Note 7 - Land Use Right and Patents

9 Months Ended

Sep. 30, 2013

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

Note 7.   Land Use Right and Patents

Northern Altair signed an agreement in April 2012 to receive a Land Use Right for a period of 50 years with respect to approximately 66 acres of industrial land in Wu’an, China from Heibei Wu’an Municipal People’s Government. Northern Altair was required to bid for the Land Use Right. Northern Altair completed the bidding process and paid approximately $13,670,000 which included various land transfer taxes and fees of approximately $1,670,000. Closing occurred on November 9, 2012 and Northern Altair received the Land Use Right (Wu State-Used, State-Owned Land Use) on this date. This Land will be used for the Company’s nLTO and energy storage system manufacturing operations in China.

Northern Altair signed an agreement in May 2013 to receive a second Land Use Right for a period of 50 years with respect to approximately 40 acres of industrial land in Wu’an, China from Heibei Wu’an Municipal People’s Government. Northern Altair was required to bid for the Land Use Right. Northern Altair completed the bidding process and paid approximately $8,600,000 which included various land transfer taxes and fees of approximately $1,200,000. Closing occurred on May 27, 2013 and Northern Altair received the Land Use Right (Wu State-Used, State-Owned Land Use) on this date. This Land will be used for the Company’s nLTO and energy storage system manufacturing operations in China. Shortly after closing, Northern Altair applied for approximately $8.6 million in cash incentives from the City of Wu’an, China. The amortized land use right’s balances as of September 30, 2013 and December 31, 2012 were:

In thousands of dollars
	September 30, 2013			December 31, 2012
Land use right	$	22,689		$	13,670
Less accumulated amortization		(330	)		(45	)
Total land use right, net	$	22,359		$	13,625

The land use rights were recorded at cost and will be amortized on a straight-line basis over their 50 year useful life at approximately $445,000 per year. Amortization expense for the nine months ended September 30, 2013 totaled $285,000.

Our patents are associated with the nanomaterials and titanium dioxide pigment technology. We are amortizing these assets on a straight-line basis over their useful lives. The amortized patents’ balances as of September 30, 2013 and December 31, 2012 were:

In thousands of dollars
	September 30, 2013			December 31, 2012
Patents and patent applications	$	1,366		$	1,366
Less accumulated amortization		(1,149	)		(1,092	)
Total patents and patent applications	$	217		$	274

The weighted average amortization period for patents is approximately 2.9 years. Amortization expense, which represents the amortization relating to the identified amortizable patents, for the nine months ended September 30, 2013 and December 31, 2012, was $57,000. For each of the next two years, amortization expense relating to patents is expected to be approximately $76,000 per year. Amortization expense is expected to be approximately $65,000 in the third year.