This Management's Discussion and Analysis provides material historical and prospective disclosures intended to enable investors and other users to assess NTIC's financial condition and results of operations. Statements that are not historical are forward-looking and involve risks and uncertainties discussed under the heading "Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Forward-Looking Statements." The following discussion of the results of the operations and financial condition of NTIC should be read in conjunction with NTIC's consolidated financial statements and the related notes thereto included under the heading "Part I. Item
1. Financial Statements."

Business Overview

NTIC develops and markets proprietary environmentally beneficial products and services in over 55 countries either directly or via a network of joint ventures, independent distributors and agents. NTIC's primary business is corrosion prevention marketed mainly under the ZERUSTŪ brand. NTIC has been selling its proprietary ZERUSTŪ rust and corrosion inhibiting products and services to the automotive, electronics, electrical, mechanical, military and retail consumer markets for over 35 years, and more recently, has targeted and expanded into the oil and gas industry. NTIC also sells a portfolio of bio-based and biodegradable (compostable) polymer resin compounds and finished products marketed under the Natur-TecŪ brand. These products are intended to reduce NTIC's customers' carbon footprint and provide environmentally sound disposal options.

NTIC's ZERUSTŪ rust and corrosion inhibiting products include plastic and paper packaging, liquids and coatings, rust removers and cleaners, diffusers and variations of these products designed specifically for the oil and gas industry. NTIC's also offers worldwide on-site technical consulting for rust and corrosion prevention issues. NTIC's technical service consultants work directly with the end users of NTIC's ZERUSTŪ rust and corrosion inhibiting products to analyze their specific needs and develop systems to meet their technical requirements. In North America, NTIC sells its ZERUSTŪ corrosion prevention solutions through a direct sales force as well as a network of independent distributors and agents. Internationally, NTIC sells its ZERUSTŪ corrosion prevention solutions through its majority owned Brazilian subsidiary, Zerust Prevenįão de Corrosão S.A. (Zerust Brazil), and joint venture arrangements in North America, Europe and Asia.

One of NTIC's strategic initiatives is to expand into and penetrate other markets for its ZERUSTŪ corrosion prevention solutions. For the past several years, NTIC has focused its sales and marketing efforts on the oil and gas industry since the infrastructure that supports that industry is typically constructed using metals that are highly susceptible to corrosion and NTIC believes that its ZERUSTŪ corrosion prevention solutions will minimize maintenance downtime on critical oil and gas industry infrastructure, extend the life of such infrastructure and reduce the risk of environmental pollution due to corrosion leaks.

Petroleo Brasileiro S.A. (Petrobras), an oil company located in Brazil, has conducted extensive multi-year product field trials of NTIC's ZERUSTŪ rust and corrosion inhibiting products against competitive alternatives. During fiscal 2010, Zerust Brazil received a Phase 1 contract for an initial implementation of $1.4 million (BRL$ 2.5 million) in ZERUSTŪ products which was delivered in fiscal 2010 and fiscal 2011. During fiscal 2011, Zerust Brazil signed a Phase 2 contract with Petrobras to supply $2.4 million (BRL$ 4.21 million) in ZERUSTŪ products. During fiscal 2012, Petrobras expanded this Phase 2 contract to supply an additional $657,000 (BRL$ 1.15 million) in ZERUSTŪ products, bringing the total Phase 2 contract value to $3.1 million (BRL$ 5.36 million) in ZERUSTŪ products. Zerust Brazil delivered the entire balance of $2.45 million (BRL$ 4.38 million) of remaining product for the Phase 2 contracts to Petrobras in March 2012; and this revenue is reflected in NTIC's net sales, excluding joint ventures, for the three and nine months ended May 31, 2012 and 2011.

