UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
                                (Amendment No. 3)

[X]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM  _______________ TO
         _______________

                            ALTAIR INTERNATIONAL INC.
                            -------------------------
             (Exact name of registrant as specified in its charter)

       Province of
        Ontario,
         Canada                       1-12497                       None
         ------                       -------                       ----
     (State or other            (Commission File No.)           (IRS Employer
      jurisdiction                                           Identification No.)
    of incorporation)

                         1725 Sheridan Avenue, Suite 140
                               Cody, Wyoming 82414
                               -------------------
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (307) 587-8245

[ ]      Securities registered pursuant to Section 12(b) of the Act:  None

[X]      Securities registered pursuant to Section 12(g) of the Act:

Common Shares, no par value                     Nasdaq National Market
---------------------------                     ----------------------
     (Title of Class)                (Name of each exchange on which registered)

         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 by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K.                                                 [ ]

         The aggregate market value of the common shares held by  non-affiliates
of the  Registrant  on March 15, 2001,  based upon the closing sale price of the
common  shares on the NASDAQ  Stock Market of $2.75 per share on March 15, 2001,
was approximately  $46,160,000.  Common Shares held by each officer and director
and by each other person who may be deemed to be an affiliate of the  Registrant
have been excluded.  As of March 15, 2001 the  Registrant had 19,510,488  common
shares outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None
================================================================================

                                       1
<PAGE>

         Altair  International Inc. (the "Company") is filing this Amendment No.
3 on Form 10-K/A (this  "Amendment")  to its Annual  Report on Form 10-K for the
year ended  December  31, 2000 (the "Form  10-K") filed with the SEC on April 2,
2001,  as amended by Amendment No. 1 filed on April 17, 2001 and Amendment No. 2
filed on May 2, 2001, for the following purposes:

o        to revise Item 1 (Business) to more accurately and completely  describe
         Altair's Tennessee mineral property;
o        to revise  Item 8  (Financial  Statements  and  Supplementary  Data) to
         revise earnings per share information in the Consoldiated  Statement of
         Operations and to revised Notes 2, 6, and 7;
o        to revise Item 6  (Selected  Financial  Data) and Item 7  (Management's
         Descussion  and  Analysis) to  correspond to the changes made to Item 1
         and Item 8; and
o        to revise Item 14 (Exhibits,  Financial Statement Schedules and Reports
         on form  8-K) to  update  the  Exhibit  Index  and  description  of the
         financial statements.

         All  subseauent  references  to "Form  10-K" shall refer to the initial
Form 10-K, as amended by this Amendment.

                                       2
<PAGE>

                                     PART I

This Annual Report on Form 10-K for the year ended December 31, 2000 (this "Form
10-K") contains  "forward-looking  statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the  "Securities  Act"),  and Section
21E of the Exchange Act of 1934, as amended (the "Exchange  Act"),  that involve
risks and securities  uncertainties.  Purchasers of any of the common shares, no
par value (the "common shares") of Altair  International  Inc.  ("Altair" or the
"Company") are cautioned that the Company's  actual results will differ (and may
differ   significantly)  from  the  results  discussed  in  the  forward-looking
statements.  Factors that could cause or contribute to such differences  include
those factors  discussed  herein under "Factors That May Affect Future  Results"
and  elsewhere in this Form 10-K  generally.  The reader is also  encouraged  to
review  other  filings  made by the Company  with the  Securities  and  Exchange
Commission (the  "Commission")  describing  other factors that may affect future
results of the Company.

Item 1:      Business

         Certain  technical  terms  used  in the  following  description  of our
business are defined in a glossary set forth on page 16. We have identified such
terms by italicizing  them the first time they are used in the text.  Unless the
context   requires   otherwise,   all  references  to  "Altair,"  "we,"  "Altair
International  Inc.,"  or the  "Company"  in this  Form  10-K  refer  to  Altair
International Inc. and all of its subsidiaries.

General

         Altair  International  Inc.  was  incorporated  under  the  laws of the
Province  of  Ontario,  Canada in April 1973 for the  purpose of  acquiring  and
exploring mineral properties.  During the period from inception through 1994, we
acquired and explored multiple mineral  properties.  In each case,  sub-economic
mineralization was encountered and the exploration was abandoned. Since 1994, we
have also  devoted  substantial  resources  to the  development  and  testing of
mineral  processing  equipment  for use in the recovery of fine,  heavy  mineral
particles.

         In November 1999, we acquired all patent  applications,  technology and
tangible  assets  related  to a  hydrometallurgical  process  developed  by  BHP
Minerals  International,  Inc. ("BHP")  primarily for the production of titanium
dioxide  ("TiO2")  products  from  titanium  bearing ores or  concentrates  (the
"titanium processing  technology"),  and all tangible equipment and other assets
used  by BHP to  develop  and  implement  the  titanium  processing  technology.
Although the titanium processing technology is capable of producing a variety of
titanium  products,   we  plan  to  initially  employ  the  titanium  processing
technology for the production and sale of TiO2  nanoparticles.  See  "--Titanium
Pigment Processing Technology."

         We have also leased, and are exploring,  approximately  14,000 acres of
land near Camden,  Tennessee  (the  "Tennessee  mineral  property") to determine
whether it would be  amenable to  large-scale  mining for  titanium  and zircon.
Preliminary  reports  suggest  that  the  Tennessee  mineral  property  contains
significant  amounts of valuable heavy minerals,  primarily titanium and zircon,
and is suitable  for a  large-scale  sand  mining  operation.  See  "--Tennessee
Mineral Property."

         During 1996,  we acquired the rights to the Campbell  Centrifugal  Jig,
since modified and renamed the Altair  Centrifugal Jig (the "jig"). The jig is a
machine that uses a rotating  circular  screen and  pulsating  water to separate
valueless  mineral  particles from more valuable mineral  particles based on the
differences in their specific  gravity.  In tests, the jig has proven capable of
segregating  and  recovering  extremely  fine  mineral  particles  which are not
economically  recoverable  using  existing  conventional   techniques.   We  are
presently  testing  and  customizing  the jig for use in the  recovery  of heavy
minerals such as titanium and zircon,  and we believe that the jig could also be
used to recover other minerals such as gold and for  environmental  remediation.
See "--Jig Technology and Proprietary Rights."

                                       3
<PAGE>

         To date,  we have derived no revenues  from product  sales or otherwise
and have experienced an operating loss in every year of operation. In the fiscal
year ended December 31, 2000, we experienced net losses of $5,914,474.

         Altair  currently  has  three  wholly-owned  subsidiaries,   Fine  Gold
Recovery Systems,  Inc., a Nevada  corporation  ("Fine Gold"),  Mineral Recovery
Systems,  Inc., a Nevada  corporation  ("MRS"),  and 660250 Ontario Limited,  an
Ontario  Corporation,   and  two  indirect  wholly-owned  subsidiaries,   Altair
Technologies, Inc., a Nevada corporation, and Tennessee Valley Titanium, Inc., a
Nevada corporation.


Titanium Pigment Processing Technology

         Acquisition  of the  Processing  Technology.  On November 15, 1999,  we
entered into an Asset  Purchase and Sale Agreement with BHP pursuant to which we
purchased all patent  applications,  technology and tangible assets related to a
hydrometallurgical  process  developed by BHP  primarily  for the  production of
titanium dioxide products from titanium bearing ores or concentrates  (i.e., the
titanium  processing  technology),  and all tangible  equipment and other assets
used by BHP to develop and implement  the titanium  processing  technology  (the
"titanium processing assets").

         The purchase price for the titanium processing  technology and titanium
processing  assets was  $9,625,500.  In  addition,  the Asset  Purchase and Sale
Agreement also requires us to pay to BHP, until the earlier of November 15, 2014
or the date we have paid an aggregate  royalty of  AUD$105,000,000,  a quarterly
royalty equal to:

     o   1.5% of the  international  market price of all  uncoated  TiO2 pigment
         produced  and sold as a result  of the use of the  titanium  processing
         technology  by the Company or a  transferee  at the  Company's  mineral
         properties in Tennessee;

     o   1.5% of the  international  market price of all  uncoated  TiO2 pigment
         produced  and sold as a result  of the use of the  titanium  processing
         technology by BHP or any affiliate of BHP at a specified  heavy mineral
         sand operation located near Auckland, New Zealand;

     o   3% of the  international  market  price of all  uncoated  TiO2  pigment
         produced  and sold as a result  of the use of the  titanium  processing
         technology  by  the  Company  or a  transferee  of the  Company  at any
         location other than  its Tennessee  mineral property or BHP's Auckland,
         New Zealand heavy mineral sand operation; and

     o   3% of the sales proceeds (F.O.B. the Company's facility, reduced by the
         amount of product  returns)  received by the Company or a transferee of
         the  Company  from the sale of any  products  other  than TiO2  pigment
         produced through its use of the titanium processing technology.

         In addition,  in connection with the Asset Purchase and Sale Agreement,
Altair and BHP entered into a Lease dated  November 15, 1999,  pursuant to which
we lease  approximately  20,000 square feet of  laboratory  and testing space at
BHP's testing facility in Reno, Nevada for a monthly rent of $15,000.  The Lease
grants us a right of first refusal in the event BHP intends to sell the building
and property subject to the Lease and includes an agreement to negotiate in good
faith with respect to our possible purchase of such building and property.

                                       4
<PAGE>

         Description  of  the  Titanium  Processing  Technology.   Our  titanium
processing  technology  is  capable  of  producing   conventional  TiO2  pigment
products. Conventional TiO2 pigments are finely-sized powders consisting of TiO2
crystals.  These  crystals  may be either  anatase or rutile  phase  (shape) and
approximate 0.18 to 0.22 microns in size. Our titanium processing  technology is
also capable of producing TiO2  nanoparticles,  a specialty  product with a size
range of 10 to 100 nanometers  (approximately one tenth the size of conventional
pigments).  We  are  currently  using  the  processing  plant  to  produce  TiO2
nanoparticles.

         Our titanium  processing  technology is  fundamentally  different  from
current  commercial  processing  techniques.  The  process  permits  exceptional
control over particle size,  shape,  and crystalline  form.  Other processes are
based on either a  precipitation  of  particles  from  aqueous  solution  or the
formation of  crystallites  from molten  droplets of titanium oxide generated in
high  temperature  flame  reactors.  While  nanoparticle  products made by these
methods exhibit the surface area and reactivity  desired for many  applications,
they are often amorphous or multiphase  materials that grow in particle size and
change  crystalline  phase when  subjected to  high-temperature  processing.  In
contrast,  our titanium processing technology produces discrete anatase crystals
in nanometer sizes that are thermally  stable at 800 degrees  Centigrade for 100
hours or more. By remaining stable in high-temperature processing, nanoparticles
produced by our titanium processing  technology retain the desired  nanoparticle
size and crystalline phase.

         The  titanium   processing   technology   is  based  on  a  proprietary
dense-phase  crystal growth technique which controls  crystal  formation using a
combination of mechanical  and fluid dynamics and chemical and thermal  control.
Through  introduction of very small  quantities of selected  chemicals  ("doping
elements") during crystal growth, the size, phase,  catalytic and photocatalytic
activity and size  distribution  of crystals  can be  controlled  within  narrow
limits and to  specification.  Other  technologies  exclude the  introduction of
doping elements during crystal growth, thereby limiting their ability to control
final product characteristics.

         Titanium  Processing  Assets.  The titanium  processing  assets consist
principally  of a production  facility  located in the leased  premises.  During
2000, we installed  additional  equipment to increase  production  capacity to a
nominal  annual  amount  of 200  tons of  TiO2  nanoparticles.  We also  added a
separate  pilot  facility  to produce  large  sample  quantities  of product for
development, test and evaluation purposes.

         Plans for Development of the Titanium Pigment Processing Technology. We
are initially  employing our titanium  processing  technology for the production
and sale of TiO2  nanoparticles.  We have  transferred  our titanium  processing
assets and titanium processing technology to Altair Technologies,  Inc. ("ATI"),
a  wholly-owned  subsidiary  of Altair,  and hired a president of ATI to provide
management  and  direction  for  the  development  of  our  titanium  processing
technology.  Effective  January 1, 2001, we hired fourteen  former BHP employees
who were instrumental in the development of our titanium processing  technology.
Certain of these  employees  will  continue  research and  development  work and
others will be involved in operation and maintenance of the production facility.
Altair  has  commenced  marketing  TiO2  nonoparticles,  has  received  a single
purchase   order  in  the  amount  of  $60,000  for  future   delivery  of  TiO2
nonoparticles and is also investigating distributor relationships.

                                       5
<PAGE>

         We are also analyzing other means of exploiting our titanium processing
technology,  including  licensing  arrangements  and joint ventures.  We believe
that, with additional research and development aimed at  commercialization,  our
titanium  processing  technology will be capable of producing  industry standard
TiO2  pigments  (larger  particle  size than  nanoparticles).  We are  assessing
potential  business  arrangements which would facilitate the development of this
and other additional applications for the titanium processing technology.

         The  raw  material  used  as a  feedstock  in the  production  of  TiO2
nanoparticles,  and  an  intermediate  step  in the  production  of  other  TiO2
products, is titanium tetrachloride, a commodity product manufactured by several
suppliers  and  currently  available  on the open market.  Although  Altair uses
purchased  titanium  tetrachloride  as the  feedstock in the  production of TiO2
nanoparticles,  our  titanium  processing  technology  is capable  of  producing
titanium tetrachloride from an ilmenite raw material.

         Target  Market for  Products  of the  Titanium  Processing  Technology.
Altair is  initially  targeting  the markets  that  utilize  the unique  optical
properties of TiO2  nanocrystals such as producers of specialty surface coatings
and UV protectant cosmetics.  Ultra-fine or nano-sized TiO2 products may also be
effectively used in battery components and pollution control and detoxification.
Coatings and cosmetics  utilize the  ultraviolet  shielding  capabilities of the
material;  pollution control and detoxification  processes take advantage of the
material's  photocatalytic  properties;  and  battery  applications  utilize the
electrochemical capabilities of the material. The current global market for TiO2
nanoparticles  is  approximately  3,800 metric tons per year,  but we expect the
nanoparticle market to grow more rapidly than the conventional pigment market as
applications for new technologies generate increased demand.

         In addition,  our titanium  processing  technology is adaptable to make
nanocrystals of materials suitable for optoelectronics,  ceramics, thermal spray
coatings  and  catalysts  as well.  Nanomaterials  applications  being  actively
pursued by many research groups include  flexible  ceramics (cast materials such
as automobile  engines),  special catalysts (chemical and petroleum  processing,
fuel cells), health care products  (pharmaceuticals and nano-sized sensors), and
optoelectronics.   Nano-crystal   optoelectronic   components  can  be  used  to
miniaturize  computers and other  electronic  devices and to expand bandwidth in
telecommunications.

         Research,   Testing  and   Development   of  the  Titanium   Processing
Technology. Our titanium processing technology is the result of several years of
research  and  development  work done by BHP.  Although we believe our  titanium
processing  technology is presently  commercially  viable, we intend to continue
the  research  and  development  work to both  improve  the  process and develop
additional  commercial  applications  for it. Such work will be conducted by the
former BHP employees who became employees of the Company on January 1, 2001.

         In  addition,  we intend to engage in joint  research  and  development
efforts with  customers and other  interested  parties.  For example,  in August
2000,  we  entered  into  an  agreement  with  the  Massachusetts  Institute  of
Technology  ("MIT") to carry on joint research to develop a nanostructured  fuel
cell system for direct hydrocarbon conversion.  The research program is aimed at
developing  economical  hydrocarbon-powered  fuel  cells by  combining  Altair's
proprietary  titanium  process  technology with novel  nanostructured  anode and
cathode catalysts developed by MIT.

         We believe our nanoparticle  products may have  applications in several
alternative  energy  applications.  As a result,  we have created an alternative
energy  group  within ATI to carry out our  research  program  with MIT and also
develop nanoparticle applications for batteries, solar cells, and photovoltaics.

                                       6
<PAGE>

         The Titanium  Processing  Technology and Proprietary Rights. We believe
our titanium processing technology  represents a significant  improvement in the
recovery of titanium  from  titanium-containing  ores and has the  potential  to
materially reduce processing costs for commodity and specialty products. The two
conventional  technologies  for processing  titanium ores are generally known as
the  chloride and sulphate  processes.  We believe that our titanium  processing
technology  is an  improvement  over these  processes in that it offers  precise
control of crystal size, structure and chemical composition, uses a wide variety
of feedstocks, and recycles wastes.

         BHP has filed  numerous  patent  applications  with the  United  States
Patent and Trademark Office with respect to our titanium  processing  technology
and has transferred the rights to such applications to us. Such applications are
in the review  process,  and no patents with respect to the titanium  processing
technology have been granted to date.

         Competition--the    Titanium   Processing    Technology.    There   are
approximately ten significant  producers of TiO2 nanoparticles in the world, the
largest of which has  approximately  20% of the market.  We believe that, with a
lower cost  structure  than our  competitors  and the  ability to produce a more
uniform,  thermally  stable  product in a wide  variety of sizes  within  narrow
ranges,  we may have a  competitive  advantage  that will allow our  products to
quickly gain market  acceptance.  However,  some producers of TiO2 nanoparticles
are major  multinational  corporations with far greater financial resources than
Altair.   These  producers  also  enjoy  other  advantages  over  us,  including
established customer relationships and operating histories.


Tennessee Mineral Property

         Description of the Tennessee  Mineral  Property.  The Tennessee mineral
property consists of approximately  14,000 acres of land that we have leased (or
have  binding  commitments  to lease) in or near Camden,  Tennessee,  containing
fine, heavy minerals.

         From 1996, when we began acquiring  leases,  through 2000,  exploration
activities on the Tennessee  mineral  property have included  geologic  mapping,
sample  collection,  drilling of 156 auger holes and preparation of geologic and
deposit models.  The deposit model also incorporates 40 drill holes completed by
an earlier  exploration  company.  Deposit model  estimates are consistent  with
deposit  estimates  previously  determined  by  other  mineral  companies.   The
mineralized deposit on the Tennessee mineral property has not yet been proven to
be a reserve (as defined in Regulation S-K, Item 802, Guide 7 promulgated  under
the Exchange Act), and our limited  operations and proposed plan with respect to
it are exploratory in nature.

         The  production of saleable  heavy minerals from heavy mineral sand ore
is a two-stage process. At the mine site, heavy mineral ore is treated in a "wet
mill"  where  a 90%  total  heavy  mineral  concentrate  is  prepared  typically
utilizing gravity separation equipment. This concentrate is then taken to a "dry
mill" where  individual  mineral  constituents  are extracted using magnetic and
high tension electrical separators.

