registrants telephone number)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.Yes [x] No [ ]

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.

| | Class
Common Stock, $.02 par value |  | Outstanding as of July 12, 2002
3,658,051 | 
| | ---------------------------------- |  | ----------------------------------------- | 

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This document consists of 12 pages

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PART I  FINANCIAL INFORMATION

ITEM 1  FINANCIAL STATEMENTS

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited)

|                                                                                                                                         |  | May 31,2002 |            | August 31,2001 |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ---------- | -------------- | -
|                                                                                                                                         |  |             |            |                |  
|ASSETS                                                                                                                                   |  |             |            |                |  
|                                                                                                                                         |  |             |            |                |  
|CURRENT ASSETS:                                                                                                                          |  |             |            |                |  
|Cash and cash equivalents                                                                                                                |  | $           | 451,318    |                | $
|Investments available for sale                                                                                                           |  |             | 3,500,000  |                |  
|Receivables:                                                                                                                             |  |             |            |                |  
|Trade excluding international corporate joint ventures, less allowance for doubtful         account of $34,000 and $25,000, respectively |  |             | 1,034,761  |                |  
|Trade international corporate joint ventures                                                                                             |  |             | 252,355    |                |  
|Technical and other services international corporate joint ventures                                                                      |  |             | 583,678    |                |  
|Income taxes                                                                                                                             |  |             | 85,655     |                |  
|Inventories                                                                                                                              |  |             | 707,429    |                |  
|Prepaid expenses and other                                                                                                               |  |             | 118,805    |                |  
|Advance to related party                                                                                                                 |  |             | 200,000    |                |  
|Deferred income taxes                                                                                                                    |  |             | 80,000     |                |  
|                                                                                                                                         |  |             |            |                |  
|Total current assets                                                                                                                     |  |             | 7,014,001  |                |  
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|PROPERTY AND EQUIPMENT, net                                                                                                              |  |             | 415,643    |                |  
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|OTHER ASSETS:                                                                                                                            |  |             |            |                |  
|Investments in international corporate joint ventures                                                                                    |  |             | 4,283,850  |                |  
|Investment in European holding company                                                                                                   |  |             | 30,812     |                |  
|Deferred income taxes                                                                                                                    |  |             | 380,000    |                |  
|Advance to related party                                                                                                                 |  |             | 50,000     |                |  
|Other                                                                                                                                    |  |             | 1,044,572  |                |  
|                                                                                                                                         |  |             |            |                |  
|                                                                                                                                         |  |             | 5,789,234  |                |  
|                                                                                                                                         |  |             |            |                |  
|                                                                                                                                         |  | $           | 13,218,878 |                | $
|                                                                                                                                         |  |             |            |                |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                     |  |             |            |                |  
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|CURRENT LIABILITIES:                                                                                                                     |  |             |            |                |  
|Accounts payable                                                                                                                         |  | $           | 214,372    |                | $
|Accrued liabilities:                                                                                                                     |  |             |            |                |  
|Payroll and related benefits                                                                                                             |  |             | 52,044     |                |  
|Other                                                                                                                                    |  |             | 247,117    |                |  
|                                                                                                                                         |  |             |            |                |  
|Total current liabilities                                                                                                                |  |             | 513,533    |                |  
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|DEFERRED GROSS PROFIT                                                                                                                    |  |             | 25,000     |                |  
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|COMMITMENTS AND CONTINGENCIES                                                                                                            |  |             |            |                |  
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|                                                                                                                                        
|STOCKHOLDERS EQUITY:                                                                                                                    |  |             |            |                |  
|Preferred stock, no par value, authorized 10,000 shares, none issued                                                                     |  |             |            |                |  
|Common stock, $.02 par value per share; authorized 10,000,000 shares; issued and       outstanding 3,667,451 and 3,689,551, respectively |  |             | 73,349     |                |  
|Additional paid-in capital                                                                                                               |  |             | 4,274,482  |                |  
|Retained earnings                                                                                                                        |  |             | 9,022,308  |                |  
|Accumulated other comprehensive loss (see Note 8)                                                                                        |  |             | (689,794   | )              |  
|                                                                                                                                         |  |             |            |                |  
|Total stockholders equity                                                                                                               |  |             | 12,680,345 |                |  
|                                                                                                                                         |  |             |            |                |  
|                                                                                                                                         |  | $           | 13,218,878 |                | $
|                                                                                                                                         |  |             |            |                |  

See notes to consolidated financial statements.

