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                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, 2004

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE  ACT OF 1934 FOR THE  TRANSITION  PERIOD FROM  _______________  TO
     ---------------
                          ALTAIR NANOTECHNOLOGIES INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         Canada                       1-12497                 33-1084375
--------------------------     ----------------------     ---------------------
     (State or other           (Commission File No.)        (IRS Employer
      jurisdiction                                        Identification No.)
    of incorporation)
                                 204 Edison Way
                             Reno, Nevada 89502-2306
          ------------------------------------------------------------
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (775) 856-2500

[ ]  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 SmallCap 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. [ ]

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). YES [] NO [X]

     The aggregate market value of the common shares held by  non-affiliates  of
the  Registrant on June 30, 2004,  based upon the average bid and asked price of
the common shares on the NASDAQ SmallCap Stock Market of $2.30 per share on June
30, 2004, was approximately $111,914,000;  however, the Registrant satisfied the
"small business issuer" requirements as of December 31, 2004, and,  accordingly,
is not an accelerated filer. 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 February 16, 2005,  the  Registrant had 57,993,975  common
shares outstanding.
                      DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Registrant's Proxy Statement on Schedule 14A for the
       Registrant's 2005 Annual Meeting of Shareholders are incorporated
                     by reference in Part III as specified.
<PAGE>

<TABLE>
<CAPTION>

                               INDEX TO FORM 10-K


<S>                                                                                                         <C>
PART I.......................................................................................................3

Item 1:    Business..........................................................................................3

Item 2.    Properties.......................................................................................26

Item 3.    Legal Proceedings................................................................................27

Item 4.    Submission of Matters to a Vote of Security Holders..............................................27


PART II.....................................................................................................28

Item 5.    Market for the Common Shares and Related Shareholder Matters.....................................28

Item 6.    Selected Financial Data..........................................................................30

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations............31

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.......................................40

Item 8.    Financial Statements and Supplementary Data......................................................40

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............41

Item 9A.   Controls and Procedures..........................................................................41

Item 9B.   Other Information................................................................................41


PART III....................................................................................................42

Item 10.   Directors and Executive Officers of the Registrant...............................................42

Item 11.   Executive Compensation...........................................................................42

Item 12.   Security Ownership of Certain Beneficial Owners and Management...................................42

Item 13.   Certain Relationships and Related Transactions...................................................42

Item 14.   Principal Accountant Fees and Services...........................................................42


PART IV.....................................................................................................43

Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K..................................43

</TABLE>

<PAGE>
                                     PART I

         This Annual  Report on Form 10-K for the year ended  December  31, 2004
(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  Securities  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  shares") of Altair  Nanotechnologies
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 "SEC")  describing  other factors that may affect
future results of the Company.

         Unless the context  requires  otherwise,  all  references  to "Altair,"
"we," "Altair  Nanotechnologies  Inc.," or the "Company" in this Form 10-K refer
to Altair  Nanotechnologies  Inc. and all of its subsidiaries.  Altair currently
has one wholly-owned subsidiary, Altair US Holdings, Inc., a Nevada corporation.
Altair  US   Holdings,   Inc.   directly  or   indirectly   wholly-owns   Altair
Nanomaterials,  Inc., a Nevada  corporation,  Mineral Recovery Systems,  Inc., a
Nevada  corporation  ("MRS"),  Fine  Gold  Recovery  Systems,   Inc.,  a  Nevada
corporation  ("Fine  Gold")  and  Tennessee  Valley  Titanium,  Inc.,  a  Nevada
corporation.

Item 1:      Business

         We are a Canadian company,  with principal assets and operations in the
United  States,   whose  primary  business  is  developing  and  commercializing
nanomaterial and titanium dioxide pigment technologies. We also provide contract
research  services on select  projects  where we can utilize  our  resources  to
develop  intellectual  property  and/or new  products  and  technology.  We have
recently  organized  into  two  divisions,   a  Life  Sciences  Division  and  a
Performance  Materials  Division,  in  anticipation  of generating a substantial
amount  of  business   activity  and  revenues  from  life  sciences   products,
specifically  pharmaceuticals and drug delivery products.  During 2004, revenues
from life science  products were not  significant.  Our  research,  development,
production  and  marketing  efforts  are  currently  directed  toward six market
applications that utilize our proprietary technologies:

The Performance Materials Division

     o   Advanced Materials for Paints, Coatings and Sensors
         o    The production of titanium dioxide pigments;
         o    The  production  of  nano-structured  powders  for  thermal  spray
              applications;
         o    The  production  of   nano-structured   powders  for   nano-sensor
              applications.
     o   Advanced Materials for Improving Process Technologies
         o    The  development  of  titanium  dioxide  electrode  structures  in
              connection   with  a  research   program  aimed  at  developing  a
              lower-cost  process  for  producing  titanium  metals and  related
              alloys;
         o    The development  and production of NanoCheck TM phosphate  binding
              materials for prevention of algae growth.
     o   Advanced Materials for Alternative Energy
         o    The development of materials for high performance batteries,  fuel
              cells and photovoltaics.
The Life  Sciences  Division
     o    Pharmaceutical Products

                                       3
<PAGE>
         o    The  co-development of RenaZorb(TM),  a new active  pharmaceutical
              ingredient,  which is  designed to be useful in the  treatment  of
              elevated  serum  phosphate  levels in patients  undergoing  kidney
              dialysis.
     o   Drug Delivery  Products
         o    The development of TiNano SpheresTM are rigid, hollow, porous high
              surface  area  ceramic  micro  structures  that are  derived  from
              Altair's proprietary process technology.
     o   Dental Materials
         o    The development of  nanomaterials  for use in various products for
              dental fillings.

         We also provide contract  research services on select projects where we
can utilize our resources to develop  intellectual  property and/or new products
and technology.

Our Nanomaterials and Titanium Dioxide Pigment Business

Background and Description of Process

          Most  of  our  existing  products,  potential  products  and  contract
research  services  are built upon our  proprietary  nanomaterials  and titanium
dioxide pigment  technology.  We acquired the basis for this technology from BHP
Minerals  International,  Inc.  in 1999  and,  over the past  five  years,  have
continued to expand and refine various applications of the technology. Today, we
use the technology in order to produce  various  finely-sized  powders that have
current  or  potential  applications  in a wide range of  industries,  including
pharmaceuticals,  TiO2  pigment,  photocatalytic  oxidation  products,  catalyst
structures, protective thermal spray powders, algae control and high performance
rechargeable  batteries.  Although the existing and potential  applications  are
varied,  each  is  directly  or  indirectly  built  upon  the  ingenuity  of our
management and engineering team and our proprietary  nanomaterials  and titanium
dioxide pigment technology.

         This  nanomaterials and titanium dioxide pigment technology enables our
production  of  conventional   titanium   dioxide  pigment   products  that  are
finely-sized  powders  consisting of titanium  dioxide  crystals.  These powders
approximate  170-300  nanometers  in size.  This  technology  is also capable of
producing titanium dioxide and other metal and mixed metal oxide  nanomaterials.
These  are  specialty  products  with  a  size  range  of 10 to  100  nanometers
(approximately  one tenth the size of  conventional  TiO2 pigment).  The primary
products  currently being produced in the processing plant are titanium dioxide,
lithium   titanate   spinel,   lanthanum   products  and   stabilized   zirconia
nanomaterials. The technology also enables the production of customized products
for catalyst support  structures and porous titanium oxide electrode  structures
for titanium metal production.

         Our   nanomaterials   and  titanium   dioxide  pigment   technology  is
fundamentally  different from current commercial  processing  techniques.  Other
processes are based on either a  precipitation  of materials  from a solution or
the formation of  crystallites  from molten droplets of titanium oxide generated
in high temperature flame reactors.  Our process is a dense-phase crystal growth
technique  which controls  crystal  formation using a combination of mechanical,
fluid dynamics,  chemical and thermal control.  Our process permits  exceptional
control over particle size,  shape,  and crystalline  form. Our titanium dioxide
processing  technology produces discrete anatase crystals in nanometer sizes and
may be doped to be thermally stable up to 800 degrees  centigrade.  By remaining
stable in high-temperature  processing,  nanomaterials  produced by our titanium
dioxide pigment processing  technology retain the desired nanomaterials size and
crystalline  phase. In addition,  our technology is designed to minimize process
effluents  needing  environmental  remediation  and to accept a wide  variety of
low-cost, naturally occurring titanium feed stocks.

                                       4
<PAGE>
         Using  this   technology,   we  are  in  various  stages  of  research,
development and marketing of numerous products and potential  products.  We also
use this  technology to provide  contract  research  services on select projects
where we can utilize our resources to develop  intellectual  property and/or new
products  and  technology.  The  following  sections  describe  the research and
development  services  we provide  and the  principal  projects we are using our
nanomaterials and titanium dioxide pigment technology to develop.

Contract Research Services

         In addition to doing research and development work for our own benefit,
we provide these  services to others,  principally  in commercial  collaboration
arrangements  and under  government  grants.  During  2005,  we will utilize our
nanomaterials and titanium dioxide pigment technology under the following:

         o    a contract  with  Western Oil Sands,  Inc. for the  production  of
              titanium  dioxide  pigment and  pigment-related  products from oil
              sands. We have approximately $200,000 of work remaining to be done
              on an existing  contract  and expect to enter into a second  phase
              contract to do additional work in 2005;
         o    a contract with Western Michigan University to develop nanosensors
              for the detection of chemical, biological and radiological agents.
              We have  approximately  $250,000 of work to be done under existing
              contracts in 2005 and approximately $250,000 in 2006;
         o    a grant awarded by the National  Science  Foundation to fund joint
              development work on next generation lithium ion power sources.  We
              will receive $33,000 under an existing  agreement in 2005 and hope
              to receive an additional grant for further development work;
         o    an agreement  with the  University of Nevada,  Las Vegas  Research
              Foundation  to act as a  subcontractor  under a  $3,000,000  grant
              awarded  to  them by the  U.S.  Department  of  Energy  for  joint
              research activities related to solar hydrogen production.  We have
              approximately  $400,000  of work to be  done  in  2005  under  the
              agreement; and
         o    a contract with Titanium Metals  Corporation to provide feedstocks
              used  in  the  production  of  titanium  metal.  We  will  receive
              approximately $60,000 under the existing contract in 2005 and hope
              to enter into another contract for further development work.

         At December 31, 2003, we had a backlog of work totaling  $319,000 under
a contract with Western  Michigan  University and $141,000 under a contract with
Titanium Metals Corp.

         We expect that contract research services will be a significant portion
of our revenues in the  short-term  but will decline in  significance  if we are
successful in bringing nanoparticle and other products to market and license our
technologies.  During the year ended December 31, 2004, research and development
costs funded by customers were $1,144,389 while such costs funded by Altair were
$954,369.  During the year ended  December  31, 2003,  research and  development
costs  funded by customers  were $64,249  while such costs funded by Altair were
$1,897,495.

         During the year ended  December 31,  2004,  we recorded  revenues  from
three major  customers,  each of which accounted for 10% or more of revenues and
all of which were in the performance  materials business segment.  Revenues from
Western Michigan University were $491,320, revenues from Western Oil Sands, Inc.
were $314,359 and revenues from Titanium Metals Corp. were $152,550.

Trademarks

         We have  registered or are in the process of registering  the following
trademarks: Altair Nanotechnologies,  Altair Nanomaterials,  Altairnano, TiNano,
Nanocheck,  RenaZorb and Altair  Hydrochloride  Pigment Process. The Performance
Materials  Division  Primary  Products  The Altair  Hydrochloride  TiO2  Pigment
Process(TM) (AHPP)
                                       5
<PAGE>
The Performance Materials Division

   Primary Products

         The Altair Hydrochloride Tio2 Pigment Process (TM) (AHPP)

         We have named the portion of the  nanomaterials  and  titanium  dioxide
pigment  technology that was developed to produce high quality  titanium dioxide
pigment the Altair  Hydrochloride  Pigment  Process(TM)  (AHPP). This package of
technologies includes three US patents and over eight years of trade secrets and
know-how.  The technology represents a comprehensive process to extract titanium
from raw materials, produce a high quality titanium dioxide pigment and minimize
environmental impact.

         Key Features
         ------------
         The AHPP is the first new, comprehensive technology to produce titanium
dioxide pigment in over fifty years and takes  advantage of new  technologies to
enable high quality pigment production.  Titanium dioxide pigment is produced in
bulk and is used principally as a whitener and opacifier for paper, plastics and
paint.  The AHPP uses a dense-phase  crystal  growth  technique  which  controls
crystal  formation using a combination of mechanical,  fluid dynamics,  chemical
and  thermal  control.  A third  party  engineering  study  suggests  that  cost
associated  with  this  process  will  be  lower  than  costs   associated  with
alternative  processes.  All hydrochloric  acid waste streams can be recycled to
recover acid, and the waste solids generated from the  purification  process are
easily manageable iron oxides.

         Target Markets and Marketing Plans/Efforts
         ------------------------------------------
         We  intend  to  benefit  from  the  AHPP  through   technology  license
agreements with large materials companies under which we would receive royalties
and other  payments.  We do not anticipate  being a manufacturer  of pigments or
competing directly in the pigment market. Our market approach has been to target
chemical  manufacturing  and mining  companies who are addressing the market for
high grade titanium  dioxide  pigment.  In general,  the Western segments of the
world have  substantial  investment in  traditional  chloride and sulphate based
methods  of  producing  pigment  so will be slow to adopt  new  technology  like
Altair's AHPP.  However,  the developing world sees  substantial  value in being
self-sufficient  in titanium dioxide production both from an economic as well as
a  political  viewpoint.  These  geographies  are  also  swifter  to  adopt  new
technology as they have less  infrastructure  and investment tied to traditional
methods of production

         Over the last 2 years Altair has developed relationships with potential
and existing major producers of titanium dioxide,  the majority of them in Asia.
Several  of these  negotiations  are now at the  point  where  the next  step is
detailed  analysis  of the ore to be  processed  to  ensure it can  produce  the
quality of titanium dioxide required.  Assuming  positive results,  this will be
followed by a process  designed to  demonstrate  the  feasibility of the overall
manufacturing  process  with a small pilot plant,  and then,  if  successful,  a
larger scale plant.  This is the normal course for  establishing  a new chemical
plant that can ultimately produce in excess of 100,000 tons of pigment per year.
During each of these phases,  we expect to receive  consulting  and  engineering
study fees. If a full plant is  constructed,  we would expect to begin receiving
royalty payments.

