|SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549


FORM 10-QSB


Quarterly Report
Pursuant to Section 13 or 15(d) ofThe Securities Exchange Act of 1934
|------------------------------------------------------------------------------------------------------------------------------------------------------------------

|For the Quarterly Period Ended:February 28, 2002 | Commission File Number1-11038
|------------------------------------------------ | -----------------------------

|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.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ClassCommon Stock, $.02 par value | Outstanding as of March 31, 20023,669,051
|--------------------------------- | -----------------------------------------

| | "This document consists of 14pages."
| | ------------------------------------

|PART I 
FINANCIAL INFORMATION


ITEM 1  FINANCIAL STATEMENTS


NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS
(Unaudited)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                       | February 28,2002 | August 31,2001
|---------------------------------------------------------------------- | ---------------- | --------------
|ASSETS                                                                 |                  |               
|                                                                       |                 
|CURRENT ASSETS:                                                        |                 
|Cash and cash equivalents                                              |                  | $   3,152,570 
|Receivables:                                                           |                 
|Trade excluding international corporate joint ventures, less allowance |                 
|for doubtful account of $15,000 and $30,000, respectively              |                  | 764,373       
|Trade international corporate joint ventures                           |                  | 218,653       
|Technical and other services international corporate joint ventures    |                  | 567,823       
|Income taxes                                                           |                  | 104,256       
|Inventories                                                            |                  | 846,412       
|Prepaid expenses and other                                             |                  | 186,438       
|Advance to related parties                                             |                  | 200,000       
|Deferred income taxes                                                  |                  | 80,000        
|                                                                       |                  |               
|Total current assets                                                   |                  | 6,120,525     
|                                                                       |                 
|PROPERTY AND EQUIPMENT, net                                            |                  | 1,067,137     
|                                                                       |                 
|OTHER ASSETS:                                                          |                 
|Investments in international corporate joint ventures                  |                  | 4,040,833     
|Investment in European holding company                                 |                  | 30,812        
|Deferred income taxes                                                  |                  | 380,000       
|Other                                                                  |                  | 991,213       
|                                                                       |                  |               
|                                                                       |                  | 5,442,858     
|                                                                       |                  |               
|                                                                       |                  | $ 12,630,520  
|                                                                       |                  |               
|                                                                       |                 
|LIABILITIES AND STOCKHOLDERS EQUITY                                   |                 
|                                                                       |                 
|CURRENT LIABILITIES:                                                   |                 
|Accounts payable                                                       |                  | $      238,017
|Accrued liabilities:                                                   |                 
|Payroll and related benefits                                           |                  | 49,503        
|Other                                                                  |                  | 233,159       
|                                                                       |                  |               
|Total current liabilities                                              |                  | 520,679       
|                                                                       |                 
|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 3,669,051 and 3,689,551, respectively   |                  | 73,381        
|Additional paid-in capital                                             |                  | 4,277,682     
|Retained earnings                                                      |                  | 8,649,474     
|Accumulated other comprehensive loss (see Note 7)                      |                  | (915,696      
|                                                                       |                  |               
|Total stockholders equity                                             |                  | 12,084,841    
|                                                                       |                  |               
|                                                                       |                  | $ 12,630,520  
|                                                                       |                  |               

|See notes to consolidated
financial statements.

2
|--------------------------------------------------

|NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|-----------------------------------------------------------------------------------------------------------------

