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

                                    FORM 10-K

[X]   ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ]   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) 587B8245

[ ]   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.   [X]

         The aggregate market value of the Common Shares held by  non-affiliates
of the  Registrant  on March 15, 2000,  based upon the closing sale price of the
Common  Shares on the NASDAQ Stock Market of $5.813 per share on March 15, 2000,
was approximately  $77,185,000.  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, 2000 the  Registrant had 15,837,882  Common
Shares outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

Portions  of  the  Registrant's  Proxy  Statement  for  the  Annual  Meeting  of
Shareholders  to be held on June 1, 2000 are  incorporated  by reference in Part
III of this Report.

<PAGE>

                               INDEX TO FORM 10-K

                               ------------------

<TABLE>
<CAPTION>

<S>                                                                                                        <C>
PART I.......................................................................................................4
------
   Exchange Rate Information.................................................................................4

Item 1:     Business.........................................................................................4
   General...................................................................................................4
   Titanium Pigment Processing Technology....................................................................6
   The Jig...................................................................................................9
   Tennessee Mineral Property...............................................................................14
   Plan of Operation--General...............................................................................16
   Subsidiaries.............................................................................................17
   Government Regulation and Environmental Concerns.........................................................18
   Employees................................................................................................18
   Where You Can Find More Information......................................................................19
   Glossary of Terms........................................................................................19
   Forward-looking Statements...............................................................................21
   Factors that May Affect Future Results...................................................................21
      We Have Not Generated Any Operating Revenues or Profits...............................................21
      We May Continue to Operate at a Net Loss..............................................................21
      We May Not be Able to Raise Sufficient Capital to Meet Present and Future Obligations.................22
      Our Operations Are And Will Be Subject to Extensive Government Regulation.............................23
      Certain of Our Experts and Directors Reside in Canada And May Be Able to Avoid Civil Liability........23
      We are Dependent on Key Personnel.....................................................................23
      We May Fail to Identify or Be Unable to Consummate Important Strategic Transactions...................24
      We May Issue Substantial Amounts of Additional Shares Without Stockholder Approval....................24
      The Market Price of Our Common Stock Is Extremely Volatile............................................24
      Future Sales of Currently Restricted Securities May Affect the Market Price of Our Common Stock.......25
      We Have Never Declared A Dividend And May Not For the Foreseeable Future..............................25
      Our Series 12 Jig Is Too Small For Most Commercial Uses...............................................25
      Testing Is Incomplete on Our Series 30 Jig............................................................26
      Performance Of The Jig In A Commercial Setting May Not Match Test Results.............................26
      The Jig Faces Competition From Alternative Technologies...............................................26
      The Jig Faces Competition From Other Jig-like Products................................................27
      The Market for Commodities Produced Using the Jig May Collapse........................................27
      We Are Dependent Upon Others To Manufacture The Jig...................................................27
      Certain Key Patents For The Centrifugal Jig Have Expired Or Will Expire In The Near Future............28
      We Have Not Completed Testing The Feasibility of Mining The Tennessee Mineral Property................28
      We May Be Unable to Obtain Necessary Environmental Permits for the Tennessee Mineral Property.........29
      Any Operations On the Tennessee Mineral Property May Lead to Environmental Liability..................29
      We Have Not Yet Confirmed the Viability and Effectiveness of the Processing Technology
        and Processing Assets...............................................................................30
      Nanoparticles Produced Using the Processing Technology May Be, or Be Perceived As, Substandard........30
      The Current Market For TiO2 Nanoparticles Is Limited..................................................31
      Our Cost of Production May Exceed Estimates...........................................................31
      Pending Patent Applications May Be Denied Or Provide Inadequate Protection............................31
      Use of the Processing Technology May Lead to Substantial Environmental Liability......................32
</TABLE>

                                        2

<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                                        <C>
Item 2.     Properties......................................................................................32

Item 3.     Legal Proceedings...............................................................................33

Item 4.     Submission of Matters to a Vote of Security Holders.............................................33


PART II.....................................................................................................33
-------

Item 5.     Market for the Common Stock and Related Shareholder Matters.....................................33
   Market Price.............................................................................................33
   Outstanding Shares and Number of Shareholders............................................................34
   Dividends................................................................................................34
   Transfer Agent and Registrar.............................................................................34
   Canadian Taxation Considerations.........................................................................34

Item 6.     Selected Financial Data.........................................................................35

Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations...........36
   Overview.................................................................................................36
   Results of Operations....................................................................................37
   Liquidity and Capital Resources..........................................................................38

Item 7A.       Quantitative and Qualitative Disclosures About Market Risk...................................38

Item 8.     Financial Statements and Supplementary Data.....................................................39

Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............39


PART III....................................................................................................39
--------

Item 10.       Directors and Executive Officers of the Registrant...........................................39

Item 11.       Executive Compensation.......................................................................39

Item 12.       Security Ownership of Certain Beneficial Owners and Management...............................39

Item 13.       Certain Relationships and Related Transactions...............................................39


PART IV.....................................................................................................39
-------

Item 14.       Exhibits, Financial Statement Schedules and Reports on Form 8-K..............................39

</TABLE>

                                        3

<PAGE>

                                     PART I

This Annual Report on Form 10-K for the year ended December 31, 1999 (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  uncertainties.  Purchasers of any of the common shares,  no par value
(the "Common Stock") 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.

Exchange Rate Information
-------------------------

         The following exchange rates represent the noon buying rate in New York
City for cable transfers in Canadian dollars,  as certified for customs purposes
by the Federal  Reserve Bank of New York.  The following  table sets forth,  for
each of the years indicated,  the period end exchange rate, the average exchange
rate  (i.e.,  the  average of the  exchange  rates on the last day of each month
during the period),  and the high and low exchange  rates of the U.S.  dollar in
exchange for the Canadian  dollar for the years  indicated  below,  based on the
noon buying rates.

                             Year Ended December 31,

              ----------------------------------------------------------------
                1999         1998         1997          1996          1995
              ----------   ----------   ----------    ---------     ----------
                              (Canadian dollar per US dollar)
High           1.5302       1.5770      1.4398        1.3822        1.4238
Low            1.4440       1.4075      1.3392        1.3310        1.3285
Average        1.4827       1.4894      1.3849        1.3638        1.3725
Year End       1.4440       1.5375      1.4288        1.3697        1.3655


Item 1:      Business.

General
-------

         A glossary of technical terms used in the following  description of the
Company's  business  is set forth at the  conclusion  of this Item 1. 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 each of its subsidiaries.

         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.   Since  1994,  the  Company  has  also  devoted
substantial  resources  to the  development  and  testing of mineral  processing
equipment for use in the recovery of fine, heavy mineral particles.

                                        4

<PAGE>

         During 1996,  Altair  acquired  the rights to the Campbell  Centrifugal
Jig, since modified and renamed the Altair Centrifugal Jig (the "Jig"),  through
a merger involving the Company, Fine Gold Recovery Systems, Inc., a wholly owned
subsidiary  of the Company  ("Fine  Gold"),  and Trans Mar,  Inc.,  a Washington
corporation  ("TMI").  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.  Altair is presently  testing and customizing the Jig for use in the
recovery of heavy minerals such as titanium and zircon. Management believes that
the Jig  could  also be used to  recover  other  minerals  such as gold  and for
environmental remediation. See "--Jig Technology and Proprietary Rights."

         Altair has also leased, and is 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 using
the Jig or other  equipment.  Preliminary  reports  suggest  that the  Tennessee
Mineral  Property  contains  significant  amounts of  valuable  heavy  minerals,
including  titanium and zircon,  and is suitable for a  large-scale  sand mining
operation with a multi-decade life. See "--Tennessee Mineral Property."

         In  October  1998,  Altair  acquired  an option to enter into a mineral
processing lease on a heavy mineral sand stockpile located near Ione, California
(the "California  Mineral  Property").  Although the California Mineral Property
was of limited  size,  existing data  suggested  that the  stockpiled  materials
graded between 14% and 31% heavy minerals (compared to 2% heavy minerals content
in some primary mine locations). During 1999, the Company completed sampling and
analysis  of  the  stockpile  and  determined  that,  due  principally  to  high
concentrations  of contaminants,  the property is not  economically  feasible to
develop.  As a  result,  Altair  allowed  the  option  to  expire  and wrote off
approximately $94,000 of costs associated with the project.

         In November 1999, Altair acquired all patents and technology related to
a  hydrometallurgical  process  developed  by BHP Minerals  International,  Inc.
("BHP")  primarily for the production of titanium dioxide products from titanium
bearing  ores  or  concentrates  (the  "Processing  Technology"),  all  tangible
equipment and other assets used by BHP to develop and  implement the  Processing
Technology  and the use for one year (for no fee) of the  services of the 18 BHP
personnel presently developing the Processing Technology.  See "Titanium Pigment
Processing  Technology."  Although  Altair  intends to continue to invest in the
exploration and testing of mineral properties and mineral processing  equipment,
it expects that a majority of its  resources  during  calendar year 2000 will be
focused on the development and exploitation of the Processing Technology.

         From  a  financial  and  accounting   standpoint,   the  Company  is  a
development  stage firm and has been since its  inception.  To date, the Company
has derived no revenues from product sales or otherwise and has  experienced  an
operating loss in every year of operation. In the fiscal year ended December 31,
1999, the Company experienced operating losses of $2,291,850.

         Throughout  this Form 10-K,  the  Company is  sometimes  referred to or
defined as a  "development  stage"  company  or firm.  Such  references  are for
financial  and  accounting  purposes  only and are  intended to signify that the
Company is  devoting  substantially  all of its  efforts to  establishing  a new
business, and planned principal operations have commenced, but there has been no
significant revenue therefrom.  References to the Company as a development stage
company are not intended to imply that  exploration  activities  with respect to
the Tennessee  Mineral  Property or any other mineral  deposits have disclosed a
commercially  viable reserve.  For purposes of Regulation S-K, Item 802, Guide 7
promulgated  under the Exchange Act of 1934, the Company should be considered an
"exploration stage" company.

                                        5

<PAGE>

Titanium Pigment Processing Technology
--------------------------------------

         Acquisition  of the  Processing  Technology.  On November 15, 1999, the
Company  entered into an Asset Purchase and Sale Agreement (the "Asset  Purchase
Agreement")  with BHP  pursuant to which the Company  purchased  all patents and
technology  related to a  hydrometallurgical  process developed by BHP primarily
for the production of titanium dioxide  ("TiO2")  products from titanium bearing
ores or concentrates (i.e., the "Processing Technology"), all tangible equipment
and other assets used by BHP to develop and implement the Processing  Technology
(the "Processing  Assets") and the use for one year (for no fee) of the services
of the BHP personnel presently developing the Processing Technology.

         The purchase price for the Processing  Technology and Processing Assets
is  15,000,000  Australian  Dollars  (AUD$) and was  arrived at after  extensive
arms-length  negotiation  between  Altair and BHP.  (The noon buying rate in New
York City for an Australian Dollar on March 15, 2000, as reported by the Federal
Reserve  Bank of New  York  for  customs  purposes,  was  $.6125  United  States
Dollars.)  Altair  initially  agreed  to pay the  purchase  price in four  equal
installments  of  AUD$3,750,000,  the  first of which was made at  closing.  The
second   payment,   which  was  originally  due  February  15,  2000,  has  been
rescheduled,  with interest at 15% per annum,  until May 15, 2000. The remaining
two  payments  are due and  payable on May 15,  2000 and August  15,  2000.  The
Company funded its first  installment of the purchase price using existing cash.
It intends to fund future  installments  primarily through the offer and sale of
Common  Stock,  warrants to purchase  Common  Stock,  and various  other debt or
equity securities. The Company may also use revenues, if any, generated from the
sale of mineral products  produced using the Processing  Technology to fund part
of the May 15, 2000 and August 15, 2000  installments.  If the Company  fails to
pay any of the remaining three  installments  to the purchase  price,  the Asset
Purchase  Agreement  provides  that it will  forfeit to BHP,  without a right to
reimbursement of any amount of the purchase price paid to date, all right, title
and interest in the Processing Technology and Processing Assets.

         The Asset  Purchase  Agreement also requires the Company to pay to BHP,
until the earlier of the fifteenth  anniversary of November 15, 1999 or the date
it has 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  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  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  Processing  Technology
         by the Company or a  transferee  of the Company at any  location  other
         than its Tennessee Mineral Property or the 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 Processing Technology.

                                        6

<PAGE>

In addition,  in connection with the Asset Purchase  Agreement,  the Company and
BHP entered into a Lease dated November 15, 1999,  pursuant to which the Company
leases 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 initial term
of the Lease  expires on December  31, 2000,  subject to  automatic  renewal for
six-month  periods at  inflation-adjusted  rent until terminated by the Company.
The Lease  grants the Company 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 the  Company's  possible  purchase of
such building and property.

         Description of the Processing Technology.  The Processing Technology is
capable of producing  conventional  TiO2  pigment  products.  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.
The  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).  The Company has determined  that it
will initially use the demonstration plant to produce TiO2 nanoparticles.

         The  Processing  Technology  is  fundamentally  different  from current
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,
the Processing  Technology produces discrete anatase crystals in nanometer sizes
that are thermally stable at 800 degrees Centigrade for 48 hours or more.

         The 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 crystal size,  phase,  catalytic and  photocatalytic
activity and size  distribution of crystals are controlled  within narrow limits
and to  specification.  Other  technologies  exclude the  introduction of doping
elements during crystal growth.

         Processing  Assets.  The  Processing  Assets  consist  principally of a
"semi-works" facility located in the leased premises. The plant was built by BHP
as a research and development  facility,  but is capable of producing commercial
grade  products.  The Company  intends to commence  limited  production  of TiO2
products using the Processing  Technology and Processing Assets during the first
half of 2000. The plant has a nominal annual production  capacity of 200 tons of
TiO2 nanoparticles.

         Plans for Development of the Titanium  Pigment  Processing  Technology.
The  Company  intends to  initially  employ the  Processing  Technology  for the
production and sale of TiO2 nanoparticles.  It has hired a production manager to
operate the semi-works  plant as a production  facility,  has commenced  product
marketing, and is investigating distributor relationships. The plant has certain
bottlenecks in the process which limit production capacity.  The Company intends
to  undertake  a  de-bottlenecking  effort  during the second half of 2000 which
should significantly increase the production capacity of the plant.

         The Company is also analyzing  other means of exploiting the Processing
Technology,  including  licensing  arrangements and joint ventures.  The Company
believes that, with additional research and development aimed at

                                        7

<PAGE>

commercialization,  the  Processing  Technology  will be  capable  of  producing
industry standard TiO2 pigments (larger particle size than  nanoparticles).  The
Company is assessing potential business  arrangements which would facilitate the
development  of this  and  other  additional  applications  for  the  Processing
Technology.

         The  raw  material  used  as a  feedstock  in the  production  of  TiO2
nanoparticles,  and an intermediate in the production of other TiO2 products, is
titanium  tetrachloride,  a commodity product  manufactured by several suppliers
and readily  available on the open market.  Although the Company uses  purchased
titanium tetrachloride as the feedstock in the production of TiO2 nanoparticles,
the  Processing  Technology  is capable of  producing  it from an  ilmenite  raw
material.

         Target Market for Products of the Processing Technology. The Company 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 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 the  Company  expects  the
nanoparticle market to grow more rapidly than the conventional pigment market as
applications for new technologies generate increased demand.

         In  addition,   the   Processing   Technology   is  adaptable  to  make
nanocrystals of materials suitable for  optoelectronics,  ceramics 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),  health care products
(pharmaceuticals  and nano-sized  sensors),  and  optoelectronics.  Nano-crystal
optoelectronic  components  can be used  to  miniaturize  computers,  electronic
devices and expand bandwidth in telecommunications.

         Research,  Testing and  Development of the Processing  Technology.  The
Processing Technology is the result of several years of research and development
work done by BHP.  Although  the Company  believes the  technology  is presently
commercially viable, it intends 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 BHP employees whose services were acquired in
conjunction with the Processing  Technology and Processing  Assets. In addition,
the Company may consider joint research and  development  efforts with customers
and other interested parties.

         Processing Technology and Proprietary Rights. The Company believes that
the 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.  Altair  believes  that the  Processing
Technology  is an  improvement  over these  processes in that it offers  precise
control of crystal  size,  structure  and chemical  composition,  it uses a wide
variety of feedstocks, and it recycles wastes.