         In order to assess the  amenability of the Tennessee  mineral  property
ore to "wet mill"  processing  with the jig, we collected  two bulk samples from
the  Tennessee  mineral  property.  Test work we  completed  on the first sample
during the spring of 1997  suggested  the sands can be  processed  with the jig.
Tests performed by Altair which emphasized recovery have yielded up to 94% heavy
mineral recovery with a six-to-one  concentration  ratio.  (Stated  differently,
after a single pass through the jig, 94% of the ore's value was  concentrated in
about one-sixth of its original volume, and five-sixths of the sand was rendered
a non-valuable discard.) As is typical of gravity separation processing, several
passes  through the jig will be necessary  to produce a 90% total heavy  mineral
concentrate.  Further,  in the event the Tennessee mineral property is proven to
contain  significant  heavy  mineral  reserves,  the jig would likely be used in
conjunction with traditional  gravity  separators,  primarily  spirals,  to most
efficiently process the sand ore in the "wet mill."

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<PAGE>

         A second bulk  sample was  collected  during  late 1997.  Approximately
5,000  pounds of  representative  mineralized  material  was  collected  from an
exposed sand horizon.  This sample was processed by an independent Florida heavy
sands producer and Altair  utilizing both "wet mill" and "dry mill" processes to
produce  representative  samples of saleable  products.  The sample results were
reviewed  by  an  independent   consulting  group  hired  by  us  to  prepare  a
pre-feasibility  study of the  Tennessee  mineral  property.  In July 1998,  the
independent consulting group completed their technical  pre-feasibility study of
approximately 4,700 acres of the Tennessee mineral property known as the "Camden
Deposit." The study states that the Camden Deposit contains in-place mineralized
materials  consisting  of 65%  titanium-bearing  minerals,  15%  zircon  and 20%
non-valuable  heavy minerals.  It indicated that saleable  ilmenite,  rutile and
zircon products can be produced,  and that established  markets  currently exist
for such  products.  The study  then  modeled  mining and  production  costs and
concluded that the Camden Deposit has the potential to be economically mined via
a large-scale sand mining operation with an approximate 20-year life.

         In August  1998,  based on the  positive  results  of the  consultant's
report, we commenced a more comprehensive feasibility study involving the actual
design,  pricing, and analysis of equipment and facilities that would be used to
mine the  Tennessee  mineral  property.  We have designed and  constructed  and,
during the first quarter of 2001, placed into operation a pilot test facility on
the Tennessee mineral property. The feasibility testing process is also expected
to involve an  examination  of the market  for  products  produced  at the pilot
facility,  applications for permits necessary for any proposed full-scale mining
facility and attempts to secure  financing  of any  proposed  full-scale  mining
facility.  If production at the pilot plant and our  marketing,  permitting  and
financing  efforts are  successful,  a mine could be  operational  within  24-36
months after financing is obtained subject to, among other things,  the price of
and demand  for  extractable  heavy  minerals . See  "--Plan of  Operation"  and
"--Government Regulation and Environmental Concerns."

         Subsequent to the  completion  of the  pre-feasibility  study,  further
exploration of the Tennessee  mineral property by Altair suggested the existence
of additional  heavy mineral  sands in an area  northwest of the Camden  Deposit
known as the "Little  Benton  Deposit."  Preliminary  results  indicate that the
Little Benton Deposit contains a high-grade titanium  mineralization  similar to
the Camden Deposit.  We have approximately 7,900 acres under lease in the Little
Benton area and intend to conduct  further testing of the Little Benton Deposit.
If such testing  demonstrates  the  existence of a resource or reserve,  and the
feasibility testing suggests that cost-effective mining of the Tennessee mineral
property  is  feasible,  the  production  capacity  and/or  life  of the  mining
operation could be significantly increased.

Location and Status of Work on the Tennessee Mineral Property.

         On the  following  page is a  location  map for the  Camden  and Little
Benton  properties,  which we  collectively  refer to as the  Tennessee  mineral
property.  Access within blocks is via a network of County and farm roads. Lease
blocks in the Camden and are made up of contiguous  rural tracts.  Land uses are
dominantly forestry and cattle grazing.  Bottom lands are sometimes used for row
crops. There is no history of mining in these areas.

                                       10
<PAGE>
         Altair is conducting  exploration  work on the lease  blocks.  Work has
included  geologic  mapping,  the drilling and sampling of scores of auger holes
having  30 to  +100  foot  depths,  and  the  collection  of  bulk  samples  for
metallurgical testing. Heavy minerals occur in the Cretaceous McNairy formation,
sheet-form sands deposited in a beach environment.  Heavy minerals  comprising 2
to 8% of  the  sand  (by  weight)  are  typical.  Under  SEC  Industry  Guide  7
regulations,  the  mineralization  is  characterized  as  "in-place  mineralized
material."

         Altair has an operating  pilot plant on the Camden  lease block.  Pilot
plant  operations  are fully  permitted  with the state of Tennessee and federal
agencies.  The plant includes dedicated  electrical service, a lay-down area for
heavy  mineral  sand  samples,  and  a  combined  water  storage/sand  placement
structure. Plant elements include a feed system, conveyors,  trommel, two stages
of cyclonrs, and a five-stage spiral plant.

         Research, Testing and Exploration of the Tennessee Mineral Property. As
discussed in  "--Description  of the Tennessee  Mineral Property" above, in July
1998, an  independent  consulting  group  completed a technical  pre-feasibility
study of  approximately  4,700 acres of the Tennessee  mineral property known as
the "Camden Deposit." Based on the positive results of the consultant's  report,
we initiated an additional  feasibility test in August 1998, which we anticipate
will involve  additional  drilling to further  define  mineral  characteristics,
detailed analysis of mineralogical  characteristics and mine processing methods,
larger  scale  testing of the Series 30 Jig,  analysis of product  markets,  and
evaluation of possible strategic alliances. If this feasibility testing suggests
that cost-effective mining of the Tennessee mineral property is feasible, mining
could begin within 24-36  months  after we obtain  financing,  subject to, among
other things,  the price of, and demand for  extractable  heavy minerals and our
ability to obtain necessary permits and government approvals.

         During 2000, we incurred $1,217,966 in exploration  expenditures on the
Tennessee  mineral  property,  and in 1999, we incurred  $689,594 in exploration
expenditures  on the  Tennessee  mineral  property.  To date,  we have  incurred
$3,239,018  in  total  expenses  on our  exploration  of the  Tennessee  mineral
properties.  Expenditures were incurred for pilot plant design,  fabrication and
site preparation,  leasehold minimum advance royalty payments, and other related
exploration  activities.  We anticipate spending between $700,000 and $3,700,000
exploration  the Tennessee  mineral  property  during 2001. The amount of future
expenditures  will depend upon the  availability  of  financial  capital and the
results of our ongoing feasibility study.

         Competition--the  Tennessee Mineral Property.  Based on the exploratory
work  done to date,  we  anticipate  that the  saleable  products  which  may be
produced from the Tennessee  mineral  property are ilmenite,  rutile and zircon.
Ilmenite,  which  may  contain  40% to 70%  titanium  dioxide,  is  used  in the
production of titanium dioxide pigment, a specialty chemical used principally as
a whitener and  opacifier for paper,  plastics and paint.  According to the U.S.
Geological  Survey,   ilmenite  is  the  most  abundant   naturally   occurring,
commercially  produced  titanium mineral and supplies  approximately  90% of the
world demand for titaniferous material.  Such demand is projected to increase at
an  annual  rate of 2%-3% for the  foreseeable  future.  The  value of  titanium
mineral  concentrates  consumed in the United  States in 2000 was  approximately
$530  million.  There are  presently  two  entities in the United  States  which
produce  ilmenite  concentrate  from  heavy  mineral  sands  and  virtually  all
production is used by four titanium pigment producers whose plants are primarily
located in the  southeastern  U.S.  Pigment  producers  use  various  methods to
process ilmenite  concentrate into titanium dioxide pigment and require that the
concentrate  feedstock meet certain chemical and size criteria applicable to the
process being used. We believe that, if we can  economically  mine the Tennessee
mineral  property  and  produce  satisfactory   products  for  sale  to  pigment
producers,  we may have a  competitive  advantage  in being a domestic  producer
operating in close proximity to our primary markets.

         Rutile,  which generally contains greater than 95% titanium dioxide, is
also used in the production of titanium  dioxide  pigment.  Its processing costs
are significantly less than ilmenite due to the higher concentration of titanium
dioxide.  Although this greatly  enhances its market value,  rutile is much less
abundant  than  ilmenite,  representing  approximately  5% of  the  total  heavy
minerals contained in the Tennessee mineral property.

         Zircon, which is used in ceramic,  refractory and foundry applications,
represents  approximately  15% of the heavy minerals  contained in the Tennessee
mineral property.  Zircon sand is currently being produced at three mines in the
southeastern  U.S. and in several  countries around the world.  Titanium-bearing
minerals and zircon are commonly found and mined together. The Jig

         Description of the Jig. The Altair Centrifugal Jig segregates particles
based  on  differences  in  their  specific  gravity.  Such  technology  may  be
categorized as a "gravity  separation"  process.  Gravity  separators are widely
used in minerals beneficiation because of their relative simplicity, low cost of
operation and ability to continuously treat large tonnage throughput. We believe
the jig will prove  able to  economically  recover  smaller  particles  than can

                                       10
<PAGE>

presently be economically recovered by competing gravity technologies. While not
yet confirmed through actual operations, the cost to manufacture and operate the
jig is expected to be similar to the cost to manufacture  and operate  competing
gravity separators, which can efficiently process only particles larger than 150
mesh.  In  contrast,  our tests  suggest  that the jig will be able to  maintain
relative  efficiency  when  processing  feeds  as  small  as 400  mesh.  See "--
Competition  -- The Jig".  In tests  conducted  to date using the jig to process
relatively  small  particles,  the jig has yielded  product  quality  (grade and
contaminates)  equivalent to that yielded by alternative technologies processing
larger particles.  See "--Target Markets For the Jig" and "-- Competition -- The
Jig".

         Several prototype and demonstration  jigs have been built and tested by
Altair and  previous  owners of the jig. Our Series 12 Jig stands about six feet
tall,  requires  floor  space of about 25 square  feet and weighs  approximately
2,000 pounds. Our Series 30 Jig stands about 10 feet tall,  requires floor space
of  about 54  square  feet  and  weighs  approximately  7,000  pounds.  Recently
constructed  jigs have been  mounted on metal  frames  along with jig  auxiliary
equipment--pulse  water pump and tank and control panel--for  transport by truck
and rapid  on-site  installation.  Continued  field  testing of the jig is being
undertaken,  as  resources  are  available,  to  increase  the volume  capacity,
identify any design problems that may reside in the jig technology, evaluate the
jig's  ability to perform  sustained  operations,  determine  the  potential for
downtime  during such  operations,  estimate the anticipated  maintenance  costs
associated  with  continued  operations  and identify  design  improvements  for
specific  applications.  There can be no assurance that the testing program will
be successful for all  applications or that testing will  demonstrate the jig to
be economically  attractive to end users.  See "--Factors That May Affect Future
Results."

         We have conducted preliminary testing of our Series 30 Jig at a mineral
recovery  plant  operated  by a large heavy  mineral  sand  producer  located in
northern  Florida.  Results of the  testing  indicate  that the Series 30 Jig is
capable of producing separation results comparable in efficiency to those of the
Series 12 Jig for zircon concentrates. (Results of tests using the Series 12 Jig
are  discussed  in  "Target  Markets  for the Jig"  below).  The  Series 30 Jig,
however,  is designed to be capable of processing 500 tons of solids per day, or
more than four times the  throughput  capacity of the Series 12 Jig. The volumes
of solids per day that the Series 30 and Series 12 Jigs are actually  capable of
processing have not been established  through testing;  however,  we expect that
continued  testing will confirm that the two models can process the volumes they
have been  designed to process.  We have also begun design work for a larger jig
that would have over twice the  processing  capacity of the Series 30 Jig. See "
-- Research, Testing and Development." Such increased capacity would enhance the
jig's commercial potential for high volume applications such as coal washing and
recovery  of iron ore fines.  Also,  multiple  units  might be used in series or
parallel configurations to process high volume operations.

         Preliminary  demonstration  tests  conducted  by Altair  and a previous
owner of the jig suggest that the jig may be commercially  viable in a number of
applications, including:

         o  Recovery of ultra fine gold from waste streams or former tailings;
         o  Recovery of zircon,  rutile,  ilmenite,  leucoxene,  and other
            valuable   fractions  from  heavy  mineral  sand   operations,
            especially from finely sized waste piles;
         o  Sulfur and ash removal from fine coal;
         o  Recovery of tin and iron ore fines from fine tailings;
         o  Concentration  of heavy  minerals,  such as anatase,  aparite,
            barite, cassiterite, chromite, columbite, industrial diamonds,
            fluorite, various garnets, monazite, tantalite and wolframite;
            and
         o  Remediation of nuclear waste.

         Target Markets for the Jig.  Although we believe that, in the long run,
the jig may potentially be useful for a number of applications,  we believe that
the most promising  market for the jig in the short run is for use in processing
of heavy mineral sands in order to recover heavy minerals,  particularly  zircon
and titanium.

                                       11
<PAGE>

         The primary  valuable  minerals  produced  from heavy mineral sands are
titanium and zircon. Titanium is used primarily as a basic component of titanium
dioxide,  a pigment  used  principally  as a whitener and  opacifier  for paper,
plastics,  and paint.  Zircon is used  primarily  for  foundry  molds and in the
manufacture of certain types of glass and ceramics.  We believe the domestic and
international  markets  for  both of these  products  are  significant  and well
established.  Both are  commodities  traded  in bulk,  usually  under  long-term
contracts,  and  are  also  sold  in  50-100  lbs.  bags,  usually  traded  as a
spot-priced  product.  The U.S. Geological Survey has reported that the value of
titanium  mineral  concentrates  consumed  in the  United  States  in  2000  was
approximately  $530 million.  The U.S.  Geological  Survey  estimates  zirconium
production for the United States at  approximately  100,000 metric tons in 2000,
representing  a market  value of  approximately  $34  million.  There  can be no
assurance that testing will demonstrate  that the jig can  economically  extract
heavy minerals from heavy  minerals sands or that the jig will prove  attractive
to end users.

         Verification  testing  with  the  Series  12  Jig  suggests  the  jig's
potential  for  recovering  zircon  from  heavy  mineral  sand dry mill tails in
Florida.  In Phase 1 and 2 trials  conducted by Altair  involving  separation of
commercial  grade zircon products from mineral sands, the Series 12 Jig withdrew
a larger portion of zircon from the feed ore than other mineral sands processing
equipment in use today. In tests on  zircon/alumina  silicate feeds conducted by
Altair,  the Series 12 Jig has yielded greater than 90% zircon  concentrates and
recovered up to 75% of the zircon fed to the unit. Initial testing of the Series
30 Jig on  zircon/alumina  silicate feeds produced  results which were generally
equivalent  to the  Series  12 Jig.  See  "--Plan  of  Operation."  We have also
conducted  tests  of  the  Series  12  jig  at  our  Reno  test  facility.  Fine
titanium-bearing  heavy  mineral  sands  were  processed  through  the jig  with
resulting titanium recovery rates of 86% and heavy mineral grades of 80%.

         Research,  Testing and  Development  of the Jig.  Field testing to date
suggests  that the jig  possesses  the  ability  to process  continuous  tonnage
throughput in several  applications.  The jig has multiple operating parameters,
primarily rotational speed, pulsing pressure, and screen characteristics,  which
must be adjusted  to fit the  processing  requirements  of the  particular  feed
stream  being  treated.  We  believe  that more  extensive  testing is needed to
identify the most efficient  operating  parameters for  specifically  identified
applications.  Further,  demonstration  of  sustained  operation  is critical to
marketing  efforts.  We are assessing our options for furthering  development of
the jig and may consider  selling the jig  technology or licensing it to others.
In the meantime,  we will continue development work on a limited basis utilizing
available resources. Such development work will likely focus on equipment design
and  amenability  testing  of mineral  ores  using  Series 12 and Series 30 Jigs
located in Northern  Florida  and our test  facility  in Reno,  Nevada.  We also
intend  to  incorporate  the jig into the pilot  plant  testing  process  at our
Tennessee mineral property for use in the recovery of titanium and zircon.

         Jig Technology and Proprietary Rights. In operation, the jig utilizes a
combination of standard  mechanical jig and  centrifugal  technologies.  Without
having tested the jig in sustained, commercial operations, we believe production
models of the jig, if completed,  will be capable of sustaining high reliability
and low maintenance costs in a production  environment.  Use of the jig requires
no chemical additives.

         A conventional jig separates a slurry of mineral  particles as it flows
across the top of a screen.  Water is periodically  pulsed up through the screen
to eliminate interparticle friction and allow differential settling according to
the variations in the net specific  gravities of the ore.  Heavier  minerals are
allowed to pass downward through the screen while lighter  materials flow across
the screen to a discharge point. The jig operates  according to conventional jig
principles  except  that the  screen  surface is  cylindrical  and is rotated to
subject the particles to centrifugal forces. As currently designed, materials to

                                       12
<PAGE>

be processed by the jig are  introduced  into the top of the jig in a slurry mix
with water.  The slurry is diffused across the top of the interior of a vertical
cylindrical  screen  which is  rotating.  Water is  pulsed  through  the  screen
allowing  differential  separation in the slurry material.  Heavy particles pass
through  the screen,  are  collected,  and exit the  machine in a  "concentrate"
stream.  Lighter particles flow down the screen interior, are collected and exit
out the bottom of the machine in a separate "tails" stream.

         Initial  patents  related  to the  concept  of the jig as a whole  were
issued in the United States, South Africa, United Kingdom, Australia and Canada.
These patents  expired on various  dates  between May 1999 and December  2000. A
series of second  patents  with  respect to the process by which water is pulsed
through the cylindrical screen on the jig, a critical component  differentiating
the jig from competing  products,  have been issued in the United States,  South
Africa, Japan, Europe,  Australia,  Canada, United Kingdom,  Germany and France.
These patents  expire on various dates between  January 2010 and January 2011. A
third series of patents with respect to an efficiency enhancing component of the
jig have been  issued in the United  States,  Europe,  Australia,  Japan,  South
Africa, Canada and Brazil. These patents have expiration dates between April and
November 2018.

         Competition--the Jig.

         Alternative  Technologies.   Various  mineral  processing  technologies
perform  many  functions  similar  or  identical  to those  for which the jig is
designed.  See "Factors That May Affect Future  Results--Competing  Products and
Alternative   Technologies."  Minerals  processing  technologies  are  generally
predicated on the physical and chemical  characteristics  of the materials being
processed. A minerals processor may exploit contrasts in size, specific gravity,
hardness,   magnetic  susceptibility,   electrical  conductivity,   and  similar
characteristics  to selectively  extract and concentrate  mineral  constituents.
Minerals processors also exploit variations in chemical reactivity and molecular
affinity to selectively separate minerals.

         The jig competes in an arena in which particle  specific gravity is the
primary criteria for particle segregation and capture. Competing technologies in
this arena include the following:

         Spirals and Cones. To separate out valuable  particles with a spiral or
         cone,  a mineral  processor  runs a  sand-size  feed  slurried in water
         through a tilted trough  (spiral) or over a convex surface  (cone).  In
         this process,  fine-sized  particles  tend to "float" and not settle as
         quickly as larger  particles.  The difference in settling speed permits
         the mineral  processor  to separate  out and extract the more  valuable
         heavy  particles.  Spirals and cones are most  effective  in feed sizes
         larger than 150 mesh.