|                                              | Three Months Ended | Six Months Ended
|--------------------------------------------- | ------------------ | ----------------
|
|                                              |                   
|SALES ORIGINATING IN NORTH AMERICA            |                    | $ 1,564,085     
|                                              |                   
|COST OF GOODS SOLD                            |                    | 798,411         
|                                              |                    |                 
|GROSS PROFIT                                  |                    | 765,674         
|                                              |                   
|OPERATING EXPENSES:                           |                   
|Selling                                       |                    | 392,179         
|General and administrative                    |                    | 485,117         
|Research, engineering, and technical support  |                    | 183,544         
|                                              |                    |                 
|                                              |                    | 1,060,840       
|                                              |                    |                 
|OPERATING (LOSS) INCOME                       |                    | (295,166        
|                                              |                   
|INTERNATIONAL CORPORATE JOINT                 |                   
|VENTURES AND EUROPEAN                         |                   
|HOLDING COMPANY:                              |                   
|Equity in income of international corporate   |                   
|joint ventures and European holding           |                   
|company                                       |                    | 184,176         
|Fees for technical support and other services |                   
|provided to international corporate joint     |                   
|ventures                                      |                    | 533,490         
|Expenses incurred in support of international |                   
|corporate joint ventures                      |                    | (496,597        
|Expenses incurred in support of international |                   
|corporate joint ventures conference           |                    |                
|                                              |                    |                 
|                                              |                    | 221,069         
|                                              |                   
|INTEREST INCOME                               |                    | 6,830           
|                                              |                    |                 
|(LOSS) INCOME BEFORE INCOME TAX               |                   
|BENEFIT (EXPENSE)                             |                    | (67,267         
|                                              |                   
|INCOME TAX BENEFIT (EXPENSE)                  |                    | 90,000          
|                                              |                    |                 
|NET INCOME                                    |                    | $      22,733   
|                                              |                    |                 
|NET INCOME PER COMMON SHARE:                  |                   
|Basic                                         |                    | $           .01 
|                                              |                    |                 
|Diluted                                       |                    | $           .01 
|                                              |                    |                 
|WEIGHTED AVERAGE COMMON SHARES                |                   
|ASSUMED OUTSTANDING:                          |                   
|Basic                                         |                    | 3,669,273       
|                                              |                    |                 
|Diluted                                       |                    | 3,669,273       
|                                              |                    |                 

|See notes to consolidated
financial statements.


3
|---------------------------------------------------

|NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited)
|--------------------------------------------------------------------------------------------------------------------

|                                                                  | Six Months Ended
|----------------------------------------------------------------- | ----------------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                             |                 
|Net income                                                        |                 
|Adjustments to reconcile net income to net cash provided          |                 
|by operating activities:                                          |                 
|Depreciation                                                      |                 
|Equity income of international corporate joint ventures           |                 
|and European holding company                                      |                 
|Dividends received from international corporate joint ventures    |                 
|Change in current assets and liabilities:                         |                 
|Receivables:                                                      |                 
|Trade                                                             |                 
|International corporate joint ventures                            |                 
|Technical fee                                                     |                 
|Income tax receivable                                             |                 
|Inventories                                                       |                 
|Prepaid expenses and other                                        |                 
|Accounts payable                                                  |                 
|Income tax payable                                                |                 
|Accrued liabilities                                               |                 
|                                                                  |                 
|Total adjustments                                                 |                 
|                                                                  |                 
|Net cash provided by operating activities                         |                 
|                                                                  |                 
|CASH FLOWS FROM INVESTING ACTIVITIES:                             |                 
|Investments in international corporate joint ventures             |                 
|Additions to property                                             |                 
|Partial return of original investment in European holding company |                 
|Increase in other assets                                          |                 
|                                                                  |                 
|Net cash used in investing activities                             |                 
|                                                                  |                 
|CASH FLOWS FROM FINANCING ACTIVITIES:                             |                 
|Proceeds from exercise of stock options                           |                 
|Repurchase of common stock                                        |                 
|Dividends paid                                                    |                 
|                                                                  |                 
|Net cash used in financing activities                             |                 
|                                                                  |                 
|NET DECREASE IN CASH AND CASH EQUIVALENTS                         |                 
|                                                                  |                 
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                  |                 
|                                                                  |                 
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                        |                 
|                                                                  |                 

|See notes to consolidated
financial statements.



4
|----------------------------------------------------

|NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited)
|-------------------------------------------------------------------------------------------------------------------------

|1. |  | INTERIM
FINANCIAL INFORMATION
|-- |  | -----------------------------

| | In
the opinion of management, the accompanying unaudited consolidated financial statements
contain all necessary adjustments, which are of a normal recurring nature, to present
fairly the financial position of Northern Technologies International Corporation and
Subsidiaries as of February 28, 2002 and February 28, 2001, the results of operations for
the three and six months ended February 28, 2002 and February 28, 2001, and the cash
flows for the six months ended February 28, 2002 and February 28, 2001, in conformity
with generally accepted accounting principles.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | These
financial statements should be read in conjunction with the financial statements and
related notes as of and for the year ended August 31, 2001 contained in the Companys
filing on Form 10-KSB dated November 9, 2001 and with Managements Discussion and
Analysis of Financial Condition and Results of Operations appearing on pages 8 through 12
of this quarterly report.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | 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 Statements 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 expects 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.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5
|-

|
|

|3. |  | INVENTORIES
|-- |  | -----------

| | Inventories
consist of the following:
| | -------------------------------------