         Research, Testing, Development and Licensing Status
         ---------------------------------------------------
         The AHPP is substantially developed, and, in a test environment, we are
able to extract  titanium  from raw materials in order to produce a high quality
titanium  dioxide  pigment.  The  AHPP  is  not,  however,  a  one-size-fits-all

                                       6
<PAGE>

technology and needs to be customized to the  particular  needs of any potential
licensee.  As described  below,  we have entered into a license with Western Oil
Sands,  Inc. ("WTO") with respect to the AHPP. In addition to our work with WTO,
we have  submitted  phased  development  proposals  for the testing and economic
evaluation of our titanium pigment  production  technology to several  companies
and have  entered  into a testing  and  development  license  with one of these,
called Avireco, located in Vietnam. Although we have been verbally informed that
two hundred and fifty  thousand  dollars have now been  authorized  to begin the
first  phase  of  pilot  plant  testing,  we have not  received  a  formal  work
authorization.  As illustrated by the description of our license with WTO below,
any license of the AHPP will involved  various stages of testing and development
tailored to the licensee's specific needs. Such licenses may involve incremental
payments and  development  services  along the way but will lead to  significant
revenue only if a full-scale  commercial titanium pigment production facility is
constructed.

         In January  2004,  we entered  into a license  agreement  with WTO with
respect to its possible use of the AHPP for the  production of titanium  dioxide
pigment and  pigment-related  products  at the  Athabasca  Oil Sands  Project in
Alberta, Canada, and elsewhere.  Upon execution of the agreement, we granted WTO
an exclusive, conditional license to use the AHPP on heavy minerals derived from
oil sands in Alberta,  Canada.  The agreement  also  contemplates a three-phase,
five-year  program  pursuant to which the parties will work  together to further
evaluate, develop and commercialize the AHPP. In the first phase of the program,
WTO is expected to spend $650,000  ($500,000 of which is scheduled to be paid to
Altair for work  performed)  to evaluate the AHPP and confirm that the AHPP will
produce pigment from oil sands. During 2004, we received several bulk samples of
oil sand material from WTO,  processed them in various  configurations to obtain
mineral  concentrates,  and processed the concentrates using the AHPP to recover
the titanium  dioxide.  We have now completed in excess of 50% of the work scope
included  in  phase  one  with  satisfactory  results.  Assuming  phase  one  is
successful,  WTO  may  elect  to  commence  phase  two,  the  construction  of a
demonstration  titanium pigment production facility using the AHPP. If phase two
is  successful,  WTO may elect to commence  phase three,  the  construction  and
operation of a full-scale  commercial titanium pigment production facility using
the AHPP.

         The scope of the license  granted to WTO under the agreement  will vary
with WTO's commitment to the project. The initial license, related to use of the
AHPP on heavy minerals derived from oil sands in Alberta, Canada, will terminate
if WTO fails to complete phase one and will convert to a  non-exclusive  license
if WTO commences phase two but fails to complete,  or spend at least $25 million
in an effort to complete, phase two.

         If WTO completes  phase one and commences phase two, WTO's license will
be expanded to include the right to use the AHPP for the  production of titanium
dioxide pigment and pigment-related  products from oil sands resources,  primary
ore  resources  and  titanium  deposits  in  Canada  and  Minnesota  and for the
production of titanium  dioxide  pigment and  pigment-related  products from oil
sands resources world wide. This expanded  license will continue on an exclusive
basis if WTO completes  phase two and completes,  or spends at least $50 million
in an effort to complete phase three.  This expanded license will continue,  but
on a  non-exclusive  basis,  if WTO completes phase two but, after spending more
than $5 million  but less than $50  million on phase  three,  does not  complete
phase  three.  If WTO does not  commence,  or spends  less than $5 million  with
respect to, phase three, the expanded license terminates.

         If  commercialization  occurs,  WTO is required to pay Altair royalties
based on a percentage of net sales revenue from any production facility.


                                       7
<PAGE>

         Proprietary Rights
         ------------------
         We have been  awarded  three U.S.  and  several  international  patents
protecting this technology including: 1) Processing titaniferous ore to titanium
dioxide pigment,  2) Processing aqueous titanium chloride solutions to ultrafine
titanium  dioxide  and 3)  Processing  aqueous  titanium  solutions  to titanium
dioxide pigment. The U.S. patents expire in 2020.


         Competition
         -----------
         Existing  chloride  pigment  technologies  are  guarded by the top tier
producers that developed the technologies. Licenses are not typically granted by
top tier companies to emerging nation companies because of the complexity of the
process and difficulty in extracting revenues from those countries. By contrast,
we are willing to license our AHPP.  Companies  assessing  the  viability of our
process  to  manufacture   pigment  from  their  resource  are  also  evaluating
alternatives,  including  producing  mineral  concentrates  for sale to  pigment
producers  and  producing  a high value  synthetic  rutile to be sold to pigment
producers  as feed  stock.  They may  elect  to  commercialize  either  of these
alternatives  instead of producing  pigment by the AHPP. We believe there are no
competing new technologies to produce titanium dioxide pigment.


         Nanocheck(TM)

         We have  developed  a compound  that has an  affinity  for  certain oxy
anions including phosphate and arsenate. We believe the best near-term potential
application  for this  material is the removal of  phosphate  from  recreational
waters, industrial waters used for cooling and aquariums to arrest the growth of
algae.

         Key Feature
         -----------
         Nanocheck(TM)  is a lanthanum  based compound that can be used to treat
water for the  removal  of  phosphates  as well as a wide  range of  deleterious
impurities.  It has no reported  human health  hazards and works  effectively in
existing filtration units without the need of purchasing additional equipment.

         The management of swimming pool water is a difficult and time-consuming
task.  The chemical  balance of the water must be carefully  monitored to ensure
that it does not become fouled with algae, or grow too much bacteria.  Either of
these will make the water smell and look unpleasant, and can be a health hazard.
Nanocheck(TM) safely deprives algae of the phosphate nutrients required for them
to reproduce and therefore reduces or minimizes algae formation.

         The Safe Drinking  Water Act required the EPA to revise the existing 50
parts per billion (ppb) standard for arsenic in drinking  water.  On January 22,
2001 the EPA adopted a new  standard,  and public water systems must comply with
the 10 ppb  standard  beginning  January 23,  2006.  Significantly  high arsenic
levels are found in some rural Western U.S.  communities that rely on well water
as a drinking water source. Low-cost,  point-of-entry or point-of-use treatments
are required to comply with the new standard. During the second quarter of 2004,
we performed a study using  Nanocheck(TM) to remove arsenic from drinking water.
The  results  of  the  study  indicate  that  Nanocheck's   performance  is  not
significantly  superior  to other less  costly  products  that are  commercially
available.  As a result,  we have  elected  not to pursue  this  application  of
Nanocheck(TM) at this time.

                                       8
<PAGE>

         Target Markets and Marketing Plans/Efforts
         ------------------------------------------
         We are  attempting to license and sell the  technology  to  manufacture
Nanocheck(TM)  to companies  that already sell  products  into the  recreational
water treatment market including pool and spa chemical companies.  The marketing
effort  so far has been  focused  on the major  suppliers  of  chemicals  to the
recreational  water market - swimming  pools and spas,  both private and public.
These suppliers  provide a distribution  channel that enables rapid market entry
once  Nanocheck(TM) has proven it meets its claims. If we are able to enter into
a long-term relationship with one or more such suppliers,  we expect to generate
revenue  in the form of  royalties  and in  connection  with our  supply  of key
ingredients.  The business relations with these companies will result in revenue
to  Altair  that  results  from   royalties  and  the  supply  of   manufactured
Nanocheck(TM).  Nanocheck(TM)'s  ability to bind with the phosphate in water and
effectively  "starve"  the algae makes it an ideal  adjunct to  algaecide  based
water  treatment.  As such it is seen as line  extension  for the pool  chemical
suppliers.

         We are in discussion  with the top three  recreational  water  chemical
suppliers.  These discussions are at various stages of maturity;  however two of
the suppliers are actively testing  Nanocheck(TM) with promising results so far.
The next step will be to move from  controlled  testing,  begun in the summer of
2004, to large scale field testing with recreational swimming pools in a variety
of climates.

         Research, Testing and Development
         ---------------------------------
         We have conducted in-house tests for phosphate removal in swimming pool
simulations,  and a recreational water company has performed  materials and pool
testing that shows effective  phosphate removal,  pool water turbidity reduction
and good  phosphate  binding  kinetics.  Larger scale  swimming pool tests being
performed by a  recreational  water  company  began in  mid-August  2004 and are
continuing.  These  were  delayed  first  due  to  internal  issues  within  the
recreational  water  company  and then due to the effects of  hurricanes  in the
locale where tests were to be  conducted.  As a result,  tests are now scheduled
through the summer of 2005.  Negotiations with major pool chemical companies are
underway and if testing is  successful  and sales  agreements  are entered into,
significant sales of products incorporating Nanocheck(TM),  if any, may begin in
2006.

         Proprietary Rights
         ------------------
         We have filed two U.S. patent  applications for the application of this
product entitled "Rare Earth Compositions and Structures for Removing Phosphates
from Water" and "Ceramic structure for removing toxic elements from water."

         Competition
         -----------
         Pool  chemicals are a commodity  market with price,  merchandising  and
small functional  advances  providing  differentiation.  There are already a few
other  phosphate  binding  products  on the  market.  These  products  are  high
maintenance,  usually  requiring weekly service.  We believe that  Nanocheck(TM)
offers high phosphate binding capacity with a long service life.  Although field
trials of Nanocheck(TM)  are still under way, early  indications are that it can
be added to a swimming  pool and then left for a month or two without  requiring
attention.

         Lithium Titanate Spinel

         We have  developed  technologies  to manufacture  nano-sized  specialty
materials  to make  electrodes  for lithium ion  batteries  that will allow very


                                       9
<PAGE>

rapid  charging and  discharging  of these types of  batteries.  We believe that
advancements   in  materials   availability   will  ultimately  be  paired  with
advancements  in the  electrolyte's  ability to carry high  current  density and
result in  batteries  that can yield very high power and  recharge in only a few
minutes.  Altair has  demonstrated  nanomaterials  that can accept a full charge
within less than one minute.  Altair has now prepared special nano-sized samples
of lithium titanate,  lithium manganate,  and lithium  cobaltate.  Some of these
materials,  in  large  crystalline  sizes,  are  currently  used by the  battery
industry. Nanomaterials are expected to improve the performance of these systems
and enable their use in  applications  where  immediate  high power  delivery is
necessary.

         Key Features
         ------------
         The large  specific  surface area of  Altairnano(TM)  Lithium  Titanate
Spinel nanoparticle  material enables very rapid charge and discharge rates. The
material is durable and is projected to last for  thousands of charging  cycles.
The next  steps in the  development  program  call for the  optimization  of the
cathode  materials to complement  the work that has been completed on the anode.
This will result in a matched  anode/cathode  pair.  In  parallel  with the next
phase of  development,  work is being  conducted  with  other  organizations  to
provide an electrolyte  that will deliver a conducting layer consistent with the
matched  electrodes.  This work will consist of optimizing the  electrolyte  for
conductivity as well as other physical properties such as heat dissipation.

         Target Markets and Marketing Plans/Efforts
         ------------------------------------------
         Batteries  constitute  a $42  billion  market  worldwide  according  to
information  supplied by  Telcordia  (Subsidiary  of SAI;  Science  Applications
International).  Of that,  around $6  billion  is  rechargeable  and $3  billion
includes  the  market  that  has,  and  continues  to be taken by,  lithium  ion
batteries.  These lithium ion  rechargeable  batteries do not develop memory and
fail and are expected to gradually increase their share of the world market. New
developments  indicate that high power batteries of this type will ultimately be
developed  for   application  as   replacements   for  lead  acid  batteries  in
automobiles,  electric vehicles,  and hybrid automobiles where direct electrical
energy for  starting and passing will assist the  gasoline  engines.  Also,  the
development  of fuel cells and solar  generation  systems will require  enhanced
battery capabilities.

         Our  technology  provides  a  fundamental  building  block  for  a  new
generation of rechargeable batteries;  however we are not battery manufacturers.
Our marketing efforts are focused on developing  relationships  with high volume
battery manufacturers who will integrate our materials into new battery designs.
Early stage discussions have taken place with several  manufacturers with a view
to  developing a joint  development  program that will use the Altair  electrode
materials as the basis for a new  generation  of  batteries.  These  discussions
could lead to commercial  relationships  that will be characterized by a revenue
stream consisting of one of more of development funding, materials manufacturing
and royalties.

         Research, Testing and Development
         ---------------------------------
         We have  completed  a series  of tests in  collaboration  with the EPFL
Switzerland,  Heyrovsky  Institute  in  Prague,  Czech  Republic  and the Xoliox
subsidiary of Ntera, a display and battery  technology  development  company.  A
joint  patent  was  filed  with  Ntera  related  to  electrode   performance  of
nanoparticles made by Altair. We have extended a marketing agreement with Nissho
Iwai Americas  Corporation for product marketing in Japan to leading lithium ion
battery manufacturers.
                                       10
<PAGE>

         In  August  2004,  we  began  work  under  a  $100,000  Small  Business
Innovative  Research  grant awarded by the National  Science  Foundation to fund
joint  development  work on next  generation  lithium  ion  power  sources  with
Hosokawa Micron's Nanoparticle Technology Center and Rutgers University's Energy
Storage  Research  Group.  The work was  completed in December 2004 and a report
issued on it in January 2005. Our research  indicated that our materials provide
a significant  improvement over conventional materials in lithium ion batteries.
As a result,  we have  submitted a proposal for a second phase project  totaling
$500,000 to continue and expand the work of phase 1 by making cathode  materials
for use with  anode  materials  already  produced.  The anode and  cathode  of a
battery are mutually  complimentary,  one  supplying  the charge,  and the other
acting as the collector of the charge. As such, their chemistry is different but
linked,  so the work that has been done so far to optimize  the anode  materials
now needs to be  complemented  with  work on the  cathode  materials.  This will
result in a matched  anode/cathode  pair. We have also  submitted a proposal for
another  project in the amount of $100,000 to improve the  manufacturing  method
for the materials to make it more scalable and efficient. We expect decisions on
these proposals in July 2005.

         Proprietary Rights
         ------------------
         We have filed three  patent  applications  including  1)  "Process  for
making lithium  titanate",  2) "High  Performance  Lithium  Titanium  Spinel for
Electrode Material",  and 3) "Process for making nano-sized and sub-micron sized
lithium-transition  metal  oxides".  We  have  also  filed  a  joint  patent  on
nano-lithium titanate performance with Ntera. In October 2004, we were awarded a
European patent for our "Process for Making Lithium Titanate", a product used in
the development of lithium ion batteries and super capacitors.

         Competition
         -----------
         There are  presently no  commercial  products  available  with the same
characteristics  as our  lithium  titanate  spinel,  but others  are  conducting
research  on  similar  materials.  Based  solely  on  our  review  of  published
information,  it appears that our  development  work is at a more advanced stage
than others being reported.