NTIC is also pursuing opportunities to market its ZERUSTŪ rust and corrosion prevention solutions to other targeted potential customers in the oil and gas industry across several countries through NTIC's joint venture partners and other strategic partners. NTIC believes the sale of its ZERUSTŪ corrosion prevention solutions to customers in the oil and gas industry will involve a long sales cycle, likely including a one- to two-year trial period with each customer and a slow integration process thereafter.

Natur-TecŪ bio-based and biodegradable plastics are manufactured using NTIC's patented and/or proprietary technologies and are intended to replace conventional petroleum-based plastics. The Natur-TecŪ bioplastics portfolio includes biopolymer resin compounds which are available in several grades tailored for a variety of applications, such as blown-film extrusion, extrusion coating, injection molding and rigid, engineered plastics, and finished products, including shopping and grocery bags, lawn and leaf bags, can liners, pet waste collection bags, cutlery, packaging foam and coated paper products, which are engineered to be fully biodegradable in a composting environment. In North America, NTIC markets its Natur-TecŪ resin compounds and finished products primarily through a network of national and regional distributors and independent agents. NTIC continues to see significant opportunities for finished bioplastic products and, therefore, continues to strengthen and expand its North American distribution network for finished Natur-TecŪ bioplastic products. Internationally, NTIC sells its Natur-TecŪ resin compounds and finished products both directly and through some of its joint venture arrangements, including in particular its joint venture in India, Harita NTI Limited (HNTI).

In fiscal 2011, NTIC and HNTI signed a memorandum of understanding with the Indian conglomerate ITC Limited to jointly develop and commercialize biopolymer extrusion coated paper products targeted at the consumer goods packaging market in India. The two companies will jointly develop solutions in the Indian market towards providing biodegradable/compostable products such as food service ware, food packaging, personal care product packaging and other fast-moving consumer goods packaging. In 2011, the Indian government enacted legislation banning the use of certain non-biodegradable plastics for laminate packaging for tobacco and food segments. As a result, HNTI has experienced significant demand for Natur-TecŪ compostable resins in this potentially large market for laminate packaging. In addition, during fiscal 2011, NTIC entered into an agreement with Italy-based Naturfuels s.r.l. to distribute its Natur-TecŪ bioplastic materials and products in the Italian market. Under the terms of the distribution agreement, NTIC will supply Naturfuels with NTIC's patented high-strength Natur-TecŪ compostable film grade resin compounds to be used for the production of bio-plastic shopping and garbage bags on conventional plastic film production equipment. In 2011, the Italian government passed legislation banning the use of non-biodegradable plastic shopping bags. However, enforcement of this law has recently been delayed until late 2012 to allow Italian bag manufacturers to exhaust their current supply of conventional polyolefinic resins before completely changing to certified compostable resins. As a result, resin sales to Naturfuels are not expected to have a material effect on NTIC's operating results until late in fiscal 2012 or 2013.

NTIC's Joint Venture Network

NTIC participates, either directly or indirectly, in 24 active joint venture arrangements in North America, Europe and Asia. Each of these joint ventures generally manufactures and markets products in the geographic territory to which it is assigned. While most of NTIC's joint ventures exclusively sell rust and corrosion inhibiting products, some of the joint ventures sell NTIC's Natur-TecŪ resin compounds. NTIC historically has funded its joint venture investments with cash generated from operations.

NTIC's receipt of funds from its joint ventures is dependent upon fees for services that NTIC provides to its joint ventures, based primarily on the revenues of the joint ventures, and NTIC's receipt of dividend distributions from the joint ventures. NTIC receives fees for services provided to its joint ventures based primarily on the net sales of the individual joint ventures. The fees for services provided to joint ventures are determined based on either a flat fee or a percentage of sales depending on local laws and tax regulations. With respect to NTIC's primary joint venture in Germany (EXCOR), NTIC recognizes an agreed upon quarterly fee for such services. With respect to NTIC's ASEAN joint venture holding company (NTI ASEAN), NTIC does not receive a fee for such services, but rather receives a bi-annual dividend based on available cash. NTIC recognizes equity income from its joint ventures based on the overall profitability of its joint ventures. Such profitability is subject to variability from quarter to quarter which, in turn, subjects NTIC's earnings to variability from quarter to quarter. The profits of NTIC's joint ventures are shared by the respective joint venture owners in accordance with their respective ownership percentages. NTIC typically owns only 50% or less of each of its joint venture entities and thus does not control the decisions of these entities regarding whether to pay dividends and, if paid, how much they should be in a given year. The payment of a dividend by an entity is determined by a joint vote of the owners and is not at the sole discretion of NTIC.

