NORTHERN TECHNOLOGIES INTERNATIONAL CORP

NTIC’s management considers its current properties and the new expansions noted above to be suitable and adequate for its current and foreseeable needs.

• NTIC relies on others for its production, and any interruptions of these arrangements could disrupt NTIC’s ability to fill its customers’ orders.
• Changes to trade regulation, quotas, duties, or tariffs, caused by the changing U.S. and geopolitical environments or otherwise, have negatively impacted in the past and in the future may negatively impact NTIC’s business, operating results, and financial condition.
• Global credit and financial markets in the past have experienced disruptions, including diminished liquidity and credit availability and rapid fluctuations in market valuations, which, if they happen again, could negatively impact NTIC’s business, operating results, and financial condition.
• NTIC has limited staffing and will continue to be dependent upon key employees.
• NTIC faces challenges caused by its aging workforce, and NTIC may not be able to recruit, train and retain adequate replacements for its qualified and skilled employees.
• Given NTIC’s limited resources, it may not effectively manage its growth.
• The evolution of the automotive industry towards electric vehicles could adversely affect NTIC’s business.
• NTIC’s liquidity and financial position rely on the receipt of fees for services provided to its joint ventures and dividend distributions from its joint ventures. No assurance can be provided that NTIC will continue to receive such fees and dividend distributions in amounts NTIC historically has received or anticipates receiving.
• Since a significant portion of NTIC’s earnings results from NTIC’s equity income from joint ventures, and since NTIC’s equity income from joint ventures varies from quarter to quarter, NTIC’s earnings are subject to quarterly fluctuations.
• Risks Related to NTIC’s International Business and the Foreign Markets in which NTIC Operates
• NTIC’s international business, which is conducted primarily through its subsidiaries and joint ventures, requires management attention and financial resources and exposes NTIC to difficulties and risks presented by international economic, political, legal, accounting, and business factors.
• Out of NTIC’s joint ventures, NTIC’s joint venture in Germany is the most significant in terms of assets and income to NTIC. If sales of NTIC’s products and services by this joint venture were to significantly decline or if NTIC’s relationships with this joint venture were to significantly deteriorate, NTIC’s operating results likely would be adversely affected.
• The ongoing war between Russia and Ukraine and the conflicts in the Middle East may adversely affect NTIC’s business and results of operations.
• The operations of NTIC China may be adversely affected by China’s evolving economic, political, and social conditions, as well as increasing tensions between the United States and China.
• Intellectual property rights are difficult to enforce in China, which could harm NTIC’s business, results of operations, or financial condition.
• Uncertainties with respect to the Chinese legal system may adversely affect the operations of NTIC China.
• Failure to comply with the U.S. Foreign Corrupt Practices Act could subject NTIC to, among other things, penalties and legal expenses that could harm its reputation and have a material adverse effect on its business, results of operations, and financial condition.
• Fluctuations in foreign currency exchange rates could result in declines in NTIC’s earnings and changes in NTIC’s foreign currency translation adjustments.
• Economic uncertainty in developing markets could adversely affect NTIC’s revenue and earnings.
• NTIC faces intense competition in almost all of its product lines, including from competitors that have substantially greater resources than NTIC does. No assurance can be provided that NTIC will be able to compete effectively, which would harm its business and operating results.
• NTIC’s ZERUST® rust and corrosion inhibiting products and services generate a significant portion of NTIC’s net sales and the net sales of NTIC’s joint ventures. Accordingly, if sales of these products and services were to decline, NTIC’s operating results would be adversely affected.
• If NTIC is unable to continue to enhance its existing products and develop and market new products that respond to customer needs and achieve market acceptance, NTIC may experience a decrease in demand for its products, and its business could suffer.
• NTIC has invested and intends to continue to invest additional research and development and marketing efforts and resources into the application of its corrosion prevention solutions into the oil and gas industry and the continued launch of its Natur-Tec® resin compounds and finished products. No assurance can be provided, however, that NTIC’s investments in these new markets and products will be successful and result in additional revenue to NTIC.
• NTIC’s strategy of expanding its corrosion prevention solutions into the oil and gas industry and continuing the expansion of its Natur-Tec® bioplastics resin compounds and finished products is risky and may not prove to be successful, which could harm NTIC’s operating results and financial condition.