    Secondary Products and Research and Development Projects in Progress

         Thermal Spray Grade Powders (TSGP)

         We have developed thermal spray grade nanomaterial  powders that can be
applied on the surface of metals by standard thermal  "gunning"  techniques.  We
have sold  approximately one ton of our powders to F.W. Gartner Thermal Spraying
Company for thermal application onto heavy-duty ball valves. Ball valves made of
solid titanium  alloys have been  introduced to control the flow and containment
of hot acidic slurry solutions in high pressure acid leach technologies  applied
to metal extraction of nickel/cobalt  ores. To extend the life of these critical
components,  a ceramic  coating is applied via a thermal  spray  process.  These
coatings  must be  impervious  to the acidic  solution  and  provide  protection
against  wear from the  abrasive  solid  particles.  F.W.  Gartner's  use of our
nanomaterial  powders  application  was delayed due to technical  and  political
problems associated with other aspects of the mining prospect.

         Our  nanomaterials  coatings possess  enhanced  toughness and increased
hardness;  these features  contribute to superior  abrasive wear resistance over
the conventional  coating of the same material.  The nanomaterial  coatings also
demonstrate  improved  porosity over standard  thermal spray powders making them
more resistant to corrosive  attack.  We believe that  improvements  will enable
longer periods between  maintenance,  repairs and examinations of these critical
components therefore improving the economics of the industrial application. Such


                                       11
<PAGE>

thermal  spray  products  could  be  used  in a  variety  of  harsh  environment
applications such as aerospace  propulsion  systems,  blades and vanes,  medical
applications,  textile  and paper  machinery,  boilers for power  plants,  waste
incinerators, oil and gas industry, etc.

         F.W.  Gartner Thermal  Spraying  Company,  Mogas  Industries,  Inc. and
Perpetual Technologies  researchers have reported on the use of our nanomaterial
powders  in tests  to  determine  the  bond  strength,  corrosion  and  abrasion
resistance and the porosity after  applying ours and  competitors'  materials on
metal using Vacuum  Plasma Spray and  Atmosphere  Plasma  Spray.  The results of
these  researchers'  tests  indicate that our novel  coatings  possess  enhanced
toughness  and increased  hardness;  these  features  contribute to its superior
abrasive wear  resistance  over the  conventional  coating of the same material.
Ball valves with the new  coatings  have been  introduced  into  different  high
pressure acid leach autoclave installations over the past two years.

         In November 2003, we contracted the National Research Council of Canada
to demonstrate,  test and evaluate our powders and prepare  specification sheets
of standard thermal spray gunning instructions to advise specialty thermal spray
shops how to apply our material.  The goal of the project was to produce titania
coatings by thermal spraying using nano-structured  titania powders developed by
Altair and compare and contrast to conventional  titania  powders.  The coatings
were characterized and evaluated to determine various characteristics, including
porosity and abrasion resistance.  The report, completed in the first quarter of
2004,  concluded that our powders were more abrasion resistant than conventional
powders.  Since that time, we have prepared sample packages of our thermal spray
grade powders for customer testing.

         Our thermal spray grade powders are  protected by U.S.  Patent  titled,
"Processing  aqueous titanium chloride solutions to Ultrafine titanium dioxide",
which expires in 2020.

         Catalyst Support and Electrode Structures for Titanium Metals

         In  January  2004 we  entered  into a  contract  with  Titanium  Metals
Corporation ("TIMET") to provide custom oxide feedstocks for a novel, four-year,
titanium  metal research  program  funded by the Department of Defense,  Defense
Advanced Research  Projects Agency ("DARPA").  We became a subcontractor for the
DARPA  program  with  responsibility  to design  and  develop a  titanium  oxide
electrode  structure  and supply TIMET  optimized  titanium  oxide  feedstock to
produce 50 pounds of titanium metal per day in batch production  demonstrations.
During 2004,  we provided  TIMET with over 100 pounds of titania  electrodes  in
accordance with the agreement,  the first phase of which expired on December 31,
2004.  The total value of the  contract has been  $215,000.  TIMET is seeking an
extension  of the  contract  from  DARPA  in order to  continue  work.  Both our
technology and the FFC Cambridge  Process are in a development stage and are not
expected to generate significant revenue for several years, if ever.

         The  DARPA  program  seeks to  lower  the cost of  titanium  metal  and
titanium metal alloys through the use of a new process for making titanium metal
(the "FFC Cambridge  Process") and thereby enable a broader market use and lower
the cost of military applications.  Under the terms of the DARPA subcontract, we
will attempt to develop a low-cost  manufacturing  process for titanium  dioxide
electrode  materials,  critical to the successful  commercialization  of the FFC
Cambridge  Process for  production  of titanium  metal.  Our unique  process for
making the titanium dioxide  electrodes may provide a superior feedstock for the
FFC Cambridge Process by enabling the process to work more efficiently.

         According to the AMPTIAC Quarterly,  a Department of  Defense-sponsored
publication, current global production of titanium metal is approximately 50,000
tons per year at a market value of $600 million.  AMPTIAC estimates that, due to
the current state of manufacturing, titanium is produced at only about 1/20th of

                                       12
<PAGE>

its current  potential  world volume.  It is widely believed that a reduction of
cost in the  manufacturing  process  will expand the use of titanium  metal in a
wider range of applications that include  lightweight armored military vehicles,
the manufacture of automotive  components and components for utility plants, oil
and gas drilling,  and lightweight and durable  consumer goods. Our intent is to
develop a suitable  process for making the titanium  dioxide  electrodes used by
the FFC Cambridge  Process but not ultimately to manufacture the electrodes.  We
would most likely license the technology for manufacture of the titanium dioxide
electrodes  to  producers  of metal  using the FFC  Cambridge  Process  or their
suppliers.

         We  have  been  awarded  one US  patent  protecting  the  catalyst  and
electrode  structure   technologies  entitled  "Method  for  producing  catalyst
structures", which expires in 2021.

         Solid Oxide Fuel Cell ("SOFC") Materials

         Our efforts in the fuel cell area have been focused on the  development
of  materials  for the solid oxide fuel cell  market.  Our  materials  are novel
precursor ceramic materials used in the construction of a solid oxide fuel cell.
Virtually  every  ceramic  material  used as  functional  components of the fuel
conversion  element of this type of cell can be  manufactured  by Altair's basic
process for making  nanomaterials.  Raw materials used by the Altair process are
in the category of commodity chemicals available on a worldwide basis. Altair is
engaged in a process of attempting to demonstrate  that 1) using its proprietary
nanotechnology,  the cost of raw  materials  for a solid  oxide fuel cell can be
reduced  to  below  $20  per   kilowatt.   2)  using  the   specially   prepared
nanomaterials, all fuel cell elements can be made from tape cast components, and
3) several fuel cells can be stacked in a single fuel conversion unit.  Stages 1
and 2 have been  demonstrated in concept and are being improved,  and stage 3 is
under  development  now.  Altair has operated  its fuel cell with  hydrogen as a
fuel. The Massachusetts  Institute of Technology ("MIT") has completed the final
stage of adding a compatible  ceramic  catalyst to the cell under  contract with
Altair.  The catalyst  developed by MIT is intended to overcome the high cost of
the platinum catalyst in the solid oxide fuel cell.

         We have successfully  completed our single cell program,  and we do not
have any  ongoing  research  or  development  activities  specifically  for this
program.  We have been  awarded  one U.S.  patent  for the  application  of this
product entitled "Method for producing catalyst  structures." The patent expires
in 2021.  The  fundamental  research  is  complete  and  testing  confirmed  the
feasibility  of our concept.  The project is on hold while  Altair  searches for
partners and/or funding to help defer further costs of development.

         Nanosensors Program

         In September  2003, we entered into an agreement with Western  Michigan
University  ("WMU")  to  provide  research  services  and  materials  to support
research  involving a technology  used in the detection of chemical,  biological
and radiological agents. The teaming/research  agreement with WMU, funded by the
Department of Energy ("DOE"),  provides for total payments to Altair of $356,500
over a two-year  period.  Through 2004, we received  $288,000 in connection with
this research  agreement.  In September 2004, the DOE awarded a stage 2 contract
for the project  under which we will  continue  joint  development  work for the
design,  synthesis and characterization of nanosensors for chemical,  biological
and  radiological  agents.  Altair will receive an additional  $672,000 over the
two-year term of the stage 2 contract.  WMU and Altair have a joint  partnership
for seeking Federal support for nanotechnology research and development and will
utilize the new grant funding equally.

         Hydrogen Generation using Solar Energy and Water

         In November  2004, we entered into an agreement  with the University of
Nevada,  Las  Vegas  Research  Foundation  to act  as a  subcontractor  under  a

                                       13
<PAGE>

$3,000,000  grant  awarded  to them by the U.S.  Department  of Energy for joint
research  activities related to solar hydrogen production at a refilling station
under  development  in Las Vegas.  The  agreement,  which is  effective  through
December 31, 2005,  provides for payments to Altair of $400,000 for research and
development  work  utilizing  nanotechnology  processes for the  production  and
commercialization of solar-based hydrogen technologies. The agreement has a work
scope  totaling  $500,000 and contains a  cost-sharing  provision  that requires
Altair to share project costs in the amount of $100,000.

         Hydrogen Solar LLC  ("Hydrogen  Solar") and Altair will act as research
and  product  development  partners  on  the  project  utilizing  nanotechnology
processes.  Under Phase 1 of the project, the parties plan to develop a hydrogen
refilling station. Under Phase 2, the parties plan to expand the capabilities of
the station by developing a high  pressure,  more efficient  electrolyser  using
Hydrogen  Solar's Tandem CellTM.  This device  converts light and water directly
into hydrogen fuel in a highly  efficient,  renewable  and  carbon-free  process
using photo-catalytic  nano-crystalline thin films to gather photons of incident
light  and  convert  them  into  electrons  to  directly  split  water  into its
constituent  elements.  We expect to be able to use our nanomaterials  synthesis
technology  to  develop  low cost  processing  for,  and  further  improve,  the
performance  of the thin film  electrode  in the  front  section  of the  Tandem
CellTM.  Our  efforts  will  focus on iron  oxide-based  materials  and  include
development of film  deposition  methods and synthesis  routes for the optimized
metal oxide nanomaterials.

The Life Sciences Division

    Primary Product

         RenaZorb(TM)

         In the second  quarter of 2002, we initiated  research and  development
efforts directed toward the utilization of nanomaterials in the  pharmaceuticals
industry.   In  July  2002,  we  announced  the  development  of  a  new  active
pharmaceutical   ingredient  ("API")  for  the  treatment  of  hyperphosphatemia
(elevated serum phosphate  levels) in patients  undergoing  kidney dialysis,  as
well as a new drug delivery system using inorganic ceramic  nanomaterials.  This
API,  given the name  RenaZorb(TM),  showed  excellent  capacity  for  phosphate
removal in laboratory  tests using standard  in-vitro  (laboratory)  procedures.
Animal  testing of this  product was  initiated  in late 2002 and was  completed
during the first quarter of 2003.  Results of this  pre-clinical  animal testing
confirmed the efficacy for phosphate binding.  In September 2004, we completed a
pre-clinical  animal study of RenaZorb(TM)  which was conducted to determine its
phosphate binding efficiency. The results indicated that RenaZorb(TM) bound more
phosphate per gram of drug than  Renagel,  a drug  currently on the market,  and
Fosrenol,  a drug of similar compounds produced by Shire  Pharmaceuticals  Group
plc ("Shire"). Fosrenol was approved by the FDA on October 26, 2004.

         In  January  2005,  we  signed  a  licensing  agreement  with  Spectrum
Pharmaceuticals,  Inc.  ("Spectrum") which grants Spectrum  exclusive  worldwide
rights to develop,  market and sell  RenaZorb(TM).  Upon signing the  agreement,
Spectrum issued to us 100,000 restricted shares of their common stock, purchased
38,314 restricted shares of our common stock at the then current market value of
$2.61 per share,  and also paid us $100,000  in  connection  with the  licensing
agreement.  Additional  payments by Spectrum are contingent upon the achievement
of  various  milestones  in  the  testing,   regulatory  approval  and  sale  of
RenaZorb(TM). Assuming that planned milestones are achieved, we may receive cash
and  restricted  shares  of  Spectrum  common  stock  with a  combined  value of
approximately  $1.3 million in 2005, between $9 million and $14 million over the
first 5-7 years and in excess of $100 million over the life of the agreement.

                                       14
<PAGE>

         Key Features
         ------------
         RenaZorb(TM) is a highly active,  lanthanum-based nanomaterial with low
intestinal  solubility and excellent in vitro phosphate binding.  Animal testing
of RenaZorb(TM) has been conducted in dogs and rats, but no human tests have yet
been conducted. Based upon our initial laboratory and animal testing, we believe
that RenaZorb(TM) may offer the following advantages over competing products:

         o    Lower dosage requirements  because of better phosphate binding per
              gram of drug compared with existing or currently proposed drugs;
         o    Fewer and less severe  side  effects  because of less  gassing and
              lower dosage; and
         o    Better patient compliance because of fewer and smaller tablets

         Target Markets
         --------------
         Our pharmaceutical product RenaZorb(TM) was developed to treat elevated
phosphate levels in patients with chronic kidney disease, especially in patients
with end stage renal disease. According to information published by AnorMED, the
worldwide  market for phosphate  binders for chronic  renal failure  patients is
approximately $400 million to $600 million annually.

         Research, Testing and Development
         ---------------------------------
         RenaZorb(TM) must undergo animal and human testing and receive approval
from the FDA in the U.S.  and  similar  regulatory  bodies in other parts of the
world before it can be approved for marketing.  Human testing  typically takes 1
to 2 years and,  if merited by the  results  of human  testing,  the  process of
seeking U.S.  regulatory  approval  typically  takes  between 3 and 5 years.  We
believe, however, that the FDA's approval of Fosrenol(TM),  a chemically related
drug, by the FDA and other regulatory bodies may accelerate the approval process
for RenaZorb(TM)  but note that timing for FDA and other regulatory  approval of
drug  candidates is  unpredictable.  Spectrum,  with technical  assistance  from
Altair,  is responsible for the clinical testing and other activities  necessary
to obtain regulatory approval of RenaZorb(TM).

         Proprietary Rights
         ------------------
         We  have  applied  for  patent   protection  for  the   manufacture  of
RenaZorb(TM)  and a wide range of similar  compounds for the  application  as an
orally administered phosphate binder for patients suffering from end stage renal
disease.

         Competition
         -----------
         Existing  phosphate  binders include Tums(TM)  antacid,  which contains
calcium  carbonate,   and  also  aluminum   hydroxide-based   products  such  as
Gaviscon(TM) manufactured by Glaxo Smith Kline, both of which are available over
the counter, as well as Renagel(TM)  manufactured by Genzyme, which is available
only by prescription. In addition, Fosrenol(TM),  another lanthanum based active
pharmaceutical agent developed by Shire Pharmaceuticals ("Shire") of the UK, has
received  certain foreign  regulatory  approvals and received  approval from the
United States FDA in October 2004.