NTIC does not consolidate the results of its joint ventures in its consolidated financial statements. NTIC's investments in its joint ventures are accounted for using the equity method. Although Zerust Brazil originated as a joint venture of NTIC, it is no longer considered a joint venture, but rather it is a majority owned subsidiary of NTIC and thus, unlike NTIC's joint ventures, its results are consolidated in NTIC's consolidated financial statements. NTIC holds 85% of the equity and 85% of the voting rights of Zerust Brazil.

Although NTIC owns a 62.5% ownership interest in Polymer Energy LLC, NTIC has not consolidated the Polymer Energy LLC joint venture in NTIC's consolidated financial statements for the three and nine months ended May 31, 2012 or any prior period since Polymer Energy LLC has had limited activity since its inception in 2003 and NTIC believes that the impact of not consolidating this entity on NTIC's consolidated financial statement has been immaterial. No license fees were received by Polymer Energy LLC and no other financial activity took place during the three and nine months ended May 31, 2012, and accordingly, during such period, NTIC received and recorded no fees for services provided to joint ventures in its consolidated financial statements attributable to its ownership interest in Polymer Energy LLC.

NTIC considers EXCOR and NTI ASEAN to be individually significant to NTIC's consolidated assets and income; and therefore, provides certain additional information regarding these entities in the notes to NTIC's consolidated financial statements and in this section of this report.

Financial Overview

NTIC's management, including its chief executive officer who is NTIC's chief operating decision maker, reports and manages NTIC's operations in two reportable business segments based on products sold, customer base and distribution center: ZERUSTŪ products and services and Natur-TecŪ products.

NTIC's consolidated net sales increased 53.0% and 26.0% during the three and nine months ended May 31, 2012 compared to the three and nine months ended May 31, 2011. These increases were primarily a result of increased sales made by Zerust Brazil and increased sales of Natur-TecŪ products and ZERUSTŪ rust and corrosion inhibiting packaging products and services. During the three and nine months ended May 31, 2012, 92.5% and 92.2% of NTIC's consolidated net sales, respectively, were derived from sales of ZERUSTŪ products and services, which increased 48.7% to $7,220,258 and 22.1% to $16,243,683 during the three and nine months ended May 31, 2012, respectively, compared to the same respective prior fiscal year periods due to increased demand from existing customers and the addition of new customers. NTIC has focused its sales efforts of ZERUSTŪ products and services by strategically targeting customers with specific corrosion issues in new market areas, including the oil and gas industry and other industrial sectors that offer sizable growth opportunities. NTIC's consolidated net sales for the three and nine months ended May 31, 2012 included $2,787,867 and $4,004,399, respectively, of sales made by Zerust Brazil, and of those sales, $2,300,139 and $2,451,000, respectively, in sales were made to the oil and gas industry sector in Brazil. Overall demand for ZERUSTŪ products and services depends heavily on the overall health of the markets in which NTIC sells its products, including in particular the automotive market.