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NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Unaudited)

|                                                                                                       |  | Three Months Ended |           | Nine Months Ended |  
|------------------------------------------------------------------------------------------------------ |  | ------------------ | --------- | ----------------- | -
|                                                                                                       |  |                    |           |                   |  
|                                                                                                       |  | May 31,2002        |           | May 31,2001       |  
|                                                                                                       |  |                    |           |                   |  
|SALES ORIGINATING IN NORTH AMERICA                                                                     |  | $                  | 2,003,500 |                   | $
|COST OF GOODS SOLD                                                                                     |  |                    | 1,000,718 |                   |  
|                                                                                                       |  |                    |           |                   |  
|GROSS PROFIT                                                                                           |  |                    | 1,002,782 |                   |  
|OPERATING EXPENSES:                                                                                    |  |                    |           |                   |  
|Selling                                                                                                |  |                    | 426,459   |                   |  
|General and administrative                                                                             |  |                    | 418,605   |                   |  
|Research, engineering, and technical support                                                           |  |                    | 204,564   |                   |  
|                                                                                                       |  |                    |           |                   |  
|                                                                                                       |  |                    | 1,049,628 |                   |  
|                                                                                                       |  |                    |           |                   |  
|OPERATING (LOSS) INCOME                                                                                |  |                    | (46,846   | )                 |  
|                                                                                                       |  |                    |           |                   |  
|INTERNATIONAL CORPORATE JOINT VENTURES AND       EUROPEAN HOLDING COMPANY:                             |  |                    |           |                   |  
|Equity in income of international corporate joint ventures       and European holding company          |  |                    | 270,270   |                   |  
|Fees for technical support and other services provided to       international corporate joint ventures |  |                    | 525,458   |                   |  
|Expenses incurred in support of international corporate joint       ventures                           |  |                    | (323,539  | )                 |  
|                                                                                                       |  |                    |           |                   |  
|                                                                                                       |  |                    | 472,189   |                   |  
|INTEREST INCOME                                                                                        |  |                    | 10,656    |                   |  
|                                                                                                       |  |                    |           |                   |  
|INCOME BEFORE INCOME TAX EXPENSE                                                                       |  |                    | 435,999   |                   |  
|INCOME TAX EXPENSE                                                                                     |  |                    | 60,000    |                   |  
|                                                                                                       |  |                    |           |                   |  
|NET INCOME                                                                                             |  | $                  | 375,999   |                   | $
|                                                                                                       |  |                    |           |                   |  
|NET INCOME PER COMMON SHARE:                                                                           |  |                    |           |                   |  
|Basic                                                                                                  |  | $                  | .10       |                   | $
|                                                                                                       |  |                    |           |                   |  
|Diluted                                                                                                |  | $                  | .10       |                   | $
|                                                                                                       |  |                    |           |                   |  
|WEIGHTED AVERAGE COMMON SHARES ASSUMED       OUTSTANDING:                                              |  |                    |           |                   |  
|Basic                                                                                                  |  |                    | 3,667,747 |                   |  
|                                                                                                       |  |                    |           |                   |  
|Diluted                                                                                                |  |                    | 3,667,747 |                   |  
|                                                                                                       |  |                    |           |                   |  

See notes to consolidated financial statements.

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NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