         While over the counter  phosphate  binders are relatively  inexpensive,
they have several disadvantages. Calcium carbonate-containing phosphate binders,
such as  Tums(TM),  in high  doses,  may  cause  increased  blood  pressure  and
increased risk of  cardiovascular  disease and is generally not  recommended for
long-term use by dialysis patients. With prolonged use, aluminum hydroxide-based
phosphate binders,  such as Gaviscon(TM),  may cause toxic neurological  effects
and are  generally  avoided by  physicians.  Aluminum  dementia  has been widely
reported in kidney dialysis patients using these products.

                                       15
<PAGE>

         The prescription  phosphate binder Renagel(TM) is relatively  expensive
(approximately  $2,800 per patient per year), has a high dosage requirement (2 x
800 mg or 4 x 400 mg  capsules/tablets  or more  three  times per day) and water
intake  is  required.  The  most  common  side  effects  related  to the  use of
Renagel(TM)  include  nausea (7% of  patients),  constipation  (2% of patients),
diarrhea (4% of  patients),  gas or bloating (4% of patients)  and  heartburn or
indigestion (5% patients).

         Fosrenol(TM)  is marketed  as large  chewable  tablets  with a proposed
dosage  of 1.5 to 3.0  grams  active  drug  per  day.  As  with  all  medicines,
Fosrenol(TM)   has   some   side   effects,   primarily   associated   with  the
gastrointestinal  system including bloating,  GI upset and vomiting. It has been
reported that the use of Fosrenol does increase serum lanthanum  levels compared
with levels in patients taking a placebo. RenaZorb(TM),  which is nanotechnology
based,  is expected  to be  developed  in a tablet  dosage form with a projected
dosage of 0.6 to 3.0 grams API per day.  Although we have done no human  testing
on  RenaZorb(TM),  we  believe  RenaZorb(TM)  has the  potential  for fewer side
effects,  lower  cost and better  patient  compliance.  We base  these  possible
advantages  upon in vitro  testing  conducted  by Altair in which  RenaZorb  was
compared to lanthanum carbonate  tetrahydrate ("LCTH"), the API in Fosrenol. Our
in vitro testing  showed that RenaZorb binds 30% more phosphate per gram of drug
than LCTH,  therefore  requiring a lower dose.  Lower dose often correlates well
with a reduction of observed side effects in chemically  related  compounds.  In
all animal  testing  conducted on  RenaZorb(TM),  which to date  included  three
separate  testing  protocols,  no adverse  side effects  were  reported.  In all
testing,  RenaZorb(TM)  was  administered to the animals by mixing the drug with
the food they eat. In no case was there any  reduction in the amount of food the
animals consumed when  RenaZorb(TM) was mixed with the food. The drug appears to
be tasteless.

         Both RenaZorb(TM) and Fosrenol(TM)  involve the binding of phosphate by
lanthanum  compounds.  In fact,  the end  product of the  binding  mechanism  is
identical;  lanthanum phosphate is the product formed. Based on laboratory tests
conducted by Altair comparing  RenaZorb(TM)  with LCTH, the API in Fosrenol(TM),
RenaZorb(TM) RZB 012, one of the two drug candidates,  required 30% less drug to
bind the same amount of phosphate and shows less  lanthanum  going into solution
in  simulated  stomach  fluid at various pH values.  In  addition,  in  Altair's
testing, using methods published by AnorMed,  RenaZorb(TM) reacts with phosphate
more rapidly.  In 20 minute  simulated  stomach acid tests  conducted by Altair,
RenaZorb(TM)  absorbed  approximately  140 mg of  phosphate  and  LCTH  absorbed
approximately 60 mg of phosphate.

    Secondary Products and Research and Development Projects in Progress

         TiNano Spheres(TM)

         Our proposed  drug  delivery  system  involves  depositing  drugs on or
inside hollow  "wiffle  ball" -like  spheres made of titanium  dioxide and other
metal oxide materials, including nanomaterials.

         Because of the early stage of development of this drug delivery system,
we are unable to state with any certainty how (or if) such drug delivery  system
would be used and, if used,  what the uses for such system would be and what the
comparative  advantages,  side effects and other  aspects of such drug  delivery
system would be. Nevertheless, based upon our early testing, we believe that the
following uses of a nanomaterials-based drug delivery system are feasible:

         o    New delivery forms for existing drugs;
         o    Delivery methods for new drugs;


                                       16
<PAGE>
         o    Enhanced delivery of hard to dissolve drugs;
         o    Delivery of sustained release drugs; and
         o    Delivery of dual action drugs

         Altair's hollow sphere "wiffle ball" like structures can deliver active
chemicals or drugs in a sustained  release fashion because the active  component
can be  "mounted"  on both the  outside  surface  and  inside  the  hollow  ball
structure.  The  dissolution  and  availability  of the  surface-mounted  active
component will be different than the active component inside the hollow spheres.
Material  inside the hollow  structure  will  possibly be  released  more slowly
compared  to  surface-mounted   material.  An  additional  feature  of  Altair's
nanomaterials  based hollow "wiffle ball"-like  structures is that two different
active substances could be mounted, one inside the hollow spheres and another on
the surface.  This allows the possibility for dual action  pharmaceuticals to be
developed using this technology.

         To date,  our research on drug  delivery  systems  involving the use of
nanomaterials  has been  limited to coating  known  drugs on the  surface of and
inside titanium dioxide  micron-sized  materials and nanomaterials.  We have not
done any animal or human testing with our new drug  delivery  systems and do not
have the expertise,  resources or capacity to complete such testing. In 2005, we
hope to undertake a joint development  program with a pharmaceutical  company to
conduct additional testing and development of our drug delivery system using the
pharmaceutical company's drug compounds.

         During 2004, we tested the "wiffle ball"-like structure in a model drug
delivery  system  for  narcotic  and  other  Class 2 drugs  that is  potentially
non-abuseable and less prone to common "street" abuse techniques. The results of
our tests did not meet our  expectations and we have deferred further testing of
the system for this application.

         We have filed two patent  applications  regarding this field including:
1)  "Pharmaceutical  composition  and  structure  containing  rare earth  porous
particles" and 2) "Pharmaceutical composition with controlled surface area."

         Dental Materials

         We are working  with a research  consortium  sponsored  by the National
Institutes of Health to strengthen  polymer-based  dental fillings utilizing our
nano-sized zirconia. Test results to date have been promising. We are continuing
development  work and will provide a larger sample of our materials in the first
quarter of 2005 for further testing.

Tennessee Mineral Property

         The Tennessee  mineral  property  presently  consists of  approximately
3,950 acres of land  containing  fine,  heavy minerals that we have leased in or
near Camden, Tennessee since 1996.

         Between 1996 and 2000, we conducted  various tests and  pre-feasibility
studies on approximately  14,000 acres of property in Tennessee on which we held
mineral leases.  In 2000, we constructed a spiral-based  pilot plant for testing
at  the  Tennessee  mineral  property.  Although  test  results  were  generally
consistent with expectations,  during 2002 and 2003, we significantly  curtailed
our testing on the  Tennessee  mineral  property  in order to conserve  capital.
During that same period, we actively sought to enter into joint venture or other
relationships with larger mining operations that could provide capital and other
resources  necessary to complete testing of the Tennessee  mineral property and,
if merited, develop a mine on the property. Such efforts were not successful.

                                       17
<PAGE>
         During 2004,  our board of directors made the decision to terminate the
mineral leases, dispose of the related assets and remediate the subject property
to  the  extent  required  by  regulatory  authorities.  Consequently,  we  have
terminated  the mineral leases on  approximately  4,750 acres as of December 31,
2004 and expect to terminate the leases on the remaining  3,950 acres during the
first six months of 2005. In October  2004,  we filed a reclamation  and closure
plan with the Tennessee  Department of Environment and  Conservation and are now
in discussions with them toward  finalizing the plan. We are also in discussions
with  potential  purchasers  of the pilot  plant  assets.  We expect  that costs
associated with the abandonment of the Tennessee  mineral property will equal or
not significantly exceed any proceeds from the disposition of related assets.

The Altair Jig

         We hold certain intellectual  property rights with respect to, and have
built several  demonstration models of the Altair jig. The Altair jig segregates
particles  based on differences in their specific  gravity.  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 Altair jig operates  according to conventional jig principles  except
that the screen surface is  cylindrical  and is rotated to subject the particles
to centrifugal forces.

         In September 2003, we entered into a technology  license agreement with
Bateman  Luxembourg  SA  ("Bateman")  for  the  manufacture,   installation  and
operation of the Altair jig.  Bateman is expected to have  exclusive  use of the
Altair jig for  specifically  identified  applications  in selected  territories
throughout the world.  Bateman is currently  testing the jig and has not used it
in  commercial  operations.  If and when  Bateman  utilizes  the  Altair  jig in
commercial applications, it is required to compensate Altair through a licensing
fee for each  project  managed by Bateman  that  utilizes  the Altair  jig.  The
compensation,   if  any,  is  based  on  Bateman's   profits  generated  through
utilization  of the  Altair jig and will vary based on the size and scope of the
individual projects.

         During  2004,  our  Board  of  Directors   determined  to  suspend  all
expenditures  on the Altair jig.  We  continue to hold rights  under the Batemen
agreement and certain  intellectual  property  rights with respect to the Altair
jig but are not making  efforts to further  develop or market the Altair jig and
do not expect to generate  substantial revenue from the licensing or disposition
of the Altair jig. All  jig-related  assets have been written off of our balance
sheet.

Government Regulation and Environmental Concerns

Government Regulation

         Most of our current and proposed  activities are subject to a number of
federal,  state, and local laws and regulations  concerning machine and chemical
safety and environmental protection.  Such laws include, without limitation, the
Clean Air Act, the Clean Water Act, the Resource  Conservation and Recovery Act,
and the Comprehensive  Environmental  Response Compensation  Liability Act. Such
laws require that we take steps to, among other  things,  maintain air and water
quality standards, protect threatened,  endangered and other species of wildlife
and vegetation,  preserve certain cultural resources,  and reclaim  exploration,
mining and processing sites.

         Compliance with federal, state, or local laws or regulations represents
a small part of our present  budget.  If we fail to comply with any such laws or
regulations, however, a government entity may levy a fine on us or require us to
take costly  measures to ensure  compliance.  Any such fine or  expenditure  may
adversely affect our development.
                                       18
<PAGE>

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

Environmental Regulation and Liability

         Any proposed  processing  operation at our main  operating  facility in
Reno, Nevada or any other property we use will be subject to federal, state, and
local  environmental  laws.  In addition,  our cleanup  efforts on the Tennessee
mineral   property  have  been,  and  will  continue  to  be,  subject  to  such
environmental laws. Under such laws, we may be jointly and severally liable with
prior property owners for the treatment, cleanup, remediation, and/or removal of
substances  discovered  at any  other  property  used by us, to the  extent  the
substances  are deemed by the federal  and/or  state  government  to be toxic or
hazardous  ("Hazardous  Substances").  Courts or government  agencies may impose
liability for, among other things,  the improper  release,  discharge,  storage,
use,  disposal,  or  transportation  of Hazardous  Substances.  We use Hazardous
Substances in our testing and operations and,  although we employ all reasonably
practicable  safeguards to prevent any liability under  applicable laws relating
to  Hazardous   Substances,   companies  engaged  in  materials  production  are
inherently  subject to substantial risk that  environmental  remediation will be
required.

Financial Information about Segments

         Information with respect to assets, net sales, loss from operations and
depreciation  and  amortization  for the performance  materials,  life sciences,
Tennessee  mineral  property  and Altair jig  segments is  presented in Note 13,
Business Segment Information,  of Notes to Consolidated  Financial Statements in
Part IV.


Subsidiaries

         Altair  Nanotechnologies  Inc. was  incorporated  under the laws of the
province  of  Ontario,  Canada in April  1973 under the name  Diversified  Mines
Limited,  which was subsequently  changed to Tex-U.S. Oil & Gas Inc. in February
1981,  then to Orex Resources Ltd. in November 1986, then to Carlin Gold Company
Inc. in July 1988, then to Altair International Gold Inc. in March 1994, then to
Altair  International Inc. in November 1996 and then to Altair  Nanotechnologies
Inc. in July 2002. In July 2002,  Altair  Nanotechnologies  Inc.  redomesticated
from  the  Ontario  Business  Corporations  Act to  Canada's  federal  corporate
statutes, the Canada Business Corporations Act.

         Altair US Holdings,  Inc. was  incorporated  by Altair in December 2003
for the purpose of facilitating a corporate  restructuring  and consolidation of
all U.S.  subsidiaries  under a U.S. holding  company.  At the completion of the
corporate  restructuring,  Fine Gold,  MRS and Altair  Nanomaterials,  Inc. were
direct  wholly-owned  subsidiaries of Altair US Holdings,  Inc., while Tennessee
Valley Titanium, Inc. remained a wholly-owned subsidiary of MRS.

         Fine Gold was acquired by Altair in April 1994. Fine Gold has earned no
operating  revenues  to date.  Fine  Gold  acquired  the  intellectual  property
associated  with the Altair jig, a fine  particle  separation  device for use in
minerals  processing,  in 1996.  Altair  intends  that  Fine  Gold will hold and
maintain jig technology rights, including patents.

                                       19
<PAGE>

         MRS was incorporated by Altair in April, 1987 and was formerly known as
Carlin Gold Company.  MRS  previously has been involved in the  exploration  for
minerals on  unpatented  mining  claims in Nevada,  Oregon and  California.  All
mining  claims  have  now been  abandoned.  MRS  currently  holds,  directly  or
indirectly,  all of Altair's  interest in the Tennessee  mineral  property.  Its
wholly-owned subsidiary,  Tennessee Valley Titanium, does not presently have any
assets or operations.

         Altair  Nanomaterials,  Inc. was incorporated in 1998 as a wholly-owned
subsidiary of MRS and holds all of the Company's  interest in our  nanomaterials
and titanium dioxide pigment technology and related assets.

Corporate History

         Altair  Nanotechnologies  Inc. was  incorporated  under the laws of the
Province  of  Ontario,  Canada in April 1973 for the  purpose of  acquiring  and
exploring  mineral  properties.  It was  redomesticated  in July  2002  from the
Business  Corporations Act (Ontario) to the Canada Business  Corporations Act, a
change which causes Altair to be governed by Canada's federal corporate statute.
The change reduced the requirement for resident  Canadian  directors from 50% to
25% of the board of directors,  which gives us greater  flexibility in selecting
qualified nominees to our board.

         During the period from inception through 1994, we acquired and explored
multiple  mineral  properties.  In each case,  sub-economic  mineralization  was
encountered and the exploration was abandoned.

         Since 1996, we have leased mineral property near Camden,  Tennessee and
owned the rights to the Altair jig.  However,  we are disposing of the Tennessee
mineral  properties  and limiting our  expenditures  on our  centrifugal  jig to
patent maintenance expenses.