During the three and nine months ended May 31, 2012, 7.5% and 7.8%, respectively, of NTIC's consolidated net sales were derived from sales of Natur-TecŪ products compared to 4.8% during the three and nine months ended May 31, 2011. Net sales of Natur-TecŪ products increased 138.4% and 104.1% during the three and nine months ended May 31, 2012, respectively, compared to the three and nine months ended May 31, 2011. These increases were due to increased sales to Natur-TecŪ distributors on the West Coast of the United States. NTIC has continued to strengthen and expand its West Coast distribution network in California, as well as expand its industrial distribution reach to geographical "green" hotspots such as Oregon, Washington, Minnesota and New England. Additionally, NTIC has continued to target key national and regional retailers utilizing independent sales agents. Demand for the Natur-TecŪ products depends primarily on market acceptance and the extent of NTIC's distribution network.

Cost of goods sold as a percentage of net sales decreased to 53.1% and 61.5% during the three and nine months ended May 31, 2012 compared to 67.8% and 65.5% during the three and nine months ended May 31, 2011, respectively, primarily as a result of increased sales by Zerust Brazil of higher average gross margin products.

NTIC's equity in income of joint ventures increased 5.7% and decreased 3.2% to $1,822,972 and $4,405,327, respectively, during the three and nine months ended May 31, 2012 compared $1,724,477 and $4,549,267 during the three and nine months ended May 31, 2011.

During three months ended May 31, 2012, the shareholders of NTIC's joint venture in India, Harita NTI Limited, waived past due fees for services from both fiscal 2011 and fiscal 2012 in the aggregate amount of $985,204. Since the waiver of fees was taken by all shareholders mutually, such action did not directly impact the earnings of either NTIC or HNTI. However, as a result of such action, NTIC recognized a reversal of fees for services provided to joint ventures of $492,602 and a corresponding increase in equity in income of joint ventures during the three months ended May 31, 2012. The primary purpose of the waiver of fees was to strengthen HNTI's working capital going forward. In addition, in fiscal 2012, HNTI experienced write downs of an aggregate of USD$605,000 related to the write down to market value of a Polymer Energy unit that HNTI was previously attempting to sell. As a result, during the nine months ended May 31, 2012, NTIC absorbed 50% of this loss and, accordingly, recognized a decrease in equity in income of $302,500 during the nine months ended May 31, 2012.

NTIC recognized a 54.8% and 22.3% decrease in fees for services provided to joint ventures during the three and nine months ended May 31, 2012 compared to the three and nine months ended May 31, 2011, respectively. These decreases were primarily a result of the waiver of fees by the shareholders of HNTI as described previously and a 13.2% and 3.5% decrease in total net sales of NTIC's joint ventures to $28,954,210 and $83,746,872 during the three and nine months ended May 31, 2012, respectively, compared to $33,339,304 and $86,744,626 for the three and nine months ended May 31, 2011, respectively. Total net sales of NTIC's joint ventures were adversely affected in part by the European sovereign debt crises, which NTIC believes adversely affected the net sales of NTIC's European joint ventures as well as certain of NTIC's other non-European joint ventures, and the weakening of the EURO and other currencies compared to the U.S. dollar.

NTIC's total operating expenses increased slightly to $3,780,363 during the three months ended May 31, 2012 compared to $3,747,301 for the three months ended May 31, 2011 and increased slightly to $10,498,659 during the nine months ended May 31, 2012 compared to $10,420,333 for the nine months ended May 31, 2011. These slight increases were primarily the result of increases in selling expenses, general and administrative expenses and expenses incurred in support of joint ventures, partially offset by decreases in research and development expenses, and reflected NTIC's efforts to hold expenses stable given the uncertainties in the global economy.

NTIC expenses all costs related to product research and development as incurred. NTIC incurred $1,067,454 and $2,856,536 of expense during the three and nine months ended May 31, 2012 and 2011, respectively, in connection with its research and development activities. These represent net amounts after being reduced by reimbursements related to certain research and development contracts. NTIC anticipates that it will spend between $3,900,000 and $4,100,000 in total during fiscal 2012 on research and development activities related to its new technologies. This estimate is a net range after being reduced by anticipated reimbursements related to certain research and development contracts.