| |  | February 28,2002     | August 31,2001
| |  | -------------------- | --------------
| |  | Production materials |               
| |  | Work in process      |               
| |  | Finished goods       |               
| |  |                      |               
| |  |                      |               
| |  |                      |               

|4. |  | PROPERTY
AND EQUIPMENT
|-- |  | ----------------------

| | Property
and equipment consist of the following:
| | ------------------------------------------------

| |  | February 28,2002              | August 31,2001
| |  | ----------------------------- | --------------
| |  | Land                          |               
| |  | Buildings and improvements    |               
| |  | Machinery and equipment       |               
| |  |                               |               
| |  |                               |               
| |  | Less accumulated depreciation |               
| |  |                               |               
| |  |                               |               
| |  |                               |               

|5. |  | INVETSTMENTS
IN INTERNATIONAL CORPORATE JOINT VENTURES
|-- |  | ------------------------------------------------------

| | During
the six months ended February 28, 2002, the Company invested an additional $15,000 in an
existing international corporate joint venture.
| | -----------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | STOCKHOLDERS
EQUITY
|-- |  | --------------------

| | During
the six months ended February 28, 2002, the Company purchased and retired 20,500 shares
of common stock for $102,097.
| | ----------------------------------------------------------------------------------------------------------------------------

|7. |  | COMPREHENSIVE
(LOSS) INCOME
|-- |  | ---------------------------

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

| | Three Months Ended | Six Months Ended                       
| | ------------------ | ---------------------------------------
|
| |                    | Net income                             
| |                    | Other comprehensive (loss) income -    
| |                    | foreign currency translation adjustment
| |                    |                                        
| |                    | Total comprehensive (loss) income      
| |                    |                                        

|6
|-

|
|

|8. |  | EXPENSES
INCURRED IN SUPPORT OF INTERNATIONAL CORPORATE JOINT VENTURES CONFERENCE
|-- |  | ---------------------------------------------------------------------------------

| | During
the three and six months ended February 28, 2001, the Company incurred expenses totaling
$236,073 relating to the Joint Venture Conference held in Chennai, India. The additional
expense had an impact on per share earnings of $0.04 per share. This conference is held
approximately every three years as a means to discuss new products and technologies being
offered and to evaluate current and future market and material science strategies for all
Joint Ventures.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. |  | NET
INCOME PER SHARE
|-- |  | --------------------

| | Basic
net income per share is computed by dividing net income by the weighted average number of
common shares outstanding. Diluted net income per share assumes the exercise of stock
options using the treasury stock method, if dilutive.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7
|-

|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 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. The Company records income from
the International Corporate Joint Ventures 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.



8
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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Sales
decreased by $526,270 or 25.2% during the second quarter of 2002 from those of the second
quarter of 2001. Net sales decreased by $989,739 or 21.5% during the six months ended
February 28, 2002 compared to the six months ended February 28, 2001. These changes
in sales are due to a decrease in demand for materials science based industrial packaging
products. The decrease was due to the slow down in the industrial sector we serve.


Cost of SalesCost of
goods sold as a percentage of net sales was 51.0% and 50.8% for the second quarter of
2002 and 2001, respectively. The cost of goods sold percentage of net sales was 47.7% and
51.2% for the six months ended February 28, 2002 and February 28, 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 67.8% in the second quarter of
fiscal 2002 and 52.3% in the second quarter of fiscal 2001. Operating expenses were 55.1%
and 47.8% of net sales for the six months ended February 28, 2002 and for the six
months ended February 28, 2001.


Operating expense classification
percentages of net sales were as follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           | Three Months Ended | Three Months Ended
|-------------------------- | ------------------ | ------------------
|
|Selling expense            |                    | 25                
|General and administrative |                    | 31                
|Research, engineering, and |                   
|technical support          |                    | 12                

|Selling expense increased
during the second 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 for the six months ended February 28, 2002
decreased 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 six months ended
February 28, 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 six months ended February 28, 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). General and administrative expenses as a
percentage of net sales increased slightly for the three and six months ended
February 28, 2002, as compared to the same periods in fiscal 2001 due to
the decrease in sales during fiscal 2002.


9
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Research, engineering, and
technical support expenses increased during the three and six months ended
February 28, 2002 as compared to the same periods in fiscal 2001. This is
primarily due to an increase in travel and consulting services for product
development and product support. Such expenses as a percentage of sales were
significantly increased for the three months and six months ended
February 28, 2002 as compared to the same period in fiscal 2001 due to
research, engineering, and technical support expense not decreasing
proportionately with the decrease in sales levels.