         In  November   1999,  we  acquired  all  the  rights  of  BHP  Minerals
International,  Inc. ("BHP") in the  nanomaterials  and titanium dioxide pigment
technologies and the nanomaterials and titanium dioxide pigment assets from BHP.
We are employing the nanomaterials and titanium dioxide pigment  technology as a
platform for the sale of contract services,  intellectual  property licenses and
for  the   production  and  sale  of  metal  oxide   nanoparticles   in  various
applications.

         We have  experienced an operating  loss in every year of operation.  In
the  fiscal  year  ended  December  31,  2004,  we  experienced  a net  loss  of
$7,002,280.

Employees

         The  business of Altair is  currently  managed by Dr. Alan J.  Gotcher,
Chief  Executive  Officer of the Company,  Dr. Rudi E. Moerck,  President of the
Company,  Mr.  Douglas  Ellsworth,  Senior  Vice  President  of the  Company and
President of Altair Nanomaterials,  Inc., Mr. Roy Graham, Senior Vice President,
and Mr. Edward Dickinson, Chief Financial Officer. We have 23 additional regular
employees and five full-time  temporary  employees in research and  development,
operations  and  administration.  We have  employment  agreements  with  Messrs.
Gotcher, Ellsworth, Graham and Dickinson.

         During 2005, we expect to hire the five  temporary  employees,  who are
primarily working in research and development,  as regular employees, and we may
hire as many as five additional employees, primarily in operations and sales.

                                       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 the  following
section and other cautionary  statements throughout this Form 10-K and our other
filings   with  the   Commission.   You  should  also  keep  in  mind  that  all
forward-looking  statements  are based on  management's  existing  beliefs about
present and future events  outside of  management's  control and on  assumptions
that may prove to be  incorrect.  If one or more risks  identified  in this Form
10-K or any other  applicable  filings  materializes,  or any  other  underlying
assumptions  prove incorrect,  our actual results may vary materially from those
anticipated, estimated, projected, or intended.

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

Factors that May Affect Future Results

We may continue to experience significant losses from operations.

         We have  experienced a loss from  operations in every fiscal year since
our inception. Our losses from operations were $6,904,955 in 2004 and $5,785,210
in 2003. We will continue to experience a net operating loss until,  and if, the
applications of our nanomaterials and titanium dioxide pigment  technology begin
generating  revenues  in excess of our  operating  expenses.  Even if any or all
applications of the nanomaterials and titanium dioxide pigment  technology begin
generating  significant  revenues,  the  revenues  may not  exceed  our costs of
production  and  operating  expenses.  We may not ever  realize  a  profit  from
operations.

Our  patents  and other  protective  measures  may not  adequately  protect  our
proprietary  intellectual  property,  and we may be  infringing on the rights of
others.
--------------------------------------------------------------------------------
         We regard  our  intellectual  property,  particularly  our  proprietary
rights in our nanomaterials and titanium dioxide pigment technology, as critical
to our  success.  We have  received  various  patents,  and filed  other  patent
applications,  for various  applications  and aspects of our  nanomaterials  and
titanium  dioxide  pigment  technology  and  other  intellectual   property.  In
addition,  we generally enter into confidentiality and invention agreements with
our employees and  consultants.  Such patents and  agreements  and various other
measures we take to protect our intellectual property from use by others may not
be effective for various reasons, including the following:

         o    Our  pending  patent  applications  may not be granted for various
              reasons,  including the existence of similar patents or defects in
              the applications;
         o    The patents we have been granted may be challenged, invalidated or
              circumvented  because of the  pre-existence of similar patented or
              unpatented intellectual property rights or for other reasons;
         o    Parties to the confidentiality  and invention  agreements may have
              such agreements declared  unenforceable or, even if the agreements

                                       21
<PAGE>

              are enforceable, may breach such agreements;
         o    The costs associated with enforcing patents,  confidentiality  and
              invention  agreements or other  intellectual  property  rights may
              make aggressive enforcement cost prohibitive;
         o    Even if we enforce our rights aggressively, injunctions, fines and
              other  penalties may be  insufficient  to deter  violations of our
              intellectual property rights; and
         o    Other persons may independently  develop  proprietary  information
              and techniques that, although functionally  equivalent or superior
              to our intellectual proprietary information and techniques, do not
              breach our patented or unpatented proprietary rights.

Because  the value of our company and common  stock is rooted  primarily  in our
proprietary   intellectual   property  rights,  our  inability  to  protect  our
proprietary  intellectual  property rights or gain a competitive  advantage from
such rights could have a material adverse effect on our business.

         In addition,  we may  inadvertently  be infringing  on the  proprietary
rights of other  persons  and may be  required  to obtain  licenses  to  certain
intellectual  property  or other  proprietary  rights from third  parties.  Such
licenses or proprietary rights may not be made available under acceptable terms,
if at all. If we do not obtain required licenses or proprietary rights, we could
encounter delays in product  development or find that the development or sale of
products requiring such licenses is foreclosed.

We have a substantial number of warrants and options outstanding and may issue a
significant number of additional shares upon exercise thereof.
--------------------------------------------------------------------------------
         As of February 16, 2005, there were outstanding warrants to purchase up
to  1,657,452  shares of common  stock and options to  purchase up to  3,014,700
shares of common  stock.  The  existence of such  warrants and options,  and any
additional warrants and options we issue in the future, may hinder future equity
offerings,  and the exercise of such warrants and options may further dilute the
interests  of all  shareholders.  The shares of common stock  issuable  upon the
exercise of many of our outstanding  warrants are subject to resale registration
statements,  and all of our options are subject to a  registration  statement on
Form S-8.  Accordingly,  future resale of the shares of common stock issuable on
the exercise of such warrants and options in most cases occurs immediately after
exercise and may have an adverse  effect on the  prevailing  market price of the
shares of common stock.

Our  competitors  have  more  resources  than  we  do,  which  may  give  them a
competitive advantage.
--------------------------------------------------------------------------------
         We have limited financial and other resources and, because of our early
stage of development,  have limited access to capital. We compete or may compete
against entities that are much larger than we are, have more extensive resources
than we do and have an established reputation and operating history.  Because of
their size,  resources,  reputation,  history and other factors,  certain of our
competitors  may be able to exploit  acquisition,  development and joint venture
opportunities  more  rapidly,  easily or  thoroughly  than we can. In  addition,
potential  customers  may  choose  to do  business  with  our  more  established
competitors,  without regard to the comparative quality of our products, because
of their  perception that our  competitors  are more stable,  are more likely to
complete  various  projects,  are more likely to continue as a going concern and
lend greater credibility to any joint venture.

We may not be able to  generate  substantial  revenues  from  the  licensing  of
RenazorbTM.
--------------------------------------------------------------------------------
         On January 28, 2005, we entered into a license  agreement with Spectrum
Pharmaceuticals,  Inc. under which we granted  Spectrum the exclusive  worldwide

                                       22
<PAGE>

rights to develop,  market and sell  RenazorbTM,  a potential drug candidate for
patients with kidney disease, for human therapeutic and diagnostic applications.
Under the  terms of the  license,  we will not  generate  substantial  recurring
revenues unless and until Spectrum  completes clinical testing of RenazorbTM and
applies for and receives  marketing approval from the FDA and similar regulatory
agencies  worldwide,   begins  marketing  products  containing   RenazorbTM  and
experiences substantial,  sustained market penetration with such products. There
are substantial risks associated with that process, including the following:

         o    further testing conducted by Spectrum may indicate that RenazorbTM
              is  less  effective  than  existing   products,   is  unsafe,  has
              significant side effects or is otherwise not viable;
         o    Spectrum may be unable to obtain FDA or other regulatory  approval
              of RenazorbTM for  technical,  political or other reasons or, even
              if it obtains  such  approval,  may not obtain such  approval on a
              timely basis;
         o    products  containing  RenazorbTM may not be accepted in the market
              for  various  reasons,  including  questions  about its  efficacy,
              safety and side effects or because of poor marketing by Spectrum;
         o    Spectrum may terminate the license agreement, experience financial
              or other  problems or otherwise  fail to  effectively  test,  seek
              approval for and market RenazorbTM; and
         o    prior to or following regulatory  approval,  superior products may
              be developed and introduced into the market.

         If  any  or  the  foregoing  risks,  or  other  risks  associated  with
developing   pharmaceutical  products  were  to  occur,  we  would  not  receive
substantial, recurring revenue from our license with Spectrum.

Our  nanomaterial   technology  with  potential   applications  in  rechargeable
batteries is still in a developmental stage.
--------------------------------------------------------------------------------
         We are still testing and developing our  AltairnanoTM  Lithium Titanate
Spinel nanomaterial technology, which has potential applications in rechargeable
batteries. Even if we complete the testing and development of our technology, we
lack the ability to integrate the technology  into a commercial  battery product
without the assistance of a strategic partner. In addition,  even if we are able
to enter  into an  agreement  with a  strategic  partner  to  commercialize  the
technology:

         o    products  utilizing the technology,  all of which would still need
              to be developed, may never be completed;
         o    products  utilizing the technology may not exhibit expected charge
              or  discharge  rates or  durability  or may  otherwise  not  prove
              competitive  with existing  technologies or those being created by
              other persons;
         o    products  incorporating  the  technology may not meet the distinct
              needs of potential customers, applications or industries; and
         o    marketing  and  branding  efforts  by us,  a  potential  strategic
              partner or others  may be  insufficient  to  attract a  sufficient
              number of customers.

We may not benefit from  licenses to use our  technology  for  titanium  dioxide
pigment production.
--------------------------------------------------------------------------------
         Because of our relatively small size and limited  resources,  we do not
plan to use our titanium  processing  technology for  large-scale  production of
titanium  dioxide  pigments.  We have  entered  into  discussions  with  various
minerals and materials companies about licensing our technology to such entities
for  large-scale  production  of titanium  dioxide  pigments.  To date,  we have
entered into a license  agreement with only one such entity,  Western Oil Sands,
Inc. Under our license  agreement with Western Oil Sands, we expect to receive a
limited amount of revenue during the early testing and development  phase of the

                                       23
<PAGE>

agreement but will receive  significant  royalties only if Western Oil Sands and
licensees of Western Oil Sands determine in their discretion, after testing at a
demonstration  plant,  to construct or license the  construction of a full-scale
titanium pigment production facility. If we enter into other license agreements,
we expect that,  as with the Western Oil Sands  agreement,  we would not receive
significant  revenues from such licenses  unless and until  feasibility  testing
yielded  positive  results and the licensee  determined,  in its discretion,  to
construct and operate a titanium pigment production facility.

We may not be able to sell  nanoparticles  produced using the  nanomaterials and
titanium dioxide pigment technology.
--------------------------------------------------------------------------------
         We  plan  to  use  the   nanomaterials  and  titanium  dioxide  pigment
technology  to  produce   titanium  dioxide   nanoparticles.   Titanium  dioxide
nanoparticles  and  other  products  we  intend to  initially  produce  with the
nanomaterials  and  titanium  dioxide  pigment  technology   generally  must  be
customized for a specific  application working in cooperation with the end user.
We are still testing and customizing our titanium dioxide nanoparticle  products
for various  applications  and have no  long-term  agreements  with end users to
purchase any of our titanium dioxide nanoparticle  products. We may be unable to
recoup  our  investment  in  the  nanomaterials  and  titanium  dioxide  pigment
technology and  nanomaterials and titanium dioxide pigment equipment for various
reasons, including the following:

         o    products  utilizing our titanium  dioxide  nanoparticle  products,
              most of which are in the research or development stage, may not be
              completed  or,  if  completed,  may  not be  readily  accepted  by
              expected end users;
         o    we may be unable to customize  our titanium  dioxide  nanoparticle
              products to meet the distinct needs of potential customers;
         o    potential  customers  may  purchase  from  competitors  because of
              perceived or actual quality or compatibility differences;
         o    our marketing and branding  efforts may be insufficient to attract
              a sufficient number of customers; and
         o    because of our limited  funding,  we may be unable to continue our
              development  efforts  until  a  strong  market  for  nanoparticles
              develops.

Our costs of production may be too high to permit profitability.
--------------------------------------------------------------------------------
         We have not  produced any  pigments,  nanoparticles  or other  products
using our nanomaterials and titanium dioxide pigment technology and equipment on
a commercial  basis. Our actual costs of production,  or those of our licensees,
may exceed those of competitors  and, even if our costs of production are lower,
competitors  may be able to sell titanium  dioxide and other products at a lower
price than is economical for us or our licensees.

We have  issued a  $3,000,000  note to secure the  purchase  of the land and the
building  where our  nanomaterials  and  titanium  dioxide  pigment  assets  are
located.
--------------------------------------------------------------------------------
         In August 2002, we entered into a purchase and sale  agreement with BHP
Minerals International Inc. to purchase the land, building and fixtures in Reno,
Nevada where our  nanomaterials and titanium dioxide pigment assets are located.
In connection  with this  transaction,  we issued to BHP a note in the amount of
$3,000,000,  at an interest rate of 7%, secured by the property we acquired. The
first payment of $600,000 of principal plus accrued  interest is due February 8,
2006.  Additional payments of $600,000 plus accrued interest are due annually on
February 8, 2007 through 2010.  If we fail to make the required  payments on the
note,  BHP has the right to  foreclose  and take the  property.  If this  should
occur,  we would be  required  to  relocate  our  primary  operating  assets and
offices, causing a significant disruption in our business.

                                       24
<PAGE>

We may not be able to raise sufficient capital to meet future obligations.
--------------------------------------------------------------------------------
         As of  February  16,  2005,  we had $31  million  in  cash,  an  amount
sufficient to fund our ongoing operations for approximately 4-5 years at current
working capital  expenditure  levels.  However,  we may use our existing capital
sooner  than  projected  in  connection  with  an   unanticipated   transaction,
litigation  or  another  unplanned  event.  We may also use  more  capital  than
projected as we expand our research,  development and marketing efforts.  Unless
we  experience  a  significant  increase  in  revenue,  we will  need  to  raise
additional  capital in the future in order to sustain  our  ongoing  operations,
continue  unfinished testing and additional  development work and, if certain of
our products have been commercialized, produce and market such products.

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

         o    market  factors  affecting  the  availability  and cost of capital
              generally;
         o    the price,  volatility  and trading volume of our shares of common
              stock;
         o    our financial  results,  particularly the amount of revenue we are
              generating from operations;
         o    the amount of our capital needs;
         o    the market's perception of nanotechnology and/or chemical stocks;
         o    the economics of projects being pursued; and
         o    the market's perception of our ability to generate revenue through
              the  licensing  or  use  of  our   nanoparticle   technology   for
              pharmaceutical,  pigment production,  nanoparticle  production and
              other uses.