Net income attributable to NTIC increased 42.1% to $1,454,037, or $0.33 per diluted common share, for the three months ended May 31, 2012 compared to $1,023,549, or $0.23 per diluted common share, for the three months ended May 31, 2011. Net income attributable to NTIC increased 5.1% to $3,018,987, or $0.68 per diluted common share, for the nine months ended May 31, 2012 compared to $2,872,369, or $0.66 per diluted common share, for the nine months ended May 31, 2011. These increases were primarily the result of increases in sales and earnings of NTIC's North American businesses as well as the increase in sales and earnings of NTIC's subsidiary in Brazil, partially offset by decreases in income from NTIC's joint ventures. NTIC anticipates that its quarterly net income will remain subject to significant volatility primarily due to the financial performance of its joint ventures and sales of its ZERUSTŪ products and services into the oil and gas industry and Natur-TecŪ bioplastics products, which sales fluctuate more on a quarterly basis than the traditional ZERUSTŪ business.

NTIC's working capital was $11,367,393 at May 31, 2012, including $4,465,898 in cash and cash equivalents compared to $9,085,748 at August 31, 2011, including $3,266,362 in cash and cash equivalents.

Results of Operations

The following tables set forth NTIC's results of operations for the three and
nine months ended May 31, 2012 and 2011.

                                                                                     Three Months Ended
                                                                     % of                               % of              $              %
                                                May 31, 2012       Net Sales       May 31, 2011       Net Sales        Change         Change
Net sales, excluding joint ventures            $    7,175,825            91.9 %   $    4,367,589            85.6 %   $ 2,808,236          64.3 %
Net sales, to joint
ventures                                              629,079             8.1 %          733,189            14.4 %      (104,110 )       (14.2 %)
Cost of goods
sold                                                4,143,514            53.1 %        3,458,851            67.8 %       684,663          19.8 %
Equity in income of joint
ventures                                            1,822,972            23.4 %        1,724,477            33.8 %        98,495           5.7 %
Fees for services provided to joint ventures          734,337             9.4 %        1,623,585            31.8 %      (889,248 )       (54.8 %)
Selling expenses                                    1,270,996            16.3 %        1,167,630            22.9 %       103,366           8.9 %
General and administrative expenses                 1,147,744            14.7 %        1,126,823            22.1 %        20,921           1.9 %
Expenses incurred in support of joint
ventures                                              294,169             3.8 %          244,959             4.8 %        49,210          20.1 %
Research and development expenses              $    1,067,454            13.7 %   $    1,207,889            23.7 %   $  (140,435 )       (11.6 %)



                                                                                    Nine Months Ended
                                                                   % of                              % of              $              %
                                              May 31, 2012       Net Sales      May 31, 2011       Net Sales        Change         Change
Net sales, excluding joint ventures           $  15,579,086            88.5 %   $  11,906,999            85.2 %   $ 3,672,087          30.8 %
Net sales, to joint
ventures                                          2,032,260            11.5 %       2,070,338            14.8 %       (38,078 )        (1.8 %)
Cost of goods
sold                                             10,833,072            61.5 %       9,155,788            65.5 %     1,677,284          18.3 %
Equity in income of joint
ventures                                          4,405,327            25.0 %       4,549,267            32.6 %      (143,940 )        (3.2 %)
Fees for services provided to joint
ventures                                          3,477,715            19.8 %       4,477,514            32.0 %      (999,799 )       (22.3 %)
Selling
expenses                                          3,393,564            19.3 %       3,088,237            22.1 %       305,327           9.9 %
General and administrative expenses               3,518,569            20.0 %       3,300,626            23.6 %       217,943           6.6 %
Expenses incurred in support of joint
ventures                                            729,990             4.1 %         722,955             5.2 %         7,035           1.0 %
Research and development expenses             $   2,856,536            16.2 %   $   3,308,515            23.7 %   $  (451,979 )       (13.7 %)