|                                                                                     |  | Nine Months Ended |           
|------------------------------------------------------------------------------------ |  | ----------------- | ----------
|                                                                                     |  |                   |           
|                                                                                     |  | May 31,2002       |           
|                                                                                     |  |                   |           
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                |  |                   |           
|Net income                                                                           |  | $                 | 886,294   
|Adjustments to reconcile net income to net cash provided by operating activities:    |  |                   |           
|Depreciation                                                                         |  |                   | 151,742   
|Gain on disposal of fixed assets                                                     |  |                   | (12,032   
|Equity income of international corporate joint ventures and European holding company |  |                   | (639,497  
|Dividends received from international corporate joint ventures                       |  |                   | 453,049   
|Change in current assets and liabilities:                                            |  |                   |           
|Receivables:                                                                         |  |                   |           
|Trade                                                                                |  |                   | (170,442  
|International corporate joint ventures                                               |  |                   | (58,846   
|Technical fee                                                                        |  |                   | 46,138    
|Income tax receivable                                                                |  |                   | 878       
|Inventories                                                                          |  |                   | 206,482   
|Prepaid expenses and other                                                           |  |                   | (292,229  
|Accounts payable                                                                     |  |                   | (25,737   
|Income tax payable                                                                   |  |                   |          
|Accrued liabilities                                                                  |  |                   | 21,488    
|                                                                                     |  |                   |           
|Total adjustments                                                                    |  |                   | (319,006  
|                                                                                     |  |                   |           
|Net cash provided by operating activities                                            |  |                   | 567,288   
|                                                                                     |  |                   |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                |  |                   |           
|Purchases of investments available for sale                                          |  |                   | (3,500,000
|Investments in international corporate joint ventures                                |  |                   | (136,056  
|Additions to property and equipment                                                  |  |                   | (121,115  
|Proceeds from the sale of property and equipment                                     |  |                   | 632,900   
|Partial return of original investment in European holding company                    |  |                   | 178,936   
|Increase in other assets                                                             |  |                   | (300,424  
|                                                                                     |  |                   |           
|Net cash used in investing activities                                                |  |                   | (3,245,759
|                                                                                     |  |                   |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                |  |                   |           
|Proceeds from exercise of stock options                                              |  |                   |          
|Repurchase of common stock                                                           |  |                   | (108,494  
|Dividends paid                                                                       |  |                   |          
|                                                                                     |  |                   |           
|Net cash used in financing activities                                                |  |                   | (108,494  
|                                                                                     |  |                   |           
|                                                                                     |  |                   |           
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                            |  |                   | (2,786,965
|                                                                                     |  |                   |           
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     |  |                   | 3,238,283 
|                                                                                     |  |                   |           
|                                                                                     |  |                   |           
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                           |  | $                 | 451,318   
|                                                                                     |  |                   |           

See notes to consolidated financial statements.

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NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

1.   INTERIM FINANCIAL INFORMATION





2.   RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS







3.   INVESTMENTS AVAILABLE  FOR-SALE



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4.   INVENTORIES



|                     |  | May 31,2002 |         | August 31,2001 |  
|-------------------- |  | ----------- | ------- | -------------- | -
|                     |  |             |         |                |  
|                     |  |             |         |                |  
|Production materials |  | $           | 256,349 |                | $
|Work in process      |  |             | 26,737  |                |  
|Finished goods       |  |             | 424,343 |                |  
|                     |  |             |         |                |  
|                     |  | $           | 707,429 |                | $
|                     |  |             |         |                |  

5.   PROPERTY AND EQUIPMENT



|                              |  | May 31,2002 |           | August 31,2001 |  
|----------------------------- |  | ----------- | --------- | -------------- | -
|                              |  |             |           |                |  
|                             
|                             
|                             
|                             
|                             
|                             
|Land                          |  | $           | 29,097    |                | $
|Buildings and improvements    |  |             | 520,681   |                |  
|Machinery and equipment       |  |             | 673,433   |                |  
|                              |  |             |           |                |  
|                              |  |             | 1,223,211 |                |  
|Less accumulated depreciation |  |             | 807,568   |                |  
|                              |  |             |           |                |  
|                              |  | $           | 415,643   |                | $
|                              |  |             |           |                |  

6.   INVESTMENTS IN INTERNATIONAL CORPORATE JOINT VENTURES



7.   STOCKHOLDERS EQUITY



8.   COMPREHENSIVE (LOSS) INCOME

The Companys total comprehensive (loss) income was as follows:

|                                                                               |  | Three Months Ended |         | Nine Months Ended |  
|------------------------------------------------------------------------------ |  | ------------------ | ------- | ----------------- | -
|                                                                               |  |                    |         |                   |  
|                                                                               |  | May 31,2002        |         | May 31,2001       |  
|                                                                               |  |                    |         |                   |  
|                                                                               |  |                    |         |                   |  
|Net income                                                                     |  | $                  | 375,999 |                   | $
|Other comprehensive (loss) income  foreign currency    translation adjustment |  |                    | 225,902 |                   |  
|                                                                               |  |                    |         |                   |  
|Total comprehensive (loss) income                                              |  | $                  | 601,901 |                   | $
|                                                                               |  |                    |         |                   |  

9.   NET INCOME PER SHARE



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ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies

The consolidated financial statements include accounts of the Company and all wholly owned subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company does not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.

Revenue Recognition

Revenues are recognized when the Company receives a valid bill of lading from the shipping agent when the shipping terms are FOB Destination. At this time, ownership and risk of loss is transferred to the customer. Revenues are recognized when the Company ships an order when the shipping terms are FOB Shipping Point. At this time, title and risk of loss is transferred to the customer. There are no provisions for returns recorded as all products are quality tested and most are made to order.