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

Operations using the  nanomaterials  and titanium dioxide pigment  technology or
our Tennessee mineral property may lead to substantial environmental liability.
--------------------------------------------------------------------------------
         Virtually  any prior or future use of the  nanomaterials  and  titanium
dioxide pigment technology is subject to federal,  state and local environmental
laws. In addition,  we have constructed a pilot plant on, and are in the process
of  reclaiming,  our  Tennessee  mineral  property.  Under such laws,  we may be
jointly and  severally  liable  with prior  property  owners for the  treatment,
cleanup,  remediation and/or removal of any hazardous  substances  discovered at
any  property we use. In  addition,  courts or  government  agencies  may impose
liability for, among other things,  the improper  release,  discharge,  storage,
use, disposal or transportation of hazardous substances.

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

                                       25
<PAGE>

We are dependent on key personnel.
--------------------------------------------------------------------------------
         Our  continued  success  will  depend  to a  significant  extent on the
services of Dr. Alan J. Gotcher,  our Chief Executive Officer,  Dr. Rudi Moerck,
our President,  Douglas Ellsworth and Roy Graham, our Senior Vice Presidents and
Edward Dickinson, our Chief Financial Officer. The loss or unavailability of any
or all of these individuals could have a material adverse effect on our business
and the  market  price of our  shares of common  stock.  We do not carry key man
insurance  on the  lives  of any of our  personnel  and do not  have  agreements
requiring any of them to remain with our company.

We may issue  substantial  amounts  of  additional  shares  without  stockholder
approval.
--------------------------------------------------------------------------------
         Our articles of  incorporation  authorize  the issuance of an unlimited
number of  shares of common  stock  that may be  issued  without  any  action or
approval by our stockholders.  In addition, we have two stock option plans and a
stock purchase plan that have potential for diluting the ownership  interests of
our  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 may  increase or decrease  dramatically  at
any time for any or no apparent reason.
--------------------------------------------------------------------------------
         The market price of our common  stock,  like that of the  securities of
other early stage companies,  may be highly volatile. Our stock price may change
dramatically  as the  result of  announcements  of our  quarterly  results,  new
products or  innovations  by us or our  competitors,  uncertainty  regarding the
viability  of  the  nanomaterials  and  titanium  dioxide  pigment   technology,
significant  customer  contracts,  significant  litigation  or other  factors or
events  that would be  expected  to affect our  business,  financial  condition,
results of operations and future  prospects.  In addition,  the market price for
our common stock may be affected by various factors not directly  related to our
business or future prospects, including the following:

         o    Intentional  manipulation of our stock price by existing or future
              shareholders  or a reaction  by  investors  to trends in our stock
              rather than the fundamentals of our business;
         o    A  single   acquisition  or   disposition,   or  several   related
              acquisitions or dispositions, of a large number of our shares;
         o    The interest of the market in our business sector,  without regard
              to our  financial  condition,  results of  operations  or business
              prospects;
         o    Positive or negative  statements or projections about our company,
              or our industry, by analysts, stock gurus and other persons;
         o    The  adoption of  governmental  regulations  or  government  grant
              programs and similar  developments  in the United States or abroad
              that may enhance or detract from our ability to offer our products
              and services or affect our cost structure;
         o    Economic  and other  external  market  factors,  such as a general
              decline  in  market  prices  due to poor  economic  indicators  or
              investor distrust; and
         o    Speculation  by short sellers of our common stock or other persons
              who stand to profit from a rapid increase or decrease in the price
              of our common stock.

We have  never  declared  a cash  dividend  and do not  intend to declare a cash
dividend in the foreseeable future.
--------------------------------------------------------------------------------
         We have never declared or paid cash  dividends on our common stock.  We
currently intend to retain any future earnings,  if any, for use in our business
and,  therefore,  do not anticipate  paying dividends on our common stock in the
foreseeable future.
                                       26
<PAGE>

Item 2.      Properties

         Our corporate  headquarters is located at 204 Edison Way, Reno,  Nevada
89502 in a building we purchased in August 2002. Our  nanomaterials and titanium
dioxide pigment assets are located in this building which contains approximately
80,000 square feet of production,  laboratory, testing and office space. We have
pledged our corporate  headquarters  and associated  land to secure a promissory
note we issued to BHP Minerals International,  Inc. in the amount of $3,000,000,
at an  interest  rate of 7%. The first  payment of $600,000  of  principal  plus
accrued interest on such promissory note is due February 8, 2006.

         We also maintain a registered office at 56 Temperance Street,  Toronto,
Ontario M5H 3V5. We do not lease any space for,  or conduct any  operations  out
of, the Toronto, Ontario registered office.

         We believe that the existing  offices and test facilities of Altair and
its  subsidiaries  are  adequate  for  our  current  needs.  In the  event  that
alternative or additional  office space is required,  we believe we could obtain
additional space on commercially acceptable terms.

         As mentioned above in Tennessee  Mineral  Property,  we have terminated
the  mineral  leases  on  approximately  4,750  acres of our  Tennessee  mineral
property and intend to terminate the leases on the remaining  3,950 acres during
the first quarter of 2005. We are also working with the Tennessee  Department of
Environment and  Conservation to finalize a plan for remediation of the property
and are in discussions with potential purchasers of the pilot plant assets. When
we have terminated all of the mineral leases, performed the required remediation
and  disposed  of the plant  assets,  we will no longer have any  properties  in
Tennessee. We expect to accomplish this during the first half of 2005.


Item 3.      Legal Proceedings

         We are from time to time involved in routine  litigation  incidental to
the conduct of our business.  We are currently not involved in any 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

         We did not submit any matters to a vote of security  holders during the
fourth quarter of the 2004 fiscal year.


                                       27
<PAGE>

                                     PART II


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

Market Price

         Our common  shares are traded on the Nasdaq  SmallCap  Market under the
symbol "ALTI." The following table sets forth,  for the periods  indicated,  the
high and low sales prices for our common  shares,  as reported on our  principal
trading market at the time.

                 Fiscal Year Ended December 31, 2003          Low         High
                                                         ---------   ----------
                 1st Quarter                                $0.31        $0.56
                 2nd Quarter                                $0.30        $1.48
                 3rd Quarter                                $0.73        $1.65
                 4th Quarter                                $1.12        $2.90

                 Fiscal Year Ended December 31, 2004          Low         High
                                                         ---------   ----------
                 1st Quarter                                $2.20        $4.40
                 2nd Quarter                                $2.05        $3.58
                 3rd Quarter                                $0.95        $2.37
                 4th Quarter                                $1.50        $3.17

         The last sale price of our common  shares,  as  reported  on the Nasdaq
SmallCap Market, on February 16, 2005 was $4.28 per share.

Outstanding Shares and Number of Shareholders

         As of February 16, 2005,  the number of common shares  outstanding  was
57,993,975 held by approximately 500 holders of record.  In addition,  as of the
same date, we have reserved  3,962,700  common shares for issuance upon exercise
of options that have been, or may be,  granted  under our employee  stock option
plans and 1,657,452  common  shares for issuance  upon  exercise of  outstanding
warrants.

Dividends

         We have never  declared or paid cash  dividends  on our common  shares.
Moreover,  we  currently  intend to retain  any future  earnings  for use in our
business and,  therefore,  do not anticipate  paying any dividends on our common
shares in the foreseeable future.

Securities Authorized for Issuance under Equity Compensation Plans

         We have stock option plans  administered by the Board of Directors that
provide for the granting of options to employees,  officers, directors and other
service  providers  of the  Company.  All  option  plans have been  approved  by
security  holders.  We also have an Employee  Stock Purchase Plan ("ESPP") which
allows  employees to purchase common shares through payroll  deductions when, as
and if determined by our board of directors.  The ESPP, which is a broadly-based
plan open to all employees, other than executive officers, has not been approved
by shareholders. The following table sets forth certain information with respect
to compensation  plans under which equity securities are authorized for issuance
at December 31, 2004:

                                       28
<PAGE>
<TABLE>
<CAPTION>

        ---------------------------------- -------------------- -------------------- -----------------------
                                                                                      Number of securities
                                                Number of                             remaining available
                                            securities to be                          for future issuance
                                               issued upon       Weighted-average         under equity
                                               exercise of       exercise price of     compensation plans
                                               outstanding          outstanding      (excluding securities
                                            options, warrants    options, warrants    reflected in column
                                               and rights           and rights                (a))
                  Plan Category                    (a)                  (b)                   (c)
        ---------------------------------- -------------------- -------------------- -----------------------
<S>                                             <C>                    <C>                 <C>
        Equity compensation plans               3,293,700              $2.28               1,048,000
        approved by security holders
        ---------------------------------- -------------------- -------------------- -----------------------
        Equity compensation plans not
        approved by security holders              None                  N/A                 348,552
        ---------------------------------- -------------------- -------------------- -----------------------
                      Total                     3,293,700              $2.28               1,396,552
        ---------------------------------- -------------------- -------------------- -----------------------
</TABLE>

Recent Sales of Unregistered Securities

         Except  as  previously  reported,  we did not  sell any  securities  in
transactions  that were not  registered  under the Securities Act in the quarter
ended December 31, 2004.


Transfer Agent and Registrar

         The  Transfer  Agent  and  Registrar  for our  common  shares is Equity
Transfer Services, Inc., Suite 420, 120 Adelaide Street West, Toronto,  Ontario,
M5H 4C3.


Canadian Taxation Considerations

         Dividends  paid on common shares 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.

                                       29
<PAGE>

         A capital gain realized on the disposition of common shares 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  Stock in  carrying on business in Canada or 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, which were listed on a prescribed stock exchange,  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 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.

Item 6.      Selected Financial Data

         The  following  table  sets  forth  selected   consolidated   financial
information  with  respect to the Company and its  subsidiaries  for the periods
indicated.  The data is derived from financial statements prepared in accordance
with  accounting  principles  generally  accepted  in the United  States  ("U.S.
GAAP").  The  selected  financial  data should be read in  conjunction  with the
section entitled  "Management's  Discussion and Analysis of Financial  Condition
and  Results  of  Operations"  and the  consolidated  financial  statements  and
accompanying notes included herein. All amounts are stated in U.S. dollars.
<TABLE>
<CAPTION>
For the Year Ended December 31,       2004            2003            2002            2001            2000
                                  ------------    ------------    ------------    ------------    ------------
<S>                               <C>             <C>             <C>             <C>             <C>
STATEMENTS OF OPERATIONS
------------------------
Revenues                          $  1,151,892    $     72,851    $    253,495    $     42,816    $       --
Operating Expenses                $  8,056,847    $  5,858,061    $  8,110,206    $  6,064,348    $  6,647,367
Interest expense                  $    194,180    $    454,415    $  1,151,388    $  1,881,077    $    215,216
Interest Income                   $    (96,229)   $     (1,879)   $     (2,105)   $   (148,980)   $    (83,440)
Loss (Gain) on foreign exchange   $       (626)   $        193    $        835    $        402    $   (864,669)
Loss on extinguishment of debt    $       --      $       --      $    914,667    $       --      $       --
Net Loss                          $  7,002,280    $  6,237,939    $  9,921,496    $  7,754,031    $  5,914,474
Basic and diluted net loss per
     common share                 $       0.14    $       0.19    $       0.40    $       0.39    $       0.34
Cash dividends declared per
     common share                 $       --      $       --      $       --      $       --      $       --
BALANCE SHEET DATA
------------------
Working capital                   $  7,663,264    $  3,565,039    $   (204,365)   $    (81,154)   $    234,714
Total assets                      $ 15,547,021    $ 11,659,754    $  8,914,405    $ 10,853,243    $ 16,651,770
Long-term obligations             $  2,880,311    $  2,686,130    $  3,905,040    $  1,462,060    $  2,689,493
Current liabilities               $    376,773    $    397,141    $    604,503    $    714,689    $  3,741,366
Net shareholders' equity          $ 12,289,937    $  8,576,483    $  4,404,862    $  8,676,494    $ 10,220,911

</TABLE>

                                       30
<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

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

Overview

         We are a Canadian company,  with principal assets and operations in the
United  States,   whose  primary  business  is  developing  and  commercializing
nanomaterial  and  titanium  dioxide  pigment  technologies.  We  have  recently
organized  into  two  divisions,  a Life  Sciences  Division  and a  Performance
Materials  Division,  in  anticipation  of  generating a  substantial  amount of
business  activity  and  revenues  from  life  sciences  products,  specifically
pharmaceuticals  and drug  delivery  products.  During 2004,  revenues from life
science products were not significant. Our research, development, production and
marketing  efforts are currently  directed toward six market  applications  that
utilize our proprietary technologies:

The Performance Materials Division.
-----------------------------------
     o   Advanced Materials for Paints, Coatings and Sensors
         o    The production of titanium dioxide pigments;
         o    The  production  of  nano-structured  powders  for  thermal  spray
              applications;
         o    The  production  of   nano-structured   powders  for   nano-sensor
              applications.
     o   Advanced Materials for Improving Process Technologies
         o    The  development  of  titanium  dioxide  electrode  structures  in
              connection   with  a  research   program  aimed  at  developing  a
              lower-cost  process  for  producing  titanium  metals and  related
              alloys;
         o    The development  and production of NanoCheck TM phosphate  binding
              materials for prevention of algae growth.
     o   Advanced Materials for Alternative Energy
         o    The development of materials for high performance batteries,  fuel
              cells and photovoltaics.
The Life Sciences Division.
---------------------------
     o   Pharmaceutical Products
         o    The   co-development   of   RenaZorb(TM),   a  test-stage   active
              pharmaceutical  ingredient,  which is designed to be useful in the
              treatment  of  elevated   serum   phosphate   levels  in  patients
              undergoing kidney dialysis.
     o   Drug Delivery Products
         o    The  development  of TiNano  SpheresTM,  which are rigid,  hollow,
              porous,  high  surface  area  ceramic  micro  structures  that are
              derived from Altair's proprietary process technology.
     o   Dental Materials
         o    The development of  nanomaterials  for use in various products for
              dental fillings.

         We also provide contract  research services on select projects where we
can utilize our resources to develop  intellectual  property and/or new products
and technology.

         We currently have agreements in place to (1) provide research involving
a technology  used in the  detection of chemical,  biological  and  radiological
agents,  (2) provide  custom  oxide  feedstocks  for a titanium  metal  research
program  funded by the  Department  of Defense,  (3) license  and  evaluate  our
pigment   production   process   for  the   production   of  TiO2   pigment  and
pigment-related  products from titanium-bearing oil sands, (4) supply nano-sized
anode and cathode  materials for design and development of high capacity lithium

                                       31
<PAGE>

ion battery and super capacitor applications, and (5) provide research utilizing
nanotechnology processes for the production and commercialization of solar-based
hydrogen  technologies.  In addition, we have entered into a licensing agreement
for  RenaZorbTM,  our potential  pharmaceutical  product.  Future  revenues will
depend on the success of these  projects,  the results of our other research and
development  work,  the  success of the  RenaZorbTM  licensee in  obtaining  FDA
approval for the drug, and the success of our marketing efforts.