         Froth Flotation Devices.  To separate minerals using a froth floatation
         device,  a processor  introduces  chemical  agents into a pool of mixed
         particles,  which agents attach to certain  sulfides.  Once attached to
         the  chemical  agents,  the sulfides  float to the  surface.  The froth
         flotation  method can be effective on particles  200 mesh or smaller in
         size.

         Heavy Media Separation.  Heavy media separation is a process in which a
         feed  containing  both dense and light particles is fed into a solution
         whose specific gravity is midway between the particles to be separated.
         The light  particles  float to the surface of the  solution,  while the
         heavy particles sink. Heavy media separation is effective  primarily in
         the  removal of ash from coal and in  small-scale  analytic  laboratory
         applications.

         We  believe  that,  in  certain  applications,  the jig may prove  more
efficient,  cost effective, or adaptable than spirals and cones, froth flotation
devices, or heavy media separation devices.  Nevertheless,  results from further
tests or actual  operations may reveal that these  alternative  technologies are
better  adapted  to any  or all of the  uses  for  which  the  jig is  intended.
Moreover,  regardless  of test  results,  consumers  may view any or all of such
alternative  technologies  as  technically  superior to, or more cost  effective
than, the jig.

                                       13
<PAGE>

         Competing Jig-Like Products. We believe the jig currently faces several
forms of competition in the commercial  segregation of dense particles contained
in  feeds  between  150  and  400  mesh,   including  the  Kelsey  jig,   Falcon
concentrators and the Knelsen batch concentrator unit, which are currently being
used  worldwide.  Another  centrifugal  jig  device,  the Kelsey  jig,  has been
developed in Australia subsequent to the invention of the jig. The Kelsey jig is
more  complicated  in  design  than the  jig,  which  we  believe  makes it more
expensive to  manufacture,  operate and  maintain in a  production  environment.
According to the Kelsey jig's  manufacturer,  Geo Logics Pty. Ltd.,  Kelsey jigs
are in service at 25 plants worldwide. In addition,  Falcon, a Canadian company,
produces  a  concentrator  which  is  used  mainly  for   pre-concentration  and
scavenging.  Their  principal  applications  to date  have  been in the gold and
tantalum industries. There also exists a batch concentrator known as the Knelsen
Bowl,  which we believe is best suited to small volumes.  (A batch  concentrator
differs  from  the jig in that it  process  a finite  "batch"  of  material,  is
completely emptied,  and then processes a completely new finite batch, while the
jig processes a continuous flow of materials). Knelsen Bowls have been installed
in various mining applications,  primarily gold,  throughout the world. Both the
Falcon  and  Knelson  concentrators  utilize  different  technologies  than  the
technology employed by the jig.

         Altair  is a small  player in an  industry  comprised  of major  mining
companies  possessing  tremendous  capital resources and we are an insignificant
competitive factor in the industry. There is no assurance that competitors, many
of whom may have significant capital and resources,  will not develop or are not
now in the process of developing  competitive equipment that may be functionally
or economically superior to our equipment.

         Business   Development--the   Jig.  We  have  concluded  that,  in  the
foreseeable   future,  our  limited  human  and  financial  resources  can  most
effectively be utilized in the development of the titanium processing assets and
titanium processing technology and the Tennessee mineral property. Consequently,
we are assessing our options for furthering  the  development of the jig and may
consider  selling the jig technology or licensing it to others who have adequate
resources  to  complete   development  of  the  jig,  establish   marketing  and
distribution channels and initiate manufacturing.  In the meantime, we expect to
continue development work, primarily equipment design, on a limited basis.

Subsidiaries.

         Altair  International  Inc.1  was  incorporated  under  the laws of the
province of Ontario, Canada in April 1973.

         Fine Gold was acquired by Altair in April 1994.  Fine Gold has received
no  operating  revenues  earned to date.  Fine Gold  acquired  the  intellectual
property  associated  with the jig in  1996.  Another  wholly-owned  subsidiary,
formerly  known as Carlin Gold Company,  is now operated  under the name Mineral
Recovery Systems,  Inc. Altair intends that Fine Gold will hold and maintain jig
technology rights, including patents, and will enter into a royalty arrangements
to allow MRS to develop and commercially utilize the jig.

---------------
         1 The company was incorporated in April 1973 under the name Diversified
Mines  Limited,  which was  subsequently  changed to tex-U.S.  Oil & Gas Inc. in
February 1981, then to Orex Resources LTD. in November 1986, then to Carlin Gold
Company Inc. in July 1988, to Altair  International Gold Inc. in March 1994, and
to Altair International Inc. in November.

                                       14
<PAGE>

         MRS was incorporated by Altair in April, 1987.2 MRS previously has been
involved in the exploration for minerals on unpatented  mining claims in Nevada,
Oregon  and  California.  All  mining  claims  have now been  abandoned.  Altair
currently  intends  that MRS will  arrange  for the  manufacture  of the jig for
commercial  sales,  rental or royalty  arrangements with end users. In addition,
MRS currently  holds,  directly or indirectly,  all of Altair's  interest in the
Tennessee mineral  property,  and Altair intends that MRS will continue to lease
or acquire and explore mineral properties in the future, particularly properties
that contain in-place mineralized materials that may be processed with the jig.

         Altair  Technologies,  Inc. was  incorporated  in 1998 as a wholy-owned
subsidary of MRS and holds all of the Company's interest in our titanium pigment
processing  technology and related assets. The remaining 100% owned subsidiaries
do not presently have any assets or operations.

Government Regulation and Environmental Concerns.

         Government  Regulation.   Our  exploration  of  the  Tennessee  mineral
property,  testing of the jig, and operation of the titanium pigment  processing
facility  are,  and  any  future  testing,  operation,  construction  or  mining
activities of Altair will be, subject to a number of federal,  state,  and local
laws and  regulations  concerning  mine and  machine  safety  and  environmental
protection.  Such laws include, without limitation, the Clean Air Act, the Clean
Water Act, the Resource  Conservation  and Recovery  Act, and the  Comprehensive
Environmental  Response  Compensation  Liability  Act. Such laws require that we
take steps to, among other  things,  maintain air and water  quality  standards,
protect  threatened,  endangered  and other species of wildlife and  vegetation,
preserve  certain  cultural  resources,  and  reclaim  exploration,  mining  and
processing sites.

         Compliance with federal, state, or local laws or regulations represents
a small part of our present budget;  nevertheless,  continued  compliance may be
extremely costly,  especially if we actually commence  extraction  operations on
the  Tennessee  mineral  property.  If we fail to  comply  with any such laws or
regulations,  a  government  entity  may levy a fine on us or require us to take
costly measures to ensure compliance. Any such fine or expenditure may adversely
affect our development.

         We are  committed  to  complying  with and,  to our  knowledge,  are in
compliance with all governmental  regulations.  We cannot, however,  predict the
extent  to which  future  legislation  and  regulation  could  cause us to incur
additional  operating expenses,  capital  expenditures,  and/or restrictions and
delays in the development of our products and properties.

         Environmental   Regulation  and  Liability.   Any  proposed  mining  or
processing operation on the Tennessee mineral property,  at the titanium pigment
processing  facility  or any other  property  acquired  by us will be subject to
federal, state, and local environmental laws. Under such laws, we may be jointly
and severally  liable with prior  property  owners for the  treatment,  cleanup,
remediation,  and/or removal of substances  discovered on the Tennessee  mineral
property  or any other  property  used by us,  which are  deemed by the  federal
and/or  state  government  to be toxic or  hazardous  ("Hazardous  Substances").
Courts or government  agencies may impose liability for, among other things, the
improper  release,  discharge,  storage,  use,  disposal,  or  transportation of
Hazardous Substances.  We might use Hazardous Substances and, although we intend
to employ all reasonably  practicable  safeguards to prevent any liability under
applicable laws relating to Hazardous  Substances,  companies engaged in mineral
exploration  and  processing are  inherently  subject to  substantial  risk that
environmental remediation will be required.

---------------
         2 MRS was formerly  known as Carlin Gold  Company.  The name change was
effective in June 1996.

                                       15
<PAGE>
Employees.

         The  business of Altair is  currently  managed by Dr.  William P. Long,
President and Chief Executive  Officer of the Company and Mr. C. Patrick Costin,
Vice  President of the Company and  President of MRS and Fine Gold. In addition,
we employ a Chief Financial  Officer, a President of Altair  Technologies,  Inc.
and 21  additional  employees.  Aside  from Dr.  Long,  Mr.  Costin,  the  Chief
Financial Officer,  and the President of Altair  Technologies,  Inc., we have no
employment agreements with any of our personnel.

         On January 1, 2001 we hired fourteen  former BHP employees who had been
involved in developing the titanium processing  technology,  and we also hired a
general counsel.  During 2001, we expect to hire sales, marketing and production
employees for the titanium pigment processing business.  The quantity and timing
of new  hires  will be  dependent  on  business  activity.  We do not  otherwise
anticipate  that the number of Company  employees  will  significantly  increase
until we have sufficient sales and business activity to warrant it.

         Our future success will depend,  in part, on our ability to attract and
retain highly qualified technical,  marketing and management personnel. There is
no assurance we will be successful in retaining or attracting  highly  qualified
individuals in key  positions.  See "Factors That May Affect Future Results - We
are Dependent on Key Personnel."

Where You Can Find More Information

         We file annual,  quarterly, and current reports, proxy statements,  and
other  information with the SEC. You may read and copy any reports,  statements,
or other  information  that we file at the SEC's  Public  Reference  Room at 450
Fifth  Street,   N.W.,   Washington,   D.C.  20549.   Please  call  the  SEC  at
1-800-SEC-0330  for further  information on the Public  Reference  Room. The SEC
also maintains an Internet site (http://www.sec.gov) that makes available to the
public reports, proxy statements,  and other information regarding issuers, such
as Altair, that file electronically with the SEC.

         Our common shares are quoted on the Nasdaq  National  Market.  Reports,
proxy statements and other  information  concerning  Altair can be inspected and
copied at the Public  Reference  Room of the National  Association of Securities
Dealers, 1735 K Street, N.W., Washington, D.C. 20006.

Enforceability of Civil Liabilities Against Foreign Persons.

         We are an Ontario  corporation,  and a majority  of our  directors  are
residents of Canada.  In addition,  certain of our experts  (including  Canadian
legal  counsel) are located in Canada.  As a result,  investors may be unable to
effect  service of process upon such persons within the United States and may be
unable to enforce court  judgments  against such persons  predicated  upon civil
liability  provisions  of the United  States  securities  laws.  It is uncertain
whether  Canadian  courts would (i) enforce  judgments of United  States  courts
obtained against us or such directors,  officers or experts  predicated upon the
civil  liability  provisions  of United  States  securities  laws or (ii) impose
liability  in original  actions  against  Altair or its  directors,  officers or
experts predicated upon United States securities laws.

Glossary of Terms.

         Amenability means responsiveness of an ore deposit to processing.

         Anatase means one of three naturally  occurring  mineral phases of TiO2
(along with rutile and brookite).  Anatase  particles have a tetragonal  crystal
structure.

                                       16
<PAGE>

         Anode  catalyst  means  the  substance  that  activates  the  oxidizing
reaction at the negative electrode (fuel side) of a solid oxide fuel cell.

         Ash means inorganic residue remaining after coal combustion.  Ash is an
undesirable  component of coal because it reduces  thermal  value and produces a
waste product after combustion.

         Beneficiate means to improve the grade of ore by processing.

         Cathode  catalyst  means the  substance  that  activates  the  reducing
reaction at the positive electrode (air side) of a solid oxide fuel cell.

         Centrifugal force means the component of force on a body in curvilinear
motion that is directed away from the axis of rotation.

         Coal washing  means  processing  of  pulverized  coal to remove ash and
pyrite.

         Ductility  means the property of solid  material that undergoes more or
less plastic deformation before it ruptures.

         Environmental  remediation  means removal of harmful mineral  particles
from a site previously altered by human activities.

         Heavy  minerals  sands means beach or dune sands which  contain a small
fraction of heavy  particles.  Heavy  mineral  sands are  commercially  mined to
produce titanium minerals and zircon.

         Ilmenite means a  titanium-bearing  oxide mineral  containing  variable
percentages  of iron and used as a raw  material in the  production  of titanium
pigments.

         Iron ore  fines  means  particles  of iron  ore,  usually  less  than 1
millimeter in diameter.

         Mesh means one of the openings or spaces in a screen.  The value (size)
of the mesh is given as the number of openings per linear inch.

         Micron  means  one  millionth  of  a  meter.  One  micron  equals  1000
nanometers.

         Mill means a building  with  machinery  for  processing  ore.  Dry mill
refers to heavy minerals sand  processing of dry  materials.  Wet mill refers to
heavy minerals sand process of material that are mixed with water in slurry.

         Mineralized  Deposit or Mineral Deposit means a mineralized  body which
has been delineated by appropriately spaced drilling and/or underground sampling
to support a sufficient tonnage and average grade of metals. Such a deposit does
not qualify as a reserve until a comprehensive  evaluation based upon unit cost,
grade,  recoveries  and other  material  factors  conclude  legal  and  economic
feasibility.

         Placer means  deposits of sand,  gravel and other  detrital or residual
material  containing a valuable mineral which has accumulated through weathering
and natural mechanical  concentration  processes.  A placer mine is an operation
that  recovers  certain  valuable  minerals  based on  differences  in  specific
gravity.

         Photocatalytic  means a process by which light frequencies activate the
catalytic nature of a substrate.

                                       17
<PAGE>

         Pyrite means a  yellowish-brown  mineral  sulfide  containing  iron and
sulphur.  Pyrite is an undesirable component of coal because sulphur dioxide gas
is released when it is burned with coal.

         Rutile means one of three  naturally  occurring  mineral phases of TiO2
(along with anatase and brookite).  Rutile  particles have a tetragonal  crystal
structure.

         Specific  gravity  means  the ratio of the mass of a solid or liquid to
the mass of an equal volume of water at a specified temperature.

         Tails or tailings  means those portions of washed ore that are regarded
as too poor to be treated further, as distinguished from material (concentrates)
that is to be smelted or otherwise utilized.

         Tantalum  is rare  metal that is  ductile,  easily  fabricated,  highly
resistant to corrosion by acids,  and a good  conductor of heat and  electricity
and has a high melting  point.  The major use for  tantalum,  as tantalum  metal
powder,  is  in  the  production  of  electronic  components,   mainly  tantalum
capacitors.  Major end uses for tantalum capacitors include portable telephones,
pagers, personal computers, and automotive electronics.


Forward-looking Statements.

         This  Form  10-K  contains  various  forward-looking  statements.  Such
statements  can  be  identified  by  the  use  of  the   forward-looking   words
"anticipate," "estimate," "project," "likely," "believe," "intend," "expect," or
similar words. These statements discuss future expectations, contain projections
regarding future developments,  operations,  or financial  conditions,  or state
other  forward-looking   information.   When  considering  such  forward-looking
statements,  you should  keep in mind the risk  factors  noted in the  following
section and other cautionary  statements throughout this Form 10-K and our other
filings   with  the   Commission.   You  should  also  keep  in  mind  that  all
forward-looking  statements  are based on  management's  existing  beliefs about
present and future events  outside of  management's  control and on  assumptions
that may prove to be  incorrect.  If one or more risks  identified  in this Form
10-K or any other  applicable  filings  materializes,  or any  other  underlying
assumptions  prove incorrect,  our actual results may vary materially from those
anticipated, estimated, projected, or intended.

         Among the key factors that may have a direct  bearing on our  operating
results are risks and  uncertainties  described  under  "Factors That May Affect
Future  Results,"  including  those  attributable  to the  absence of  operating
revenues   or   profits,    uncertainties    regarding   the   development   and
commercialization  of the jig,  development  risks associated with the Tennessee
mineral property,  risks related to our proposed development and exploitation of
our  titanium   processing   technology  and  titanium   processing  assets  and
uncertainties regarding our ability to obtain capital sufficient to continue our
operations and pursue our proposed business strategy.

Factors that May Affect Future Results.


         We have not generated any operating  revenues and may not ever generate
significant revenues.

         To date, we have not generated  revenues from  operations.  We have not
completed  development of the jig or the titanium processing technology and have
not completed  exploration of the Tennessee mineral property.  We can provide no
assurance  that we will ever  generate  revenues  from the jig or the  Tennessee
mineral property or that we will generate significant revenues from the titanium
processing technology.

                                       18
<PAGE>

We may continue to experience significant losses from operations.

         We have  experienced a loss from  operations in every fiscal year since
our inception. Our losses from operations in 1999 were $3,729,534 and our losses
from  operations for in 2000 were  $6,647,367.  We will continue to experience a
net operating loss until, and if, the titanium  processing  technology,  the jig
and/or the Tennessee  mineral  property begin generating  significant  revenues.
Even if any or all  such  products  or  projects  begin  generating  significant
revenues,  the revenues  may not exceed our costs of  production  and  operating
expenses. We may not ever realize a profit from operations.

We may not be able to raise sufficient capital to meet future obligations.

         As of  March  31,  2000,  we had  $703,796  in  unrestricted  cash  and
$4,056,348  in  restricted  cash that is  securing  a letter  of  credit  and is
scheduled to be released as the  outstanding  principal  balance is reduced.  We
believe that the  unrestricted  cash we currently  possess is sufficient to fund
our basic  operations  through  June 30,  2001.  In the  absence of  significant
revenue,  this  amount  of  capital  will  likely  prove  insufficient  to  fund
development  work  necessary  to  complete  the testing  necessary  to place the
titanium  processing  technology  into  continuous  operation  in  a  commercial
setting. In addition, we will likely need additional capital to complete testing
and development of the jig or exploration of the Tennessee mineral property.  If
we determine to construct and operate a mine on the Tennessee  mineral property,
we will need to obtain a significant  amount of  additional  capital to complete
construction of the mine and commence operations.

         We may not be able obtain the amount of  additional  capital  needed or
may be forced to pay an extremely high price for capital.  Factors affecting the
availability and price of capital may include the following:

  o  market factors affecting the availability and cost of capital generally;
  o  our financial results;
  o  the amount of our capital needs;
  o  the market's perception of mining, technology and/or minerals stocks;
  o  the economics of projects being pursued;
  o  industry perception of our ability to recover minerals with the jig or
     titanium processing technology or from the Tennessee mineral property; and
  o  the price, volatility and trading volume of our common shares.

If we are unable to obtain sufficient  capital or are forced to pay a high price
for capital,  we may be unable to meet future  obligations or adequately exploit
existing or future opportunities, and may be forced to discontinue operations.