Allowance for Doubtful Accounts

Accounts receivable are reduced by an allowance for amounts that may become uncollectable in the future. The majority of the Companys receivables are due from manufacturing facilities located in the United States. The estimated allowance for doubtful accounts is based upon the age of the outstanding receivables and the payment history and credit worthiness of each customer. Management on a quarterly basis evaluates adequacy of the reserve for doubtful accounts.

Inventories

Inventories are valued at the lower of cost or market. On a quarterly basis, management assesses the inventory quantities on hand to estimated future usage and sales and, if necessary, writes down the value of inventory deemed obsolete or excess to market.

International Corporate Joint Ventures

International Corporate Joint Ventures are recorded on the equity basis of accounting due to 50% or less ownership for all of its joint venture investments and does not exercise control. The Company records income from its proportionate ownership share of income or loss in equity investors and also records income relating to fees for technical support and other services provided by the Company to the International Corporate Joint Ventures. Management reviews the historical and planned future operations of each joint venture on a quarterly basis to determine if the Companys investment in the Joint Venture is recoverable.

RESULTS OF OPERATIONS

General  The Company conducts all foreign transactions based on the U.S. dollar, except for its investments in foreign joint ventures. The exchange rate differential relating to investments in foreign joint ventures is accounted for under the requirements of SFAS No. 52.

Sales Originating in North America Net sales decreased by $360,456 or 15.2% during the third quarter of 2002 from those of the third quarter of 2001. Net sales decreased by $1,337,795 or 19.3% during the nine months ended May 31, 2002 compared to the nine months ended May 31, 2001. These changes in sales are due to a decrease in demand for materials science based industrial packaging products. This decrease in demand was due to the slow down in the industrial sector we serve.

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Cost of Sales  Cost of goods sold as a percentage of net sales were 49.9% and 47.2% for the third quarter of 2002 and 2001, respectively. The cost of goods sold percentage of net sales was 48.5% and 49.8% for the nine months ended May 31, 2002 and May 31, 2001. Variations are due primarily to the mix of product sales and changes in the price of resin.

Operating Expenses  As a percentage of net sales, total operating expenses were 52.4% in the third quarter of fiscal 2002 and 46.5% in the third quarter of fiscal 2001. Operating expenses were 54.1% and 47.4% of net sales for the nine months ended May 31, 2002 and for the nine months ended May 31, 2001.

Operating expense classification percentages of net sales were as follows:

|                                             |  | Three Months Ended |     | Nine Months Ended | 
|-------------------------------------------- |  | ------------------ | --- | ----------------- | 
|                                             |  |                    |     |                   | 
|                                             |  | May 31,2002        |     | May 31,2001       | 
|                                             |  |                    |     |                   | 
|                                             |  |                    |     |                   | 
|Selling expense                              |  |                    | 21% |                   | 
|General and administrative                   |  |                    | 21  |                   | 
|Research, engineering, and technical support |  |                    | 10  |                   | 

Selling expense increased during the third quarter of fiscal 2002 as compared to the same period in fiscal 2001. This is primarily due to the increase in salaries associated with adding additional employees to the existing sales staff and related commission and travel expenses. Selling expense amounts for the nine months ended May 31, 2002 decreased slightly over the same period in fiscal 2001 due to a reduction in spending in the first quarter of fiscal 2002 related to trade show attendance and related travel expenses. Selling expense for the three and nine months ended May 31, 2002 as a percentage of net sales increased over the same periods in fiscal 2001 due to selling expense not decreasing proportionately with the decrease in sales levels.

General and administrative expenses decreased during the three and nine months ended May 31, 2002 as compared to the same periods in fiscal 2001 due primarily to decreases in consulting expense and expenses related to the operation of Northern Instruments Corporation (a 100% owned Subsidiary). These same reasons accounted for general and administrative expenses as a percentage of net sales decreasing for the three months ended May 31, 2002, as compared to the same period in fiscal 2001. General and administrative expenses as a percentage of net sales remained stable for the nine months ended May 31, 2002, as compared to the same period in fiscal 2001.

Research, engineering, and technical support expenses increased during the three and nine months ended May 31, 2002 as compared to the same periods in fiscal 2001. This is primarily due to an increase in lab expenses and consulting services for product development and product support. Such expenses as a percentage of sales were significantly increased for the three months and nine months ended May 31, 2002 as compared to the same period in fiscal 2001 due both to research, engineering, and technical support expense not decreasing proportionately with the decrease in sales levels and an increase in expenses.