         BHP has filed  numerous  patent  applications  with the  United  States
Patent and Trademark  Office ("PTO") with respect to the  Processing  Technology
and has  transferred  the  rights  to such  applications  to the  Company.  Such
applications  are in the PTO review process,  and no patents with respect to the
Processing Technology have been granted to date.

                                        8

<PAGE>

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

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. Management
believes the Jig will prove able to economically  recover smaller particles than
can 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, the Company's 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
the Company and TMI.  Continued field testing of the Jig is being  undertaken 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  and estimate the
anticipated maintenance costs associated with continued operations. In addition,
field  testing is being  carried out to improve  operating  design 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."

         During 1998, the Company conducted preliminary testing of its 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,  the Company
expects that continued  testing will confirm that the two models can process the
volumes  they have been  designed to process.  The Company has 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.

                                        9

<PAGE>

         Preliminary  demonstration  tests  conducted  by the  Company  and  TMI
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;
         o Remediation of nuclear waste.

         Target  Markets  for  the  Jig.  The  Company's  present  focus  is  on
developing  markets  for  the  Jig  that  have  the  greatest  near-term  profit
potential.  Although  management of the Company  believes that, in the long run,
the Jig may  potentially  be  useful  for a number of  applications,  management
believes  that the most  promising  markets for the Jig in the short run are for
use in processing  of heavy  mineral  sands in order to recover heavy  minerals,
particularly zircon and titanium.

         The  Company  is seeking  to enter  into  royalty or limited  licensing
agreements  under  which  the Jig can add  value to the  beneficiation  process,
especially the processing of heavy mineral sands.  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 the
Company  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/contaminate feeds conducted by the Company, 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/contaminate  feeds
produced  results  which were  generally  equivalent  to the Series 12 Jig.  The
Company  plans more  extensive  testing of the  Series 30 Jig during  2000.  See
"--Plan of Operation."

         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.  The Company  believes 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 production of
titanium  dioxide in the United States during 1999 was  approximately  1,350,000
metric tons,  representing a market value of approximately $3 billion.  The U.S.
Geological  Survey does not report  zirconium  production for the United States;
however,  according  to survey  data for 1999  prepared  by the U.S.  Geological
Survey,  imports of zirconium for  consumption  in the United States during 1999
were  approximately   43,100  metric  tons,   representing  a  market  value  of
approximately  $12.9  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.

         Business  Development-the Jig. Testing conducted to date by the Company
indicates the Jig may have economic  potential in a wide variety of  industries,
and  management  believes  the Jig can be used for finely  sized heavy  minerals
recovery, coal cleaning and environmental  remediation.  See "--Target Markets".
During 2000,  the Company plans to develop the Jig for use in the  processing of
heavy  mineral  sands and other uses that may have  near-term  profit  potential
through implementation of the following critical steps:

         (1)      Continued field testing and demonstration of the Series 12 Jig
                  and  experimentation  with  design  manipulations  to  improve
                  effectiveness for certain specific applications.  In addition,
                  sustained  operational  testing is critical in  determining if
                  any material design problems reside in the Jig technology,  if
                  the  Jig  is  capable  of  sustained   operation  with  little
                  downtime,  and if its maintenance costs are satisfactory.  See
                  "--Research, Testing and Development."

                                       10

<PAGE>

         (2)      Continued  field  testing,   including  sustained  operational
                  testing,  of the larger volume, more marketable Series 30 Jig.
                  See "--Research, Testing and Development."

         (3)      Initial  engineering  and  design  work for a Jig that will be
                  larger than the Series 30 Jig.  See  "--Research,  Testing and
                  Development."

         (4)      Separation  testing on potential new ore applications  such as
                  tin and iron ore fines.

         (5)      Development   of  royalty,   rental,   or  limited   licensing
                  agreements with prospective industrial users and introduction
                  of the Jigs into targeted markets

         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.  Management believes 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.  To this end, the Company has installed or is in the process
of installing  the Jig in several test sites.  Specifically  designed  research,
testing and  development  efforts planned for the upcoming twelve months include
the following:

         (1)      The Company has installed and commenced testing of a Series 30
                  Jig at a mineral  recovery plant located in Northern  Florida.
                  Tests  conducted  by the  Company  indicate  that  the  Jig is
                  capable of yielding  greater than 90% zircon  concentrates and
                  recovering up to 75% of the zircon fed to the unit. The Series
                  30  Jig is  designed  to  process  500  tons  per  day  and is
                  considered  to be  commercial-sized  for this  application.  A
                  Series  12 Jig  unit  has  also  been  installed  at the  sand
                  processing  facility in Northern  Florida.  During  2000,  the
                  Company  intends to test  various  plant  titanium  and zircon
                  feedstreams  and to test heavy  mineral  sand feeds from other
                  Florida  locations.   Testing  utilizing  the  Jigs  is  being
                  performed by Company personnel.

         (2)      The Company has established a Jig testing  facility near Reno,
                  Nevada to test samples supplied by mineral companies and other
                  potential   users  of  the  Jig.  The  facility  is  used  for
                  demonstrations  of the Jig  technology,  provides  amenability
                  testing  for a variety of mineral  ores,  and serves as a test
                  site for  on-going  equipment  design.  The test  facility  is
                  equipped  with a Series  12 Jig,  placed  in a  "closed  loop"
                  circuit  designed to take an initial  charge of solids (0.5 to
                  2.0 tons) which can be continuously  fed in slurry form to the
                  Jig.  Concentrate and tails streams produced by the Jig may be
                  accessed for sampling prior to recombination and return to the
                  feed circuit.  Testing  performed at the test facility  during
                  1999 included  amenability testing of ores which may have near
                  term   commercial   potential  for  recovery  using  the  Jig.
                  Operation of the Jig test facility is performed exclusively by
                  Company personnel.

         (3)      Engineering  and  design  work will  continue  on a Jig having
                  approximately  twice the processing  capacity of the Series 30
                  Jig. The Company  anticipates that it will be able to complete
                  construction of the first unit by the end of 2000.

                                       11

<PAGE>

         Provided  that the  planned  testing  of the Jig  over the next  twelve
months as described above is successful,  the Company believes the Series 30 Jig
would be ready at that time for  commercial  use in  applications  involving the
recovery of titanium,  zircon and gold. While such capabilities of the Jig could
then be  marketed,  the  Company  expects  that  the  Jig's  multiple  operating
parameters  would need to be adjusted to fit the requirements of each particular
customer  and  application.  In the  event  any of the  foregoing  tests are not
successful,  the Company expects that it would conduct additional  testing,  the
nature of which would  depend upon the results  obtained in the  above-described
tests.  During 1999,  the Company  expended  $113,000 for research,  testing and
development of the Jig.

         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,  management believes
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.  The Series 12 Jig stands  about six feet
tall,  requires  floor  space of about 25 square  feet and weighs  approximately
2,000 pounds,  while the 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.

         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
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.

         The  Company  does  not  intend  to  establish  its  own  manufacturing
facility.  Management  is  considering  options  for  manufacture  of  the  Jig,
including manufacturing under contract, exclusive licensing, or a joint venture.
The arrangement  could eventually  include an exclusive license for manufacture,
warehousing and  distribution of spare parts, as well as maintenance and leasing
of the Jig. Currently,  the Company has entered into an agreement with a machine
shop located in central Tennessee to manufacture three Series 30 Jigs.

         Initial  patents related to the concept of the Jig as a whole have been
issued in the United States, South Africa, United Kingdom, Australia and Canada.
These  patents  expire 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.

                                       12

<PAGE>

         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.

         The Company believes 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.

         Competing  Jig-Like  Products.   The  Company  believes  that  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  the  Company
believes  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 24 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  management  believes 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.

                                       13

<PAGE>

         The Company is a small player in an industry  comprised of major mining
companies   possessing   tremendous  capital   resources.   The  Company  is  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 the Company's equipment.

Tennessee Mineral Property
--------------------------

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

[MAP GRAPHIC OMITTED]

         From 1996,  when the Company  began  acquiring  leases,  through  1999,
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  resource
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 the Company's  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 processing  with the Jig, two bulk samples were  collected by the Company
from the Tennessee Mineral  Property.  Test work completed by the Company on the
first sample during the spring of 1997 suggested the sands can be processed with
the Jig. Tests performed by the Company 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  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".

                                       14

<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 the  Company  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 the Company to
prepare a pre-feasibility  study of the Tennessee Mineral Property.  See "--Plan
of Operation." 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  an  indicated  resource  of 12  million  tons of total  heavy
minerals  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.

         Based on the positive results of the consultant's  report,  the Company
initiated a final  feasibility  study in August 1998.  The Company has commenced
the design and engineering of the wet concentration  process/facilities  and has
filed an  application  for a National  Pollution  Discharge  Elimination  System
permit for a pilot plant  facility with the Tennessee  Department of Environment
and  Conservation.  Other  activities  involved  in the  feasibility  study will
include additional drilling to further define resource 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.  The Company expects that the final feasibility
study will be completed during the second half of 2000. If the feasibility study
suggests  that  cost-effective  mining  of the  Tennessee  Mineral  Property  is
feasible,  mining could begin within 24-36 months after completion of the study,
subject to, among other things,  the price of, and demand for extractable  heavy
minerals and the Company's ability to obtain necessary  financing,  permits, and
government approvals. 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 the Company  suggested  the
existence of an  additional  heavy mineral sands  resource of  approximately  10
million  tons 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. The
Company has approximately  7,900 acres under lease in the Little Benton area and
intends to conduct further testing of the Little Benton Deposit. If such testing
affirms the  existence of the  indicated  resource,  and the  feasibility  study
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.

         Research, Testing and Development 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,
the  Company  initiated  a final  feasibility  study  in  August  1998  which it
anticipates  will  involve  additional   drilling  to  further  define  resource
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.  The Company
expects that a  feasibility  study will be  completed  during the second half of
2000.  If the  feasibility  study  suggests  that  cost-effective  mining of the
Tennessee  Mineral Property is feasible,  mining could begin within 24-36 months
after completion of the study, subject to, among other things, the price of, and
demand  for  extractable  heavy  minerals  and the  Company's  ability to obtain
necessary financing, permits, and government approvals.

                                       15

<PAGE>

         During  1999,  the Company  incurred  $689,594 in deferred  exploration
expenditures on the Tennessee  Mineral  Property.  Expenditures were incurred on
leasehold  minimum  advance  royalty  payments,  auger hole drilling,  sampling,
sample analysis and assay,  geological and mineralized deposit  characterization
studies and other related exploration activities.

         Competition--the  Tennessee Mineral Property.  Based on the exploratory
work done to date, the Company  anticipates 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 United States imports
approximately 60% of total ilmenite consumed. There are presently three entities
in the United States which produce ilmenite concentrate from heavy mineral sands
and virtually all production is used by five 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. The Company believes that, if it
can economically  mine the Tennessee  Mineral Property and produce  satisfactory
products for sale to pigment producers,  it may have a competitive  advantage in
being a domestic producer operating in close proximity to its 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.

Plan of Operation--General.
---------------------------

         With respect to the Jig, the  Company's  marketing  efforts in the near
future will continue to be directed to opportunities within North America,  with
future expansion into foreign markets  developing over time. Because the Company
does not  intend to engage in the  actual  manufacture  of the Jig,  it does not
expect to purchase a  manufacturing  facility or any  significant  manufacturing
equipment.

         During  2000,  the  Company  expects  to  hire  sales,   marketing  and
production employees for its titanium pigment processing business.  The quantity
and timing of new hires will be dependent on business  activity.  As part of the
acquisition of the Processing Technology from BHP, the Company received the use,
until  December  31,  2000,  of the  services  of  the  eighteen  BHP  employees
developing  the  Processing  Technology.  The  Company  expects  to  hire  these
individuals as Altair employees on January 1, 2001.

         Management  does not  otherwise  anticipate  that the number of Company
employees will significantly increase until the Company has sufficient sales and
business  activity  to  warrant  it.  Management  expects  to  hire  two to four
additional employees during the next 12-month period; however, the actual number
of new employees hired will depend on the Company's operating results. If hired,
such new employees would be primarily engineering and technical staff to support
testing, development and commercialization programs.

                                       16

<PAGE>

Subsidiaries.
-------------

         Altair  International  Inc.1  was  incorporated  under  the laws of the
province  of  Ontario,   Canada  in  April  1973.  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 three indirect
wholly-owned   subsidiaries,   California  Recovery  Systems,   Inc.,  a  Nevada
corporation,  Altair  Technologies,  Inc., a Nevada  corporation,  and Tennessee
Valley Titanium, Inc., a Nevada corporation.

         Fine Gold was acquired by the Company in April 1994.  Fine Gold is, for
accounting  purposes,  a development  stage  company with no operating  revenues
earned to date.  The Company's  acquisition of TMI in February 1996 was effected
by merging  TMI with and into Fine Gold (the "TMI  Merger").  Fine Gold also now
includes the  operations of a  wholly-owned  subsidiary of the Company  formerly
known as Mineral  Recovery  Systems,  Inc.,  which was merged with and into Fine
Gold in June 1996. As discussed below,  another  wholly-owned  subsidiary of the
Company,  formerly known as Carlin Gold Company,  is now operated under the name
Mineral Recovery Systems,  Inc. The Company 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.

         MRS was incorporated by the Company in April, 19872. MRS previously has
been  involved in the  exploration  for minerals and  development  of unpatented
mining claims in Nevada, Oregon and California.  All mining claims have now been
abandoned.  The  Company  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 the
Company's  interest in the Tennessee Mineral  Property,  and the Company intends
that MRS will continue to lease or acquire and develop mineral properties in the
future,  particularly  properties  that contain  mineral  resources  that may be
processed with the Jig.

         Altair  Technologies,  Inc. holds all of the Company's  interest in the
titanium pigment processing  technology.  California Recovery Systems, Inc. held
the  company's  exploratory  rights  with  respect  to  the  California  Mineral
Property,   which  were  terminated   during  1999.  The  remaining  100%  owned
subsidiaries do not presently have any assets or operations.

------------------------
(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  Resourcese  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 1996.

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



                                       17

<PAGE>

Government Regulation and Environmental Concerns.
-------------------------------------------------

         Government  Regulation.  The  Company's  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 the Company 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 the Company 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.  These laws are continually  changing
and, as a general matter, are becoming more restrictive.

         Compliance with federal, state, or local laws or regulations represents
a small part of the Company's present budget; nevertheless, continued compliance
may be extremely costly, especially if the Company actually commences extraction
operations on the  Tennessee  Mineral  Property.  If the Company fails to comply
with any such laws or  regulations,  a government  entity may levy a fine on the
Company or require the Company to take costly measures to ensure compliance. Any
such fine or expenditure may adversely affect the Company's development.

         The Company is committed to complying with and, to its knowledge, is in
compliance  with all  governmental  regulations.  The Company  cannot,  however,
predict the extent to which future  legislation  and regulation  could cause the
Company to incur additional  operating expenses,  capital  expenditures,  and/or
restrictions  and  delays  in the  development  of the  Company's  products  and
properties.

         Environmental   Regulation  and  Liability.   Any  proposed  mining  or
processing operation on the Tennessee Mineral Property, at the facility at which
the Processing  Assets are located or any other property acquired by the Company
will be subject to federal,  state,  and local  environmental  laws.  Under such
laws, the Company 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 the Company,
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.  The Company  might use
Hazardous  Substances and, although the Company intends 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.

Employees.
----------



         The  business of the  Company 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,  the  Company  employs a Chief  Financial  Officer,  a senior  process
engineer, a metallurgist,  a geologist, a controller and a part-time employee in
an office management and administrative  assistance capacity. There are no other
employees of the Company or its subsidiaries.



         Other  than  the  employment  agreements  of Dr.  Long  and Mr.  Costin
described below, and the employment  agreement with the Chief Financial Officer,
there  are  no  written  employment   agreements  between  the  Company  or  its
subsidiaries and their respective  personnel.  The future success of the Company



                                       18

<PAGE>

will  depend,  in part,  on its ability to attract and retain  highly  qualified
technical, marketing and management personnel. There is no assurance the Company
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.
------------------------------------

     The Company files 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 the Company  files 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 the Company, that file electronically with the SEC.

     The Common Stock is quoted on the Nasdaq National  Market.  Reports,  proxy
statements  and other  information  concerning  the Company 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.

Glossary of Terms.
------------------

         Amenability means responsiveness of an ore deposit to processing.

         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.

         Assay  means to  analyze an ore or other  substance  to  determine  the
presence, absence, and quantity of one or more components.