The common shares issued upon exchange of the Exchangeable  Term Note may dilute
existing shareholders

         We do not  presently  have the capital to redeem the  monthly  payments
required by the Exchangeable Term Note in cash. If we do not redeem such monthly
payments, the holder of the Exchangeable Term Note has the right to exchange the
monthly  payment  amounts into common  shares at an exchange  price equal to the
lesser of $3.00 and the average of the lowest three daily trading  prices of the
common  shares  during the 15 trading  days ending on the day before an exchange
right is  exercised.  Because the exchange  price is tied to the market price of

                                       19
<PAGE>

our common  shares,  the number of shares  issuable  upon  exercise  of exchange
rights  increases  significantly  as the market price of our common shares falls
below $3.00 and would approach infinity if the market price of our common shares
approached  zero. For example,  if the market price of our common shares were to
remain at $.50  throughout  the term of the  Exchangeable  Term Note, the holder
would  receive  approximately  15,458,332  common  shares  upon  exercise of all
exchange rights accruing under the Exchangeable Term Note.

         The exercise of exchange  rights under the  Exchangeable  Term Note may
place  downward  pressure on the market price of our common shares and encourage
short selling.

         The exchange of the monthly payment amount under the Exchangeable  Term
Note and  subsequent  sale of the common shares  issuable upon such exchange may
place downward  pressure on the market price of our common  shares.  Speculative
traders may  anticipate the exercise of exchange  rights under the  Exchangeable
Term Note and, in  anticipation  of a decline in the market  price of our common
shares,  engage in short  sales of our common  shares.  Such short  sales  could
further negatively affect the market price of our common shares.


We have pledged substantial assets to secure the Exchangeable Term Note.

         We have  pledged all of the  intellectual  property and common stock of
Altair Technologies,  Inc., our second-tier wholly-owned  subsidiary,  to secure
repayment of the  Exchangeable  Term Note.  Altair  Technologies,  Inc. owns and
operates the titanium  processing  technology  we acquired  from BHP Minerals in
1999. The Exchangeable Term Note is also secured by a pledge of the common stock
of Mineral  Recovery  Systems,  Inc.,  which  owns and  operates  our  leasehold
interests in the Camden,  Tennessee area. If we default on the Exchangeable Term
Note,  severe remedies will be available to the holder of the Exchangeable  Term
Note, including immediate seizure and disposition of all pledged assets.


Operations using the titanium  processing  technology,  the jig or the Tennessee
mineral property may lead to substantial environmental liability.

         Virtually any proposed use of the titanium processing  technology,  the
jig or the  Tennessee  mineral  property is subject to federal,  state and local
environmental laws. Under such laws, we may be jointly and severally liable with
prior property owners for the treatment,  cleanup, remediation and/or removal of
any hazardous substances discovered at any property used by Altair. In addition,
courts or government  agencies may impose liability for, among other things, the
improper  release,  discharge,  storage,  use,  disposal  or  transportation  of
hazardous  substances.  We might use hazardous substances and, if we do, we will
be subject to substantial risks that environmental remediation will be required.

Certain of our experts and  directors  reside in Canada and may be able to avoid
civil liability.

         We are an Ontario corporation,  and a majority of our directors and our
Canadian  legal counsel are residents of Canada.  As a result,  investors may be
unable to effect  service of process upon such persons  within the United States
and may be unable to enforce  court  judgments  against such persons  predicated
upon civil  liability  provisions  of the United States  securities  laws. It is
uncertain  whether Canadian courts would (i) enforce  judgments of United States
courts  obtained  against us or such directors,  officers or experts  predicated
upon the civil  liability  provisions of United States  securities  laws or (ii)
impose liability in original  actions against Altair or its directors,  officers
or experts predicated upon United States securities laws.

                                       20
<PAGE>

We are dependent on key personnel.

         Our  continued  success  will  depend  to a  significant  extent on the
services of Dr. William P. Long, our President and Chief Executive Officer,  and
Mr. C. Patrick  Costin,  our Vice  President and President of Fine Gold and MRS.
The loss or  unavailability  of Dr.  Long or Mr.  Costin  could  have a material
adverse effect on us. We do not carry key man insurance on the lives of Dr. Long
or Mr. Costin.

We may issue  substantial  amounts  of  additional  shares  without  stockholder
approval.

         Our Articles of  Incorporation  authorize  the issuance of an unlimited
number of common  shares.  All such  shares may be issued  without any action or
approval by our stockholders.  In addition, we have two stock option plans which
have potential for diluting of the ownership interests of our stockholders.  The
issuance of any  additional  common shares would further  dilute the  percentage
ownership  of Altair held by existing  stockholders.  Additional  common  shares
could be issued at a lower price per share than the price you are being offered.

The market price of our common shares is extremely volatile.

         Our common shares have been listed on the Nasdaq National Market since
January 26, 1998.  Trading in our common shares has been characterized by a high
degree  of  volatility.  Trading  in  our  common  shares  may  continue  to  be
characterized  by  extreme  volatility  for  numerous  reasons,   including  the
following:

     o   Uncertainty   regarding  the  viability  of  the  titanium   processing
         technology, the jig or the Tennessee mineral property;

     o   Continued  dominance of trading in our common  shares by a small number
         of firms;

     o   Positive or negative announcements by us or our competitors;

     o   Industry trends,  general  economic  conditions in the United States or
         elsewhere,  or the general markets for equity securities,  minerals, or
         commodities; and

     o   Speculation  by short  sellers  of our common  shares or other  persons
         (such as the holders of the Exchangeable Term Note) who stand to profit
         from a rapid increase or decrease in the price of our common shares.

Future sales of currently  restricted  securities  or common  shares  subject to
outstanding options may affect the market price of our common shares.

         In general,  under Rule 144,  outstanding  restricted  common shares of
Altair  may be sold  subject  to  certain  conditions  beginning  one year after
issuance  and,  unless  held by an  affiliate  of  Altair,  may be sold  without
limitation  beginning  two  years  after  issuance.  Future  sales of  currently
restricted  securities  may have a negative  effect on the  market  price of our
common shares.

         In addition, shares issued upon exercise of options granted pursuant to
our employee  stock option plans are presently  registered  under the Securities
Act. Subject to certain restrictions on resale by affiliates, such shares may be
sold without  restriction.  The sale of any substantial  number of common shares
may have a depressive effect on the market price of our common shares.

                                       21
<PAGE>

We have never declared, and are currently prohibited from declaring, a dividend.

         We have never  declared  or paid  dividends  on our common  shares.  We
currently intend to retain any future earnings,  if any, for use in our business
and,  therefore,  do not anticipate paying dividends on our common shares in the
foreseeable future. In addition,  under the terms of the Exchangeable Term Note,
we are prohibited from declaring or paying any dividends until the  Exchangeable
Term Note is paid in full.

We have not yet  confirmed  the  viability  and  effectiveness  of the  titanium
processing technology.

         We have not completed testing of product  applications for the titanium
processing  technology.  In addition,  the titanium  processing  technology  and
titanium  processing  equipment have not been used by Altair or anyone else in a
commercial  setting and may prove  ineffective  or unreliable  when subjected to
continuous use. If the titanium processing  technology proves ineffective or the
titanium processing  equipment proves unreliable in a commercial setting, we may
be unable to recoup our  investment in the titanium  processing  technology  and
titanium processing equipment.

We may not be able to sell nanoparticles  produced using the titanium processing
technology.

         In the short run, we plan to use the titanium processing  technology to
produce TiO2  nanoparticles.  We have not  previously  produced or marketed TiO2
nanoparticles  and,  to  date,  have  obtained  only  a  small  order  for  TiO2
nanoparticles.  The TiO2  nanoparticles  and other  products  produced using the
titanium  processing  technology  and titanium  processing  equipment  may be of
inferior quality to alternative  products or, regardless of actual quality,  may
be perceived as lacking adequate quality or reliability.

         Even if TiO2  nanoparticles  we produce  are of  adequate  quality  for
general  use,  they  may have  properties  that  make  them  unsuitable  for the
particular  use of a  potential  customer.  Even if we are  able to  efficiently
produce TiO2  nanoparticles  and other  products  using the titanium  processing
technology and titanium  processing  equipment,  we may not be able to sell such
products in the marketplace.

         In addition,  the uses for such  nanoparticles  are  limited--primarily
cosmetics and surface  coatings--and the market for such nanoparticles is small,
currently  estimated at 3,800 tons per annum.  In light of the small size of the
market,  we may not be able to profitably  market our nanoparticle  products for
any of the following reasons:

o  there may be insufficient demand for such products;

o  despite strong initial demand for such products, the market for such products
   may  contract  or  collapse  as a result of a  decrease  in demand  for goods
   incorporating  such products,  a worldwide or regional  financial  crisis, or
   other unforeseen event;

o  the  increased  supply of such  products as a result of our entrance into the
   market may cause the price to drop,  reducing or  eliminating  profitability;
   and

o  competing  entities may begin  producing,  or increase  their  production  of
   nanoparticles, causing the price to drop or displacing potential sales.

                                       22
<PAGE>

Our cost of production may exceed estimates.

         We purchased the titanium  processing  technology and related  titanium
processing  equipment  based  on the  belief  that we  will be able to use  that
technology  and  equipment to produce TiO2 and other  products more cheaply than
many competitors.  We have not, however, produced any mineral products using the
processing  technology and equipment on a commercial  basis. Our actual costs of
production may exceed those of competitors  and, even if our costs of production
are lower,  competitors  may be able to sell TiO2 and other  products at a lower
price than is economical for Altair.

Pending patent applications may be denied or may provide inadequate protection.

         BHP  Minerals  has filed  patent  applications  with the United  States
Patent and Trademark Office with respect to the titanium  processing  technology
and has transferred the rights to such applications to Altair. Such applications
are being  reviewed  by the Patent and  Trademark  Office,  and no patents  with
respect to the titanium processing  technology have been granted to date. If the
applications for any patents related to the titanium  processing  technology are
denied,  the value of the titanium  processing  technology,  and any competitive
advantage gained from our ownership of the titanium processing technology,  will
be  substantially  diminished.  We can provide no assurance  that pending patent
applications will be granted.  Even if pending patent  applications are granted,
we may have insufficient  resources to pay legal costs associated with enforcing
any patents.

We have not  completed  testing  and  development  of the jig and are  presently
focusing our resources on other projects.

         We have not completed  testing of, or developed a production  model of,
any series of the jig. We do not expect to complete  testing and  development of
the jig during the coming years and have determined to focus most of our limited
resources  on the  titanium  processing  technology  and the  Tennessee  mineral
property. We may never develop a production model of the jig.


Even if we completed  development of the jig, the jig may prove unmarketable and
may not perform as anticipated in a commercial operation.

         The  designed  capacity  of the  Series  12 jig is too  small  for coal
washing, heavy minerals extraction,  and most other intended applications of the
jig,  except use in small placer gold mines or similar  operations.  Even if the
Series 12 jig is completed and performs to design  specifications  in subsequent
tests or at a  commercial  facility,  we  believe  that,  because  of its  small
capacity, the potential market for the Series 12 jig is limited.

         If we complete development of and begin marketing the Series 30 jig, it
may not prove  attractive  to potential end users,  may be rendered  obsolete by
competing  technologies or may not recover end product at a commercially  viable
rate.  Even if  technology  included in the jig initially  proves  attractive to
potential end users,  performance  problems and maintenance issues may cause the
market for the jig to disappear.

The jig faces  competition  from other  jig-like  products and from  alternative
technologies.

         The jig currently  faces  competition in the commercial  segregation of
dense particles from several jig-like products, including the Kelsey jig, Falcon
concentrators and the Knelsen batch concentrator unit. All of these products are
currently being used in various parts of the world.

                                       23
<PAGE>

         In  addition,   various  alternative  mineral  processing  technologies
perform many functions similar or identical to those for which the jig and other
jig-like products are designed.  Results from further tests or actual operations
may reveal that these alternative  technologies are better adapted to any or all
of the uses for which the jig is intended. Moreover, regardless of test results,
consumers may view any or all of such  alternative  technologies  as technically
superior to, or more cost effective than, the jig.

We are dependent upon others to manufacture the jig.

         We currently  contract with a machine shop located in central Tennessee
for assembly of the jig, but have no long-term  contract with such entity. If we
complete  testing of the jig and  develop a final  production  model,  we do not
currently  have the know-how or resources  to  establish  our own  manufacturing
facility.  We may not be able to obtain  adequate  manufacturing  capacity  at a
reasonable cost.

Certain patents for the  centrifugal  jig have expired,  and those that have not
expired may be difficult to enforce.

         All of the initial  patents issued on the jig have expired,  and we are
unable to prevent a competitor  from copying the  technology  once  protected by
such patents.  Additional patents related to efficiency-enhancing  components of
the jig have been issued in the United States and various other  countries,  but
expire during 2011 or 2018. The cost of enforcing patents is often  significant,
especially  outside of North America.  Accordingly,  we may be unable to enforce
even our patents that have not yet expired.

We have not completed  examining the feasibility of mining the Tennessee mineral
property.

         The   Tennessee   mineral   property   is   currently   in  the   early
exploratoration  stage.  Based on the  results of a  pre-feasibility  study,  we
determined  in August 1998 to  commence  additional  feasibility  testing of the
Tennessee mineral property.  Such additional  feasibility testing is expected to
involve the actual  design,  pricing,  and analysis of equipment and  facilities
that would be used to mine the  Tennessee  mineral  property.  To date,  we have
constructed  a pilot  test  facility  on the  Tennessee  mineral  property.  The
feasibility  testing  process is also expected to involve an  examination of the
market for products  produced at the pilot  facility,  applications  for permits
necessary  for any proposed  full-scale  mining  facility and attempts to secure
financing of any proposed full-scale mining facility.

         If  production  at the pilot plant and our  marketing,  permitting  and
financing  efforts are  successful,  a mine would not be  operational  for 24-36
months after  financing is obtained.  Our test production at the pilot plant may
indicate that the Tennessee mineral property does not contain minable quantities
of heavy  minerals  or that  such  deposits  are not  amenable  to  large-scale,
low-cost mining. Even if the tests suggest that mining is economically  feasible
on the  Tennessee  mineral  property,  we may be unable to obtain  the  capital,
resources and permits necessary to mine the property.  Moreover, market factors,
such as a decline in the price of, or demand for,  minerals  recoverable  at the
Tennessee  mineral  property,  may adversely  affect the  development  of mining
operations on such property.

We may be  unable to  obtain  necessary  environmental  permits  and may  expend
significant resources in order to comply with environmental laws.

                                       24
<PAGE>

         In order to begin  construction and commercial  mining on the Tennessee
mineral property, we must obtain additional federal, state and local permits. We
will also be required to conform our operations to the  requirements of numerous
federal,  state and local  environmental laws. Because we have not yet commenced
design of a commercial mining facility on the Tennessee mineral property, we are
not in a position  to  definitively  ascertain  which  federal,  state and local
mining  and  environmental  laws or  regulations  would  apply  to a mine on the
Tennessee  mineral property.  Nevertheless,  we anticipate having to comply with
and/or  obtain  permits  under the  Clean Air Act,  Clean  Water  Act,  Resource
Conservation  and  Recovery  Act,  and  Comprehensive   Environmental   Response
Compensation  Liability Act, in addition to numerous state laws and  regulations
before  commencing  construction or operation of a mine on the Tennessee mineral
property.  We can provide no assurance  that we will be able to comply with such
laws and  regulations  or obtain any such permits.  In addition,  obtaining such
permits and complying with such  environmental  laws and regulations may be cost
prohibitive.

The market for  commodities  produced using the jig or at the Tennessee  mineral
property may significantly decline.

         If the jig is successfully developed and manufactured, we intend to use
the jig,  or lease the jig for use,  to separate  and  recover  valuable,  heavy
mineral particles. Active international markets exist for gold, titanium, zircon
and many other minerals  potentially  recoverable  with the jig.  Prices of such
minerals fluctuate widely and are beyond our control.  A significant  decline in
the  price  of  minerals  capable  of  being  extracted  by the jig  could  have
significant  negative effect on the value of the jig.  Similarly,  a significant
decline in the price of  minerals  being  produced or expected to be produced on
the Tennessee  mineral property could have a significant  negative effect on the
viability of a mine or processing facility on such property.

Item 6.      Selected Financial Data

         The  following  table  sets  forth  selected   consolidated   financial
information  with  respect to the Company and its  subsidiaries  for the periods
indicated.  The data is derived from financial statements prepared in accordance
with  accounting  principles  generally  accepted  in the United  States  ("U.S.
GAAP").  The  selected  financial  data should be read in  conjunction  with the
section entitled  "Management's  Discussion and Analysis of Financial  Condition
and  Results  of  Operations"  and the  consolidated  financial  statements  and
accompanying notes included herein. All amounts are stated in U.S. dollars.
<TABLE>
<CAPTION>

For the Year Ended December 31,       2000          1999          1998          1997         1996
                                  --------------------------------------------------------------------
<S>                               <C>             <C>           <C>           <C>          <C>
STATEMENTS OF OPERATIONS
Revenues from operations          $        --     $       --    $       --    $      --    $      --
Operating expenses                    6,647,367      3,729,534     3,842,441    2,885,043    1,752,016
Interest expense                        215,216          1,966       959,612       43,497       19,373
Interest income                         (83,440)      (134,811)     (335,037)     (70,059)     (27,872)
(Gain) loss on foreign exchange        (864,669)       160,619        17,109      123,612       (7,888)
Gain on forgiveness of debt              --            (67,442)      (25,805)        --       (702,726)
Loss on redemption of convertible
   debentures                            --               --         193,256         --            --
                                  --------------------------------------------------------------------
Net Loss                          $   5,914,474   $  3,689,866  $  4,651,576  $ 2,982,093  $ 1,032,903
                                  ====================================================================
Basic and diluted net loss per
   common share from operations$           0.34   $       0.24  $       0.31  $      0.21  $      0.09
                                  ====================================================================
Cash dividends declared per
     common share                 $        --     $       --    $       --    $      --    $      --
                                  ====================================================================
Deficit, beginning of year        $  15,691,904   $ 12,002,038  $  7,350,462  $ 4,368,369  $ 3,335,466
Net loss                              5,914,474      3,689,866     4,651,576    2,982,093    1,032,903
                                  --------------------------------------------------------------------
Deficit, end of year              $  21,606,378   $ 15,691,904  $ 12,002,038  $ 7,350,462  $ 4,368,369
                                  ====================================================================
BALANCE SHEET DATA
Working capital                   $   234,714     $ (5,931,717) $  3,008,789  $ 7,480,153  $ 2,974,955
Total assets                         16,651,770     13,365,848     7,103,267   12,956,079    7,868,840
Long-term obligations                 2,689,493           --          31,091    4,774,420      269,685
Current liabilities                   3,741,366      7,578,083       222,431      712,810      308,762
Net shareholders' equity             10,220,911      5,787,765     6,849,745    7,468,849    7,290,393
</TABLE>

                                       28
<PAGE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

The following  discussion  should be read in conjunction  with the  consolidated
financial statements and notes thereto.

Overview

         From  inception  through  the  end  of  1993,  our  business  consisted
principally  of the  exploration  of  mineral  properties  for  acquisition  and
development.  During  1994,  our  focus  changed  as we  became  engaged  in the
acquisition,  development and testing of mineral processing equipment for use in
the recovery of fine, heavy mineral particles including gold,  titanium,  zircon
and  environmental  contaminants.  Since that time, we have continued  exploring
mineral   properties   suitable  for  development  using  our  patented  mineral
processing  equipment.  In November  1999,  we acquired the titanium  processing
technology and titanium  processing assets from BHP which we intend to initially
use for commercial production of TiO2 nanoparticles.

