Note 3 - NTI ASEAN

12 Months Ended

Aug. 31, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

3.           NTI ASEAN

NTI ASEAN LLC (NTI Asean) is an entity that holds investments in eight entities operating in the Association of Southeast Asian Nations (ASEAN) region, including the following countries: China, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand.

Prior to September 1, 2012, the Company owned 50% of the equity and voting rights of NTI Asean and accounted for its investment using the equity method, as its ownership was considered to be less than a majority.  On September 1, 2012, the Company obtained an additional 10% ownership interest in NTI Asean in exchange for a license agreement, and thereafter holds 60% of the equity and voting rights of NTI Asean.

The Company accounted for the transaction resulting in the additional ownership as a business combination.  Beginning in the first quarter of fiscal 2013, the Company consolidated the results of NTI Asean.  Immediately prior to the transaction, the Company re-measured the fair value of NTI Asean and determined that there was no difference between the fair value and the book value of the entity.  As a result, there was no accounting impact related to the business combination in the consolidated statements of operations.

The Company determined the fair value of NTI Asean using the capitalized income method, including a capitalization rate of 25%.  The allocation of the total transaction amount was as follow:

Net assets acquired (liabilities assumed):
Cash and cash equivalents	$	1,613,000
Accounts receivables		1,342,000
Investments in joint ventures		4,967,000
Value of assets	$	7,922,000
Purchase price:
Fair value of non-controlling interest	$	3,961,000
Value of previously held interest		3,961,000
Total consideration	$	7,922,000

The following is a summary of certain line items of the Company’s consolidated statement of operations for the fiscal year ended August 31, 2012 as reported and on a pro forma basis, assuming the consolidation of NTI Asean on the Company’s consolidated financial statements as of the beginning of such period:

	As Reported		NTI Asean			Eliminated in Consolidation			Pro Forma
Net sales	$	22,781,653	$	—		$	—		$	22,781,653
Cost of goods sold		14,528,785		—			—			14,528,785
Gross profit		8,252,868		—			—			8,252,868
Joint venture operations		10,142,707		3,395,354			(1,414,248	)		12,123,813
Operating expenses		13,825,806		185,700			—			14,011,506
Operating income		4,569,769		3,209,654			(1,414,248	)		6,365,175
Income before income tax expense		4,616,646		3,209,654			(1,414,248	)		6,412,052
Income tax expense		1,041,000		381,466			—			1,422,466
Net income		3,575,646		2,828,188			(1,414,248	)		4,989,586
Net income attributable to non-controlling interest		127,450		(1,131,275	)		—			(1,003,825	)
Net income attributable to NTIC		3,448,196		1,696,913			(1,414,248	)		3,730,861
Net income per common diluted share	$	0.78	$	0.38		$	(0.32	)	$	0.84