General Outlook

         We have  generated net losses in each fiscal year since  incorporation.
Our revenues in fiscal 2004 were $1,152,000, representing a significant increase
over our revenues of $73,000 in fiscal 2003. Total operating expenses for fiscal
2004  were  $8,056,847.  Substantially  all of our  revenues  in 2004  came from
commercial  collaborations,  grants and other research or development work which
we have undertaken primarily in order to benefit from resulting technology.  Our
gross profit margins on such research and  development  work is very low, and in
order that we may be  profitable  in the long run, our business  plan focuses on
the  development  of products and  technologies  that we expect will  eventually
bring  a  substantial   amount  of   higher-margin   revenues  from   licensing,
manufacturing, product sales and other sources.

         As we attempt to  significantly  expand our  revenues  from  licensing,
manufacturing,  sales and other sources,  some of the key near-term  events that
will affect our long term success prospects include the following:

         o    We  must  complete  animal  testing  of our  RenaZorb(TM)  product
              demonstrating specified result levels of our RenaZorb(TM) product,
              which we expect to be  performed  during  the first  half of 2005.
              Successful   completion  of  this  milestone   under  our  license
              agreement  with Spectrum will result in Spectrum's  release of the
              associated milestone payment to Altair, 100,000 shares of Spectrum
              common  stock,  and  enable  Spectrum  to begin  the  testing  and
              application processes necessary to receive FDA approval.

         o    Licensing and product purchase  commitments for our  Nanocheck(TM)
              swimming pool product are currently under  discussion.  Successful
              completion of potential license  agreement(s) and product purchase
              commitments  are  essential  for  the   commercialization  of  the
              Nanocheck(TM)   product,   which  could  bring  manufacturing  and
              licensing revenue in late 2005 or 2006.

         o    The  initial  phase  of work for the  Western  Oil  Sands  License
              agreement is  approximately  50%  complete.  We must  successfully
              complete the initial  phase,  and Western Oil Sands must decide to
              proceed  with phase 2 work for this  project to  continue  to move
              toward commercialization.

         o    We  have  completed  phase  one  work  under  a  National  Science
              Foundation grant to produce  materials  enabling a next generation
              of  rechargeable  batteries and have applied for a phase two grant
              of $500,000. Phase two grants are scheduled to be announced during
              July 2005. The ultimate commercialization of our battery materials
              will be dependant upon our ability to secure a technology  license
              or similar  agreement with one or more battery  manufacturers.  We
              are currently in discussions with several such  manufacturers  and
              cannot  project  when,  or if,  we will  enter  into a  partnering
              agreement with respect to our batter materials technology and what
              the terms of such agreement may be.

         o    Although  its is not  essential  that  all of  these  projects  be
              successful  in  order  to  permit  substantial  long-term  revenue
              growth, we believe that full  commercialization  of several of our

                                       32
<PAGE>

              technologies  will be  necessary  in order to expand our  revenues
              enough to create a likelihood  of our becoming  profitable  in the
              long term.  We are  optimistic  with  respect to our  current  key
              projects,  as well as other we are pursuing,  but recognize  that,
              with respect to each, there are development, marketing, partnering
              and other risks to be overcome.

Restructuring Progress

         In June  2004,  we  reorganized  the  Company  in order to  concentrate
resources  on the  nanomaterials  and titanium  dioxide  pigment  business.  The
reorganization  involved the creation of the Performance  Materials Division and
the Life Sciences  Division and the  commencement of a process of narrowing down
the number of projects within those divisions and selecting certain projects for
increased  near-term  focus and effort.  The  reorganization  also  involved the
decision to  discontinue  our mineral  processing  business,  particularly  that
aspect related to our Tennessee mineral  properties.  During 2004, we terminated
the mineral  leases on  approximately  4,750 acres and expect to  terminate  the
leases on the  remaining  3,950  acres  during the first six months of 2005.  In
October  2004,  we filed a  reclamation  and  closure  plan  with the  Tennessee
Department of Environment and  Conservation and are now in discussions with them
toward finalizing the plan. We are also in discussions with potential purchasers
of the pilot plant assets.  We expect that costs associated with the abandonment
of the  Tennessee  mineral  property  will equal or exceed any proceeds from the
disposition of related assets.

Liquidity and Capital Resources

    Current and Expected Liquidity

         Our cash position was  significantly  enhanced  during 2004 and through
February 2005. During 2004, we received $8,955,000 from the exercise of warrants
and $902,000 from the exercise of options.  In early  February  2005, the market
price of our  common  shares  increased  significantly.  As a result,  2,839,281
warrants and 379,000 options were exercised, resulting in cash proceeds to us of
$4,903,487.  Additionally, on February 14, 2005, we sold 5,000,000 of our common
shares which had been  previously  registered  in a shelf  registration  for net
proceeds to us of $19.2  million.  As of February 16, 2005, we had cash and cash
equivalents on hand of approximately  $31 million,  an amount sufficient to fund
our operations for approximately 4-5 years at projected operating levels.

         We intend to use these funds for working capital, capital expenditures,
research and development  activities and the acquisition of other  technologies.
Net cash used in operations  was $5,620,000 in 2004 and we expect this amount to
remain  approximately  the same in 2005.  Although  we expect  cash  outflows to
increase  in 2005  due  primarily  to  staff  additions  and  increased  capital
expenditures,  as  outlined  in the  following  paragraphs,  we expect a similar
increase in revenues as a result of increased  contract R&D work,  product sales
and licensing revenues.

         In 2005, we expect to generate revenues from commercial collaborations,
contracts and grants by utilizing our nanomaterials and titanium dioxide pigment
technology. We currently have six contracts in place that will generate revenues
in 2005. These are:

         o    a  licensing   agreement   with   Spectrum   Pharmaceuticals   for
              RenaZorb(TM)  under which we expect to receive  approximately $1.3
              million during 2005;

         o    a contract  with  Western Oil Sands,  Inc. for the  production  of
              titanium  dioxide  pigment and  pigment-related  products from oil
              sands. We have approximately $200,000 of work remaining to be done
              on an existing  contract  and expect to enter into a second  phase
              contract to do additional work in 2005.


                                       33
<PAGE>

         o    a contract with Western Michigan University to develop nanosensors
              for the detection of chemical, biological and radiological agents.
              We have  approximately  $250,000 of work to be done under existing
              contracts in 2005.
         o    a grant awarded by the National  Science  Foundation to fund joint
              development work on next generation lithium ion power sources.  We
              will receive $33,000 under an existing  agreement in 2005 and hope
              to receive an additional grant for further development work.
         o    an agreement  with the  University of Nevada,  Las Vegas  Research
              Foundation  to act as a  subcontractor  under a  $3,000,000  grant
              awarded  to  them by the  U.S.  Department  of  Energy  for  joint
              research activities related to solar hydrogen production.  We have
              approximately  $400,000  of work to be  done  in  2005  under  the
              agreement.
         o    a contract with Titanium Metals  Corporation to provide feedstocks
              used  in  the  production  of  titanium  metal.  We  will  receive
              approximately $60,000 under the existing contract in 2005 and hope
              to enter into another contract for further development work.

         In addition, to these existing collaborations, contracts and grants, we
hope to commence  generating  revenue  from certain of our  products,  including
Nanocheck (TM), a  lanthanum-based  compound that can be used to treat water for
the removal of a wide range of  deleterious  impurities,  and yttria  stabilized
zirconia,  a product that may be used in solid oxide fuel cells and as a thermal
barrier coating. Contributions to total revenues from these products during 2005
will not likely be  significant,  but such  increases may lay the foundation for
more substantial revenue in future years.

         In  addition,  we  will  generate  revenue  through  the  licensing  of
RenaZorb(TM), a potential drug that may be useful in phosphate control in kidney
dialysis patients. In January 2005, we signed a RenaZorb(TM) licensing agreement
with Spectrum Pharmaceuticals, Inc. ("Spectrum") which grants Spectrum exclusive
worldwide  rights to develop,  market and sell  RenaZorb(TM).  Upon  signing the
agreement, Spectrum issued to us 100,000 restricted shares of their common stock
and purchased 38,314  restricted  shares of our common stock at the then current
market value of $2.61 per share,  and also paid us $100,000 in  connection  with
the licensing agreement. Additional payments by Spectrum are contingent upon the
achievement of various milestones in the testing,  regulatory  approval and sale
of RenaZorb(TM).  Assuming that planned milestones are achieved,  we may receive
payments  of  approximately  $1.3  million in 2005,  between $9 million  and $14
million  over the first 5-7 years and in excess of $100 million over the life of
the agreement. We expect that most of the revenue generated during 2005 from our
RenaZorb(TM) license will be in the form of restricted shares of Spectrum common
stock, and, as a result, such revenue will be non-cash.

         Historically,   we  have  financed  operations  primarily  through  the
issuance of equity  securities  (common shares,  convertible  debentures,  stock
options and warrants) and by the issuance of debt. In light of our recent public
offering of securities,  we do not presently have any plans to pursue additional
debt or equity  financing  during  2005 but reserve the right to do so if deemed
necessary in connection with an unexpected  business  opportunity or need. We do
not have any commitments  with respect to future  financing and may, or may not,
be able to obtain  such  financing  on  reasonable  terms,  or at all. We have a
single note payable in the principal  amount of $3,000,000 that does not contain
any  restrictive  covenants  with respect to the issuance of additional  debt or
equity securities by Altair.

    Capital Commitments and Expenditures

         The  following  table  discloses   aggregate   information   about  our
contractual  obligations  including  notes  payable,   mineral  lease  payments,
facilities lease payments and contractual service agreements, and the periods in
which payments are due as of December 31, 2004:

                                       34
<PAGE>
<TABLE>
<CAPTION>
                                               Less Than                               After
Contractual Obligations             Total        1 Year     1-3 Years   4-5 Years     5 Years
------------------------------   ----------   ----------   ----------   ----------   ----------
<S>                              <C>          <C>          <C>          <C>          <C>
Notes Payable                    $3,000,000*  $     --     $1,200,000   $1,200,000   $  600,000

Interest on notes payable           525,000         --        273,000      210,000       42,000
Mineral Leases                      284,575       47,815       96,181       69,097       71,482

Contractual Service Agreements      651,650      589,150       62,500         --           --

Unfulfilled Purchase Orders         161,151      161,151         --           --           --
                                 ----------   ----------   ----------   ----------   ----------
Total Contractual Obligations    $4,622,376   $  798,116   $1,631,681   $1,479,097   $  713,482
                                 ==========   ==========   ==========   ==========   ==========
</TABLE>
* Before discount of $119,689.

         During  2003,  our  capital  expenditures   consisted  of  pilot  plant
extraction  columns and a company  vehicle  which totaled  $92,000.  In 2004, we
spent  $310,000  for  equipment  used in our  nanosensor  project  with  Western
Michigan University,  $165,000 for computer equipment and software, $105,000 for
a centrifuge used in production of  RenaZorb(TM),  $97,000 for equipment used in
making  titanium  dioxide  disks for the Timet  project  and  $72,000  for other
equipment.  During 2005, we expect to spend $800,000 to upgrade our laboratories
and purchase new equipment for them, $100,000 for production equipment,  $80,000
for pilot plant  equipment,  $67,000 for  computers  and  software,  $27,000 for
building improvements and $130,000 for other equipment. At December 31, 2004, we
had no significant commitments for capital asset expenditures.

Critical Accounting Policies and Estimates

         Management based the following discussion and analysis of our financial
condition and results of operations on our  consolidated  financial  statements.
The preparation of these financial  statements requires us to make estimates and
judgments that affect the reported amounts of assets,  liabilities,  revenue and
expenses,  and related  disclosure of contingent  assets and liabilities.  On an
on-going  basis,  we evaluate our critical  accounting  policies and  estimates,
including those related to long-lived assets, stock-based compensation,  revenue
recognition,  overhead  allocation and allowance for doubtful accounts.  We base
our estimates on historical  experience and on various other assumptions that we
believe to be reasonable under the circumstances,  the results of which form the
basis for making  judgments  about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

         We believe the following critical  accounting  policies affect the more
significant  judgments and estimates used in the preparation of our consolidated
financial statements.  These judgments and estimates affect the reported amounts
of assets and  liabilities  and the  reported  amounts of revenues  and expenses
during the reporting  periods.  Changes to these  judgments and estimates  could
adversely affect the Company's future results of operations and cash flows.

     o   Long-Lived  assets.  Our long-lived  assets consist  principally of the
         nanomaterials  and titanium  dioxide pigment assets,  the  intellectual
         property (patents and patent applications)  associated with them, and a
         building.  Included in these  long-lived  assets are long-lived  assets
         that relate to our research and development  process.  These assets are
         initially evaluated for capitalization  based on Statement of Financial
         Accounting  Standards  ("SFAS")  No. 2,  Accounting  for  Research  and
         Development  Costs.  If the assets  have  alternative  future  uses (in
         research and development  projects or otherwise),  they are capitalized

                                       35
<PAGE>

         when acquired or constructed;  if they do not have  alternative  future
         uses, they are expensed as incurred. At December 31, 2004, the carrying
         value of these  assets  was  $7,309,635,  or 47% of  total  assets.  We
         evaluate  the  carrying  value of  long-lived  assets  when  events  or
         circumstances indicate that an impairment may exist. In our evaluation,
         we estimate the net undiscounted cash flows expected to be generated by
         the assets, and recognize  impairment when such cash flows will be less
         than the carrying values.  Events or circumstances  that could indicate
         the  existence of a possible  impairment  include  obsolescence  of the
         technology,  an absence of market  demand for the  product,  and/or the
         partial or complete lapse of technology rights protection.

     o   Stock-Based Compensation.  We have two stock option plans which provide
         for the  issuance  of common  stock  options to  employees  and service
         providers.   Although  SFAS  No.  123,   Accounting   for  Stock  Based
         Compensation, encourages entities to adopt a fair-value-based method of
         accounting  for stock options and similar equity  instruments,  it also
         allows  an  entity  to  continue   measuring   compensation   cost  for
         stock-based   compensation   for  employees  and  directors  using  the
         intrinsic-value   method  of   accounting   prescribed   by  Accounting
         Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
         Employees.  We have elected to follow the accounting  provisions of APB
         25 and to furnish the pro forma disclosures required under SFAS 123 for
         employees  and  directors,  but we also issue  warrants  and options to
         non-employees  that are recognized as expense when issued in accordance
         with the  provisions  of SFAS 123. We  calculate  compensation  expense
         under SFAS 123 using a modified  Black-Scholes option pricing model. In
         so doing,  we estimate  certain key  assumptions  used in the model. We
         believe the estimates we use, which are presented in Note 2 of Notes to
         Consolidated Financial Statements,  are appropriate and reasonable.  As
         explained  in  Note 2 to the  Consolidated  Financial  Statements,  the
         Financial  Accounting Standards Board has issued a revision to SFAS 123
         that  eliminates  the  alternative  of  applying  the  intrinsic  value
         measurement  provisions of APB 25. We are required to adopt the revised
         SFAS  123 no  later  than  July  1,  2005.  Although  we  have  not yet
         quantified  the  effects  of  adoption,  it is  expected  that  the new
         standard will result in significant  additional  expense depending upon
         the nature and amount of stock-based  compensation  awards which may be
         granted.