         In 1996, we acquired all patent rights to the Campbell Centrifugal Jig,
since modified and renamed the Altair Centrifugal Jig. Since April 1996, we have
acquired mineral  leaseholds on approximately  14,000 acres of land in Tennessee
which contain heavy mineral sand deposits. A prefeasibility study issued in July
1998 confirmed the existence of in-place mineralized materials and suggests that
the  property  warrants  further  development.  Based  on the  results  of these
independent  studies, we have initiated  additional  feasibility testing and are
assessing our options for developing the property.

         In November  1999, we acquired all patent  applications  and technology
related to a  hydrometallurgical  process  developed  by BHP  primarily  for the
production  of  titanium   dioxide   products  from  titanium  bearing  ores  or
concentrates  (i.e.,  the  "titanium  processing  technology")  and all tangible
equipment and other assets (i.e., the "titanium  processing assets") used by BHP
to develop and implement the titanium processing technology.


Results of Operations.

         We  have  earned  no  revenues  to  date.   Operating   losses   before
extraordinary  items  totaled  $5,914,474  ($0.34 per share) for the 2000 fiscal
year,  $3,757,308  ($0.24 per share) for the 1999 fiscal  year,  and  $4,484,125
($0.30 per share) for the 1998 fiscal year.  Principal  factors  contributing to
the losses  during these  periods were the absence of revenues  coupled with the
incurrence of operating expenses.

                                       29
<PAGE>

Fiscal Year 2000 vs. 1999

         During 2000, we began  construction of a mineral processing pilot plant
at the Tennessee  mineral  property.  In connection with such  construction,  we
incurred $413,000 of costs for permitting,  design and construction of the plant
site and ancillary  facilities,  and $388,000 for design and  fabrication of the
processing  equipment.  The  equipment was installed and testing of the facility
began during the first quarter of 2001.  During 2000, we also incurred  $417,000
of ongoing costs for development work and maintenance of our mineral leaseholds.
The costs associated with the Tennessee mineral property are recorded as mineral
exploration and development expenses.

         Since  acquiring  the  titanium  processing   technology  and  titanium
processing assets from BHP in November 1999, we have directed our efforts toward
the  production  and marketing of TiO2  nanoparticles.  Our  acquisition  of the
titanium processing  technology and titanium processing assets in late 1999, and
our  subsequent  production  and marketing  efforts  during 2000,  have caused a
significant  increase in our operating  expenses for the year ended December 31,
2000 when compared to the year ended December 31, 1999.

         In  connection  with  the  acquisition,  we  entered  into  a  services
agreement  with BHP wherein BHP agreed to provide,  through  December  31, 2000,
certain services  necessary to continue  development and testing of the titanium
processing technology and operation of the titanium processing assets. The costs
associated  with this service  agreement were  approximately  $1,368,000 for the
year  ended  December  31,  2000 and were  recorded  as  testing,  research  and
development  expense.  Our comparable expense during the year ended December 31,
1999 was $171,000.

         We also  entered  into a lease  agreement  with BHP to lease  the space
occupied by the titanium  processing  assets at a BHP facility in Reno,  Nevada.
The lease cost was $180,000 for the year ended December 31, 2000 and is included
in  general  and  administrative  expenses  in the  Consolidated  Statements  of
Operations.  We incurred  $22,500 of  comparable  lease costs for the year ended
December 31, 1999. General and administrative expenses also increased by $80,000
due to the  recognition  of expense  associated  with options and  warrants,  by
$75,000 due to the  addition of one new  employee,  by $20,000 due to  insurance
costs for  coverages  on the  titanium  processing  assets and by $34,000 due to
additional Nasdaq listing fees in connection with the issuance of common shares.

         Professional  services for the year ended  December 31, 2000  increased
over the  comparable  period of 1999 due to legal costs  associated  with patent
reviews and trademark filings related to the titanium processing technology, and
consulting  costs  for  marketing  and  production  management  related  to TiO2
nanoparticle products.

         We are depreciating the costs of the titanium processing technology and
titanium processing assets acquired from BHP at approximately $61,000 per month.
This  amount  (approximately  $732,000  for the year ended  December  31,  2000)
represents the increase in depreciation  expense for the year ended December 31,
2000 over the same period in 1999.

         The purchase price for the titanium processing  technology and titanium
processing assets was 15,000,000  Australian dollars ("AUDS") (U.S.  $9,625,500)
and was payable in four equal  installments.  The first  installment was paid at
closing in November 1999, the second and third installments were paid on May 12,
2000 and the  remaining  payment was paid on August 1, 2000.  Since the purchase
price was payable in  Australian  dollars,  the  liability to BHP was subject to
exchange  rate  fluctuations.  From  December  31, 1999 to March 31,  2000,  the
American  dollar  strengthened  significantly  against  the  Australian  dollar,
resulting in a gain on foreign exchange of approximately $559,000. From April 1,
2000 through June 30, 2000, the American dollar strengthened further,  resulting
in a gain on foreign exchange of approximately  $237,000. When the final payment
was paid on August 1, 2000, an additional foreign exchange gain of approximately
$69,000 was realized, resulting in a total foreign exchange gain on the purchase
of  the  titanium  processing  technology  and  titanium  processing  assets  of
approximately $865,000 for the year ended December 31, 2000.

                                       30
<PAGE>

         Interest  on  long-term  debt  increased  by  $79,000 in the year ended
December  31, 2000 over the  comparable  period of 1999 due to interest  paid in
connection with the rescheduling of the second installment due BHP from February
15, 2000 to May 15,  2000.  It further  increased  by  $129,000  due to interest
charges associated with a $7,000,000  Asset-Backed  Exchangeable Term Note which
we entered into in December  2000 (see  "Liquidity  and Capital  Resources"  for
discussion of this note).

         Interest  income  in 2000  decreased  from  1999 as we had  lower  cash
balances available for investment during most of the year.

Fiscal Year 1999 vs. 1998

         Prior to the  acquisition  of the titanium  processing  technology  and
titanium  processing assets, our principal business  activities  centered around
the  exploration of the Tennessee  mineral  property and development of the jig.
During 1998,  we  increased  the amount of testing and  development  work on the
Series 30/16 Jig, began testing of potential new  applications for it, initiated
the  preliminary  design  work for a larger  capacity  jig,  and  increased  our
exploration  efforts in  Tennessee.  In order to support  this  higher  level of
activity,  we increased the number of employees in our Reno,  Nevada office from
four to eight personnel and expanded into new leased office space. The full-year
effect of the costs  associated with this  additional  staffing and office space
are  reflected in increased  research and  development  expenses and general and
administrative expenses in 1999.

         Mineral  exploration and development  costs decreased by  approximately
$80,000 in 1999 due to a reduction in the exploration expenditures in the Little
Benton area of the  Tennessee  mineral  property.  We explored the Little Benton
area in 1998,  incurring  costs for sampling and other test work, and discovered
an additional heavy mineral deposit.

         In 1998, we completely  amortized the balance of costs  associated with
certain jig  license  agreements.  As a result,  depreciation  and  amortization
expense declined in 1999 from 1998.

         In August  1998,  we redeemed  $2,250,000  of  convertible  debentures,
incurring a redemption  premium of $193,256.  Interest  expense in 1998 includes
approximately  $927,000 related to the convertible  debentures.  Of this amount,
$390,000   represents  premium  and  accretion  on  conversions  of  convertible
debentures and $537,000 represents issuance costs written off as a result of the
redemption of the debentures.

         Interest  income  declined  in  1999  from  1998  as a  result  of  the
redemption of the convertible debentures which decreased cash balances available
for investment.

         We incurred a $161,000  loss on foreign  exchange in 1999 in connection
with the purchase of the titanium processing  technology and titanium processing
assets. The purchase price was stated in Australian dollars,  which strengthened
in relation to U.S.  dollars from the date of the purchase  through December 31,
1999.

         In  connection  with  our  acquisition  of the  rights  to  the  Altair
Centrifugal Jig, we assumed certain liabilities  associated with the jig. During
1999 and 1998,  we  extinguished  certain  of such  accounts  payable  and notes
payable at less than the book amounts of such debt. The net of such  forgiveness
of debt was $67,442 in 1999,  and $25,805 in 1998,  with neither amount having a
material effect on earnings per share.

                                       31
<PAGE>

Liquidity and Capital Resources.

         We have earned no revenues from operations and have incurred  recurring
losses.  At December 31, 2000, our accumulated  deficit was  $21,606,378,  or an
increase of $5,914,474 over the  accumulated  deficit at December 31, 1999. This
increase was due to the net loss for the year.

         Our cash and short-term investments increased from $153,580 at December
31, 1999 to  $3,585,729  at December  31, 2000,  principally  as a result of two
financing transactions which are described below.

         On December  15,  2000,  we and an investor  entered  into a Securities
Purchase  Agreement  pursuant  to which we issued to the  investor a  $7,000,000
Asset-Backed  Exchangeable  Term Note (the  "Note")  and a Warrant  to  purchase
350,000  common shares at an initial  exercise  price of $3.00 at any time on or
before December 15, 2005 (the "Warrant").  The Note,  Warrant and related rights
were sold to the  investor in exchange for  $7,000,000  (less  financing  fees).
Among certain other covenants,  we have agreed to maintain a letter of credit in
favor of the investor in an amount equal to 57.15% of the  principal  balance of
the Note until certain  conditions are met, after which the required amount will
be reduced to 50% of the principal  balance of the Note. The letter of credit is
currently  secured by cash  proceeds from issuance of the Note equal to the face
amount of the letter of credit.  Such cash  proceeds are reflected as restricted
cash in the Consolidated Balance Sheets.

         The Note is in the principal amount of $7,000,000 and bears interest at
a rate of 10% per  annum.  Under  the  Note,  we are  required  to make  monthly
payments  on or  before  the 15th day of each  calendar  month in the  principal
amount of $291,667 plus accrued  interest (the "Monthly  Payment  Amount").  The
Note is due and payable in full on December 15, 2003.

         We may redeem the Monthly  Payment Amount in cash. In addition,  we may
pay accrued  interest in cash at any time throughout the term and may prepay the
Note in $250,000  increments at any time throughout the term at a price equal to
115% of the sum of outstanding principal and accrued interest.

         If we elect not to redeem the Monthly Payment Amount, on each due date,
the  holder  of the Note  automatically  will  receive  the  right  to  exchange
(immediately  or at any later date during the term) the Monthly  Payment  Amount
into common shares at the  applicable  "Exchange  Price." The Exchange Price for
any date is the lesser of (a) a fixed  exchange  price of $3.00 as adjusted,  or
(b) the average of the lowest three daily  trading  prices of the common  shares
during  the 15  trading  days  ending  on the day  before an  exchange  right is
exercised.  The Note is secured  by a pledge of the  intellectual  property  and
common stock of Altair  Technologies,  Inc., and by a pledge of the common stock
of Mineral Recovery Systems, Inc.

         On March 31, 2000,  we and a private  equity fund entered into a Common
Stock Purchase  Agreement and related  agreements,  pursuant to which the equity
fund purchased  1,251,303 Common Shares of the Company for an aggregate purchase
price of $6,000,000;  however,  the number of shares received by the equity fund
in exchange for $6,000,000 was subject to "repricing"  adjustments if the lowest
average  closing  price for any ten days during each of four 30-day  "repricing"
periods did not meet a certain threshold. Prior to December 15, 2000, the equity
fund repriced  750,782 of the initial shares it purchased under the Common Stock
Purchase Agreement and received an additional 1,003,626 Common Shares.

                                       32
<PAGE>

         Pursuant to an  Assignment  and Agreement  dated  December 15, 2000, in
exchange for $1,650,000, the equity fund transferred all of its remaining rights
under the Common Stock  Purchase  Agreement,  including its right to reprice the
remaining  500,521  of  the  initial  1,251,303  shares,  to the  investor  that
purchased the Note. On December 15, 2000,  pursuant to the  Securities  Purchase
Agreement,  the investor that  purchased the Note exercised its right to reprice
approximately  70,928 of the initial shares and received  247,678 Common Shares.
Simultaneously with such exercise, in exchange for approximately $1,650,000, the
investor  terminated  all  remaining  rights  under the  Common  Stock  Purchase
Agreement, including all remaining repricing rights.

         During 2000,  we paid the  remaining  $7,363,600  due BHP in connection
with the purchase of the titanium processing  technology and titanium processing
assets.

         At December 31, 2000, we had unrestricted  cash and cash equivalents of
$1,335,729,  an amount  which,  together  with  $561,300 of stock  subscriptions
receivable at December 31, 2000 that were collected  during the first quarter of
2001,  is sufficient to fund the  Company's  basic  operations  through June 30,
2001.  In  connection  with the issuance of the Note,  we are required to file a
registration  statement  registering  the common  shares  which may be exchanged
under the Note.  We are also required to maintain a letter of credit in favor of
the lender in an amount equal to 57% of the Note  balance,  reducing to 50% when
the  registration  statement  is  effective  and the market  price of our common
shares  closes  at  or  above  $2.25  for  five  consecutive   days.  After  the
registration  statement is  effective,  and as payments are made on the Note, we
have the right to draw against the restricted cash securing the letter of credit
as long as the letter of credit  amount meets the  specified  percentage  of the
Note balance.  We presently  anticipate  that the Monthly Payment Amount will be
satisfied  through the exchange of common  shares  during the year 2001 and that
draws against the restricted cash, together with cash from anticipated  revenues
and  potential  sales of common stock,  will be  sufficient  to fund  operations
during the remainder of the year.

Item 8.  Financial Statements and Supplementary Data.

         The  financial  statements  required  by this Item  appear on pages F-1
through F-18 of this Form 10-K.


                                     PART IV


Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a) Documents Filed

         1.  Financial   Statements.   The  following   Consolidated   Financial
Statements of the Company and Auditor's Reports are filed as part of this Annual
Report on Form 10-K:

         o   Independent   Auditors'   Report  of   McGovern   Hurley,   Hurley,
             Cunningham, LLP

         o   Independent Auditors' Report of Deloitte & Touche LLP

         o   Consolidated Balance Sheets, December 31, 2000 and 1999

         o   Consolidated  Statements of Operations  for Each of the Three Years
             in the Period Ended December 31, 2000 and for the Period from April
             9, 1973 (Date of Inception) to December 31, 2000

         o   Consolidated Statements of Shareholders' Equity from April 9, 1973
             (Date of Inception) to December 31, 2000

         o   Consolidated  Statements  of Cash Flows for Each of the Three Years
             in the Period Ended December 31, 2000 and for the Period from April
             9, 1973 (Date of Inception) to December 31, 2000

         o   Notes to Consolidated Financial Statements

         2. Financial Statement Schedule.  Not applicable.

                                       35
<PAGE>



<PAGE>


         3. Exhibit List

<TABLE>
<CAPTION>

  Exhibit No.                         Exhibit                            Incorporated by Reference/ Filed Herewith
----------------    ---------------------------------------------     ------------------------------------------------
<S>                 <C>                                               <C>
                                                                      Incorporated by reference to Registration
          3.1.1     Articles of Incorporation of the Registrant       Statement on Form 10-SB filed with the
                                                                      Commission on November 25, 1996.

                                                                      Incorporated by reference to Amendment No. 1
          3.1.2     Amendment to Articles of  Incorporation  of       To Registration Statement on Form 10-SB filed
                    the Registration dated November 6, 1996           With the Commission on December 23, 1996.

                                                                      Incorporated by reference to Registration
            3.2     Bylaws of the Registrant                          Statement on Form 10-SB filed with the
                                                                      Commission on November 25, 1996.

                                                                      Incorporated by reference to Registration
            4.1     Form of Common Stock Certificate                  Statement on Form 10-SB filed with the
                                                                      Commission on November 25, 1996.

                    Amended and Restated Shareholder Rights           Incorporated by reference to the Company's
            4.2     Plan dated October  15,  1999,  between the       Current Report on Form 8-K filed with the
                    Company and Equity Transfer Services, Inc.        Commission on November 19, 1999.

                                                                      Incorporated by reference to the Company's
            4.3     Form of Doral Warrant                             Current Report on Form 8-K filed with the
                                                                      Commission on December 26, 2000.

                                                                      Incorporated by reference to the Company's
            4.4     Asset-backed  Exchangeable Term Note              Current Report on Form 8-K filed with the
                    dated December 15, 2000                           Commission  on December 26, 2000.

                                                                      Incorporated by reference to the Company's
                    Employment Agreement between Altair               Annual Report on Form 10-K filed with the
           10.1     International Inc. and William P. Long            Commission on March 31, 1998, as amended by
                    dated January 1, 1998                             Amendment No. 1 to Annual Report on Form
                                                                      10-K/A filed on May 15, 1998.

                    Employment Agreement between Fine Gold            Incorporated by reference to Registration
           10.2     Recovery Systems Inc. and C. Patrick Costin       Statement on Form 10-SB filed with the
                    dated August 15, 1994                             Commission on November 25, 1996.

                                                                      Incorporated by reference to the Company's
           10.3     Altair International Inc. Stock Option Plan       Registration Statement on Form S-8 filed with
                    adopted by shareholders on May 10, 1996           the Commission on July 11, 1997.

                    1998 Altair International Inc. Stock Option       Incorporated by reference to the Company's
           10.4     Plan adopted by Shareholders on June 11,          Definitive Proxy Statement on Form 14A filed
                    1998                                              with the Commission on May 12, 1998.

                                                                      Incorporated by reference to the Company's
                                                                      Annual Report on Form 10-K filed with the
           10.5     Form of Mineral Lease                             Commission on March 31, 1998, as amended by
                                                                      Amendment No. 1 to Annual Report on Form
                                                                      10-K/A filed on May 15, 1998.

                                                                      Incorporated by reference to the Company's
           10.6     Lease dated November 15, 1999, between the        Current Report on Form 8-K filed with the
                    Company and BHP Minerals International Inc.       Commission on November 19, 1999.
</TABLE>

                                       36
<PAGE>
<TABLE>
<CAPTION>

<S>                 <C>                                               <C>

                    Asset Purchase and Sale Agreement dated
                    November 15, 1999,  between  the  Company         Incorporated by reference to the Company's
           10.7     and BHP Minerals International Inc                Current Report on Form 8-K filed with the
                                                                      Commission on November 19, 1999.

                                                                      Incorporated by reference to the Company's
           10.8     Securities Purchase Agreement dated               Current Report on Form 8-K filed with the
                    December 15, 2000.                                Commission on December 26, 2000.

                                                                      Incorporated by reference to the Company's
           10.9     Registration Rights Agreement dated               Current Report on Form 8-K filed with the
                    December 15, 2000.                                Commission on December 26, 2000.

                    Stock Pledge Agreement dated December 15,         Incorporated by reference to the Company's
          10.10     2000 (Mineral Recovery Systems common             Current Report on Form 8-K filed with the
                    stock).                                           Commission on December 26, 2000.

                                                                      Incorporated by reference to the Company's
          10.11     Stock Pledge Agreement dated December 15,         Current Report on Form 8-K filed with the
                    2000 (Altair Technologies common stock).          Commission on December 26, 2000.