International Corporate
Joint Ventures and European Holding Company Net earnings from
international corporate joint ventures and European holding company were
$221,069 and $679,622 for the three and six months ended February 28, 2002,
respectively, compared to $271,648 and $779,719 for the three and the six months
ended February 28, 2001. This net decrease is due to decreased sales volume
at certain of the Companys joint ventures and an increase in expenses
incurred in support of international corporate joint ventures.


Income Taxes 
Income tax benefit (expense) for the three and six months ended February 28,
2002 and February 28, 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.


LIQUIDITY AND CAPITAL RESOURCES


At November 30, 2001, the
Companys working capital was $5,599,846, including $3,152,570 in cash and
cash equivalents, 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 six months ended February 28, 2002 and 2001 was $214,991 and $182,597,
respectively. The net cash provided by operations for the six months ended
February 28, 2002 resulted principally from net income, receivables, dividends
and depreciation, offset by equity income of international corporate joint
ventures and European holding company and increases in prepaid expenses and
other. The net cash provided by operations for the six months ended February 28,
2001 was principally from net income, depreciation, dividends received from
international corporate joint ventures and a decrease in accounts receivable.
This was offset by income tax payments, an increase prepaid expenses and other
decreases in current liabilities.


Net cash used in investing
activities for the six months ended February 28, 2002 was $198,607, which
resulted from 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. Net cash used in investing activities
for the six months ended February 28, 2001 was $316,479, which resulted from
investments in international corporate joint ventures, additions to property and
increases in other assets.


Net cash used in financing
activities for the six months ended February 28, 2002 was $102,097, which
resulted from the repurchase of common stock. Net cash used in financing
activities for the six months ended February 28, 2001 was $983,026, which
resulted from the repurchase of common stock of $358,053 and dividends paid of
$644,972 offset by proceeds from the exercise of stock options of $19,999.


10
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 February 28, 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.


Euro Currency Issue


On January 1, 1999, twelve
of the fifteen member countries of the European Union established fixed
conversion rates between their respective existing currencies and the Euro and
elected to adopt the Euro as their common legal currency on that date (the
Euro Conversion). Following the Euro Conversion, however, the
previously existing currencies of the participating countries will remain legal
tender in the participating countries through January 2002. During the
transition period, public and private parties have been paying for goods and
services using both the Euro and the previously existing currencies. The
participating countries were issued new Euro-denominated bills and coins for use
in cash transactions. No later than July 1, 2002, the participating countries
will withdraw all bills and coins denominated in the previously existing
currencies making Euro Conversion complete. The Euro Conversion has not impacted
on the overall business operations of the Company or its international corporate
joint ventures.


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.


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
expects 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.


11
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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


The Annual Meeting of Stockholders
of the Company (Annual Meeting) was held on February 15, 2002. The following matters
were voted on and approved by the Companys stockholders at the Annual Meeting.
There were 3,689,551 shares of common stock entitled to vote at the meeting and a total
of 3,310,126 shares or 89.72% were represented at the meeting. The tabulation of votes
with respect to each of the following matters voted on at the Annual Meeting is set forth
as follows:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1. |  | ELECTION
OF DIRECTORS:
|-- |  | ----------------------

| |  | For                    | Withheld
| |  | ---------------------- | --------
| |  | Ursula-Kiel-Dixon      |         
| |  | Prof. Aradhna Krishna  |         
| |  | Dr. Donald A. Kubik    |         
| |  | Richard G. Lareau      |         
| |  | Philip M. Lynch        |         
| |  | Haruhiko Rikuta        |         
| |  | Mark J. Stone          |         
| |  | Stephan C. Taylor      |         
| |  | Dr. Milan R. Vukcevich |         
| |  | Dr. Mehmet A. Gencer   |         

|2. |  | APPOINTMENT
OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
|-- |  | ------------------------------------------------------------

| | The
appointment of Deloitte & Touche LLP as independent auditors of the Company for the fiscal
year ending August 31, 2002 was ratified. Total votes cast:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |        
| |  | -------
| |  | For    
| |  | Against
| |  | Abstain

|ITEM 5  OTHER INFORMATION


None


ITEM 6  EXHIBITS AND REPORTS ON
FORM 8-K


None



12
|------------------------------------------------------------------------------------------

|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
| |  | -----------------------------------------------

|April 12, 2002 | 
|-------------- | 

| |  | /s/ Matthew Wolsfeld
Matthew WolsfeldChief Financial Officer
| |  | --------------------------------------------------------------------------