         Beneficiate means to improve the grade of ore by processing.

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

         Coal fines  means  finely  pulverized  coal  particles  which will pass
through a 28 mesh screen.

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

         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.

         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.

                                       19

<PAGE>

         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.

         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.

         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.

         Thermal  value  means a  measure  of the  ability  of a fuel  (coal) to
produce energy when ignited.

                                       20

<PAGE>

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 this section and
other  cautionary  statements  throughout this Form 10-K and the Company's 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,  the Company's actual results may vary materially
from those anticipated, estimated, projected, or intended.

         Among the key factors that may have a direct  bearing on the  Company's
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  the  Company's  purchase  and  proposed
development and exploitation of the Processing  Technology and Processing Assets
and uncertainties  regarding the Company's ability to obtain capital  sufficient
to continue its operations and pursue its proposed business strategy.

Factors that May Affect Future Results.
---------------------------------------

--------------------------------------------------------------------------------
                 RISK FACTORS RELATED TO THE COMPANY GENERALLY
--------------------------------------------------------------------------------

We Have Not Generated Any Operating Revenues or Profits.
--------------------------------------------------------

         Altair  is a  development  stage  company.  To  date,  Altair  has  not
generated  revenues from  operations  or realized a profit.  Altair is presently
investing  substantial  resources in the testing and development of the Jig, the
exploration of the Tennessee Mineral Property, and the acquisition,  development
and  commercialization of the Processing Technology and Processing Assets. There
can be no assurance that the Jig, the Tennessee Mineral Property, the Processing
Technology and Processing Assets or any other project  undertaken by Altair will
ever enable Altair to generate  revenues or that Altair will at any time realize
a profit from operations.

                                       21

<PAGE>

We May Continue to Operate at a Net Loss.
-----------------------------------------

         Altair has  experienced  a loss from  operations  in every  fiscal year
since its inception. Altair's losses from operations in 1998 were $1,762,088 and
its losses from operations in 1999 were  $2,291,850.  Although Altair expects to
begin product sales of TiO2 nanoparticles in 2000, total sales will probably not
be at a level  sufficient to produce a positive net income for the year.  Altair
will continue to experience a net operating  loss until,  and if, the Processing
Technology and Processing  Assets, the Jig and/or the Tennessee Mineral Property
begin  generating  revenues for Altair.  Even if the  Processing  Technology and
Processing  Assets,  the Jig or the Tennessee  Mineral Property begin generating
revenues,  such  revenues may not exceed the costs of  production.  Accordingly,
Altair may not ever realize a profit from operations.

We May Not be Able to  Raise  Sufficient  Capital  to Meet  Present  and  Future
--------------------------------------------------------------------------------
Obligations.
------------


         Altair may not be able to obtain the capital  necessary to complete the
development  work  necessary to place the  Processing  Technology and Processing
Assets into continuous operation in a commercial setting. In addition, we may be
unable to obtain the capital  necessary to complete  testing and  development of
the Jig or exploration of the Tennessee Mineral  Property.  If Altair determines
to construct and operate a mine on the Tennessee Mineral  Property,  Altair will
need  to  obtain  a  significant   amount  of  additional  capital  to  complete
construction of the mine and commencement of operations.


         In  addition,  Altair may need  additional  capital  for  necessary  or
discretionary  acquisitions  of  equipment,  properties,  intellectual  property
rights or companies.  General and industry  market  factors or other  unforeseen
events may also affect Altair's use of and need for capital.

         If Altair needs  additional  capital,  it may not to 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, without limitation, the following:

o      market factors affecting the availability and cost of capital generally;
o      the performance of Altair;
o      the size of Altair's capital needs;
o      the market's perception of mining, technology, and or minerals stocks;
o      the economics of projects being pursued; and
o      industry  perception of Altair's ability to recover minerals with the Jig
       or Processing Technology.


If Altair is unable  to  obtain  sufficient  capital  or is forced to pay a high
price for capital,  Altair may be unable to place the Processing  Technology and
Processing Assets into continuous operation, complete the testing and production
of the Jig,  exploration and development of the Tennessee Mineral  Property,  or
otherwise pursue and fully exploit existing or future development opportunities.
In  addition,  because of their  size,  resources,  history  and other  factors,
certain competitors of Altair may have better access to capital than Altair and,
as a result, may be able to exploit opportunities more easily or thoroughly than
Altair.


                                       22

<PAGE>

Our Operations Are And Will Be Subject to Extensive Government Regulation.
--------------------------------------------------------------------------

         Altair's 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 Altair 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. These laws are continually
changing and, as a general matter, are becoming more restrictive.

         Compliance with federal, state, or local laws or regulations represents
a small part of Altair's present budget; nevertheless,  continued compliance may
be extremely costly,  especially if Altair actually  commences mining operations
on the Tennessee Mineral Property.  If Altair fails to comply with any such laws
or regulations,  a government entity may levy a fine on Altair or require Altair
to take costly measures to ensure  compliance.  Any such fine or expenditure may
adversely affect Altair's development.

Certain of Our Experts and  Directors  Reside in Canada And May Be Able to Avoid
--------------------------------------------------------------------------------
Civil Liability.
----------------

         Altair is an Ontario  corporation,  and a majority of its directors are
residents of Canada.  In addition,  certain of Altair's  experts  (including its
principal  accountants  and 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  Altair 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.

We are Dependent on Key Personnel.
----------------------------------

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

         In addition to the individuals identified above, Altair employs a Chief
Financial Officer, senior process engineer, metallurgist, geologist, controller,
and  administrative  assistant.  Altair has no other  employees.  Aside from Dr.
Long,  Mr.  Costin and the Chief  Financial  Officer,  Altair has no  employment
agreements with any of its personnel. Competition for such personnel is intense,
and Altair can provide no assurance that it will be able to attract and maintain
all personnel necessary for the development and operation of its business.

                                       23

<PAGE>

We  May  Fail  to  Identify  or Be  Unable  to  Consummate  Important  Strategic
--------------------------------------------------------------------------------
Transactions.
-------------

         Altair is  currently  evaluating,  and plans to continue  to  evaluate,
licensing or acquiring  additional  mining  products or properties.  Altair also
plans to remain open to acquiring,  or developing strategic relations with other
companies that have products,  manufacturing  capabilities,  or other  qualities
that are compatible with Altair's business  objectives.  Altair must compete for
attractive  acquisition  or strategic  alliance  candidates  with numerous other
companies,  many of whom have significantly  greater financial and technological
resources  than Altair.  In addition,  to the extent  Altair is in a competitive
position,  it may  fail to  identify  or  consummate  acquisition  or  strategic
alliance opportunities.

         Even if Altair  identifies and completes such  alliances,  consummation
thereof may require Altair to incur additional debt,  amortize  expenses related
to goodwill and intangible assets, or issue dilutive equity  securities,  all of
which could adversely affect Altair's operating results or financial  condition.
In addition,  a failure by Altair to integrate  its  operations  with that of an
ally or acquisition target may adversely affect operating  results.  Disruptions
in  operations  are likely to be especially  severe  during the fiscal  quarters
immediately  following  any  acquisition  or  alliance  transaction,  while  the
operations  of the  acquired  or combined  business  are being  integrated  into
Altair's operations.

We May Issue  Substantial  Amounts  of  Additional  Shares  Without  Stockholder
--------------------------------------------------------------------------------
Approval.
---------

         Altair's  Articles  of  Incorporation  authorize  the  issuance  of  an
unlimited  number  of  shares of Common  Stock.  All such  shares  may be issued
without any action or approval by Altair's stockholders. In addition, Altair has
two stock  option  plans which have  potential  for  diluting  of the  ownership
interests of Altair's  stockholders.  The issuance of any  additional  shares of
Common Stock would  further  dilute the  percentage  ownership of Altair held by
existing stockholders.

The Market Price of Our Common Stock Is Extremely Volatile.
-----------------------------------------------------------

         The Common Stock was listed on the Alberta Stock Exchange through April
23, 1998 and has been listed on the Nasdaq  National  Market  since  January 26,
1998.  Between March 24, 1997 and January 23, 1998,  our Common Stock was listed
on  the  Nasdaq  SmallCap   Market.   Trading  in  the  Common  Stock  has  been
characterized by a high degree of volatility. See "Price Range of Common Stock."
Trading  in the  Common  Stock  may  continue  to be  characterized  by  extreme
volatility for numerous reasons, including the following:

o      Uncertainty regarding the viability of the Processing Technology;

o      The continued absence of any revenues from the Jig;

o      Uncertainty  regarding  the  viability  of mining the  Tennessee  Mineral
       Property;

o      Continued  dominance  of trading in the Common Stock by a small number of
       firms;

o      Positive or negative announcements by Altair or its competitors;

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

                                       24

<PAGE>

o      The  announcement of financial or research and  development  results that
       differ from analyst and investor  expectations,  regardless of the health
       of Altair;

o      Significant changes in future prospects of Altair; and

o      Speculation  by short  sellers of Common Stock or other persons who stand
       to profit  from a rapid  increase  or decrease in the price of the Common
       Stock.

Future Sales of Currently  Restricted  Securities May Affect the Market Price of
--------------------------------------------------------------------------------
Our Common Stock.
-----------------

         The resale of  "restricted  securities"  as well as securities  held by
"affiliates"  of Altair,  is  generally  subject to the  provisions  of Rule 144
("Rule  144")  promulgated  under the  Securities  Act of 1993,  as amended (the
"Securities  Act"). In general,  under Rule 144 as currently in effect, a person
who  has  beneficially  owned  restricted  securities  for  at  least  one  year
(including the holding  period of any prior owner except an affiliate)  would be
entitled to sell within any three-month  period a number of shares that does not
exceed  the  greater  of 1% of  the  number  of  shares  of  Common  Stock  then
outstanding  or the average weekly trading volume of the Common Stock during the
four  calendar  weeks  preceding  the filing of a Form 144 with  respect to such
sale.  In  addition,  a person  who is not deemed to have been an  affiliate  of
Altair at any time during the 90 days preceding a sale, and who has beneficially
owned the  shares  proposed  to be sold for at least two  years  (including  the
holding  period of any prior owners except an  affiliate),  would be entitled to
sell such shares under Rule 144(k) without regard to the requirements  described
above.  Altair is unable to predict the effect that future  sales under Rule 144
may have on the then prevailing market price of the Common Stock.

         In addition, shares issued upon exercise of options granted pursuant to
Altair's  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
shares of Common Stock may have a  depressive  effect on the market price of our
Common Stock.

We Have Never Declared A Dividend And May Not For the Foreseeable Future.
------------------------------------------------------------------------

         Altair  has never  declared  or paid  dividends  on the  Common  Stock.
Moreover,  Altair currently intends to retain any future earnings for use in its
business and,  therefore,  does not  anticipate  paying  dividends on its Common
Stock in the foreseeable future.

--------------------------------------------------------------------------------
                 RISK FACTORS RELATED TO DEVELOPMENT OF THE JIG
--------------------------------------------------------------------------------

Our Series 12 Jig Is Too Small For Most Commercial Uses.
--------------------------------------------------------

         To date, Altair has developed and tested a lower-capacity Series 12 Jig
and a higher-capacity Series 30 Jig. Test results on the Series 12 Jig, designed
to be capable of processing  approximately  120 tons of solids per day,  suggest
that commercial use of the Series 12 Jig is technically feasible.  Nevertheless,
the designed capacity of the Series 12 Jig is too small for coal washing, heavy

                                       25

<PAGE>

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
performs  to  design  specifications  in  subsequent  tests  or at a  commercial
facility,  Altair believes that,  because of its small  capacity,  the potential
market for the Series 12 Jig is limited.

Testing Is Incomplete on Our Series 30 Jig.
-------------------------------------------

         The  Series 30 Jig is  designed  to process  approximately  500 tons of
solids per day.  Altair  believes that this designed  capacity is sufficient for
heavy mineral sands processing and many other intended commercial  applications.
Having  completed  an  initial  set of  tests  on the  Series  30 Jig at a heavy
minerals sand processing facility in Northern Florida,  Altair hopes that it can
begin  marketing the Series 30 Jig for heavy mineral sands recovery during 2000.
Nevertheless, the Series 30 Jig may not prove attractive to potential end users.
Even if Altair is  successful  in leasing  the  Series 30 Jig to end users,  the
Series 30 Jig may not prove  efficient,  durable,  or  cost-effective  enough to
satisfy  the  expectations  of  end  users  once  operated  in  an  uncontrolled
environment.  In addition,  the  introduction of new technologies by competitors
could render the Series 30 Jig or larger Jig obsolete or unmarketable or require
costly alterations to make it marketable.

Performance Of The Jig In A Commercial Setting May Not Match Test Results.
--------------------------------------------------------------------------

         Although  test  results  from  controlled  tests on the  Series  30 Jig
suggest that it is capable of separating  valuable  heavy  minerals from mineral
sands,  the Series 30 Jig has not been operated as part of an actual  commercial
mineral processing facility.  When integrated into actual commercial operations,
the Series 30 Jig:

o      may not be able to process sand at its design capacity;

o      may not  recover a  commercially  valuable  end  product at a  commercial
       viable rate when processing mineral sands;

o      may break down  frequently  or  otherwise  be too  costly to operate  and
       maintain;

o      may be displaced or rendered  obsolete by the  introduction  of competing
       technologies  or jigs and may be incompatible  with developing  mining or
       extraction processes; and

o      may be rendered  obsolete by the absence of demand for heavy  minerals or
       other end product of processing.



                                       26

<PAGE>

The Jig Faces Competition From Alternative Technologies.
--------------------------------------------------------

         The centrifugal jig process may not prove superior,  either technically
or commercially,  to alternative  technologies.  As explained in  "Business--the
Jig--Competition--Alternative    Technologies,"   various   mineral   processing
technologies  perform many functions similar or identical to those for which the
Jig is designed.  Altair  believes  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.

The Jig Faces Competition From Other Jig-like Products.
-------------------------------------------------------

         Altair   believes  that  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.  According  to  the  Kelsey  jig's
manufacturer,  Geo Logics Pty. Ltd.,  Kelsey jigs are in service  worldwide.  In
addition,  Falcon, a Canadian  company,  produces a small batch  concentrator as
well as a machine  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.
Knelsen  units have been  installed in various  mining  applications,  primarily
gold,  throughout  the  world.  Competitors,  many of whom may have  significant
capital and resources, may develop, or be in the process of developing, superior
or less expensive alternatives to the Jig.

The Market for Commodities Produced Using the Jig May Collapse.
---------------------------------------------------------------

         If the Jig is successfully  developed and manufactured,  Altair intends
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  the  control  of  Altair.  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  either  such
property.  In addition,  because  Altair  intends to market the Jig primarily to
mining  companies,  a  general  economic  downturn  in  the  mining  or  mineral
industries may have a material adverse effect on Altair.

                                       27

<PAGE>

We Are Dependent Upon Others To Manufacture The Jig.
----------------------------------------------------

         Altair  currently  contracts  on a per-unit  basis with a machine  shop
located  in  central  Tennessee  for  assembly  of the Jig but has no  long-term
contract with such entity. If Altair completes testing of the Jig and develops a
final production model, Altair does not currently have the know-how or resources
to establish its own manufacturing  facility.  Management is considering options
for manufacture of the Jig, including  manufacturing  under a long-term contract
or through an exclusive licensing  arrangement or joint venture.  Altair may not
be  able  to  obtain  adequate  manufacturing  capacity.  Moreover,  even  if  a
manufacturer  is  found,  it  may  not  be  able  to  cost-effectively   produce
affordable,  high-quality units capable of sustaining continuous operations with
low maintenance costs in a production environment.

Certain Key Patents For The  Centrifugal  Jig Have Expired Or Will Expire In The
--------------------------------------------------------------------------------
Near Future.
------------

         Initial patents on the Jig have been issued in the United States, South
Africa,  United Kingdom,  Australia and Canada.  These patents expire on various
dates between May 1999 and December  2000. A series of second  patents have been
issued with  respect to a critical  component  of the Jig 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.

         Persons  in  countries  in which  Altair  has not  patented  the Jig or
certain critical  components may develop and market an infringing  product.  The
cost of enforcing patents outside of North America,  and similar obstacles,  may
limit Altair's  ability to enforce its patents and keep infringing  products out
of the market for the Jig.