                                                                      Incorporated by reference to the Company's
          10.12     Assignment and Agreement dated December 15,       Current Report on Form 8-K filed with the
                    2000.                                             Commission on December 26, 2000.

          10.13     Research Agreement dated August 1, 2000           Incorporated by reference to the Company's
                                                                      Amendment No. 1 on Form 10-K/A filed  with
                                                                      the Commission on April 17, 2001.

             23     Auditor's Consent                                 Filed herewith.

             24     Power of Attorney                                 Included on the Signature Page hereof.
</TABLE>

         (b)      Reports on Form 8-K

         The Company filed a Current Report on Form 8-K on December 26, 2000, in
which it reported  (i) the  issuance of a $7 million  Asset-Backed  Exchangeable
Term Note  together  with a Warrant  to  purchase  350,000  common  shares at an
initial  exercise price of $3.00,  and (ii) the  assignment  and  termination of
repricing rights under a March 31, 2000 Common Stock Purchase Agreement.

         (c)      Exhibits

                  Exhibits  to this  Report  are  attached  following  page F-19
hereof.

         (d)      Financial Statement Schedule

                  Not applicable.

                                       37
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934,  the  Registrant  has duly caused this  Amendment No. 3 to
Annual  Report on Form  10-K/A to be  signed on its  behalf by the  undersigned,
thereunto duly authorized, on May 5, 2001.

                                    ALTAIR INTERNATIONAL INC.


                                    By: /s/ William P. Long
                                    ----------------------------------------
                                            William P. Long,
                                            President, Chief Executive Officer


                                               ADDITIONAL SIGNATURES

<TABLE>
<CAPTION>

     Signature                        Title                              Date
<S>                             <C>                                   <C>

/s/ William P. Long             President and Chief Executive         May 5, 2001
---------------------------
William P. Long                 Officer and Director (Principal
                                Executive Officer)


/s/ Edward Dickinson            Chief Financial Officer
Edward Dickinson                (Principal Financial and              May 5, 2001
                                Accounting Officer)


/s/ James I. Golla*             Secretary and Director                May 5, 2001
---------------------------
James I. Golla


/s/ George Hartman*             Director                              May 5, 2001
---------------------------
George Hartman


/s/ Robert Sheldon*             Director                              May 5, 2001
---------------------------
Robert Sheldon


* By: /s/ William P. Long
      -------------------------------------
          William P. Long, Attorney-in-Fact
</TABLE>

                                       38
<PAGE>

     ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
     (AN EXPLORATION STAGE COMPANY)

     Consolidated  Financial Statements as of December 31, 2000 and 1999 and for
     Each of the Three Years in the Period  Ended  December 31, 2000 and for the
     Period  from April 9, 1973 (Date of  Inception)  to  December  31, 2000 and
     Independent Auditors' Report
<PAGE>

altair international, inc. and subsidiaries
(An Exploration Stage Company)


TABLE OF CONTENTS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                               Page
<S>                                                                                            <C>

INDEPENDENT AUDITORS' REPORTS                                                                  F-1-2

FINANCIAL STATEMENTS:

  Consolidated Balance Sheets, December 31, 2000 and 1999                                        F-3

  Consolidated  Statements  of  Operations  for Each of the  Three  Years in the
    Period Ended December 31, 2000 and for the Period from April 9, 1973
    (Date of Inception) to December 31, 2000                                                     F-4

  Consolidated Statements of Shareholders' Equity for the Period from April 9, 1973
    (Date of Inception) to December 31, 2000                                                 F-5-6-7

  Consolidated  Statements  of Cash  Flows  for Each of the  Three  Years in the
    Period Ended December 31, 2000 and for the Period from April 9, 1973
    (Date of Inception) to December 31, 2000                                                     F-8

Consolidated  Statements of Cash Flows for Each of the Three Years in the Period
    Ended December 31, 2000 and for the Period from April 9, 1973
    (Date of Inception) to December 31, 2000                                                     F-9

Notes to Consolidated Financial Statements                                                   F-10-19
</TABLE>

<PAGE>

Letterhead of McGovern, Hurley, Cunningham, LLP]


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors
Altair International Inc.


We have audited the consolidated statements of operations,  stockholders' equity
and cash flows of Altair  International  Inc. and  subsidiaries  (a  development
stage company) for the period from April 9, 1973 (date of inception) to December
31, 1997 (these financial statements are not presented separately herein). These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated results of operations and cash flows of
Altair International Inc. and subsidiaries (a development stage company) for the
period from April 9, 1973 (date of inception) to December 31, 1997 in conformity
with accounting principles generally accepted in the United States of America.

The  consolidated  financial  statements  referred  to above have been  prepared
assuming  that the Company will  continue as a going  concern.  The Company is a
development stage enterprise engaged in developing mineral processing equipment,
producing  titanium  dioxide  products,  and  exploring and  developing  mineral
properties. As discussed in Note 1 to the consolidated financial statements, the
Company's operating losses raise substantial doubt about its ability to continue
as a  gong  concern.  Management's  plans  concerning  these  matters  are  also
described in Note 1. The  consolidated  financial  statements do not include any
adjustments that might result from the outcome of these uncertainties.

We consent to the incorporation by reference of this report in the Registration
Statements  on Form S-3,  file Nos.  333-54092,  333-36462 and 333-45511 and the
Registration  Statements on Form S-8, file Nos. 333-64495 and 333-33481 filed by
Altair International Inc.


                                               McGOVERN, HURLEY CUNNINGHAM, LLP

                                       By: /s/ McGovern, Hurley Cunningham, LLP
                                           ------------------------------------
                                               McGovern, Hurley Cunningham, LLP
                                               Chartered Accounts

TORONTO, Canada
February 17, 2000

                                       F-1
<PAGE>


<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Altair International, Inc.
Reno, Nevada

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Altair
International,   Inc.  (an   exploration   stage   company)   and   subsidiaries
(collectively  referred to as the  "Company")  as of December 31, 2000 and 1999,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period  ended  December  31, 2000,
and for the period from April 9, 1973 (date of  inception) to December 31, 2000.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits. The Company's  consolidated  financial  statements for the period
from April 9, 1973 (date of  inception)  to December  31,  1997 were  audited by
other  auditors  whose report,  dated February 17, 2000 expressed an unqualified
opinion on those statements. The other auditors' report has been furnished to us
and our  opinion,  insofar as it related to the amounts  included for such prior
periods, is based solely on the report of such other auditors.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial statement  presentation.  We believe that our audits and the report of
other auditors provide a reasonable basis for our opinion.

In our  opinion,  based on our  audits and the  report of other  auditors,  such
consolidated  financial statements present fairly, in all material respects, the
financial  position  of the Company as of  December  31, 2000 and 1999,  and the
results of its  operations and its cash flows for each of the three years in the
period ended  December 31, 2000,  and for the period from April 9, 1973 (date of
incorporation)  to December 31, 2000, in conformity with  accounting  principles
generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company is a development
stage enterprise engaged in developing mineral processing  equipment,  producing
titanium dioxide products,  and exploring and developing mineral properties.  As
discussed in Note 1 to the  consolidated  financial  statements,  the  Company's
operating  losses  raise  substantial  doubt  about its ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note 1. The  consolidated  financial  statements do not include any  adjustments
that might result from the outcome of these uncertainties.



By: /s/ DELOITTE & TOUCHE LLP
-----------------------------
        DELOITTE & TOUCHE LLP




Salt Lake City, Utah
March 30, 2001
                                       F-2
<PAGE>


ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS                                                                2000            1999
                                                              ------------    ------------
CURRENT ASSETS:
<S>                                                           <C>             <C>
  Cash and cash equivalents                                   $  1,335,729    $    153,580
  Restricted cash                                                2,250,000            --
  Other current assets                                             390,351       1,492,786
                                                              ------------    ------------
           Total current assets                                  3,976,080       1,646,366

RESTRICTED CASH                                                  1,750,000            --

PROPERTY AND EQUIPMENT, Net                                      6,601,917       7,093,569

PATENTS AND RELATED EXPENDITURES, Net                            4,111,740       4,625,913

OTHER ASSETS                                                       212,033            --
                                                              ------------    ------------

TOTAL ASSETS                                                  $ 16,651,770    $ 13,365,848
                                                              ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable and accrued liabilities                    $    158,642    $    214,483
  Notes payable - current portion                                3,500,004       7,363,600
  Capital lease obligations - current portion                       24,763            --
  Deferred revenue                                                  57,957            --
                                                              ------------    ------------
           Total current liabilities                             3,741,366       7,578,083
                                                              ------------    ------------
NOTES PAYABLE, Long-term portion                                 2,687,181            --
                                                              ------------    ------------
CAPITAL LEASE OBLIGATIONS, Long-term portion                         2,312            --
                                                              ------------    ------------
COMMITMENTS AND CONTINGENCIES
  (Notes 1, 3, 6, 7, 8, 9, 10, and 12)

SHAREHOLDERS' EQUITY:
  Common stock, no par value, unlimited shares authorized;
    19,325,488 and 15,474,915 shares issued and outstanding
    at December 31, 2000 and 1999                               32,388,589      21,479,669
  Stock subscription receivable                                   (561,300)           --
  Deficit accumulated during the development stage             (21,606,378)    (15,691,904)
                                                              ------------    ------------
           Total shareholders' equity                           10,220,911       5,787,765
                                                              ------------    ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                    $ 16,651,770    $ 13,365,848
                                                              ============    ============
</TABLE>

              See notes to the consolidated financial statements.

                                      F-3
<PAGE>

ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000 AND
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2000
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                 Period
                                                                                                 April 9, 1973
                                                                                                 (Date of
                                                                                                 Inception) to
                                                                Year Ended December 31,          December 31,
                                                         2000            1999            1998            2000

REVENUES                                                 None            None            None            None
                                                 ------------    ------------    ------------    ------------
OPERATING EXPENSES:
<S>                                              <C>             <C>             <C>             <C>
  Mineral exploration and development            $  1,217,966    $    714,893    $    793,249    $  4,987,888
  Research and development                          1,555,472         354,462         259,630       2,569,505
  Professional services                               366,275         252,337         236,549       1,970,824
  General and administrative expenses               2,271,250       1,899,759       1,867,420       9,022,836
  Depreciation and amortization                     1,236,404         508,083         685,593       3,379,206
                                                 ------------    ------------    ------------    ------------
           Total operating expenses                 6,647,367       3,729,534       3,842,441      21,930,259
                                                 ------------    ------------    ------------    ------------
LOSS FROM OPERATIONS                                6,647,367       3,729,534       3,842,441      21,930,259
                                                 ------------    ------------    ------------    ------------
OTHER (INCOME) EXPENSE:
  Interest expense                                    215,216           1,966         959,612       1,502,874
  Interest income                                     (83,440)       (134,811)       (335,037)       (664,860)
  (Gain) loss on foreign exchange                    (864,669)        160,619          17,109        (559,179)
                                                 ------------    ------------    ------------    ------------
           Total other (income) expense, net         (732,893)         27,774         641,684         278,835
                                                 ------------    ------------    ------------    ------------
LOSS BEFORE EXTRAORDINARY ITEMS                     5,914,474       3,757,308       4,484,125      22,209,094
                                                 ------------    ------------    ------------    ------------
EXTRAORDINARY ITEMS:
  (Gain) on forgiveness of debt                          --           (67,442)        (25,805)       (795,972)
  Loss on redemption of convertible debentures           --                           193,256         193,256
                                                 ------------    ------------    ------------    ------------
           Total extraordinary items                     --           (67,442)        167,451        (602,716)
                                                 ------------    ------------    ------------    ------------
NET LOSS                                         $  5,914,474    $  3,689,866    $  4,651,576    $ 21,606,378
                                                 ============    ============    ============    ============
LOSS BEFORE EXTRAORDINARY ITEMS
  PER COMMON SHARE:
     Basic and diluted                           $       0.34    $       0.24    $       0.30    $       3.43

EFFECT OF EXTRAORDINARY ITEMS ON
  EARNINGS PER SHARE:
     Basic and diluted                                   0.00           (0.01)           0.01           (0.09)
                                                 ------------    ------------    ------------    ------------

LOSS PER COMMON SHARE -
  Basic and diluted                              $       0.34    $       0.23    $       0.31    $       3.43
                                                 ============    ============    ============    ============
WEIGHTED AVERAGE SHARES -
  Basic and diluted                                17,371,214      15,472,075      15,175,743       6,477,364
                                                 ============    ============    ============    ============
</TABLE>

              See notes to the consolidated financial statements.

                                      F-4
<PAGE>

ALTAIR INTERNATIONAL, INC. AND SUBSIDIARIES
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2000
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                        Deficit
                                                                                        Accumulated
                                                     Common Stock          Stock        During the
                                                              Stated    Subscription    Development
                                                 Shares       Amount     Receivable       Stage          Total
                                               ----------   ----------   ----------    ----------    ----------
<S>                                               <C>       <C>          <C>           <C>          <C>
APRIL 9, 1973 (DATE OF INCEPTION)                    None         None         None          None          None

Common stock issued                               101,668   $  387,073   $     --             $-    $  387,073
Net loss                                             --           --           --        (361,572)     (361,572)
                                               ----------   ----------   ----------    ----------    ----------
BALANCE,  DECEMBER 31, 1984                       101,668      387,073         --        (361,572)       25,501

Common stock issued                                40,000      240,770         --            --         240,770
Common stock issued for management fees             1,280        7,004         --            --           7,004
Net loss                                             --           --           --         (78,606)      (78,606)
                                               ----------   ----------   ----------    ----------    ----------

BALANCE,  DECEMBER 31, 1985                       142,948      634,847         --        (440,178)      194,669

Common stock issued for property                    3,333       18,058         --            --          18,058
Acquisition of subsidiary                         780,000       44,551         --            --          44,551
Common stock issued for underwriter bonus           4,000            1         --            --               1
Net loss                                             --           --           --        (210,667)     (210,667)
                                               ----------   ----------   ----------    ----------    ----------
BALANCE,  DECEMBER 31, 1986                       930,281      697,457         --        (650,845)       46,612

Common stock issued for property                    6,667        8,027         --            --           8,027
Flow through shares                               298,650      463,301         --            --         463,301
Common stock issued for rights offering           257,822      253,947         --            --         253,947
Net loss                                             --           --           --        (696,642)     (696,642)
                                               ----------   ----------   ----------    ----------    ----------
BALANCE,  DECEMBER 31, 1987                     1,493,420    1,422,732         --      (1,347,487)       75,245

Common stock issued for services                   16,667       14,592         --            --          14,592
Common stock issued                                16,667       14,592         --            --          14,592
Common stock issued in settlement of debt         233,333       51,073         --            --          51,073
Net loss                                             --           --           --        (149,316)     (149,316)
                                               ----------   ----------   ----------    ----------    ----------
BALANCE,  DECEMBER 31, 1988                     1,760,087    1,502,989         --      (1,496,803)        6,186

Common stock issued                               127,500       75,058         --            --          75,058
Common stock issued in settlement of lawsuit       41,667       22,800         --            --          22,800
Net loss                                             --           --           --        (151,372)     (151,372)
                                               ----------   ----------   ----------    ----------    ----------
BALANCE,  DECEMBER 31, 1989                     1,929,254    1,600,847         --      (1,648,175)      (47,328)
                                               ----------   ----------   ----------    ----------    ----------

                                                                                                     (Continued)
</TABLE>

                                      F-5
<PAGE>

ALTAIR INTERNATIONAL, INC. AND SUBSIDIARIES
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2000
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                          Deficit
                                                                                          Accumulated
                                                      Common Stock           Stock        During the
                                                                Stated    Subscription    Development
                                                   Shares       Amount     Receivable        Stage          Total
                                               -----------   -----------   -----------    -----------    -----------
<S>                                              <C>         <C>           <C>            <C>            <C>
BALANCE,  DECEMBER 31, 1989                      1,929,254   $ 1,600,847   $      --      $(1,648,175)   $   (47,328)

Common stock issued                                133,333       218,882          --             --          218,882
Exercise of stock options                           33,333        18,240          --             --           18,240
Common stock issued for property                    11,666        11,674          --             --           11,674
Common stock issued for services                    13,333        21,888          --             --           21,888
Net loss                                              --            --            --         (230,125)      (230,125)
                                               -----------   -----------   -----------    -----------    -----------
BALANCE,  DECEMBER 31, 1990                      2,120,919     1,871,531          --       (1,878,300)        (6,769)

Common stock issued                                266,667       196,994          --             --          196,994
Common stock issued for property                    28,333        17,146          --             --           17,146
Net loss                                              --            --            --         (258,209)      (258,209)
                                               -----------   -----------   -----------    -----------    -----------

BALANCE,  DECEMBER 31, 1991                      2,415,919     2,085,671          --       (2,136,509)       (50,838)

Common stock issued                              1,086,753       443,237          --             --          443,237
Common stock issued for property                   115,000        49,249          --             --           49,249
Common stock issued for settlement of debt          55,177        24,155          --             --           24,155
Net loss                                              --            --            --         (353,665)      (353,665)
                                               -----------   -----------   -----------    -----------    -----------

BALANCE, DECEMBER 31, 1992                       3,672,849     2,602,312          --       (2,490,174)       112,138

Common stock issued                                 48,000        36,393          --             --           36,393
Common stock issued for property                    46,667        55,012          --             --           55,012
Net loss                                              --            --            --         (193,323)      (193,323)
                                               -----------   -----------   -----------    -----------    -----------

BALANCE,  DECEMBER 31, 1993                      3,767,516     2,693,717          --       (2,683,497)        10,220

Common stock issued                                600,000       131,329          --             --          131,329
Common stock issued for shares of subsidiary       750,000       257,187          --             --          257,187
Common stock issued for royalties                   83,333        33,641          --             --           33,641
Net loss                                              --            --            --         (227,860)      (227,860)
                                               -----------   -----------   -----------    -----------    -----------

BALANCE,  DECEMBER 31, 1994                      5,200,849     3,115,874          --       (2,911,357)       204,517

Common stock issued                              2,700,000       875,529          --             --          875,529
Exercise of stock options                          247,000        53,553          --             --           53,553
Exercise of stock warrants                         350,000       171,458          --             --          171,458
Net loss                                              --            --            --         (424,109)      (424,109)
                                               -----------   -----------   -----------    -----------    -----------

BALANCE,  DECEMBER 31, 1995                      8,497,849     4,216,414          --       (3,335,466)       880,948
                                               -----------   -----------   -----------    -----------    -----------

                                                                                                         (Continued)
</TABLE>

                                      F-6
<PAGE>
ALTAIR INTERNATIONAL, INC. AND SUBSIDIARIES
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2000
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                Deficit
                                                                                                Accumulated
                                                  Common Stock                     Stock        During the
                                                                   Stated       Subscription    Development
                                                   Shares          Amount        Receivable         Stage           Total
                                                ------------    ------------    ------------    ------------    ------------
<S>                                                <C>          <C>             <C>             <C>             <C>
BALANCE,  DECEMBER 31, 1995                        8,497,849    $  4,216,414    $       --      $ (3,335,466)   $    880,948