Net Sales. NTIC's consolidated net sales increased 53.0% and 26.0% to $7,804,904 and $17,611,346, respectively, during the three and nine months ended May 31, 2012 compared to the three and nine months ended May 31, 2011. NTIC's consolidated net sales to unaffiliated customers excluding NTIC's joint ventures increased 64.3% and 30.8% to $7,175,825 and $15,579,086, respectively, during the three and nine months ended May 31, 2012 compared to the same respective prior year periods. These increases were primarily a result of increased sales made by Zerust Brazil and increased sales of Natur-TecŪ products and ZERUSTŪ rust and corrosion inhibiting packaging products and services. Net sales to joint ventures decreased 14.2% and 1.8% to $629,079 and $2,032,260 during the three and nine months ended May 31, 2012, respectively, compared to the same respective prior year periods. These decreases correlated with the 13.2% and 3.5% decrease in total net sales of NTIC's joint ventures for the three and nine months ended May 31, 2011.

The following table sets forth NTIC's net sales by product category for the three and nine months ended May 31, 2012 and 2011 by segment:

                                                                       Three Months Ended                    Nine Months Ended
                                                                 May 31, 2012       May 31, 2011      May 31, 2012      May 31, 2011
ZERUSTŪ sales                                                   $    7,220,258     $    4,855,535     $  16,243,683     $  13,307,276
Natur-TecŪ sales                                                       584,646            245,243         1,367,663           670,061
Total North American net sales*                                 $    7,804,904     $    5,100,778     $  17,611,346     $  13,977,337


__________________

During the three and nine months ended May 31, 2012, 92.5% and 92.2% of NTIC's consolidated net sales, respectively, were derived from sales of ZERUSTŪ products and services, which increased 48.7% and 22.1% to $7,220,258 and $16,243,683 during the three and nine months ended May 31, 2012, respectively, compared to $4,855,535 and $13,307,276 during the same respective prior year periods, due primarily from increased demand from existing customers and the addition of new customers. NTIC has focused its sales efforts of ZERUSTŪ products and services by strategically targeting customers with specific corrosion issues in new market areas, including the oil and gas industry and other industrial sectors that offer sizable growth opportunities.

NTIC's consolidated net sales during the three and nine months ended May 31, 2012 included $2,787,867 and $4,004,399, respectively, of sales made by Zerust Brazil, and of those sales, $2,300,139 and $2,451,000, respectively, in sales were made to the oil and gas industry sector in Brazil.

During the three and nine months ended May 31, 2012, 7.4% and 7.8% of NTIC's consolidated net sales, respectively, were derived from sales of Natur-TecŪ products, which increased 138.4% and 104.1% to $584,646 and $1,367,663 during the three and nine months ended May 31, 2012, respectively, compared to the three and nine months ended May 31, 2011. These increases were due to increased sales to Natur-TecŪ distributors on the West Coast of the United States. NTIC has continued to strengthen and expand its West Coast distribution network in California, as well as expand its industrial distribution reach to geographical "green" hotspots such as Oregon, Washington, Minnesota and New England. Additionally, NTIC has continued to target key national and regional retailers utilizing independent sales agents. Demand for the Natur-TecŪ products depends primarily on market acceptance and the extent of NTIC's distribution network.

Cost of Goods Sold. Cost of goods sold increased 19.8% and 18.3% for the three and nine months ended May 31, 2012, respectively, compared to the three and nine months ended May 31, 2011 primarily as a result of increased net sales as described above. Cost of goods sold as a percentage of net sales decreased to 53.1% and 61.5% for the three and nine months ended May 31, 2012, respectively, compared to 67.8% and 65.5% for the three and nine months ended May 31, 2011, respectively, primarily as a result of increased sales by Zerust Brazil of higher average gross margin products.

Equity in Income of Joint Ventures. NTIC's equity in income of joint ventures increased 5.7% and decreased 3.2% to $1,822,972 and $4,405,327, respectively, . . .