--------------------------------------------------------------------------------
                   RISK FACTORS RELATED TO DEVELOPMENT OF THE
                           TENNESSEE MINERAL PROPERTY
--------------------------------------------------------------------------------


We Have Not Completed  Testing The  Feasibility of Mining The Tennessee  Mineral
--------------------------------------------------------------------------------
Property.
---------

         The Tennessee  Mineral Property is currently in the exploratory  stage.
An independent  consultant hired by Altair has completed a pre-feasibility study
on the Tennessee Mineral Property,  which study concludes sands on the Tennessee
Mineral  Property  contain   commercial   quantities  of  heavy  minerals.   The
preliminary study further concludes that the sands can be economically  mined to
produce  commercial grade products and that  established  markets exist for such
products.  Based on these  results,  Altair has  determined  to commence a final
feasibility study of the Tennessee Mineral Property.

         The final feasibility study, commenced during August 1998, will involve
the actual design,  pricing, and analysis of equipment and facilities that would
be used to  mine  the  Tennessee  Mineral  Property.  Altair  expects  that  the
feasibility  study will be  completed  in late 2000.  If the  feasibility  study
suggests  that  cost-effective  mining  of the  Tennessee  Mineral  Property  is
feasible,  a mine would not be operational for 24-36 months after  completion of
the study. The final feasibility study may indicate that the Tennessee Mineral

                                       28

<PAGE>

Property  does not contain  minable  quantities  of heavy  minerals or that such
deposits are not amenable to large-scale,  low-cost  mining,  as contemplated by
Altair.  Even  if  the  studies  and  future  testing  suggest  that  mining  is
economically feasible on the Tennessee Mineral Property, Altair may be unable to
obtain the  capital,  resources,  and permits  necessary  to mine the  Tennessee
Mineral 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 for the  Tennessee
--------------------------------------------------------------------------------
Mineral Property.
-----------------

         In order to begin  construction and commercial  mining on the Tennessee
Mineral Property, Altair may have to obtain additional federal, state, and local
permits, none of which Altair has obtained. Because Altair has not yet commenced
design of a commercial mining facility in the Tennessee Mineral Property, Altair
is 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,  Altair  anticipates that compliance
with the Clean Air Act,  the Clean  Water Act,  the  Resource  Conservation  and
Recovery  Act,  and  the  Comprehensive   Environmental   Response  Compensation
Liability Act would be necessary if Altair  determined to commence  construction
and operation of a mine on the Tennessee  Mineral  Property.  See  "--Government
Regulation."

         In addition to these federal laws and regulations,  Altair  anticipates
that, if the Tennessee Mineral Property is developed, Altair will be required to
obtain a surface  mining permit from the State of Tennessee  under the Tennessee
Mineral  Surface Mining Law of 1972. The  application  for such a permit must be
preceded by public notice and must include,  among other things, a filing fee, a
reclamation and revegetation plan, and a bond to cover the costs of reclamation.
Moreover,  in connection  with its  feasibility  study of the Tennessee  Mineral
Property,  Altair has filed an application  for a National  Pollution  Discharge
Elimination  System  permit  for a  pilot  plant  facility  with  the  Tennessee
Department of Environment and  Conservation.  The application is currently under
review.   Additional   state  and  federal  permits  may  be  required  for  the
construction  and  operation  of the pilot plant Altair can provide no assurance
that it will be able to obtain any such permit.

         Altair is not aware of any existing  local land use  restrictions  that
would outright  prohibit mining  operations on the Tennessee  Mineral  Property.
Altair  has held  preliminary  discussions  with  state  and  federal  officials
regarding  land use issues and  permitting  requirements,  but no decisions have
been issued by any regulatory agencies.

                                       29

<PAGE>

Any  Operations  On the  Tennessee  Mineral  Property May Lead to  Environmental
--------------------------------------------------------------------------------
Liability.
----------

         Any proposed  mining or processing  operation on the Tennessee  Mineral
Property,  or any other property acquired by Altair, will be subject to federal,
state, and local  environmental laws. Under such laws, Altair may be jointly and
severally  liable  with  prior  property  owners  for  the  treatment,  cleanup,
remediation,  and/or removal of substances discovered on either of the Tennessee
Mineral  Property or any other property used by Altair,  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.  Altair might use Hazardous  Substances
and, although Altair intends 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.

--------------------------------------------------------------------------------
                   RISK FACTORS RELATED TO DEVELOPMENT OF THE
                      PROCESSING TECHNOLOGY AND PROCESSING
--------------------------------------------------------------------------------

We Have Not Yet  Confirmed the Viability  and  Effectiveness  of the  Processing
--------------------------------------------------------------------------------
Technology and Processing Assets.
---------------------------------


         The Processing  Technology and Processing  Assets have not been used by
Altair or anyone else in a  commercial  setting,  and may prove  ineffective  or
unreliable  when  subjected to continuous  use.  Altair has used the  Processing
Technology and Processing  Assets to  effectively  produce sample  quantities of
TiO2 nanoparticles, but has not completed testing of other product applications.
The Processing  Technology  and Processing  Assets may prove wholly or partially
ineffective  when  applied  by  Altair  on a  continuous  basis in a  commercial
setting.  In  addition,  the  Processing  Assets  may break  down,  be costly to
maintain or prove unreliable when operated on a continuous basis in a commercial
setting.  If the  Processing  Technology  proves  ineffective  or the Processing
Assets prove unreliable in a commercial setting,  Altair may be unable to recoup
the investment in the Processing Technology and Processing Assets.


Nanoparticles  Produced Using the Processing  Technology May Be, or Be Perceived
--------------------------------------------------------------------------------
As, Substandard.
----------------

         In the short run,  Altair plans to use the  Processing  Technology  and
Processing  Assets to produce  TiO2  nanoparticles.  Altair  has not  previously
produced or marketed  TiO2  nanoparticles  and, to date,  has not  obtained  any
orders  for  TiO2  nanoparticles.  The TiO2  nanoparticles  and  other  products
produced  using  the  Processing  Technology  and  Processing  Assets  may be of
inferior quality to alternative  products or, regardless of actual quality,  may
be perceived as lacking adequate quality or reliability.  Even if Altair is able
to  efficiently   produce  TiO2  nanoparticles  and  other  products  using  the
Processing  Technology  and Processing  Assets,  it may not be able to sell such
products in the marketplace.

                                       30

<PAGE>

The Current Market For TiO2 Nanoparticles Is Limited.
-----------------------------------------------------

         In the short run,  Altair plans to use the  Processing  Technology  and
Processing Assets to produce TiO2 nanoparticles. The uses for such nanoparticles
are  limited--primarily  cosmetics and surface coatings--and the market for such
nanoparticles  is small,  estimated  at 3,800 tons per annum.  Even if Altair is
able to  effectively  produce TiO2  nanoparticles  and other  products using the
Processing  Technology and Processing  Assets,  it may not be able to profitably
market such 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 mineral products,  a worldwide or regional
         financial crisis, or other unforeseen event;

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

o        such products may be of inferior  quality to  alternative  products or,
         regardless  of actual  quality,  may be perceived  as lacking  adequate
         quality or reliability.

Our Cost of Production May Exceed Estimates.
-------------------------------------------

         Altair purchased the Processing  Technology and Processing Assets based
on the  belief  that  it will be able to  produce  titanium  dioxide  and  other
products more cheaply than many competitors.  Altair has not, however,  produced
any mineral products using the Processing  Technology and Processing Assets on a
commercial  basis.  Altair's  actual  costs of  production  may exceed  those of
competitors  and, even if its costs of production are lower,  competitors may be
able to sell  titanium  dioxide  and other  products  at a lower  price  than is
economical for Altair.

Pending Patent Applications May Be Denied Or Provide Inadequate Protection.
---------------------------------------------------------------------------

         BHP has filed numerous patent applications with the PTO with respect to
the Processing Technology and has transferred the rights to such applications to
Altair.  Such  applications  are being  reviewed by the PTO, and no patents with
respect  to  the  Processing  Technology  have  been  granted  to  date.  If the
applications  for any patents  related to the Processing  Technology are denied,
the value of the Processing  Technology,  and any competitive  advantage  gained
from Altair's  ownership of the  Processing  Technology,  will be  substantially
diminished.  Altair can provide no assurance  that pending  patent  applications
will be granted.

         In addition,  persons in jurisdictions  outside of the United States in
which no  application  has been  filed,  or which  do not  honor  United  States
patents,  may  develop and market  infringing  technologies.  Also,  the cost of
enforcing  patents  outside of North America,  as well as other  obstacles,  may
limit the  Altair's  ability to enforce  any patents  related to the  Processing
Technology outside of the United States.

                                       31

<PAGE>

Use  of  the  Processing  Technology  May  Lead  to  Substantial   Environmental
--------------------------------------------------------------------------------
Liability.
----------

         Any proposed use of the Processing  Technology  and  Processing  Assets
will be subject to federal,  state,  and local  environmental  laws.  Under such
laws,  Altair may be jointly and severally liable with prior property owners for
the treatment, cleanup, remediation,  and/or removal of substances discovered at
the leased Reno,  Nevada  facility or any other property used by Altair that are
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.  Altair might use Hazardous  Substances
and,  although it intends 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.

Item 2.      Properties

         Altair maintains a registered office at 56 Temperance Street,  Toronto,
Ontario M5H 3V5.  Altair does not lease any space for, or conduct any operations
out of, the Toronto,  Ontario registered office. In addition,  Altair leases 900
square feet of office space at 1725 Sheridan  Avenue,  Suite 140, Cody,  Wyoming
82414,   which  serves  as  the  corporate   headquarters  for  Altair  and  its
subsidiaries.  Altair's  lease  for  the  Cody,  Wyoming  office  space  may  be
terminated by either party on 30 days' prior written notice.

         In addition,  in connection with the Asset Purchase  Agreement,  Altair
and BHP entered into a lease dated  November 15, 1999,  pursuant to which Altair
is leasing  approximately  20,000 square feet of laboratory and testing space at
BHP's testing  facility  located at 204 Edison Way,  Reno,  Nevada,  89502.  The
initial term of the lease  expires on December  31,  2000,  subject to automatic
renewal for six-month  periods at  inflation-adjusted  rent until  terminated by
Altair.  The  lease  grants  Altair 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 Altair's  possible purchase
of such building and property.

         Fine Gold and MRS lease 5,700  square feet of office space at 230 South
Rock Boulevard,  Suite 21, Reno,  Nevada 89502.  The lease for the Reno,  Nevada
offices expires on January 31, 2002. MRS leases  approximately 1,550 square feet
of laboratory  space at 7950 Security  Circle,  Reno,  Nevada 89506, for its Jig
testing  operations.  The test facility  lease may be terminated by either party
upon eight weeks prior  written  notice.  Management  believes that the existing
offices and test  facilities  of Altair and its  subsidiaries  are  adequate for
their current needs. In the event that alternative or additional office space is
required,  Altair  believes it could  obtain  additional  space on  commercially
acceptable terms.

         The Tennessee Mineral Property  consists of approximately  14,000 acres
of real  property  located  near  Camden,  Tennessee,  which MRS  leases (or has
binding  commitments to lease) from multiple  owners of the real property.  Such
leases grant MRS certain exclusive rights, including the right to explore, test,
mine,  extract,  process,  and sell any minerals or other materials found on the
land, in exchange for the payment of minimum annual  advanced  royalty  payments
prior to commencement of production on the properties (or after  commencement of
production,  to the extent  production  royalty  payments  do not equal  nominal
royalty  payments) and,  thereafter,  production  royalty  payments in an amount
equal to a percentage of the value of minerals mined and sold from the property.
See Note 6 to the Consolidated  Financial  Statements for information  regarding
present and future minimum advanced royalty  payments.  The leases typically are
for a  minimum  term of ten  years,  and may be  extended  indefinitely  at MRS'
option, provided Altair is actively conducting exploration, development, or

                                       32

<PAGE>

mining  operations.  The  leases  are  cancelable  by MRS at any  time,  and are
cancelable  by the lessor in the event MRS breaches the terms of the lease.  The
mineralized deposit on the Tennessee Mineral Property has not yet proven to be a
reserve,  and  Altair's  operations  and  proposed  plan with  respect to it are
exploratory in nature. See "Item 1.  Business--Tennessee  Mineral Property." The
Tennessee  Mineral  Property  is  accessed  by public  roads  and,  to  Altair's
knowledge, has not been used in prior mining operations.

         During  1998  and  1999,   Altair   incurred   $793,253  and  $689,594,
respectively,  in deferred  exploration  expenditures  on the Tennessee  Mineral
Property.  Expenditures  were  incurred on  leasehold  minimum  advance  royalty
payments, auger hole drilling,  sampling,  sample analysis and assay, geological
and mineralized deposit characterization  studies, and other related exploration
activities.

Item 3.      Legal Proceedings

         Altair is from time to time involved in routine  litigation  incidental
to the conduct of its  business.  Altair is currently  not involved in any suit,
action  or other  legal  proceedings,  nor is it aware of any  threatened  suit,
action or other legal proceedings which management  believes will materially and
adversely affect the business or operations of Altair or its subsidiaries.

Item 4.      Submission of Matters to a Vote of Security Holders

         Altair did not submit any matters to a vote of security  holders during
the fourth quarter of the 1999 fiscal year.

                                     PART II

Item 5.      Market for the Common Stock and Related Shareholder Matters

Market Price
------------

         In the United  States,  prior to March 23,  1997,  the Common Stock was
listed under the symbol "AIGDF" on the over-the-counter  bulletin board maintain
by the National  Association  of Securities  Dealers.  From March 24, 1997 until
January 23,  1998,  the Common  Stock was quoted on the Nasdaq  SmallCap  Market
under the symbol "ALTIF."

         Beginning  on January 26, 1998,  the Common Stock began  trading on the
Nasdaq National Market under the symbol "ALTIF." The following table sets forth,
for the periods  indicated,  the high and low sales prices for the Common Stock,
as reported on the Nasdaq National Market.

Fiscal Year Ended December 31, 1998                Low                High
                                      ----------------    ----------------

         1st Quarter (beginning January 26,     $8.125             $15.625
         1998)

         2nd Quarter                             7.000               9.625
         3rd Quarter                             3.000              10.250
         4th Quarter                             5.875               8.625


                                       33

<PAGE>

Fiscal Year Ended December 31, 1999                Low                High
                                      ----------------    ----------------

         1st Quarter                            $6.063              $9.875
         2nd Quarter                             4.125               6.875
         3rd Quarter                             3.875               5.000
         4th Quarter                             3.453               5.063


The last sale price of the Common  Stock,  as  reported  on the Nasdaq  National
Market, on March 15, 2000 was $5.813 per share.

Outstanding Shares and Number of Shareholders.
----------------------------------------------


         As of March 15, 2000, the number of shares of Common Stock  outstanding
was 15,837,882 held by 467 holders of record. In addition,  as of the same date,
the Company has reserved  3,346,700  shares of Common  Stock for  issuance  upon
exercise of options that have been, or may be,  granted under its employee stock
option plans.


Dividends
---------

         The Company has never  declared or paid  dividends on its Common Stock.
Moreover, the Company currently intends to retain any future earnings for use in
its business and,  therefore,  does not  anticipate  paying any dividends on its
Common Stock in the foreseeable future.

Transfer Agent and Registrar
----------------------------

         The  Transfer  Agent  and  Registrar  for the  Common  Stock is  Equity
Transfer Services, Inc., Suite 420, 120 Adelaide Street West, Toronto,  Ontario,
M5H 4C3.


Canadian Taxation Considerations
--------------------------------

         Dividends  paid on Common  Stock owned by  non-residents  of Canada are
subject to Canadian  withholding  tax. The rate of withholding  tax on dividends
under the Income Tax Act (Canada) (the "Act") is 25%. However,  Article X of the
reciprocal  tax treaty  between  Canada and the  United  States of America  (the
"Treaty")  generally  limits the rate of  withholding  tax on dividends  paid to
United States residents to 15%. The Treaty further  generally limits the rate of
withholding  tax to 5% if  the  beneficial  owner  of  the  dividends  is a U.S.
corporation which owns at least 10% of the voting shares of the Company.

         If the beneficial  owner of the dividend  carries on business in Canada
through a permanent  establishment in Canada, or performs in Canada  independent
personal  services  from a fixed  base in  Canada,  and the shares of stock with
respect  to which the  dividends  are paid is  effectively  connected  with such
permanent  establishment  or fixed base,  the dividends are taxable in Canada as
business  profits at rates  which may exceed the 5% or 15% rates  applicable  to
dividends that are not so connected with a Canadian  permanent  establishment or
fixed base. Under the provisions of the Treaty, Canada is permitted to apply its
domestic  law  rules  for  differentiating  dividends  from  interest  and other
disbursements.