Common stock issued                                  554,027       1,637,307            --              --         1,637,307
Exercise of stock options                            702,000         526,850            --              --           526,850
Exercise of stock warrants                         3,012,463       2,471,219            --              --         2,471,219
Stock options issued to non-employees                   --           285,503            --              --           285,503
Common stock issued for acquisition of TMI         1,919,957       2,521,469            --              --         2,521,469
Net loss                                                --              --              --        (1,032,903)     (1,032,903)
                                                ------------    ------------    ------------    ------------    ------------
BALANCE,  DECEMBER 31, 1996                       14,686,296      11,658,762            --        (4,368,369)      7,290,393

Exercise of stock options                            362,500       1,530,406            --              --         1,530,406
Stock options issued to non-employees                   --           528,555            --              --           528,555
Stock options issued to employees                       --            62,800            --              --            62,800
Exercise of stock warrants                           443,949       1,038,788            --              --         1,038,788
Net loss                                                --              --              --        (2,982,093)     (2,982,093)
                                                ------------    ------------    ------------    ------------    ------------

BALANCE,  DECEMBER 31, 1997                       15,492,745      14,819,311            --        (7,350,462)      7,468,849

Stock options issued to non-employees                   --           841,944            --              --           841,944
Stock options issued to employees                       --            15,420            --              --            15,420
Common stock cancelled                              (723,065)           --              --              --
Common stock issued for convertible debenture        387,735       3,061,444            --              --         3,061,444
Exercise of stock options                             17,500         113,664            --              --           113,664
Net loss                                                --              --              --        (4,651,576)     (4,651,576)
                                                ------------    ------------    ------------    ------------    ------------

BALANCE,  DECEMBER 31, 1998                       15,174,915      18,851,783            --       (12,002,038)      6,849,745

Stock options issued to non-employees                   --           765,386            --              --           765,386
Common stock issued                                  300,000       1,862,500            --              --         1,862,500
Net loss                                                --              --              --        (3,689,866)     (3,689,866)
                                                ------------    ------------    ------------    ------------    ------------

BALANCE,  DECEMBER 31, 1999                       15,474,915      21,479,669            --       (15,691,904)      5,787,765

Stock options issued to non-employees                   --           424,063            --              --           424,063
Stock subscription receivable                           --              --          (561,300)           --          (561,300)
Stock warrants issued                                   --         1,245,050            --              --         1,245,050
Exercise of stock options                             71,300         335,778            --              --           335,778
Common stock issued                                3,779,273       8,904,029            --              --         8,904,029
Net loss                                                --              --              --        (5,914,474)     (5,914,474)
                                                ------------    ------------    ------------    ------------    ------------

BALANCE,  DECEMBER 31, 2000                       19,325,488    $ 32,388,589    $   (561,300)   $(21,606,378)   $ 10,220,911
                                                ------------    ------------    ------------    ------------    ------------

                                                                                                                 (Concluded)
</TABLE>

                See notes to consolidated financial statements.

                                      F-7
<PAGE>

ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000 AND
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2000
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                       Period
                                                                                                       April 9, 1973
                                                                                                       (Date of
                                                                                                       Inception) to
                                                                    Year Ended December 31,            December 31,
                                                               2000           1999            1998            2000
                                                       ------------    ------------    ------------    ------------
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
<S>                                                    <C>             <C>             <C>             <C>
  Net loss                                             $ (5,914,474)   $ (3,689,866)   $ (4,651,576)   $(21,606,378)
  Adjustments to reconcile net loss to net cash used
    in development activities:
    Depreciation and amortization                         1,236,404         508,083         685,593       3,379,206
    Shares issued for services                                 --              --              --            99,926
    Shares issued for settlement of debt                       --              --              --            75,228
    Shares issued for property                                 --              --              --           159,166
    Issuance of stock options to non-employees              424,063         765,386         841,944       2,845,451
    Issuance of stock options to employees                     --              --            15,420          78,220
    Issuance of stock warrants                              420,182            --              --           420,182
 Amortization of discount on note payable                    12,052            --              --            12,052
 Loss on redemption of convertible debenture                   --              --           193,256         193,256
    Gain on forgiveness of debt                                --           (67,442)        (25,805)       (795,972)
    Loss on disposal of fixed assets                           --              --             1,945           1,945
    Loss (gain) on foreign currency translation            (864,669)        160,619          17,109        (559,179)
    Deferred financing costs written off                       --              --           515,842         515,842
    Changes in assets and liabilities
       (net of effects of acquisition):
      Restricted cash                                    (4,000,000)           --              --        (4,000,000)
      Other current assets                                  990,579         172,512         (95,182)      1,690,601
      Other assets                                         (169,606)           --            10,189        (169,606)
      Accounts payable and accrued liabilities              (75,161)         48,734          65,194        (110,572)
      Deferred revenue                                       57,957            --              --            57,957
                                                       ------------    ------------    ------------    ------------
           Net cash used in development activities       (7,882,673)     (2,101,974)     (2,426,071)    (17,712,675)
                                                       ------------    ------------    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Asset acquisition (see Note 3)                               --        (2,422,417)           --        (2,422,417)
  Purchase of property and equipment                       (226,612)       (207,048)       (146,213)     (1,136,379)
  Purchase of patents and related expenditures                 --           (76,135)       (169,804)     (1,888,120)
                                                       ------------    ------------    ------------    ------------
           Net cash used in investing activities           (226,612)     (2,705,600)       (316,017)     (5,446,916)
                                                       ------------    ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common shares for cash, net of share
    issue costs                                           8,904,029       1,862,500            --        15,523,659
  Issuance of convertible debenture                            --              --              --         5,000,000
  Proceeds from exercise of stock options                   335,778            --           113,664       2,578,491
  Proceeds from exercise of warrants                           --              --              --         3,903,995
  Issuance of notes payable                               7,000,000            --              --         7,000,000
  Payment of notes payable                               (6,498,931)         (6,191)       (177,563)     (6,810,445)
  Purchase of call options                                 (449,442)           --              --          (449,442)
  Redemption of convertible debentures                         --              --        (2,250,938)     (2,250,938)
                                                       ------------    ------------    ------------    ------------
           Net cash provided by (used in)
             financing activities                         9,291,434       1,856,309      (2,314,837)     24,495,320
                                                       ------------    ------------    ------------    ------------
NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                    1,182,149      (2,951,265)     (5,056,925)      1,335,729
CASH AND CASH EQUIVALENTS, Beginning of period              153,580       3,104,845       8,161,770            None
                                                       ------------    ------------    ------------    ------------
CASH AND CASH EQUIVALENTS, End of period               $  1,335,729    $    153,580    $  3,104,845    $  1,335,729
                                                       ============    ============    ============    ============

                                                                                                          (Continued)
</TABLE>

                                      F-8
<PAGE>

ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998,
AND THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2000
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
                                             Year Ended December 31,
                                        ---------------------------------
                                         2000        1999         1998

SUPPLEMENTAL DISCLOSURES:
  Cash paid for interest                $85,929      $1,966       $32,165
                                        =======      ======       =======
  Cash paid for income taxes              None        None          None
                                        =======      ======       =======




SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

For the year ended December 31, 2000:

o      We entered  into a capital  lease  obligation  of $46,395 for  laboratory
       equipment.

o      We  issued  1,003,626  shares  of  common  stock  as part of a  repricing
       agreement (see Note 9).

o      We recorded a stock subscription  receivable for 165,000 shares of common
       stock with an investor.

o      In  conjunction  with the  Doral  18,  LLC note  (see  Note 6), we issued
       warrants  to  purchase  350,000  common  shares at $3.00 per  share.  The
       warrants had an estimated fair value of $824,900.

For the year ended December 31, 1999:

o      On November  16,  1999,  we  acquired  certain  assets from BHP  Minerals
       International,  Inc.  Liabilities  assumed  in  the  acquisition  are  as
       follows:

          Fair value of assets purchase                   $9,625,500
          Cash paid                                          None
                                                          ----------
          Note payable denominated in U.S.
            dollars (15,000,000 Austrailian dollars)      $9,625,500

For the year ended December 31, 1998:

o      Convertible  debentures  having a  principal  amount  of  $2,750,000  and
       accrued  interest of $66,528 were converted into 387,735 shares of common
       stock with a fair market value of $3,061,444.

See notes to consolidated financial statements.                      (Concluded)

                                      F-9
<PAGE>

ALTAIR INTERNATIONAL INC. and subsidiaries
(An Exploration Stage Company)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2000
(Expressed in United States Dollars)
--------------------------------------------------------------------------------


1.   DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

     Description of Business - Altair  International Inc. is incorporated in the
province of  Ontario,  Canada and is engaged in the  business  of (1)  producing
titanium dioxide products,  (2) exploring and developing  mineral  properties in
the United States, and (3) developing  mineral  processing  equipment for use in
the recovery of fine and heavy mineral particles,  including  titanium,  zircon,
gold and environmental  contaminants.  Our authorized capital stock is comprised
of an unlimited number of common shares with no par value.

     Prior to  fiscal  year  1998,  we  prepared  our  financial  statements  in
accordance  with  accounting  principles  generally  accepted in Canada.  Due to
substantially  all of our operations being located in the United States, we have
elected to present  our  financial  statements  in  accordance  with  accounting
principles generally accepted in the United States of America.

     Principles of Consolidation - The consolidated financial statements include
the accounts of Altair International Inc. and its subsidiaries which include (1)
Mineral  Recovery  Systems,  Inc. (MRS),  (2) Fine Gold Recovery  Systems,  Inc.
(FGRS), (3) Altair  Technologies,  Inc. (ATI), (4) California  Recovery Systems,
Inc. (CRS), (5) Tennessee  Valley  Titanium,  Inc. (TVT), and (6) 660250 Ontario
Limited (OL) (collectively referred to as the "Company"),  all of which are 100%
owned.   Intercompany   transactions   and  balances  have  been  eliminated  in
consolidation.

     Basis of Presentation - Our accompanying  consolidated financial statements
have been prepared on a going-concern  basis, which contemplates the realization
of assets and the  satisfaction of liabilities in the normal course of business.
As shown in the consolidated statements of operations,  we have not yet achieved
profitable  operations.  We incurred a net loss of $5,914,474,  $3,689,866,  and
$4,651,576 for the years ended December 31, 2000, 1999, and 1998,  respectively,
and a  cumulative  loss of  $21,606,378  for the  period  April 9, 1973 (date of
inception)  to December  31,  2000.  In  addition,  development  of the titanium
processing  technology,  the Tennessee mineral property, and the centrifugal jig
will  require  additional  financing  or  capital  to bring  these  assets  into
commercial operation.  The consolidated  financial statements do not include any
adjustments  relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should we be unable to continue as a going concern.

     Our  continuation  as a going  concern  is  dependent  upon our  ability to
generate  sufficient  cash flow to meet our  obligations  on a timely  basis and
ultimately to develop commercially viable products and processes and then attain
successful  operations.  We  are in  the  process  of  developing  the  titanium
processing technology,  the Tennessee mineral property, and the centrifugal jig.
We have financed operations  primarily through the issuance of equity securities
(common stock,  convertible debentures,  stock options and warrants), and by the
issuance of a $7 million term note as discussed in Note 6. Additional funds will
be required to complete development activities.  We believe that current working
capital,  cash receipts from  anticipated  sales,  and funding  through sales of
common stock will be sufficient to enable us to continue as a going concern.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Use of Estimates - The preparation of consolidated  financial statements in
conformity with accounting principles generally accepted in the United States of
America requires that we make estimates and assumptions that affect the reported

                                      F-10
<PAGE>

amounts of assets and  liabilities,  and  disclosure  of  contingent  assets and
liabilities  at the  date  of the  consolidated  financial  statements  and  the
reported  amounts of revenues and expenses during the reporting  period.  Actual
results could differ from those estimates.

     Cash and Cash Equivalents - We consider all highly liquid  investments with
an  original  maturity  of three  months  or less to be cash  equivalents.  Cash
equivalents are recorded at cost, which approximates fair value.

     Property  and  Equipment - Property and  equipment  are stated at cost less
accumulated  depreciation.  Depreciation  is  recorded  using the  straight-line
method over the  following  useful lives:

            Furniture and office  equipment         3 - 7 years
            Vehicles                                5 years
            Centrifugal jig equipment               7 years
            Jig testing equipment                   7 years
            Pigment production equipment            5 - 10 years

     Patents  and  Related   Expenditures  -  Patents  related  to  the  pigment
production  technology  and  centrifugal  jig technology are carried at cost and
amortized on a  straight-line  basis over their  estimated  useful lives,  which
range from 3 to 17 years.

     Exploration - Expenditures  incurred in the search for mineral deposits and
the  determination  of the commercial  viability of such deposits are charged to
expense as incurred.

     Research  and   Development   Expenditures   -  Research  and   development
expenditures are charged to expense as incurred.

     Foreign  Currency  Translation  - Asset and liability  accounts,  which are
originally  recorded in the appropriate  local  currencies,  are translated into
U.S.  dollars at year-end  exchange  rates.  Revenue and  expense  accounts  are
translated at the average exchange rates for the period.  Transaction  gains and
losses are included in the accompanying  consolidated  statements of operations.
Substantially all of our assets are located in the United States of America.

     Stock-Based  Compensation  - We  have  elected  to  follow  the  accounting
provisions of Accounting  Principles Board (APB) Opinion No. 25,  Accounting for
Stock Issued to Employees for Stock-Based  Compensation,  and to furnish the pro
forma  disclosures  required under Statement of Financial  Accounting  Standards
(SFAS) No. 123, Accounting for Stock-Based Compensation.

     Long-Lived  Assets - We evaluate  the carrying  value of  long-term  assets
including  intangibles  when events or circumstance  indicate the existence of a
possible impairment,  based on current and anticipated  undiscounted cash flows,
and  recognize  impairment  when such cash flows will be less than the  carrying
values.  Measurement  of the amounts of  impairments,  if any, is based upon the
difference  between carrying value and fair value.  Events or circumstances that
could indicate the existence of a possible  impairment  include  obsolescence of
the technology,  an absence of market demand for the product,  and/or continuing
technology rights protection.

     Net Loss Per Common Share - Basic net loss per common  share is  calculated
by dividing net loss by the weighted average number of common shares outstanding
during the period.  The existence of stock options,  warrants,  and  convertible
debentures  affects the  calculation of loss per share on a fully diluted basis.
When a net loss is reported, the number of shares used for basic and diluted net
loss per share is the same since the effect of including the  additional  common
stock  equivalents  would be antidilutive.  During the three years in the period
ended December 31, 2000,  because the exercise price of the options and warrants
(see Note 7) was equal to or greater  than the fair  market  value of the stock,
the warrants and options would be  antidilutive  and excluded from fully diluted
loss per share.  See Notes 8 and 9 for a summary of convertible  securities that
potentially could effect the fully diluted loss per share.

     Recent Accounting  Pronouncements - In June 1998, the Financial  Accounting
Standards  Board  ("FASB")  issued  SFAS No. 133,  as  amended,  Accounting  for
Derivative  Instruments and Hedging  Activities,  and established  standards for

                                      F-11
<PAGE>

derivative  instruments,  including certain derivative  instruments  embedded in
other  contracts and hedging  activities.  We adopted the standard on January 1,
2001. The adoption of SFAS No. 133 did not have any effect on us.

     On September 29, 2000, the Financial Accounting Standards Board issued SFAS
No.  140,  Accounting  for  Transfers  and  Servicing  of  Financial  Assets and
Extinguishments  of  Liabilities - A Replacement of FASB Statement No. 125. SFAS
140  is  effective  for  transfers  occurring  after  March  31,  2001  and  for
disclosures  relating to  securitization  transactions and collateral for fiscal
years ending after December 15, 2000. We do not expect that the adoption of this
statement will have a material impact on our financial statements.

     Effective  the  fourth  quarter  of fiscal  year  2000,  we  adopted  Staff
Accounting  Bulletin  (SAB) 101. The adoption of this  standard had no effect on
our consolidated financial statements.

     Comprehensive Income - We classify components of other comprehensive income
by their  nature  in the  consolidated  financial  statements  and  display  the
accumulated  balance of other  comprehensive  income as a separate  component of
shareholders'  equity in the  consolidated  balance sheets.  There were no other
components of comprehensive income other than the net loss.

     Deferred  Income  Taxes  - We use  an  asset  and  liability  approach  for
financial  accounting and reporting for income taxes.  Deferred income taxes are
provided for temporary  differences  in the bases of assets and  liabilities  as
reported  for  financial  statement  purposes and income tax  purposes.  We have
recorded a valuation allowance against all deferred tax assets.

     Extraordinary  Items - As a result of a 1994  merger  with  TransMar,  Inc.
(TMI), FGRS assumed all of TMI's liabilities.  During 1999, 1998, and 1996, FGRS
extinguished  certain of TMI's  liabilities at less than the recorded amounts of
such debt. The  forgiveness of debt totaled  $67,442,  $25,805,  and $702,725 in
1999, 1998, and 1996, respectively.

     During  1998,  we  redeemed  $2,250,000  of  the  convertible   debentures,
incurring a redemption premium of $193,256.

     Deferred Revenue - We entered into a sales contract on October 6, 2000 with
a customer for titanium  dioxide  nanoparticles  under which the total  contract
amount was prepaid.  Product delivery dates are not fixed but are anticipated to
be during 2001. We will recognize revenue as the product is shipped.

     Financial Instruments - Our financial instruments, when valued using market
interest rates, would not be materially  different from the amounts presented in
the consolidated financial statements.

3.   ACQUISITION OF CERTAIN ASSETS

     On November 16, 1999, we entered into an Asset  Purchase and Sale Agreement
with BHP Minerals  International Inc. (BHP), an Australian company,  pursuant to
which we  purchased  all  tangible  equipment  and  other  assets  related  to a
hydrometallurgical  process  developed by BHP  primarily  for the  production of
titanium  dioxide  products  from  titanium  bearing ores or  concentrates  (the
"Technology"),  in process  patent  applications  and the use of the services of
certain BHP personnel involved in the development of the Technology for a period
of one year.

     The purchase price for the assets and technology was 15,000,000  Australian
dollars (AUD$),  or $9,625,500 U.S. dollars (US$), and was payable in four equal
installments.  The first  installment  was paid at closing on November 16, 1999,
the second and third  installments  were paid on May 12, 2000 and the  remaining
installment  was paid on  August  1,  2000.  The  installments  due in AUD$ were
translated into US$ at the date of payment and the related foreign currency gain
(loss) was recorded as other income or expense.  We are also  required to pay to
BHP,  until the earlier of (1) November 15, 2014 or (2) the date we have paid an
aggregate royalty of 105,000,000 AUD$, a quarterly royalty of from 1.5% to 3% of
certain titanium dioxide products  produced and 3% of other products sold. As we
have not yet entered  commercial  production with this technology,  no royalties
are due under this agreement.