• The commercial success of NTIC’s Natur-Tec® resin compounds and finished products depends on the widespread market acceptance of products manufactured with bio-based and biodegradable resins.
• NTIC relies on its joint ventures, distributors, manufacturer’s sales representatives, and other agents to market and sell its products.
• NTIC may be subject to product liability claims or other claims arising out of the activities of its joint ventures, which could adversely affect NTIC and its business.
• The sale of ZERUST® rust and corrosion inhibiting products into the oil and gas industry is risky in light of the hazards typically associated with such operations and the significant amount of potential liability involved, which could adversely affect NTIC’s business if ZERUST® rust and corrosion inhibiting products are involved, even if the cause of such events was not related to NTIC’s products.
• The sale of ZERUST® rust and corrosion inhibiting products into the oil and gas industry is dependent on certain macroeconomic factors, including seasonality of installations, fluctuations of crude oil prices, global events and regulatory guidelines.
• Although NTIC’s 85% owned subsidiary, Zerust Brazil, recently secured a secured a three-year offshore oil and gas production asset preservation contract with an estimated total value of approximately R$70 million (US$13 million), no assurance can be provided that such total amount will be realized by NTIC during the next three years.
• The expansion of NTIC’s corrosion prevention solutions into the oil and gas industry and the continued launch of NTIC’s Natur-Tec® resin compounds and finished products may require additional capital in the future, which may not be available or may be available only on unfavorable terms. In addition, any equity financings may be dilutive to NTIC’s stockholders.
• NTIC’s business, properties, and products are subject to governmental regulation and taxes, compliance with which may require NTIC to incur expenses or modify its products or operations, and which may expose NTIC to penalties for non-compliance. Governmental regulation also may adversely affect the demand for some of NTIC’s products and its operating results.
• Fluctuations in NTIC’s effective tax rate could have a significant impact on NTIC’s financial position, results of operations, or cash flows.
• Certain of NTIC’s operations are subject to regulation by the U.S. Food and Drug Administration.
• Any change in accounting principles generally accepted in the United States of America requiring NTIC to consolidate its joint ventures could adversely affect NTIC’s operating results.
• Risks Related to NTIC’s Intellectual Property
• NTIC’s reliance upon patents, trademark laws, trade secrets, and contractual provisions to protect its proprietary rights may not be sufficient to protect its intellectual property from others who may sell similar products.
• The trading volume of NTIC’s common stock is typically very low, leaving NTIC’s common stock open to risk of high volatility.
• The price and trading volume of NTIC’s common stock has been, and may continue to be, volatile.
• A large percentage of NTIC’s outstanding common stock is held by insiders, and, as a result, the trading market for NTIC’s common stock is not as liquid as the stock of other public companies.
• If securities or industry analysts do not publish research or reports about NTIC’s business, or if they adversely change their recommendations regarding NTIC’s common stock, the market price for NTIC’s common stock and trading volume could decline.
• One of NTIC’s principal stockholders beneficially owns a significant percentage of NTIC’s outstanding common stock and is affiliated with NTIC’s President and Chief Executive Officer and, thus, may be able to influence matters requiring stockholder approval, including the election of directors, and could discourage or otherwise impede a transaction in which a third-party wishes to purchase NTIC’s outstanding shares at a premium.
• General Risk Factors
• Climate change, or legal, regulatory, or market measures to address climate change, may negatively affect our business and operations.
• Severe weather could have a material adverse effect on NTIC’s business.
• NTIC may grow its business through additional joint ventures, subsidiaries, alliances, and acquisitions, which could be risky and harm its business.
• NTIC relies on its management information systems , including its recently implemented Enterprise Resource Planning (“ERP”) system, for inventory management, distribution, and other functions. If these information systems fail to adequately perform these functions or if NTIC experiences an interruption in their operation, NTIC’s business and operating results could be adversely affected.
• NTIC’s business could be negatively impacted by cyber security threats.
• NTIC’s quarterly results are typically unpredictable and subject to variation.
• NTIC’s business is subject to a number of other miscellaneous risks that may adversely affect NTIC’s operating results, financial condition, or business.