                                       34

<PAGE>

         A capital gain realized on the  disposition of Common Stock by a person
resident in the United  States ("a  non-resident")  will be subject to tax under
the Act if the shares held by the non-resident are "taxable Canadian  property."
In general,  Common Stock will be taxable  Canadian  property if the  particular
non-resident used (or in the case of a non-resident  insurer,  used or held) the
Common  Stock in  carrying  on  business  in Canada  or,  pursuant  to  proposed
amendments to the Act, where at any time during the five-year period immediately
preceding  the  realization  of the gain,  not less than 25% of the  issued  and
outstanding shares of any class or series of shares of the Company were owned by
the particular  non-resident,  by persons with whom the particular  non-resident
did not deal at arms' length, or by any combination thereof. If shares of Common
Stock constitute taxable Canadian property, relief nevertheless may be available
under the Treaty.  Under the Treaty,  gains from the  alienation of Common Stock
owned by a non-resident  who has never been resident in Canada generally will be
exempt  from  Canadian  capital  gains  tax if the  shares  do not  relate  to a
permanent  establishment  or fixed  base  which the  non-resident  has or had in
Canada,  and if not more than 50% of the value of the  shares was  derived  from
real  property  (which  includes  rights to explore  for or to  exploit  mineral
deposits) situated in Canada.

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 Canada ("Canadian GAAP"), which
differ in certain respects from those in the United States. See Note 15 of Notes
to Consolidated Financial Statements included herein for certain reconciliations
to 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,        1999            1998          1997         1996          1995
                                  ----------------------------------------------------------------------

STATEMENTS OF OPERATIONS
<S>                               <C>           <C>           <C>           <C>           <C>
Revenues from operations          $          -  $          -  $          -  $         -   $      -
Operating expenses                    2,424,695     2,064,958     1,858,033    1,335,725     438,103
Interest expense                          1,966        32,165        43,497       19,373         -
Interest income                        (134,811)     (335,037)      (70,059)     (27,872)     (1,000)
                                  ----------------------------------------------------------------------
Loss from operations              $   2,291,850 $   1,762,086 $   1,831,471 $  1,327,226  $  437,103
                                  ======================================================================
Basic loss per common share
     from operations              $       (0.15)$       (0.13)$       (0.13)$      (0.12) $    (0.07)
                                  ======================================================================
Cash dividends declared per
     common share                 $          -  $          -  $          -  $         -   $      -
                                  ======================================================================
Deficit, beginning of year        $   8,645,021 $   6,303,879 $   3,956,564 $  3,332,064  $2,894,961
Net loss                              2,224,408     1,929,539     1,831,471      624,500     437,103
Other items                                  -        411,603       515,844           -          -
                                  ----------------------------------------------------------------------
Deficit, end of year              $  10,869,429 $   8,645,021 $   6,303,879 $  3,956,564  $3,332,064
                                  ======================================================================
</TABLE>

                                       35

<PAGE>

<TABLE>
<CAPTION>

BALANCE SHEET DATA
<S>                               <C>           <C>           <C>           <C>           <C>
Working capital                   $  (6,429,243)$   2,991,707 $   7,480,153 $  2,974,955  $  313,502
Total assets                         15,673,908     8,712,052    13,125,804    8,042,888     975,259
Long-term obligations                        -             -        602,451      269,685         -
Current liabilities                   7,563,276       239,512       712,810      308,762      90,910
Net shareholders' equity              8,110,632     8,472,540    11,810,543    7,464,441     884,349

</TABLE>

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,  the  Company's  business
consisted  principally of the exploration of mineral  properties for acquisition
and  development.  During 1994, the Company's focus changed as it 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,  the  Company  has
continued  exploring  mineral  properties  suitable  for  development  using the
Company's patented mineral processing  equipment.  In November 1999, the Company
acquired  the  Processing  Technology  and  Processing  Assets from BHP which it
intends to initially use for commercial production of TiO2 nanoparticles.

         On November  15,  1994,  the Company  executed an option  agreement  to
acquire TMI, a development stage enterprise which owned all patent rights to the
Campbell Centrifugal Jig, since modified and renamed the Altair Centrifugal Jig.
Since April 1996, the Company has 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 a viable
heavy mineral resource,  and a subsequent  technoeconomic  assessment  concluded
that the property  warrants further  development.  Based on the results of these
independent  studies, the Company has initiated a final feasibility study and is
assessing its options for developing the property.

         In November  1999,  the  Company  acquired  all patents 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 "Processing  Technology")  all tangible  equipment and
other  assets  (i.e.,  the  "Processing  Assets")  used  by BHP to  develop  and
implement the  Processing  Technology,  and the use for one year (for no fee) of
the  services  of  the  BHP  personnel   presently   developing  the  Processing
Technology.

         The purchase price for the Processing  Technology and Processing Assets
was  15,000,000   Australian  Dollars  (AUD$)  and  is  payable  in  four  equal
installments.  The first  installment was paid at closing,  two payments are due
and payable on May 15, 2000, and the last is due on August 15, 2000. The Company
is also required to pay to BHP,  until the earlier of the fifteenth  anniversary
of November  15, 1999 or the date the Company has paid an  aggregate  royalty of
AUD$105,000,000,  a  quarterly  royalty of from 1.5% to 3% of  certain  titanium
dioxide products produced and 3% of other products sold.

         Prior to 1994,  the Company  operated  its minerals  business  with the
intent of  receiving  income  from  property  sales,  joint  ventures,  or other
business arrangements with larger companies, rather than developing and placing

                                       36

<PAGE>

its properties  into  production on its own. The Company has received no royalty
income in the past, and at present,  there are no business arrangements or joint
venture prospects involving the Company's properties or potential property sales
from which the Company expects to receive income. However, during the first half
of 2000 the  Company  intends  to  initiate  limited  commercial  production  of
titanium dioxide  nanoparticles  using the Processing  Technology and Processing
Assets acquired from BHP.

Results of Operations.
----------------------

Fiscal Years 1999, 1998 and 1997

         The Company has earned no revenues  to date.  Operating  losses  before
extraordinary  items  totaled  $2,291,850  ($0.15 per share) for the 1999 fiscal
year,  $1,762,088  ($0.13 per share) for the 1998 fiscal  year,  and  $1,831,471
($0.13 per share) for the 1997 fiscal year.  Principal  factors  contributing to
the losses  during these  periods were the absence of revenues  coupled with the
incurrence of operating expenses.

         Operating  expenses increased from $1,858,033 during 1997 to $2,064,960
during 1998 and to $2,424,695 during 1999. Of these amounts, amortization of the
Company's assets (including patents) represented $590,831, $555,626 and $494,104
during 1997, 1998 and 1999, respectively. During 1998, the Company increased the
amount of test 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 its exploration  efforts in Tennessee.  This
higher  level of activity  caused a direct  increase in testing,  research,  and
development  costs from  $78,034 in 1997 to  $259,630  and  $290,420 in 1998 and
1999,  respectively.  In  addition,  in order to support  this  higher  level of
activity,  the Company  increased  the number of employees  in its Reno,  Nevada
office from four to eight  personnel  and expanded into new leased office space.
The  costs  associated  with  this  additional  staffing  and  office  space are
reflected in increased wages and administration expenses,  testing, research and
development expenses,  general and office expenses,  travel, and occupancy costs
in 1998 and 1999 over 1997.

         In January 1998, the Common Stock began trading on the Nasdaq  National
Market  System.  As a result of the expanded  market for the Common  Stock,  the
expenses  associated  with  stock  exchange  fees,  shareholders'  meetings  and
reports,  and shareholder  relations  combined increased to $319,928 in 1999 and
$345,880 in 1998, compared to $209,739 in 1997.

         In 1999,  the  Company  completed  its testing  and  assessment  of the
California Mineral Property and determined that it was not economically feasible
to  develop.  As a result,  it wrote off  $93,643 of costs  associated  with the
property.

         Interest income increased in 1998 over 1997 principally due to interest
earned on temporary cash investments  following the issuance of $5,000,000 of 5%
convertible  subordinated debentures (the "Convertible  Debentures") in December
1997.  Interest  income declined in 1999 from 1998 as a result of the redemption
of the Convertible Debentures in August 1998.

         As a  result  of the  TMI  Merger,  Fine  Gold  assumed  all  of  TMI's
liabilities.  During 1999 and 1998,  Fine Gold  extinguished  certain of the TMI
accounts  payable and notes  payable at less than the book amounts of such debt.
The net of such  forgiveness  of debt was  $67,442 and $25,805 in 1999 and 1998,
respectively,  with  neither  amount  having a material  effect on earnings  per
share.   During  1998,  the  Company  redeemed  $2,250,000  of  the  Convertible
Debentures,  incurring a redemption  premium of $193,256.  See  "--Liquidity and
Capital Resources." This represented a net loss per share of $.01. There were no
extraordinary items during 1997.

                                       37

<PAGE>

Liquidity and Capital Resources.
--------------------------------

         The Company has financed its operations  since  inception  primarily by
the issuance of equity securities  (Common Stock,  Convertible  Debentures,  and
options and warrants to purchase  Common  Stock) with  cumulative  aggregate net
proceeds of  $18,980,061  as of December 31,  1999.  The Company  received  cash
proceeds  from the sale of Common Stock of  $1,862,500 in 1999 and received cash
proceeds  from the exercise of options and  warrants to acquire  Common Stock of
$113,664 and  $2,521,448  in 1998 and 1997,  respectively.  In addition,  during
1997, the Company received net proceeds of $4,484,156  ($5,000,000 less $515,844
costs of issuance) from the issuance of the  Convertible  Debentures and related
warrants.

         The Company has earned no revenues  from  operations  and has  incurred
recurring  losses. At December 31, 1999, the Company's  accumulated  deficit was
$10,869,429,  or an  increase  of  $2,224,408  over the  accumulated  deficit at
December 31, 1998. This increase was due to the net loss for the year.

         The Company's cash and short-term investments decreased from $3,100,577
as of December  31, 1998 to $153,580 as of December  31,  1999.  The decrease is
primarily  attributable  to a cash  payment  of  $2,422,763  made to BHP for the
acquisition of the  Processing  Technology  and  Processing  Assets,  $1,396,805
expended  for  operating  activities  and $714,893  for the  exploration  of the
Tennessee  Mineral  Property.  During 1998,  the Company's  cash and  short-term
investments  decreased from  $8,161,770 as of December 31, 1997 to $3,100,577 as
of December 31,  1998.  The decrease  was  primarily  attributable  to operating
activities   ($1,546,590),   exploration  of  the  Tennessee   Mineral  Property
($793,251) and the redemption of the Convertible Debentures ($2,337,892).

         On March 31, 2000 the Company  entered into a stock purchase and equity
line of credit agreement with an investor. Under the terms of the stock purchase
portion of the agreement, the Company issued to the Investor 1,251,303 shares of
Common Stock in exchange for $6 million. After the initial issuance,  additional
shares may be issued through a reset provision that compares market price in the
reset period to an adjusted  original  issue price.  The investor  also received
warrants  for  250,261  shares of Common  Stock  exercisable  at $6.76 per share
through April 7, 2003.

         Under the terms of the  equity  line of  credit,  the  Company  has the
option to cause the  investor to  purchase  up to $10  million of the  Company's
Common Stock during an 18-month period.  The stock is to be issued at a discount
to market price with the timing and amounts of purchases  at the  discretion  of
the Company  (subject to the price of the  Company's  Common Stock  remaining in
excess of $2 per share and the average daily  weighted  dollar trading volume of
the Common Stock being at least 150% of the amount of the additional financing).

         The  Company  intends  to  use  these  proceeds  to pay  the  remaining
AUD$11,250,000  due to BHP,  fund the  estimated  $5.5  million  needed  for the
completion of the  feasibility  study on the  Tennessee  Mineral  Property,  and
provide working capital.

                                       38

<PAGE>

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk.

         Although   the   Company  is  an  Ontario   corporation,   it  conducts
substantially all of its operations in the United States and holds substantially
all of its cash in United States Dollar denominated bank accounts. The Company's
liability to BHP in connection  with the purchase of the  Processing  Technology
and Processing Assets is stated in Australian dollars and is, therefore, subject
to  exchange  rate  risk.  As a  result,  the  Company's  obligation  to pay BHP
AUD$7,500,000 0n May 15, 2000 and AUD$3,750,000 on August 15, 2000 will increase
as the Australian  Dollar becomes  stronger against the United States Dollar and
will decrease as the Australian Dollar weakens against the United States Dollar.
Exchange rates tend to fluctuate  widely,  and there is a real risk that cost in
United States  Dollars of repaying the Company's  AUD$11,250,000  obligation may
increase  significantly during the period between the date of this Form 10-K and
the date the Company pays, or is required to pay, such obligation.

         By  way of  illustration,  on  November  15,  2000,  when  the  Company
consummated its purchase of the Processing Technology and Processing Assets, the
cost of an  Australian  dollar in United  States  Dollars  (or the U.S.$ to AUD$
exchange rate) was $.6403. As a result, the Company's  AUD$11,250,000  liability
to BHP was equal to  U.S.$7,202,738  on November 15, 1999.  Between November 15,
1999 and December 31, 1999, the United States Dollar weakened in relation to the
Australian Dollar such that the Company's liability to BHP increased by $160,862
to  $7,363.600.  (An  unrealized  loss in that amount  appears on the  Company's
Consolidated  Statements of Operations  and Deficit for the year ended  December
31,  1999).  However,  during the period  between  January 1, 2000 and March 15,
2000,  the United  States  Dollar  strengthened  in relation  to the  Australian
Dollar,  with  the  result  that the  liability  to BHP on  March  30,  2000 has
decreased by $488,287 from the amount at December 31, 1999 and $327,425 from the
amount at November 15, 1999 to $6,875,313, Because of the exchange rate exposure
on its  liability to BHP, the amount in United  States  Dollars of the Company's
liability  to BHP will  continue to  fluctuate  until such  liability is paid in
full.

Item 8.      Financial Statements and Supplementary Data.

         The  financial  statements  required  by this Item  appear on pages F-1
through F-17 of this Form 10-K.

Item 9.      Changes in and  Disagreements  with  Accountants  on Accounting and
Financial Disclosure.

         None.



                                    PART III

Item 10.     Directors and Executive Officers of the Registrant

         The  information  required by this Item is incorporated by reference to
the section entitled  "Election of Directors" in the Company's  definitive proxy
statement to be filed with the Commission.

Item 11.     Executive Compensation

         The  information  required by this Item is incorporated by reference to
the section entitled "Executive  Compensation" in the Company's definitive proxy
statement to be filed with the Commission.

Item 12.     Security Ownership of Certain Beneficial Owners and Management

         The  information  required by this Item is incorporated by reference to
the  section  entitled  "Security  Ownership  of Certain  Beneficial  Owners and
Management"  in the Company's  definitive  proxy  statement to be filed with the
Commission.

Item 13.     Certain Relationships and Related Transactions

         The  information  required by this Item is incorporated by reference to
the section entitled  "Certain  Relationships  and Related  Transactions" in the
Company's definitive proxy statement to be filed with the Commission.

                                       39

<PAGE>

                                     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  Report are filed as part of
this Annual Report on Form 10-K:

                           o        Report of McGovern,  Hurley, Cunningham LLP,
                                    for the years ended December 31, 1999, 1998,
                                    and 1997

                           o        Consolidated  Balance Sheets at December 31,
                                  1999 and 1998

                           o        Consolidated  Statements of  Operations  and
                                    Deficit  for the years  ended  December  31,
                                    1999, 1998 and 1997

                           o        Consolidated  Statements  of Cash  Flows for
                                    the years ended December 31, 1999,  1998 and
                                    1997

                           o        Notes to Consolidated Financial Statements

                  2.       Financial Statement Schedule.  Not applicable.

<TABLE>
<CAPTION>

                  3.       Exhibit List

      <S>           <C>                                               <C>
     Exhibit No.    Exhibit                                           Incorporated by Reference/ Filed Herewith
     -----------    -------                                           -----------------------------------------
                                                                      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 filed
                    the Registrant  dated November 6,                 with the Commission on December 23, 1996.
                    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.

                                                                      Incorporated by reference to the Company's
                                                                      Current Report on Form 8-K filed with the
            4.2     Form of Warrant (related to Convertible           Commission on January 13, 1998, as amended by
                    Debentures)                                       Amendment No. 1 to Current Report on Form
                                                                      8-K/A, filed on January 21, 1998.