                                      F-12
<PAGE>

     In connection  with the Asset Purchase  Agreement,  we entered into a lease
with  BHP  pursuant  to  which  we lease  approximately  20,000  square  feet of
laboratory  and testing  space at BHP's testing  facility in Reno,  Nevada for a
monthly rent of $15,000. The lease is subject to automatic renewal for six-month
periods at inflation-adjusted rent until terminated by us. The lease grants us a
right of first  refusal  in the  event  BHP  intends  to sell the  building  and
property subject to the lease.

     The acquisition was accounted for as a purchase.  The assets (consisting of
property and equipment, service agreement, and technology) have been recorded at
their  estimated  fair  values  at the date of  acquisition.  The  amount of the
purchase  price  allocated to property and  equipment  was  $6,568,839,  service
agreement was $1,538,985, and technology was $1,517,736. The technology is being
amortized  using  the   straight-line   method  over  seventeen   years,   which
approximates  the  remaining  life of the  patents  pending.  Subsequent  to the
acquisition, we applied for four United States patents related to the technology
acquired from BHP.

4.   PROPERTY AND EQUIPMENT

     Property and  equipment  consisted of the following as of December 31, 2000
and December 31, 1999:

                                                    2000           1999

            Furniture and office equipment   $    82,582    $    76,228
            Vehicles                             125,031        125,031
            Centrifugal jig equipment            644,632        644,632
            Jig testing equipment                 91,521         45,128
            Pigment production equipment       6,776,286      6,568,839
                                             -----------    -----------
            Total                              7,720,052      7,459,858
)           Less accumulated depreciation     (1,118,135)      (366,289)
                                             -----------    -----------
            Total property and equipment     $ 6,601,917    $ 7,093,569
                                             ===========    ===========

     Depreciation  expense for the years ended December 31, 2000, 1999, and 1998
totaled $751,846, $169,234, and $76,934, respectively.

                                      F-13
<PAGE>

5.   PATENTS AND RELATED EXPENDITURES

     Patents and related expenditures consisted of the following at December 31,
2000 and December 31, 1999:

                                                         2000           1999

         Pigment production patent applications   $ 1,523,670    $ 1,553,286
         Centrifugal jig patents                    4,210,987      4,223,800
         Royalty agreement                            424,881        424,881
         Mineral recovery technology rights           243,000        243,000
                                                  -----------    -----------
                                                    6,402,538      6,444,967
         Less accumulated amortization             (2,290,798)    (1,819,054)
                                                  -----------    -----------
         Total patents and related expenditures   $ 4,111,740    $ 4,625,913
                                                  ===========    ===========

6.       NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

     Notes payable consisted of the following at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                          2000           1999

<S>                                                                <C>            <C>
         Note payable to Doral 18, LLC                             $ 7,000,000           --
         Note payable to BHP Minerals International, Inc.
           (amount reported herein is reflected in U.S. dollars;
           however, actual payments were made in Australian
           dollars)                                                       --      $ 7,363,600
                                                                   -----------    -----------
         Total                                                       7,000,000      7,363,600
         Less current portion                                       (3,500,004)    (7,363,600)
         Less discount resulting from allocation
           of debt proceeds to warrant                                (812,815)          --
                                                                   -----------    -----------
         Long-term portion of notes payable                        $ 2,687,181           None
                                                                   ===========    ===========
</TABLE>

     On December 15, 2000, pursuant to a securities purchase agreement,  we sold
to Doral 18, LLC a $7 million 10% Asset-Backed Exchangeable Term Note (the Note)
and detachable  warrants to purchase 350,000 common shares (the "Common Shares")
at $3.00 per share. At the same time, we acquired call options on 247,678 shares
of our common stock held by Doral 18, LLC (see Note 9).

     Net proceeds of $4 million  from the Note were placed in a restricted  bank
account  to  secure a letter of  credit  and are  scheduled  to be  released  as
principal  payments  are made.  Under the Note,  we are required to make monthly
payments  on or  before  the 15th day of each  calendar  month in the  principal
amount of $291,667 plus accrued interest. The Note is due and payable in full on
December 15, 2003.

     We may redeem the monthly  payment  amounts in cash at any time  throughout
the term of the Note and may prepay the Note in $250,000  increments at any time
at a  price  equal  to  115% of the sum of  outstanding  principal  and  accrued
interest.  If we elect not to redeem the monthly payment amount in cash, on each
due  date,  the  holder  of the Note  automatically  will  receive  the right to
exchange  (immediately or at any later date during the term) the monthly payment
amount into common

                                      F-14
<PAGE>

shares at the applicable  exchange price. The exchange price for any date is the
lesser of (a) a fixed  exchange price of $3.00,  subject to adjustment,  and (b)
the average of the lowest three daily trading prices of the common shares during
the 15 trading days ending on the day before an exchange right is exercised.  At
its option, the holder of the Note may reduce at fair market value the number of
shares  subject  to the call  option  described  in Note 9 in lieu of  receiving
shares upon the  exercise  of  exchange  rights.  Because  this is a  contingent
embedded  beneficial  conversion  feature, no amounts have been allocated to the
beneficial conversion feature until the contingency is resolved.

     The Note is secured by a pledge of the equipment, intellectual property and
common stock of ATI, and by a pledge of the common stock of MRS.

     The warrants have an exercise  price of $3.00,  and are  exercisable at any
time on or before the earlier of (a) December 15, 2005, and (b) the date 60 days
after we provide notice to the holder that the market price of the Common Shares
has been equal to or greater than $12.00 for five consecutive days. The exercise
price is subject to  reduction  pursuant to a formula set forth in the  warrant.
The warrants have an estimated fair value of $824,900,  as determined  using the
Black-Scholes pricing model. The proceeds of the debt were allocated between the
debt and the warrants based on relative fair values on the date of issuance. The
portion  allocated  to the  warrants  resulted in a discount on the note payable
which is being accreted to interest expense over the term of the debt agreement.

     Upon the occurrence of a default or specified  major corporate  event,  the
holder of the Note has the right to exchange the entire principal balance of the
Note for common shares. Upon the occurrence of other specified events, we may be
required to redeem the monthly  payment amount in cash at 120% of face value. As
of December 31, 2000, we had no occurrences of default or corporate events.
     We have long-term  capital leases related to the  acquisition of equipment.
Long-term capital lease obligations as of December 31, 2000 are as follows:

         Year ending December 31:
           2001                                         $ 28,235
           2002                                            2,352
                                                        --------
         Subtotal                                         30,587
         Less amounts representing interest               (3,512)
         Less current portion                            (24,763)
                                                        --------
         Total                                          $  2,312
                                                        ========

     At December  31,  2000,  the gross book value of  equipment  under  capital
leases was  $46,395.  There were no capital  leases at December  31,  1999.  The
amortization  expense  associated  with  these  capital  leases is  included  in
depreciation expense.

7.   STOCK OPTIONS AND WARRANTS

     Stock  Options - We have stock  option plans  administered  by the Board of
Directors  that  provide  for the  granting of options to  employees,  officers,
directors and other service providers of the Company.  Options granted under the
plans  generally are granted with an exercise price equal to the market value of
a common share at the date of grant,  have two- to five-year terms and typically
vest over  periods  ranging  from  immediately  to three  years from the date of
grant.

                                      F-15
<PAGE>

     Stock option  activity for the years ended December 31, 2000, 1999 and 1998
is summarized as follows:
<TABLE>
<CAPTION>
                                              2000                       1999                      1998
                                        -------------------------- ------------------------- --------------------------
                                                         Weighted                  Weighted                   Weighted
                                                         Average                    Average                   Average
                                                         Exercise                  Exercise                   Exercise
                                             Shares       Price         Shares       Price        Shares       Price
<S>                                       <C>            <C>          <C>           <C>           <C>         <C>
        Outstanding at beginning
          of year                         3,060,000      $ 5.92       1,965,000     $ 6.61        962,500     $ 4.93
        Granted during the year             420,000        3.86       1,550,000       5.74      1,020,000       8.18
        Cancelled                          (450,000)       7.80        (455,000)      8.30          --           --
        Exercised                           (71,300)       4.71           --           --         (17,500)      5.46
                                          ---------      ------       ---------     ------      ---------     ------

        Outstanding at end of year        2,958,700      $ 5.37       3,060,000     $ 5.92      1,965,000     $ 6.61
                                          =========      ======       =========     ======      =========     ======

        Options exercisable at year end   2,153,700      $ 5.45       1,835,000     $ 5.64      1,540,000     $ 6.18
                                          =========      ======       =========     ======      =========     ======

        Weighted average fair value of
          options granted during year                     $ 3.24                    $ 2.83                    $ 5.33
                                                          ======                    ======                    ======
</TABLE>


     The following table summarizes  information about stock options outstanding
at December 31, 2000:
<TABLE>
<CAPTION>
                                                                                                  Stock Options
                                              Stock Options Outstanding                            Exercisable
                                     ---------------------------------------------         -----------------------------
                                                        Weighted
                                                         Average       Weighted                              Weighted
                                                        Remaining      Average                               Average
        Range of                         Number        Contractual     Exercise                Number        Exercise
        Exercise Prices                Outstanding    Life (Years)      Price                Exercisable      Price

<S>                                    <C>               <C>         <C>                      <C>           <C>
        $2.00 to $4.00                   670,000           1.5         $ 2.83                   610,000       $ 2.92
        $4.38 to $4.75                   915,000           4.0           4.39                   370,000         4.41
        $4.94 to $7.50                   908,700           2.5           6.64                   853,700         6.75
        $8.00 to $10.00                  465,000           2.6           8.69                   320,000         8.33
                                         -------           ---           ----                   -------         ----
                                       2,958,700           4.6         $ 5.37                 2,153,700       $ 5.45
                                       =========           ===         ======                 =========       ======
</TABLE>


     We have elected to follow the measurement provisions of APB Opinion No. 25,
under  which no  recognition  of expense is  required  in  accounting  for stock
options  granted to employees for which the exercise price equals or exceeds the
fair market value of the stock at the grant date.  Generally  stock  options are
granted at an option  price at or greater  than fair market value on the date of
grant. We recorded  compensation expense of $15,420 for stock options granted to
employees  for which the fair market value  exceeded  the exercise  price of the
stock at the grant  date for the year  ended  December  31,  1998.  We  recorded
compensation  expense of $424,063,  $765,386,  and  $841,944  for stock  options
granted to non-employees  for the years ended December 31, 2000, 1999, and 1998,
respectively.
     We have adopted the  disclosure-only  provisions  of Statement of Financial
Accounting  Standards No. 123,  Accounting for Stock-Based  Compensation  ("SFAS
123"). To estimate compensation expense that would be recognized under SFAS 123,
we  have  used  the  modified  Black-Scholes  option  pricing  model.  If we had
accounted for our stock options using the accounting  method  prescribed by SFAS
123, our net loss and loss per share would be as follows:

                                      F-16
<PAGE>

<TABLE>
<CAPTION>
                                                                            2000                1999              1998

<S>                                                                  <C>                  <C>              <C>
        Net loss (both basic and diluted):
          As reported                                                $ 5,914,474          $3,689,866       $ 4,651,576
          Pro forma                                                    9,637,609           4,628,960         5,445,728

        Loss per common share (both basic and diluted):
          As reported                                                       0.34                0.23              0.31
          Pro forma                                                         0.56                0.30              0.36
</TABLE>


     In calculating pro forma compensation,  the fair value of each stock option
is estimated on the date of grant using the Black-Scholes  option-pricing  model
and the following weighted average assumptions:

                                     2000            1999            1998

        Dividend yield               None            None            None
        Expected volatility            93 %            75 %            77 %
        Risk-free interest rate      6.40 %          5.80 %          5.43 %
        Expected life (years)         4.6             5.0             4.9


     Warrants - As of December 31, 2000,  there were 1,883,672  warrants  issued
and outstanding for the purchase of our common shares.  The warrants were issued
in conjunction  with debt offerings,  issuance of common stock,  and payment for
outside services.  The warrants have a weighted average exercise price of $5.175
per share and expire on various  dates  ranging from March 2002 to January 2006.
Most warrants contain  provisions  whereby the expiration date is accelerated if
our common  shares  close at or above  specified  prices  ranging  from $6.00 to
$14.00 per share.

8.   CONVERTIBLE DEBENTURES

     On December 29, 1997,  we issued  $5,000,000  in  convertible  subordinated
debentures due December 29, 2001 (the  "Debentures")  bearing interest at 5% per
annum  payable in cash or common shares  either  annually or upon  conversion or
maturity,  at our discretion.  Subject to certain  restrictions during the first
180 days after closing,  the Debentures were  convertible by holders into common
shares at a conversion  rate equal to the lesser of (a) 92% of the average price
of the common  shares for the five trading days prior to  submission of a notice
of conversion by the holder,  or (b) $14.36875 per share.  The purchasers of the
Debentures also received  transaction warrants entitling the holders to purchase
75,000 common  shares on or before  December 29, 1999 at a price of $16.7188 per
share. In addition,  the placement  agent received  105,000  placement  warrants
entitling the agent to purchase  105,000  common shares at $16.7188 per share on
or before December 29, 1999. The proceeds of the debt were allocated between the
debt, the warrants and the beneficial conversion feature based upon fair values.
The amount  allocated  to the  beneficial  conversion  feature and  warrants was
accreted to interest  expense in 1998 when the debentures were converted  and/or
retired.
     During the period May 20, 1998 through  July 31,  1998,  the holders of the
Debentures  elected  to  convert  $2,750,000  of  the  principal  amount  of the
Debentures and $66,528 of accrued interest.  These  conversions  resulted in the
issuance of 387,735 common shares.  On August 28, 1998, we elected to redeem the
remaining  $2,250,000 of Debentures using cash previously invested in short-term
instruments.  The total cash of $2,550,938,  required to redeem the  Debentures,
included a redemption  premium of $193,256 and accrued interest of $107,682.  In
conjunction with this redemption, we wrote off deferred financing costs totaling
$515,842.

                                      F-17
<PAGE>

9.   OTHER TRANSACTIONS

     On March 31, 2000, we entered into a common stock purchase agreement with a
private equity fund pursuant to which the equity fund purchased 1,251,303 common
shares of Altair for an aggregate  purchase  price of $6,000,000;  however,  the
number of shares  received  by the equity fund in exchange  for  $6,000,000  was
subject to repricing adjustments if the lowest average closing price for any ten
days  during  each of four  30-day  repricing  periods  did not  meet a  certain
threshold.  Prior to December 15, 2000, the equity fund repriced  750,782 of the
initial  shares it  purchased  under the common  stock  purchase  agreement  and
received an additional 1,003,626 common shares.

     Pursuant to an assignment and agreement dated December 15, 2000, the equity
fund referred to in the  preceding  paragraph  transferred  all of its remaining
rights under the common stock purchase agreement, including its right to reprice
the remaining  500,521 of the initial 1,251,303 shares, to Doral 18, LLC (Doral)
(see Note 6). Pursuant to this purchase agreement,  Doral exercised its right to
reprice  approximately  70,928 of the initial shares and received 247,678 common
shares.  In  exchange  for  approximately  $1,650,000,  we bought from Doral and
terminated  all  remaining  rights  under the common stock  purchase  agreement,
including all remaining repricing rights. In conjunction with this buyout, Doral
granted  us a call  option  to  purchase  247,678  common  shares  for a nominal
exercise  price.  At the option of Doral,  the number of shares  subject to such
option may be reduced at fair  market  value in lieu of our making  payments  of
interest and principal. From December 15, 2000 through December 31, 2000, 19,222
of such common  shares were used to satisfy  accrued  interest on the $7 million
10% Asset-Backed Exchangeable Term Note. Accordingly,  the call option is valued
at the fair value of the underlying  stock (228,456 shares) subject to call, and
totaled  $342,684  and is included in other  current  assets as of December  31,
2000.

10.  LEASES

     Operating  Leases - We lease certain premises and equipment under operating
leases.  Future minimum lease payments under non-cancelable  operating leases as
of December 31, 2000 are as follows:

        Year ending December 31:
          2001                                 $ 154,980
          2002                                     5,415
                                               ---------
        Total                                  $ 160,395
                                               ---------

     Lease expense for the years ended December 31, 2000, 1999, and 1998 totaled
$283,964, $104,622, and $79,471, respectively.

     Mineral  Leases - Our  subsidiary,  MRS, has entered  into various  mineral
leases for a 100% interest in approximately 14,000 acres of land in the state of
Tennessee,  United  States  with  minimum  annual  advance  royalty  payments as
follows:

        Year ending December 31:
          2001                                       $ 152,306
          2002                                         194,704
          2003                                         212,479
          2004                                         424,227
          2005                                         430,623
          Thereafter                                 1,137,661


     The mineral leases are subject to a production royalty;  however,  MRS will
receive a credit against  production  royalties for all advance  royalties paid.
The  lessors  can only  terminate  the  leases  upon  failure of MRS to make the
minimum  payments as required by the leases.  As of December  31,  2000,  we are
current on revenue payments to lessors.

                                      F-18
<PAGE>

11.  INCOME TAXES

     Because of the net operating  losses and a valuation  allowance on deferred
tax assets, there was no provision for income taxes recorded in the accompanying
consolidated  financial  statements  for the  three  years in the  period  ended
December 31, 2000.
     A reconciliation of the federal statutory income tax rate and our effective
income tax rates is as follows:
<TABLE>
<CAPTION>
                                                         Year Ended December
                                           -----------        -----------        -----------
                                              2000               1999               1998
<S>                                        <C>                <C>                <C>
        Federal statutory income taxes     $(2,010,921)       $(1,254,554)       $(1,581,536)
        Meals and entertainment                  1,824              2,349              3,013
        Valuation allowance                  2,009,097          1,252,205          1,578,523
                                           -----------        -----------        -----------
            Total                               None               None               None
                                           ===========        ===========        ===========
</TABLE>

     The components of the deferred tax assets  consisted of the following as of
December 31, 2000 and 1999:

                                                  2000               1999
        Deferred tax assets:
          Net operating loss carryforward     $ 3,349,475        $ 1,412,607
          Unrealized loss                          24,312               --
                                              -----------        -----------
          Total deferred tax assets             3,373,787          1,412,607

        Deferred tax liabilities -
          basis difference in assets             (725,740)          (773,597)

        Valuation allowance                    (2,648,047)          (639,010)
                                              -----------        -----------
        Total deferred tax assets                  None               None
                                              ===========        ===========

     The net operating loss  carryforwards  expire at various dates beginning in
2001 through 2020.

12.  COMMITMENTS AND CONTINGENCIES

     Employment  Agreement  - Under the  current  employment  agreement  between
Altair and our  president,  Dr. William P. Long, Dr. Long is entitled to receive
200,000  common shares in the event (i) voting control of over 35% of the issued
stock is acquired in a merger,  takeover  or similar  transaction  (a "change of
control") and Dr.  Long's  employment  agreement is  terminated  within 180 days
before or at any time after such change of  control,  or (ii) absent a change of
control, if Dr. Long's employment  agreement is terminated for any reason except
by Dr. Long, by mutual consent, by Altair for cause, or at the end of the term.
     Litigation - We are currently not aware of any  investigations,  claims, or
lawsuits  which  we  believe  could  have  a  material  adverse  effect  on  our
consolidated financial position or on our consolidated results of operations.

                                     ******

                                      F-19
<PAGE>