International Corporate Joint Ventures and European Holding Company Net earnings from international corporate joint ventures and European holding company were $472,189 and $1,151,811 for the three and nine months ended May 31, 2002, respectively, compared to $335,673 and $1,115,392 for the three and the nine months ended May 31, 2001. This net increase is due to increased sales volume at certain of the Companys joint ventures.

Income Taxes  Income tax expense for the three and nine months ended May 31, 2002 and May 31, 2001 was calculated based on managements estimate of the Companys annual effective income tax rate. The Companys annual effective income tax rate for fiscal 2002 was lower than the statutory rate primarily due to the Companys equity in income of international corporate joint ventures and European holding company being recognized based on after-tax earnings of these entities. To the extent joint ventures undistributed earnings are distributed to the Company, it does not result in any material additional income tax liability after the application of foreign tax credits.

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LIQUIDITY AND CAPITAL RESOURCES

At May 31, 2002, the Companys working capital was $6,500,468, including $451,318 in cash and cash equivalents and $3,500,000 in investments available for sale, compared to working capital of $5,579,475 including $3,238,283 in cash and cash equivalents as of August 31, 2001.

Net cash provided from operations has been sufficient to meet liquidity requirements, capital expenditures, research and development cost, and expansion of operations of the Companys international joint ventures. Cash flows provided by operations for the nine months ended May 31, 2002 and 2001 were $567,288 and $440,986, respectively. The net cash provided by operations for the nine months ended May 31, 2002 resulted principally from net income, inventories, dividends and depreciation, offset by equity income of international corporate joint ventures and European holding company and increases in receivables and prepaid expenses and other. The net cash provided by operations for the nine months ended May 31, 2001 was principally from net income, depreciation, dividends received from international corporate joint ventures and accounts receivable. This was offset by equity income of international corporate joint ventures and European holding company, income tax payments, prepaid

 expenses, accounts payable and accrued liabilities.

Net cash used in investing activities for the nine months ended May 31, 2002 was $3,245,759, which resulted from the purchase of investments available for sale, increased investments in international corporate joint ventures, an increase in other assets and additions to property and equipment partially offset by a partial return of the Companys original investment in European holding company and the proceed from the sale of fixed assets. Net cash used in investing activities for the nine months ended May 31, 2001 was $403,523, which resulted from investments in international corporate joint ventures, additions to property and equipment and increases in other assets.

Net cash used in financing activities for the nine months ended May 31, 2002 was $108,494, which resulted from the repurchase of common stock. Net cash used in financing activities for the nine months ended May 31, 2001 was $1,012,006, which resulted from the repurchase of common stock of $387,033 and dividends paid of $644,972 offset by proceeds from the exercise of stock options of $19,999.

The Company expects to meet future liquidity requirements with its existing cash and cash equivalents and from cash flows of future operating earnings and distributions of earnings and technical assistance fees from the international corporate joint venture investments.

The Company has no long-term debt and no material capital lease commitments at May 31, 2002; however, the Companys subsidiary has entered into a 15-year lease agreement for 16,826 square feet of office, manufacturing, laboratory, and warehouse space requiring monthly payments of $16,434, which can be adjusted annually according to the annual consumer price index through November 2014.

The Company has no postretirement benefit plan and does not anticipate establishing any postretirement benefit program.

Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets (the Statements). The Company does not currently have any goodwill or intangible assets relating to business acquisitions. Therefore, the adoption of the statement does not impact the Companys financial statements.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company expects to adopt SFAS No. 143 in fiscal year 2003. The Company has not yet determined the impact of SFAS No. 143 on its financial position and results of operations.

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In September 2001, the FASB also issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets. SFAS No. 144 replaces SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposal Of. The FASB issued SFAS No. 144 to establish a single accounting model, based on the framework established in SFAS No. 121, as SFAS No. 121 did not address the accounting for a segment of a business accounted for as a discontinued operation under Accounting Principle Board Opinion No. 30, Reporting the Results of OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequent Occurring Events and Transactions. SFAS No. 144 also resolves significant implementation issues related to SFAS No. 121. The provisions of SFAS No. 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively. The Company expe

cts to adopt SFAS No. 144 in fiscal year 2003. The Company has not yet determined the impact of SFAS No. 144 on its financial position and results of operations.

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PART II  OTHER INFORMATION

ITEM 1  LEGAL PROCEEDINGS

None

ITEM 2  CHANGES IN SECURITIES

None

ITEM 3  DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5  OTHER INFORMATION

None

ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K

None

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|              |  | NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
|------------- |  | -----------------------------------------------
|July 12, 2002 |  |                                                
|              |  |                                                
|              |  |                                                
|              |  |