                                                                      Incorporated by reference to the Company's
            4.3     Form of Series J Warrant                          Quarterly Report on Form 10-Q filed on May 15,
                                                                           1999.

</TABLE>

                                       40

<PAGE>

<TABLE>
<CAPTION>

                  3.       Exhibit List (continued)
      <S>           <C>                                               <C>
     Exhibit No.    Exhibit                                           Incorporated by Reference/ Filed Herewith
     -----------    -------                                           -----------------------------------------

            4.4     Form of Series K Warrant                          Filed herewith.

            4.5     Form of Series L Warrant                          Filed herewith.

                    Shareholders Rights Plan Agreement dated

                    November 27, 1998, between Altair                 Incorporated by reference to the Company's
            4.6     International Inc. and Equity Transfer            Current Report on Form 8-K filed with the
                    Services Inc.                                     Commission on December 29, 1998.

                    Performance Escrow Agreement dated February       Incorporated by reference to Registration
           10.1     27, 1996; Performance Escrow Release              Statement on Form 10-SB filed with the
                    Schedule                                          Commission on November 25, 1996.

                                                                      Incorporated by reference to the Company's
                    Employment Agreement between Altair               Annual Report on Form 10-K filed with the
           10.2     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
           10.3     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
                    Employment Agreement between Altair               Quarterly Report on Form 10-Q for the quarter
           10.4     International Inc. and John W. Parsons            ended September 30, 1998, filed with the
                    dated July 6, 1998                                Commission on November 13, 1998.

                                                                      Incorporated by reference to the Company's
           10.5     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
           10.6     Plan adopted by Shareholders on June 11,          Definitive Proxy Statement on Form 14A filed
                    1998                                              with the Commission on May 12, 1998.

                    Escrow Agreement among Altair International

                    Inc., Equity Transfer Services Inc., Thomas       Incorporated by reference to Registration
           10.7     P. Campbell and C. Patrick Costin dated           Statement on Form 10-SB filed with the
                    June 1, 1994                                      Commission on November 25, 1996.

                                                                      Incorporated by reference to the Company's
                                                                      Annual Report on Form 10-K filed with the
           10.8     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
           10.9     Exploration License with Option dated             Annual Report on Form 10-K filed with the
                    October 1, 1998                                   Commission on March 18, 1999.
</TABLE>

                                       41

<PAGE>

<TABLE>
<CAPTION>

                  3.       Exhibit List (continued)
      <S>           <C>                                               <C>
     Exhibit No.    Exhibit                                           Incorporated by Reference/ Filed Herewith
     -----------    -------                                           -----------------------------------------

                    Amended and Restated Shareholder Rights           Incorporated by reference to the Company's
          10.10     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
          10.11     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.

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

                     Asset Purchase and Sale Agreement dated

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

           23.1     Consent of McGovern, Hurley, Cunningham           Filed herewith.

             27     Financial Data Schedule                           Filed herewith.
</TABLE>

         (b)      Reports on Form 8-K
                  -------------------

                  The Company filed a Current Report on Form 8-K on November 19,
         1999,  in  which  (i) it  reported  the  acquisition  of  all  patents,
         technology  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  and filed all
         material  transaction  documents,  and (ii) it filed and  reported  its
         Amended and Restated  Shareholders  Rights Plan dated October 15, 1999,
         between the Company and Equity Transfer Services, Inc.

         (c)      Exhibits

                  --------

                  Exhibits  to this  Report  are  attached  following  page F-17
                  hereof.

         (d)      Financial Statement Schedule

                  ----------------------------

                  Not applicable.



                                       42

<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 report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 29, 2000.

                                    ALTAIR INTERNATIONAL INC.


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

                   POWER OF ATTORNEY AND ADDITIONAL SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this Form 10-K has been signed by the following persons in the capacities and on
the dates indicated. Each person whose signature to this Form 10-K appears below
hereby  constitutes and appoints William P. Long and Edward Dickinson,  and each
of them, as his true and lawful  attorney-in-fact  and agent, with full power of
substitution,  to sign on his behalf  individually  and in the  capacity  stated
below  and to  perform  any  acts  necessary  to be done in  order  to file  all
amendments  and  post-effective  amendments  to this Form 10-K,  and any and all
instruments or documents  filed as part of or in connection  with this Form 10-K
or the  amendments  thereto and each of the  undersigned  does hereby ratify and
confirm all that said  attorney-in-fact and agent, or his substitutes,  shall do
or cause to be done by virtue hereof.

   Signature             Title                                 Date

/s/ William P. Long      President and Chief Executive         March 29, 2000
-------------------
William P. Long          Officer and Director (Principal
                         Executive Officer)


/s/ Edward Dickinson     Chief Financial Officer

--------------------
Edward Dickinson         (Principal Financial and              March 29,  2000
                         Accounting Officer)


/s/ James I. Golla       Secretary and Director                March 29, 2000
------------------
James I. Golla

/s/ George Hartman       Director                              March 29, 2000
------------------
George Hartman



                                       43

<PAGE>

                            ALTAIR INTERNATIONAL INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 1999

                      (Expressed in United States Dollars)


INDEX                                                          PAGE
Auditors'                                                       F-2
Report
Consolidated Balance                                            F-3
Sheets
Consolidated Statements of Operations and                       F-4
Deficit
Consolidated Statements of Cash                                 F-5
Flows
Notes to the Consolidated Financial                          F-6 - F-16
Statements

                                       F-1

<PAGE>

McGovern, Hurley, Cunningham, LLP                          Chartered Accountants
2005 Sheppard Avenue East, Suite 503                   Telephone: (416) 496-1234
Toronto, Ontario, Canada  M2J 5B4                            Fax: (416) 496-0125
                                                     Gen.E-mail:  info@mh-ca.com
                                                        Website:  www.mhc-ca.com

                                AUDITORS' REPORT

To the Shareholders of ALTAIR INTERNATIONAL INC.

We have audited the consolidated  balance sheets of Altair International Inc. as
at December 31, 1999 and 1998 and the consolidated  statements of operations and
deficit and cash flows for the years ended  December  31,  1999,  1998 and 1997.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in Canada.  Those standards  require that we plan and perform an audit to obtain
reasonable  assurance  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.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1999
and 1998 and the  results  of its  operations  and its cash  flows for the years
ended December 31, 1999,  1998 and 1997 in accordance  with  generally  accepted
accounting principles in Canada.

Generally  accepted  accounting  principles in Canada differ in general respects
from those applicable in the United States (see Note 15).

                                         By:/s/McGOVERN, HURLEY,CUNNINGHAM, LLP
                                         --------------------------------------
                                         McGovern, Hurley, Cunningham, LLP
                                         Chartered Accountants

TORONTO, Canada
February 17, 2000,
except as to Note 17 which
is as of April 7, 2000




                                       F-2

<PAGE>

                            ALTAIR INTERNATIONAL INC.
                           CONSOLIDATED BALANCE SHEETS

                      (Expressed in United States Dollars)

<TABLE>
<CAPTION>

                                                                   December 31,
                                                                   ------------
                                                               1999          1998
                                                               ----          ----
                            ASSETS

<S>                                                       <C>            <C>
Current

     Cash and short-term investments                      $   153,580    $3,100,577
     Other current assets                                     980,453       130,642
                                                          -----------    ----------
                                                            1,134,033     3,231,219
Capital

     Property and equipment (Cost, net of amortization)
       (Note 4)                                             2,507,878       462,417

Patents and related expenditures
     (Cost, net of amortization) (Note 5)                  10,001,967     3,609,024

Mineral properties and related deferred exploration
     expenditures (Note 6)                                  2,021,052     1,399,802

Goodwill, net                                                   8,978         9,590
                                                          -----------    ----------
                         Total Assets                     $15,673,908    $8,712,052
                                                          ===========    ==========


                          LIABILITIES

Current

     Accounts payable and accrued liabilities             $   199,676    $  165,979
     Current portion of notes payable (Note 7)              7,363,600        73,533
                                                          -----------    ----------
                         Total Liabilities                  7,563,276       239,512
                                                          -----------    ----------

                     SHAREHOLDERS' EQUITY
Capital stock issued (Note 8)
     15,474,915 and 15,174,915 common shares at
     December 31, 1999 and 1998, respectively              18,324,963    16,462,463
Contributed surplus                                           655,098       655,098
Deficit                                                   (10,869,429)   (8,645,021)
                                                          -----------    ----------
                  Total Shareholders' Equity                8,110,632     8,472,540
                                                          -----------    ----------
          Total Liabilities and Shareholders' Equity      $15,673,908    $8,712,052
                                                          ===========    ==========


        See accompanying Notes to the Consolidated Financial Statements.
</TABLE>

                                       F-3

<PAGE>

                            ALTAIR INTERNATIONAL INC.
                CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

                      (Expressed in United States Dollars)

<TABLE>
<CAPTION>

                                                                   Year Ended December 31,
                                                         --------------------------------------------
                                                              1999            1998            1997
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Operating Expenses

     Wages and administration                           $    373,269    $    251,798    $    256,033
     Testing, research and development                       290,420         259,630          78,034
     Professional fees                                       252,337         236,549         293,883
     Shareholder relations                                   209,009         165,063         105,993
     General and office                                      134,949         108,785          74,266
     Travel                                                   97,663         106,661          87,777
     Occupancy costs                                          92,581          69,286          43,146
     Shareholders' meetings and reports                       92,414         119,497          96,308
     Insurance                                                57,580          58,951          48,120
     Government fees and taxes                                39,236          23,123          25,447
     Stock exchange fees                                      18,505          61,320           7,438
     Corporate services                                       12,170          10,625           8,166
     Transfer agent's fees                                     4,616          14,247          17,390
     Bank charges                                              1,580           2,272           1,589
     Loss on foreign exchange                                160,619          17,109         123,612
     Loss on disposal of fixed assets                           --             4,418            --
     Write off of mineral properties                          93,643            --              --
     Amortization                                            494,104         555,626         590,831
                                                        ------------    ------------    ------------
                                                           2,424,695       2,064,960       1,858,033
Interest on long-term debt                                     1,966          32,165          43,497
Interest income                                             (134,811)       (335,037)        (70,059)
                                                        ------------    ------------    ------------

Loss from operations                                       2,291,850       1,762,088       1,831,471
Premium on redemption of convertible debentures                 --           193,256            --
(Gain) on forgiveness of debt                                (67,442)        (25,805)           --
                                                        ------------    ------------    ------------


Net loss for the year                                      2,224,408       1,929,539       1,831,471
Deficit, beginning of the year                             8,645,021       6,303,879       3,956,564
Premium on conversion of convertible debentures                 --           244,915            --
Accretion of equity element of convertible debentures           --           144,801            --
Convertible debenture issuance costs                            --            21,887         515,844
                                                        ------------    ------------    ------------
Deficit, end of the year                                $ 10,869,429    $  8,645,021    $  6,303,879
                                                        ============    ============    ============

Basic net loss per share from operations (Note 12)      $      (0.15)   $      (0.13)   $      (0.13)
                                                        ============    ============    ============
Net loss per share from premium on redemption of
     convertible debentures                             $       --      $      (0.01)   $       --
                                                        ============    ============    ============
Net income per share from gain on forgiveness of debt   $       --      $       --      $       --
                                                        ============    ============    ============
</TABLE>

        See accompanying Notes to the Consolidated Financial Statements.

                                       F-4

<PAGE>

                            ALTAIR INTERNATIONAL INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                      (Expressed in United States Dollars)

<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                                  -----------------------
                                                             1999          1998          1997
                                                             ----          ----          ----
<S>                                                     <C>            <C>            <C>
Cash flows from operating activities
     Net loss for the year                              $(2,224,408)   $(1,929,539)   $(1,831,471)
     Items not involving cash:
          Amortization                                      494,104        555,626        590,831
          Gain on forgiveness of debt                       (67,442)       (25,805)          --
          Write off of mineral properties                    93,643           --             --
          Unrealized loss on foreign exchange               160,862           --             --
          Loss on disposal of fixed assets                     --            4,418           --
          Interest on long-term debt                           --            9,619           --
                                                        -----------    -----------    -----------
                                                         (1,543,241)    (1,385,681)    (1,240,640)
     Changes in non-cash working capital balances:

          Other current assets                              112,739        (99,450)       (17,637)
          Accounts payable and accrued liabilities           33,697        (61,459)        71,444
                                                        -----------    -----------    -----------

Net cash used in operating activities                    (1,396,805)    (1,546,590)    (1,186,833)
                                                        -----------    -----------    -----------

Cash flows from investing activities
     Acquisition of pigment processing technology        (2,422,763)          --             --
     Purchase of mineral properties and related
          deferred exploration expenditures                (714,893)      (793,251)      (480,248)
     Purchase of capital assets                            (231,550)      (146,211)      (237,283)
     Purchase of centrifugal jig patents and related
          expenditures                                      (37,398)      (168,572)       (46,701)
                                                        -----------    -----------    -----------

Net cash used in investing activities                    (3,406,604)    (1,108,034)      (764,232)
                                                        -----------    -----------    -----------
Cash flows from financing activities
     Issuance of common shares for cash, net of share
           issue costs                                    1,862,500           --             --
     Proceeds from exercise of stock options                   --          113,664      1,530,406
     Proceeds from exercise of warrants                        --             --          991,042
     Payment of notes payable                                (6,088)      (160,454)      (162,930)
     Issuance of convertible debentures                        --             --        5,000,000
     Convertible debenture issuance costs                      --          (21,887)      (515,844)
     Redemption of convertible debentures                      --       (2,337,892)          --
                                                        -----------    -----------    -----------
Net cash provided by (used in) financing activities       1,856,412     (2,406,569)     6,842,674
                                                        -----------    -----------    -----------

Net increase (decrease) in cash and short-term
investments                                              (2,946,997)    (5,061,193)     4,891,609

Cash and short-term investments, beginning of year        3,100,577      8,161,770      3,270,161
                                                        -----------    -----------    -----------

Cash and short-term investments, end of year            $   153,580    $ 3,100,577    $ 8,161,770
                                                        ===========    ===========    ===========
</TABLE>

                                       F-5

        See accompanying Notes to the Consolidated Financial Statements.


<PAGE>

                 Notes to the Consolidated Financial Statements

Note 1.  Basis of Presentation
------------------------------

The United States dollar is the principal currency in which the Company conducts
business;  accordingly, these consolidated financial statements are expressed in
United States dollars.

Note 2.  Summary of Significant Accounting Policies
---------------------------------------------------

These  consolidated   financial  statements  are  prepared  in  accordance  with
accounting  principles  generally  accepted in Canada.  As described in Note 15,
these  principles  differ in certain  respects  from  principles  and  practices
generally  accepted in the United  States.  Summarized  below are those policies
considered particularly significant for the Company.

Consolidation

The  financial   statements   include  the  accounts  of  the  Company  and  its
subsidiaries,  Mineral Recovery Systems, Inc., Fine Gold Recovery Systems, Inc.,
Altair  Technologies,  Inc, California Recovery Systems,  Inc., Tennessee Valley
Titanium, Inc. and 660250 Ontario Limited, all of which are 100% owned.

Nature of Operations

The Company and its  subsidiaries  are engaged in the business of (1)  producing
titanium dioxide products,  (2) developing mineral processing  equipment for use
in the recovery of fine and heavy mineral particles, including titanium, zircon,
gold and environmental  contaminants,  and (3) exploring and developing  mineral
properties in the United States.

Mineral  Properties  and  Related  Deferred  Exploration  Expenditures

Mineral  properties are carried at cost until they are brought into  production,
at which time they are depleted on a  unit-of-production  method based on proven
and  probable  reserves.  If a property  is  subsequently  determined  not to be
economic,  the  property  and related  deferred  costs are  written  down to net
realizable value.

Exploration  expenses,  as well as advance royalty payments  relating to mineral
properties  in which  the  Company  has an  interest,  are  deferred  until  the
properties  are brought into  production,  at which time they are amortized on a
unit-of-production  basis.  Other  general  exploration  expenses are charged to
operations  as incurred.  The cost of mineral  properties  abandoned or sold and
their  related  deferred  exploration  costs are  charged to  operations  in the
current year.

The Company  reviews its mineral  properties  on an annual basis to determine if
events or changes in  circumstances  have  transpired  which  indicate  that the
carrying value of its assets may not be recoverable. The recoverability of costs
incurred on the mineral  properties is dependent upon numerous factors including
exploration results,  environmental risks, commodity risks, political risks, and
the Company's ability to attain profitable production.  In reviewing its mineral
properties,  the Company estimates the future cash flows expected to result from
each  asset  and  its  eventual  disposition.  If the  sum of the  undiscounted,
expected  future  cash flow is less than the  carrying  value of the  asset,  an
impairment  loss is  recognized.  It is reasonably  possible,  based on existing
knowledge,  that changes in future  conditions in the near-term  could require a
change in the determination of the need for and amount of any writedown.

Administrative Expenditures

Administrative expenditures are charged to operations as incurred.

Short-term Investments

Surplus  cash of the Company is invested in a  diversified  portfolio  of United
States dollar-denominated money market instruments. These investments are liquid
and can be converted to cash at any time  through the public money  market.  The
carrying amount of the short-term investments approximates their market value.

                                       F-6

<PAGE>

Capital Assets and Amortization

Capital assets are stated at acquisition cost. Amortization is provided based on
the estimated useful life of the assets as follows:

      o    Furniture  and  office  equipment  - 3,  5 and 7  year  straight-line
      o    Vehicles - 5 year  straight-line
      o    Centrifugal  jig equipment - 7 year straight-line
      o    Jig  test  facility  - 7  year  straight-line
      o    Pigment production facility - 10 year straight-line


Effective  January 1, 1998, the Company  changed certain methods of amortization
from the declining balance method to the straight-line  method.  This change has
been  applied  prospectively.  The effect of the change on the reported net loss
for the year ended December 31, 1998 is not significant.

Patents and Related Expenditures

The Company  owns  patents with  respect to pigment  production  technology  and
centrifugal  jig  technology.  Patents are carried at  acquisition  cost and are
being amortized on a straight-line basis over their remaining lives.

The related  expenditures  are also being  carried at  acquisition  cost and the
amortization policies are as follows:

    Royalty agreement (Note 3(a))       - 15 year straight-line
    License agreement                   - Straight-line over the remaining life
                                          of the related patent
    Mineral recovery technology rights  - Straight-line over the remaining life
                                          of the related patent

The Company  reviews its patents and related  expenditures on an annual basis to
determine if events or changes in  circumstances  have transpired which indicate
that the carrying value of its assets may not be recoverable.  In performing its
review, the Company estimates the future cash flows expected to result from each
asset and its  eventual  disposition.  If the sum of the  undiscounted  expected
future cash flow is less than the  carrying  value of the asset,  an  impairment
loss is recognized. It is reasonably possible, based on existing knowledge, that
changes in future conditions in the near-term affecting the operating capability
and/or  marketability  of the pigment  processing  facility and  centrifugal jig
could  require a change in the  determination  of the need for and amount of any
writedown.

Research and Development Expenditures

Research and development expenditures are charged to operations as incurred.

Goodwill

Goodwill is the excess of the cost of the  investment in  subsidiaries  over the
estimated  fair  value  of  the  net  assets  acquired  and  is  amortized  on a
straight-line basis over 20 years. Goodwill is written down (to fair value) when
declines in value are considered  other than temporary  based on expected future
cash flows of the respective subsidiary.

Foreign Currency Translation

The Company's consolidated  operations are integrated and amounts denominated in
currencies  other than U.S.  dollars are translated into U.S.  dollars using the
temporal  method.  This  method  translates  monetary  balances  at the  rate of
exchange at the balance sheet date, non-monetary balances at historical exchange
rates and revenue and expense  items at average  exchange  rates.  The resulting
gains and losses are included in income (loss) in the reporting period.

Use of Estimates

The  preparation  of  consolidated   financial  statements  in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of contingent  assets and liabilities at the date of the consolidated
financial  statements  and the related  reported  amounts of revenue and expense
during the report  period.  Actual  results  could differ from those  estimates.
Management believes that the estimates are reasonable.

                                       F-7

<PAGE>

Financial Instruments

The carrying  amounts for other  current  assets,  accounts  payable and accrued
liabilities,  and notes  payable on the balance  sheets  approximate  fair value
because of the limited term of these instruments.  Fair value estimates are made
at the balance sheet date based on relevant  market  information and information
about the financial  instrument.  These  estimates are  subjective in nature and
involve uncertainties in significant matters of judgment and therefore cannot be
determined with precision.  Changes in assumptions  could  significantly  affect
these estimates.

Income Taxes

In fiscal  1999,  the  Company  adopted  the  Canadian  Institute  of  Chartered
Accountants'  recommendations  for  the  accounting  of  income  taxes.  The new
standard  requires the use of the asset and liability  method of accounting  for
income  taxes.  Under the asset and  liability  method,  future income taxes are
recognized for the future income tax  consequences  attributable  to differences
between the financial  statement carrying values and their respective income tax
basis  (temporary  differences).  Future income tax assets and  liabilities  are
measured  using enacted  income tax rates expected to apply to taxable income in
the  years in which  temporary  differences  are  expected  to be  recovered  or
settled.  The effect on future income tax assets and  liabilities of a change in
tax rates is included in income in the period that includes the enactment  date.
Future income tax assets are evaluated and if realization is not considered more
likely than not, a valuation  allowance  is  provided.  Previously,  the Company
followed the  deferral  method of  accounting  for income taxes that related the
provision for income taxes to the accounting income for the period.

As at December 31, 1999, the valuation  allowance is equal to 100% of the future
income tax asset. There is no effect on prior years' figures as a result of this
change in accounting policy.

Note 3.  Acquisitions
---------------------

(a)      Intercontinental Development Corporation

In 1996,  the  Company  purchased  66% of the issued and  outstanding  shares of
Intercontinental  Development  Corporation ("INDECO") for total consideration of
$319,298. The acquisition was accounted for using the purchase method. From 1997
through 1999, the Company  acquired the remaining 34% of INDECO shares for total
consideration  of $105,584.  The entire  amount of the  purchase  price has been
allocated to the Centrifugal Jig Royalty Agreement.  INDECO, which was dissolved
in 1999, had as its sole asset a royalty agreement  entitling the corporation to
10% of the cost of  manufacturing  any  Centrifugal  Jigs which  were  placed in
production, sold or exploited for profit worldwide.

(b)      Pigment Production Technology and Assets

As of November 15,  1999,  the Company  entered into an Asset  Purchase and Sale
Agreement (the "Asset Purchase Agreement") with BHP Minerals  International Inc.
("BHP")  pursuant to which it purchased all patents and technology  related to a
hydrometallurgical  process  developed by BHP  primarily  for the  production of
titanium  dioxide  products  from  titanium  bearing ores or  concentrates  (the
"Technology"),  all tangible  equipment  and other assets used by BHP to develop
and  implement  the  Technology  (the  "Assets") and the use for one year of the
services of the BHP personnel presently developing the Technology.

The  purchase  price for the  Technology  and Assets was  15,000,000  Australian
Dollars (AUD$) and is payable in four equal installments.  The first installment
was paid at closing and the second  payment,  which was  originally due February
15, 2000, has been rescheduled by Letter of Amendment,  with interest at 15% per
annum, until May 15, 2000. The remaining two payments are due and payable on May
15, 2000 and August 15, 2000.  If the Company  fails to pay any of the remaining
three installments,  it will forfeit to BHP, without a right to reimbursement of
any amount of the purchase price paid to date, all right,  title and interest in
the Technology and Assets.

The Asset Purchase  Agreement also requires the Company to pay to BHP, until the
earlier  of the  fifteenth  anniversary  of  November  15,  1999 or the date the
Company has paid an aggregate  royalty of  AUD$105,000,000,  a quarterly royalty
equal to:

                                       F-8

<PAGE>

    o    1.5% of the international market price of all uncoated titanium dioxide
         pigment  produced and sold as a result of the use of the  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 titanium dioxide
         pigment  produced and sold as a result of the use of the  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 titanium dioxide
         pigment  produced and sold as a result of the use of the  Technology by
         the Company or a transferee  of the Company at any location  other than
         the  Tennessee  mineral  property or the  Auckland,  New Zealand  heavy
         mineral sand operation; and

    o    3% of the sales proceeds received by the Company or a transferee of the
         Company  from the sale of any  products  other  than  titanium  dioxide
         pigment produced through the Company's use of the Technology.

In addition,  in connection with the Asset Purchase  Agreement,  the Company and
BHP entered into a lease dated November 15, 1999,  pursuant to which the Company
will 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
initial term of the lease  expires on December  31,  2000,  subject to automatic
renewals for six-month  periods at  inflation-adjusted  rent until terminated by
the Company.  The lease grants the Company a right of first refusal in the event
BHP intends to sell the building and property subject to the lease.

The  Assets  have  been  recorded  in the  capital  asset  accounts  as  pigment
production  facility (see Note 4), and the  Technology  has been recorded in the
patents accounts as pigment production patents (see Note 5).

Note 4.  Capital Assets
-----------------------
<TABLE>
<CAPTION>

                                           December 31, 1999                      December 31, 1998
                                           -----------------                      -----------------
                                             Accumulated                           Accumulated
                                  Cost      Amortization      Net         Cost      Amortization    Net
                                ------------------------------------        --------------------------------
<S>                           <C>          <C>          <C>          <C>          <C>          <C>
Furniture and office

  equipment                   $   76,228   $   42,952   $   33,276   $   65,538   $   28,325   $   37,213
Vehicles                         125,031       68,119       56,912       92,629       44,499       48,130
Centrifugal jig
  equipment                      333,028      154,523      178,505      333,028      111,674      221,354
Jig testing facility              45,128       18,583       26,545       45,128       12,555       32,573
Pigment production
  facility                     1,925,100       24,064    1,901,036         --           --           --
Centrifugal jigs
under
  construction                   311,604         --        311,604      123,147         --        123,147
                              ------------------------------------   -------------------------------------
                              $2,816,119   $  308,241   $2,507,878   $  659,470   $  197,053   $  462,417
                              ====================================   =====================================
</TABLE>

                                       F-9

<PAGE>

Note 5.  Patents and Related Expenditures
-----------------------------------------
<TABLE>
<CAPTION>

                                              December 31, 1999                           December 31, 1998
                                   ------------------------------------------- -------------------------------------
                                                 Accumulated                                Accumulated
                                        Cost     Amortization       Net            Cost    Amortization        Net
                                   ---------------------------------------     -------------------------------------
<S>                                <C>           <C>           <C>           <C>           <C>           <C>
Pigment production

  patents                          $ 6,773,400   $    55,228   $6 ,718,172   $      --     $      --     $      --

Centrifugal jig

  patents                            4,223,800     1,601,052     2,622,748     4,182,262     1,332,821     2,849,441

Royalty agreement                      424,881        88,588       336,293       424,604        59,265       365,339

Mineral recovery

  technology rights                    243,000        37,385       205,615       243,000        18,692       224,308

License agreement                      136,004        16,865       119,139       136,004         6,036       129,968

Patent application                        --            --            --          39,968          --          39,968
                                   ---------------------------------------      -------------------------------------

                                   $11,801,085   $ 1,799,118   $10,001,967   $ 5,025,838   $ 1,416,814   $ 3,609,024
                                   =======================================   ========================================
</TABLE>

Note 6.  Mineral Properties and Related Deferred Exploration Expenditures
-------------------------------------------------------------------------

The Company's  subsidiary,  Mineral Recovery Systems,  Inc. ("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                                Amount
                           ----                                ------
                           2000                              $  90,992
                           2001                                152,116
                           2002                                194,513
                           2003                                212,289
                           2004                                423,736
                           2005 and every year thereafter      430,132

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.  During the years ended December 31,
1999 and 1998, approximately $715,000 and $793,000,  respectively,  was incurred
on exploration.

Note 7.  Notes Payable
----------------------
<TABLE>
<CAPTION>

                                                           1999            1998
                                                       ------------    ------------
<S>                                                   <C>              <C>
Note payable to BHP Minerals International, Inc.,
  $4,903,600 due May 15, 2000, $2,460,000 due

   August 15, 2000 (Note (a))                         $  7 ,363,600    $       -

Notes payable assumed from Trans Mar, Inc.,
  interest payable at various rates,
  unsecured, principal and interest due
  December 31, 1999                                       --              67,442
Note payable, interest payable at 10% per
 annum, unsecured,  blended payments of
  $2,000 per month, due April 1, 1999                     --               6,091
                                                       ------------    ------------
                                                      $   7,363,600    $  73,533
                                                       ============    ============
</TABLE>

                                      F-10

<PAGE>

(a)Interest is due on  $2,443,600 at 15% per annum from February 16, 2000 to May
   15, 2000.  The remainder of payments are interest free and secured by pigment
   production equipment and patents having a net book value of $8,619,208.

Note 8.  Capital Stock
----------------------

Authorized  capital stock of the Company is comprised of an unlimited  number of
Common Shares. Details of issued and outstanding shares are as follows:

<TABLE>
<CAPTION>

                                                                 Shares           Amount

                                                               -----------    -----------
<S>                                                             <C>            <C>
Balance, December 31, 1996                                      14,686,296    $11,373,259
Exercise of stock options                                          362,500      1,530,406
Exercise of warrants                                               411,229        991,042
Common shares issued on warrants exercised in December 1996         32,720         47,746
                                                               -----------    -----------
Balance, December 31, 1997                                      15,492,745     13,942,453
Exercise of stock options                                           17,500        113,664
Common shares issued on conversion of convertible debentures       387,735      3,061,443
Common shares canceled pursuant to settlement agreement
  with former TMI shareholders                                    (723,065)      (655,097)
                                                               -----------    -----------
Balance, December 31, 1998                                      15,174,915     16,462,463
Common shares issued for cash                                      300,000      1,862,500
                                                               -----------    -----------
Balance, December 31, 1999                                      15,474,915    $18,324,963
                                                               ===========    ===========
</TABLE>

Prospectus

Pursuant to a prospectus dated March 17, 1999, the Company issued 300,000 common
shares and 150,000 warrants for net proceeds of $1,862,500.

Stock Options

As of December 31, 1999,  3,060,000  Common  Shares are reserved for issuance to
directors,  officers and employees under the Company's  stock option plans.  The
following  table  summarizes  the  status  of  stock  options   outstanding  and
exercisable as of December 31, 1999:

<TABLE>
<CAPTION>

                                 Stock Options Outstanding         Stock Options Exercisable
                          ---------------------------------------- ---------------------------
                                          Weighted

                                          Average      Weighted                   Weighted
                                         Remaining     Average                     Average
             Range of                   Contractual    Exercise                   Exercise
          Exercise Prices    Shares     Life (Years)    Price         Shares        Price
          ---------------    ------     ------------    -----         ------        -----
<S>       <C>               <C>             <C>          <C>          <C>           <C>
          $2.56 to $4.13    550,000         2.0          2.98         500,000       2.87
          $4.38 to $4.94    860,000         4.8          4.46         202,500       4.55
          $5.82 to $7.50    945,000         3.5          7.07         765,000       7.01
          $8.00 to $10.00   705,000         3.7          8.83         367,500       8.36
</TABLE>

The number of Common  Shares  available  for the granting of options at December
31, 1999 and 1998 was 358,000 and 1,453,000,  respectively.  The following table
summarizes stock option activity for the years ended December 31, 1999 and 1998:

                                      F-11

<PAGE>

                                                       1999             1998
                                                   ----------        ----------
Outstanding at beginning of year                    1,965,000           962,500
Granted during the year                             1,550,000         1,020,000
Cancelled                                            (455,000)             --
Exercised at an average price of
     $9.26 (1998)                                        --             (17,500)
                                                   ----------        ----------
Outstanding at end of year                          3,060,000         1,965,000
                                                   ==========        ==========
Currently exercisable                               1,835,000         1,540,000
                                                   ==========        ==========

Warrants

As of December 31, 1999, there were 150,000 warrants issued and outstanding,  of
which 125,000  warrants entitle the holder to purchase one Common Share at $9.00
per share on or before  the  earlier  of March 19,  2002 and the date that is 30
days  following  the fifth day the closing  price  equals or exceeds  $14.00 per
share and 25,000  warrants  entitle the holder to purchase  one Common  Share at
$6.00 per share on or before the earlier of November  30, 2002 and the date that
is 30 days following the fifth day the closing price equals or exceeds $8.00 per
share.

Note 9.  Convertible Debentures
--------------------------------

On December 29, 1997, the Company 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  of the  Company  annually  or upon
conversion or maturity,  at the  discretion  of the Company.  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 (i) 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 (ii)
$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.

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.  The  conversions  were made at a
conversion price rate equal to 92% of the average price of the Common Shares for
the five trading days prior to  submission  of the notice of  conversion  by the
holders. These conversions resulted in the issuance of 387,735 Common Shares.

On August 28, 1998,  the Company  elected to redeem the remaining  $2,250,000 of
Debentures using cash previously invested in short-term  instruments.  The total
cash required to redeem the Debentures, including the 10% redemption premium and
accrued interest,  was $2,550,938.  As of December 31, 1999, all of the warrants
had expired unexercised.

Note 10.  Commitments
---------------------

Under the current  employment  agreement  between the Company and its president,
Dr. William P. Long,  Dr. Long is entitled to receive  payment of 200,000 Common
Shares  in the event  (i)  voting  control  of over 35% of the  issued  stock is
acquired  by a person or group of  persons  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 the Company
for cause, or at the end of the term.

Note 11.  Net Loss per Share
----------------------------

The  calculation  of basic net loss per share  from  operations  is based on the
weighted average number of Common Shares outstanding for the year. Net loss used
in the  calculation  is loss from  operations  increased by the accretion of the
equity element of convertible subordinated debentures.

                                      F-12

<PAGE>

                                             1999          1998         1997
                                          ----------    ----------    ----------
Loss from operations                     $ 2,291,850   $ 1,762,088    $1,831,471
Accretion of equity element of
  convertible debentures                        --         144,801          --
                                          ----------    ----------    ----------
                                         $ 2,291,850   $ 1,906,889    $1,831,471
                                          ==========    ==========    ==========
Weighted average number of
  common shares                           15,374,093    15,143,020    14,366,457
                                          ==========    ==========    ==========
Basic net loss per share
  from operations                        $      0.15   $      0.13    $     0.13
                                          ==========    ==========    ==========

The existence of stock options,  warrants and convertible debentures affects the
calculation  of loss per share on a fully diluted  basis.  As the effect of this
dilution is to reduce the reported  loss per share,  the fully  diluted loss per
share has not been presented.

Note 12.  Income Taxes
----------------------

As  of  December  31,  1999,  the  Company  has  approximately  $  7,500,000  of
non-capital  losses carried forward for income tax purposes which, under certain
circumstances,  are  available to reduce  future years' income for tax purposes.
Approximately $ 7,300,000 of these losses are subject to expiration beginning in
2003.

Note 13.  Concentration of Credit Risk
--------------------------------------

As of December 31,  1999,  the Company had  $115,044  invested in a  diversified
portfolio of United States  dollar-denominated  money market  instruments in the
United States.  This  portfolio is neither  insured nor guaranteed by the United
States Government.

Note 14.  Statements of Cash Flows
----------------------------------

Non-Cash Investing and Financing Activities

Year ended  December  31,  1999:  There were no non-cash  investing or financing
activities.

Year ended December 31, 1998:  Convertible  debentures having a principal amount
of $2,750,000 and accrued interest of $66,528 were converted into 387,735 Common
Shares with a fair market value of $3,061,444.

Year ended  December  31,  1997:  There were no non-cash  investing or financing
activities.

Cash and Cash Equivalents

The cash and  short-term  investments  on hand as of December 31, 1999 represent
cash and a  diversified  portfolio  of United  States  dollar-denominated  money
market instruments which is considered cash equivalent.

Supplemental Information

                                    1999            1998             1997
                                    ----            ----             ----

Interest paid                     $  1,966       $  32,165       $   43,497

Interest received                  134,811         335,037           70,057


Note 15.  Differences  Between  Canadian and United  States  Generally  Accepted
Accounting  Principles
----------------------

The Company  prepares  its accounts in  accordance  with  accounting  principles
generally  accepted in Canada ("Canadian  GAAP") which conform,  in all material
respects,  with accounting  principles  generally  accepted in the United States
("U.S. GAAP"), except as described below.

Development Stage Company

As of December 31, 1999 the Company  would be  characterized  as a  "development
stage  enterprise"  under U.S.  GAAP in accordance  with  Statement of Financial
Accounting  Standards  No. 7 ("SFAS  7").  Under  Canadian  GAAP,  there  are no

                                      F-13

<PAGE>

requirements for the indication or reporting of development stage entities.  The
following is a summary of the deficit  accumulated  during the development stage
prepared in accordance with SFAS 7:

                                                     Accumulated deficit
                                                          during the
                                                      development stage
                                                      -----------------
Professional fees                                       $  1,604,549
Salaries and wages                                         2,245,499
Shareholders' expenses                                     1,291,838
Office and general                                         2,549,845
Loss on sale of mining claims                                101,047
Amortization                                               2,031,656
Interest on long-term debt                                    97,001
Write off of mineral properties and related
     deferred exploration expenditures                     1,385,997
Write off of organization costs                                8,563
                                                        ------------
                                                          11,315,995

Less:
     Interest income                                        (581,420)
     Gain on sale of marketable securities                   (35,773)
     Lease payments                                         (143,754)
     Gain on forgiveness of debt                            (795,973)
     Option payments                                         (70,906)
                                                        ------------
Total accumulated loss                                     9,688,169
Convertible debenture costs                                  537,731
Share issue costs                                             60,557
Accretion of equity element of convertible debentures        144,801
Premium on conversion of convertible debentures              244,915
Premium on redemption of convertible debentures              193,256
                                                        ------------
Accumulated deficit, December 31, 1999                  $ 10,869,429
                                                        ============


Foreign Currency Translation

In Canada and the United States,  a distinction is made between the  measurement
and accounting for an enterprise's own transactions in a foreign  currency.  The
Company  remeasures its books and records into the functional  currency prior to
translation  into the reporting  currency.  The Company  maintains its books and
records in Canadian dollars and the U.S.  subsidiaries  maintain their books and
records in United States dollars.  The remeasurement of the Company's  financial
statements  according  to  U.S.  GAAP  would  not  change  the  results  of  the
consolidated financial statements prepared in accordance with Canadian GAAP.

Stock Options

Under Canadian  GAAP,  there is no  requirement  to record  compensation  on the
issuance  of  stock  options  to  employees  or  directors.   Under  U.S.  GAAP,
compensation would be accrued on the date of granting of the options, calculated
as the difference between the market price and exercise price on the date of the
grant. For the fiscal years ended December 31, 1999 and 1998, the exercise price
of all stock options  granted has been equal to or greater than the market price
on the date of the grant and  therefore  the  compensation  cost under U.S. GAAP
would be nil.

Reconciliation to Accounting Principles Generally Accepted in the United States

Convertible  debenture  issuance  costs are added to the deficit under  Canadian
GAAP,  but  would be  recorded  as  deferred  financing  costs (an  asset),  and
amortized to expense,  under U.S. GAAP. The Company  incurred  issuance costs of
$21,887 in 1998 and  $515,844  in 1997 that have been  charged to deficit  under
Canadian  GAAP.  Under U.S.  GAAP,  the balance sheet at December 31, 1997 would
include a deferred financing cost asset of $515,844 but this amount and the 1998
charges of $21,887 would be charged to expense in 1998 due to the redemption and
conversion  of the  Debentures  during the year (see Note 9).  Also,  under U.S.
GAAP,  the premium on conversion of  convertible  debentures  ($144,801) and the
accretion of equity element of convertible debentures ($244,915) would be

                                      F-14

<PAGE>

expensed in the Statements of Operations.  The following  reflects  amounts that
would have been reported had the  Company's  consolidated  financial  statements
been prepared on the basis of U.S. GAAP:
<TABLE>
<CAPTION>

                                                1999             1998            1997
                                          ----------------- ----------------- -----------------
<S>                                        <C>             <C>             <C>
Convertible debenture issuance costs       $       --      $    537,731    $       --
Premium on conversion of convertible
     debentures                                    --           244,915            --
Accretion of equity element of
     convertible debentures                        --           144,801            --
Net loss for the year                         2,224,408       2,856,986       1,831,471
Deficit, beginning of year                    8,645,021       5,788,035       3,956,564
Deficit, end of year                         10,869,429       8,645,021       5,788,035
Basic net loss per share from operations   $      (0.15)   $      (0.19)   $      (0.13)
</TABLE>

There are no other material differences between Canadian GAAP and U.S. GAAP.


Note 16.  Uncertainty Due to the Year 2000 Issue
------------------------------------------------

The Year 2000 Issue  arises  because  many  computerized  systems use two digits
rather than four to identify a year.  Date-sensitive  systems may  recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed.  In addition,  similar  problems may arise in some
systems  which use certain  dates in 1999 to  represent  something  other than a
date.  Although the change in date has occurred,  it is not possible to conclude
that all  aspects of the Year 2000 Issue that may affect the  entity,  including
those related to customers,  suppliers,  or other third parties, have been fully
resolved.

Note 17.  Subsequent Events
---------------------------

         (a)      Pursuant to three stock purchase  agreements  dated subsequent
                  to the year end, the Company  issued 125,000 Common Shares and
                  62,500  warrants for gross proceeds of $500,000.  Each warrant
                  entitles the holder to purchase one Common Share at a price of
                  $6.00  per  share  on or  before  the  earlier  of  the  third
                  anniversary  and the date that is 30 days  following the fifth
                  day the closing price equals or exceeds $8.00 per share.

         (b)      Pursuant to a stock  purchase  agreement  dated March 3, 2000,
                  the Company issued  166,667 Common Shares and 83,333  warrants
                  for gross  proceeds of $1 million.  Each warrant  entitles the
                  holder to  purchase  one Common  Share at a price of $8.00 per
                  share on or before  the  earlier of March 3, 2004 and the date
                  that is 30 days  following  the  fifth day the  closing  price
                  equals or exceeds $10.00 per share.

         (c)      Subsequent  to  the  year  end,   71,300  stock  options  were
                  exercised for total proceeds of $335,778.

         (d)      On March 31, 2000,  the Company  entered into a stock purchase
                  and equity line of credit agreement with an investor. Pursuant
                  to the common stock purchase agreement, the Company has issued
                  1,251,303   Common  Shares  and  250,261  warrants  for  gross
                  proceeds of $ 6 million before  deducting  estimated  costs of
                  the issue of $455,000 and 75,085 warrants.

                  Each warrant  entitles the holder to purchase one Common Share
                  at a price of $6.76 on or before April 7, 2003.

                  The  1,251,303  Common  Shares  are  subject  to a  "repricing
                  period" of 120 days. During the repricing  period,  additional
                  shares may be issued  through a reset  provision that compares
                  market price in the repricing  period to an adjusted  original
                  issue price.

                  Pursuant to the equity line of credit agreement,  the investor
                  will purchase up to $10 million of the Company's Common Shares
                  over an 18-month period at a discounted  market price based on
                  the five lowest  closing  bid prices of the Common  Shares for
                  the ten trading  days  following  the  Company's  notice.  The
                  timing and amounts of the purchases  are at the  discretion of
                  the Company.  Each additional  purchase may be no greater than
                  66.7% of the average daily  weighted  dollar trading volume of
                  the  Common  Shares  for the twenty  days  preceding  both the
                  notice and closing of the purchase.  In addition,  the average
                  market value during the same twenty day period must be greater
                  than $2.00 per share.

Common Stock
------------

United States

The Company's  Common Shares began trading through the Nasdaq National Market on
January 23, 1998 under the symbol "ALTIF". From March 24, 1997 until January 23,
1998,  the Common  Shares  traded  under the same symbol on the Nasdaq  SmallCap
Market.  Prior to March 24, 1997,  the Common  Shares traded on the OTC Bulletin
Board under the symbol  "AIDGF".  On  December  31,  1999,  the number of record
holders  was 471 and the  Company  estimates  that on that date there were 9,600
beneficial owners.

The Company has never declared or paid dividends on its Common Shares. Moreover,
the  Company  currently  intends to retain any  future  earnings  for use in the
business and,  therefore,  does not  anticipate  paying  dividends on its Common
Shares in the foreseeable future.

The following  table sets forth,  on a quarterly  basis,  the high and low sales
prices during the last two fiscal years for the Common  Shares as reported.  The
prices reported do not include retail mark-up,  mark-down or commissions and may
not reflect actual transactions.

                                      F-15

<PAGE>

For the Fiscal Year Ended:          December 31, 1999       December 31, 1998
(In U.S. Dollars)                   -----------------       -----------------
                                 High          Low           High          Low

First Quarter                   $  9.88       $ 6.06        $15.63       $ 8.13
Second Quarter                  $  6.88       $ 4.13        $  9.63      $ 7.00
Third Quarter                   $  5.00       $ 3.88        $10.25       $ 3.00
Fourth Quarter                  $  5.06       $ 3.45        $  8.63      $ 5.88

Canada

In Canada,  the Common  Shares were traded under the symbol "AIL" on the Alberta
Stock  Exchange  (the "ASE")  through  April 23, 1998.  The Company  voluntarily
removed the Common  Shares from the ASE on that date due to  increased  focus on
operations in the United States and diminishing trading volume on the ASE.

Exchange Rate Information

The following exchange rates represent the noon buying rate in New York City for
cable transfers in Canadian dollars,  as certified for Customs purposes,  by the
Federal  Reserve Bank of New York.  The table sets forth,  for each of the years
indicated,  the period-end  exchange rate, the average  exchange rate (i.e., the
average of the exchange  rates on the last day of each month during the period),
and the high and low  exchange  rates of the U.S.  dollar  in  exchange  for the
Canadian dollar for the years indicated, based on the noon buying rates:

<TABLE>
<CAPTION>

For the Year Ended December 31,           1999      1998         1997      1996       1995
(Canadian Dollar per U.S. Dollar)         ----      ----         ----      ----       ----
<S>                                      <C>        <C>         <C>       <C>        <C>
High                                     1.5302     1.5770      1.4398    1.3822     1.4238
Low                                      1.4440     1.4075      1.3392    1.3310     1.3285
Average                                  1.4827     1.4894      1.3849    1.3638     1.3725
Year-End                                 1.4440     1.5375      1.4288    1.3697     1.3655
</TABLE>

Canadian Taxation Considerations

Dividends paid on Common Shares of the Company owned by  non-residents of Canada
are  subject  to  Canadian  withholding  tax.  The  rate of  withholding  tax on
dividends under the Income Tax Act (Canada) (the "Act") is 25%. However, Article
X of the reciprocal  treaty between Canada and the United States of America (the
"Treaty")  generally  limits the rate of  withholding  tax on dividends  paid to
United States residents to 15%. The Treaty further  generally limits the rate of
withholding  tax to 5% if  the  beneficial  owner  of  the  dividends  is a U.S.
corporation that owns at least 10% of the voting shares of the subject company.

If the beneficial  owner of the dividend carries on business in Canada through a
permanent  establishment in Canada, or performs in Canada  independent  personal
services  from a fixed base in Canada,  and the shares of stock with  respect to
which the  dividends  are paid are  effectively  connected  with such  permanent
establishment  or fixed base,  the  dividends  are taxable in Canada as business
profits at rates  which may exceed the 5% or 15% rate  applicable  to  dividends
that are not so connected with a Canadian permanent establishment or fixed base.
Under the  provisions  of the treaty,  Canada is permitted to apply its domestic
law rules for differentiating dividends from interest and other disbursements.

A capital gain realized on the  disposition of Common Shares of the Company by a
person resident in the United States (a  "non-resident")  will be subject to tax
under the Act if the  shares  held by the  non-resident  are  "taxable  Canadian
property".  In general,  Common Shares will be taxable Canadian  property if the
particular  non-resident used (or in the case of a non-resident insurer, used or
held) the Common  Shares in  carrying  on  business  in Canada or,  pursuant  to
proposed  amendments to the Act,  where at any time during the five-year  period
immediately  preceding  the  realization  of the gain,  not less than 25% of the
issued and  outstanding  shares of any class or series of shares of the  Company
were owned by the particular  non-resident,  by persons with whom the particular
non-resident did not deal at arm's length, or by any combination thereof. If the
Company's   Common  Shares   constitute   taxable  Canadian   property,   relief
nevertheless may be available under the Treaty. Under the Treaty, gains from the
alienation of Common Shares owned by a non-resident  who has never been resident
in Canada generally will be exempt from Canadian capital gains tax if the shares
do not relate to a permanent  establishment or fixed base which the non-resident
has or had in  Canada,  and if not more than 50% of the value of the  shares was
derived from real property  (which  includes rights to explore for or to exploit
mineral deposits) situated in Canada.

                                      F-16

<PAGE>