     o   Revenue  Recognition.  We recognize revenue when persuasive evidence of
         an  arrangement  exists,  delivery  has  occurred  or service  has been
         performed,  the fee is fixed and  determinable,  and  collectibility is
         probable. During 2004, our revenues were derived principally from three
         sources:  commercial collaborations,  contract research and development
         and product  sales.  Based on the specific terms and conditions of each
         contract/grant,  revenues are recognized on a time and materials basis,
         a percentage of  completion  basis and/or a completed  contract  basis.
         Revenue for product  sales is  recognized at the time the purchaser has
         accepted delivery of the product. Revenue under contracts based on time
         and materials is recognized at  contractually  billable  rates as labor
         hours and expenses are  incurred.  Revenue under  contracts  based on a
         fixed  fee  arrangement  is  recognized  based on  various  performance
         measures,  such as  stipulated  milestones.  As  these  milestones  are
         achieved, revenue is recognized.  From time to time, facts develop that
         may  require  us to  revise  our  estimated  total  costs  or  revenues
         expected. The cumulative effect of revised estimates is recorded in the
         period in which the facts requiring  revisions  become known.  The full
         amount of anticipated  losses on any type of contract are recognized in
         the period in which they become known.

     o   Overhead Allocation.  Facilities overhead, which is comprised primarily
         of occupancy and related expenses, is initially recorded in general and
         administrative  expenses  and then  allocated  monthly to research  and

                                       36
<PAGE>

         development  expense  based  on  labor  costs.   Facilities   overheads
         allocated to research and  development  projects may be chargeable when
         invoicing customers under certain research and development contracts.

     o   Allowance for Doubtful Accounts. The allowance for doubtful accounts is
         based on our  assessment  of the  collectibility  of specific  customer
         accounts and the aging of accounts  receivable.  We analyze  historical
         bad debts,  the aging of customer  accounts,  customer  concentrations,
         customer credit-worthiness,  current economic trends and changes in our
         customer payment patterns when evaluating the adequacy of the allowance
         for doubtful accounts. From period to period,  differences in judgments
         or estimates utilized may result in material  differences in the amount
         and timing of our bad debt expenses.

Results of Operations

    Fiscal Year 2004 vs. 2003

         Our revenues increased significantly from $73,000 in 2003 to $1,152,000
in 2004 as a result of new  customer  contracts  we entered  into under which we
provide research and development ("R&D") work on a variety of projects. See Note
13, Business Segment Information, in Notes to Consolidated Financial Statements,
for sales and accounts  receivable  information with respect to major customers.
We  anticipate  that  revenues  will  increase  in 2005 over 2004 as a result of
increased contract R&D work, product sales and licensing revenues.

         Cash used in operations increased by $1,617,000 from $4,005,000 in 2003
to  $5,620,000  in 2004 due to  increased  R&D and  general  and  administrative
("G&A") expenses. We added staff in R&D in order to meet the workload created by
new  customer  contracts  and we  added  staff  in G&A  primarily  to  meet  the
requirements  of the  Sarbanes-Oxley  Act. Other increases in these expenses are
discussed   below.   We  believe  the  staffing   additions  and  certain  other
expenditures  in  2004  have   significantly   strengthened  the  Company's  R&D
capabilities and enhanced our ability to grow the business.  We expect cash used
in operations to remain at approximately the same level in 2005. However, to the
extent that we can generate  increased  product  sales and  licensing  revenues,
which  provide  higher  profit  margins than contract R&D, our cash flow will be
improved. We do not, however, expect to generate positive cash flow in 2005.

         Operating  losses  increased from $5,785,210 in the 2003 fiscal year to
$6,904,955 in the 2004 fiscal year. Although revenues increased significantly in
2004, this increase was more than offset by increases in R&D and G&A expenses.

         Revenues from  commercial  collaborations  increased by $524,803,  from
$27,696 in 2003 to  $552,499,  in 2004.  Revenues in 2003 were  derived from two
customers.  In late 2003 and during 2004,  we entered into new  contracts  which
generated the substantial  increase in revenues.  Our commercial  collaborations
now include projects to (1) provide custom oxide feedstocks for a titanium metal
research  program funded by the Department of Defense,  (2) license and evaluate
our  pigment   production  process  for  the  production  of  TiO2  pigment  and
pigment-related  products from  titanium-bearing oil sands, (3) develop advanced
aerospace  materials,  and (4) evaluate our pigment  production  process for the
production of TiO2 pigment from titanium-bearing minerals.

         Revenues from contracts and grants increased by $555,337,  from $36,553
in 2003 to $591,890,  in 2004. We had one customer  contract in place during the
last half of 2003, and we entered into two additional contracts during 2004. Our
contracts  and grants  revenues  are now  generated  by  projects to (1) provide
research  involving a technology  used in the detection of chemical,  biological
and radiological  agents,  (2) supply nano-sized anode and cathode materials for
design and development of high capacity  lithium ion battery and super capacitor
applications,  and (3) provide research utilizing  nanotechnology  processes for
the production and commercialization of solar-based hydrogen technologies.

                                       37
<PAGE>

         Increased  customer  contract  work was the primary  driver  behind the
increase in R&D expenses in 2004.  R&D labor costs  increased  by $340,000  from
$768,000  in 2003  to  $1,108,000  in  2004  due to the  addition  of  four  R&D
employees,  the cost of temporary employees doing R&D work, salary increases for
existing  employees  and an  increase  in the cost of  employee  benefit  plans.
RenaZorb(TM)  development  expenses increased by $157,000 from $4,000 in 2003 to
$161,000  in 2004 as a result of animal  testing,  laboratory  and other  costs.
Out-of-pocket  costs for customer projects  increased by $221,000 from $3,000 in
2003 to $224,000 in 2004 due to the increase in the amount of customer  contract
work being done.  These  increases were partially  offset by a decrease in stock
option expense  allocable to R&D of $264,000 as a result of a reduction in value
of repriced stock options. Repriced stock options are revalued at each reporting
date based on the market price of our common  shares on that date.  Any increase
or decrease in the value of the  options is  recorded in the  accounts.  We also
experienced  a  decrease  in   development   expenses  for  other   products  of
approximately  $60,000 and a decrease in minerals R&D of $224,000.  During 2004,
our board of  directors  made the decision to dispose of the  Tennessee  mineral
properties. In accordance with this, we began terminating the mineral leases and
prepared plans for  remediation of the property and sale of the pilot plant.  As
of December 31, 2004, we had terminated the mineral leases on 4,750 acres out of
a total of  approximately  8,700  acres  originally  under  lease.  We expect to
terminate the remaining mineral leases in 2005.

         Our general and administrative  expenses increased by $2,036,346,  from
$3,015,829 in 2003 to $5,052,175 in 2004.  G&A labor  increased by $604,000 from
$1,269,000  in 2003 to  $1,873,000  in 2004 due to  salary  increases,  employee
bonuses,  an increase in the cost of employee benefit plans and the net addition
of three new employees.  Investor relations expenses increased by $305,000, from
$225,000  in 2003 to  $530,000  in  2004,  as a  result  of  increased  investor
relations programs aimed at increasing investor awareness of Altair. In 2004, we
incurred an expense of $235,000  representing  the value of common shares issued
to a shareholder in connection with an agreement resolving certain issues raised
by the shareholder.  Consulting fees increased by $270,000, from $93,000 in 2003
to $363,000 in 2004,  primarily as a result of consultants  hired to assist with
marketing and product  development  in both the  performance  materials and life
sciences divisions.  Legal expenses increased by $257,000, from $293,000 in 2003
to  $550,000  in the  2004,  due to patent  costs  associated  with  performance
materials and life sciences  products,  and a settlement  agreement  involving a
shareholder. Accounting fees increased by $124,000, from $112,000 during 2003 to
$236,000  in  2004,   primarily  as  a  result  of  costs  associated  with  the
Sarbanes-Oxley Act. General office expenses increased by $172,000, from $387,000
in 2003 to $559,000 in 2004,  primarily as a result of  additional  purchases of
office supplies and equipment as well as higher costs for utilities,  telephone,
postage and  printing.  Director fees and expenses  increased by $108,000,  from
$16,000 in 2003 to $124,000  in 2004,  due to the  addition of two  non-employee
directors  and an  increase  in the fees paid to  directors.  Insurance  expense
increased by $65,000,  from $154,000 in 2003 to $219,000 in 2004, as a result of
increased premiums for liability  insurance.  Shareholder  information  expenses
increased by $43,000,  from  $69,000 in 2003 to $112,000 in 2004,  due to annual
report printing and mailing costs;  the number of shareholders  owning our stock
increased  substantially  in 2004.  These  increases were partially  offset by a
decrease in stock option  expense of $194,000  which occurred due to a reduction
in value of repriced stock options.

         Interest  expense  decreased  by  $260,235,  from  $454,415  in 2003 to
$194,180 in 2004. The decrease is due to the payoff of our note payable to Doral
18, LLC in September 2003.

         Interest income increased by $94,350, from $1,879 in 2003 to $96,229 in
2004, as a result of increased  invested cash balances.  Cash balances increased
early in 2005,  due to the  exercise of a  significant  number of  warrants  and
options.
                                       38
<PAGE>

    Fiscal Year 2003 vs. 2002

         During  2003,  we generated  $36,553 of revenues for research  services
involving  a  technology  used in the  detection  of  chemical,  biological  and
radiological  agents.  This work was  conducted  under an agreement  funded by a
government grant. Revenues from commercial  collaborations decreased by $90,874,
from $118,570 in 2002 to $27,696 in 2003, due to a decline in business activity.
Revenues  from product  sales  decreased by $126,323,  from  $134,925 in 2002 to
$8,602  in 2004 due to a  decrease  in sales of  thermal  spray  grade  powders,
lithium titanate and titanium dioxide nanoparticles.

         During 2003, we concentrated  our research and  development  efforts on
nanotechnology and materials science, specifically TiO2 pigment, TiO2 electrodes
for titanium metal, pharmaceutical delivery structures,  pharmaceuticals, dental
materials and nanostructured materials for lithium ion batteries and fuel cells.
Total research and development  expenses increased by $420,169,  from $1,541,575
in 2002 to  $1,961,744  in  2003.  The  suspension  of  development  work on the
Tennessee  mineral  properties and jig allowed us to reassign certain  employees
from those efforts to other research and development  work,  primarily  titanium
pigment  process  development.  As a result  of  this,  our  nanotechnology  and
materials R&D increased by $338,000,  from $628,000 in 2002 to $966,000 in 2003.
In addition,  stock  option  expense  increased  by $377,000  from $0 in 2002 to
$377,000 in 2003 as a result of an  increase  in the value of repriced  options,
and  facilities  overheads  increased by $148,000 as a result of the purchase of
our headquarters  building in Reno,  Nevada in August 2002. These increases were
partially offset by a decrease in minerals R&D expenses related to the Tennessee
mineral properties.  These expenses declined by $443,000,  from $599,000 in 2002
to $156,000 in 2003, as we  significantly  reduced our expenditures for minerals
R&D in 2003 in order to conserve cash for operating requirements and development
of the nanomaterials and titanium dioxide pigment technology.

         General  and  administrative   expenses  increased  by  $257,984,  from
$2,757,845 in 2002 to $3,015,829 in 2003. Consulting fees decreased by $176,000,
from  $347,000 in 2002 to $171,000 in 2003. We issued stock options and warrants
in 2002 and 2003 in payment for a portion of our consulting fees,  primarily for
assistance  with  financing.  The options and warrants issued in 2002 had a fair
value of $219,000  whereas the  options and  warrants  issued in 2003 had a fair
value of $92,000. In addition to this, cash payments for consulting decreased by
$49,000 due to a decrease in services  purchased.  Accounting  fees decreased by
$18,000,  from $127,000 in 2002 to $109,000 in 2003,  due to a decrease in audit
fees.  We also  experienced a decrease in general  office  expenses of $295,000,
from $711,000 in 2002 to $416,000 in 2003, and a decrease in technical operating
costs of  $104,000,  from  $357,000 in 2002 to  $253,000 in 2003,  both of which
occurred as a result of our efforts to reduce operating costs.  Offsetting these
decreases  was an increase  in investor  relations  expenses of  $236,000,  from
$53,000 in 2002 to $289,000 in 2003, as a result of increased investor relations
programs  aimed at  increasing  investor  awareness of Altair.  Also,  insurance
expense  increased by $11,000,  from  $143,000 in 2002 to $154,000 in 2003, as a
result of increased premiums for liability  insurance,  and stock option expense
increased  by  $527,000,  from $0 in 2002 to  $527,000 in 2003 as a result of an
increase in the value of repriced options. In addition,  legal fees increased by
$58,000,  from  $235,000  in 2002 to  $293,000  in  2003,  due to  patent  work,
financing transactions and general corporate matters.

         During the year ended  December 31,  2002,  we recorded  $1,080,000  of
interest expense for interest accruals,  amortization of debt issuance costs and
amortization  of debt discount on the Doral 18, LLC ("Doral")  note. In November
2002,  we entered  into a new note with  Doral  (see Note 6 to the  consolidated
financial  statements),  the  balance of  unamortized  debt  issuance  costs was
written  off as a  component  of loss on  extinguishment  of debt and no further
amortization of debt discount costs was incurred. In September 2003, we paid the
remaining  balance  due on the Doral  note.  As a result  of all this,  interest
expense decreased by $696,973 from $1,151,388 in 2002 to $454,415 in 2003.

                                       39
<PAGE>
         Preferential  warrant dividend  increased by $543,820,  from $48,666 in
2002 to $592,486 in 2003.  On June 2, 2003,  we reduced  the  exercise  price of
796,331  outstanding  warrants  held by a shareholder  to $1.00 per share.  As a
result,  we  recorded a  preferential  warrant  dividend  of  $176,472 as of the
repricing  date. The warrants had been  previously  issued with exercise  prices
ranging from $2.50 to $3.50.  In addition,  in September 2003, we issued 631,882
warrants to a shareholder which had a fair value of $416,014 and was recorded as
a preferential warrant dividend.

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk

         Not Applicable.

Item 8.      Financial Statements and Supplementary Data.

    Supplementary Data

         The  following  Supplementary  Financial  Information  for  the  fiscal
quarters  ended March 31, June 30,  September  30 and December 31 in each of the
years  2003 and 2004 were  derived  from our  unaudited  quarterly  consolidated
financial  statements filed by us with the SEC in our Quarterly  Reports on Form
10-Q with respect to such periods (except for 4th quarter data).
<TABLE>
<CAPTION>

          Supplementary Financial Information by Quarter, 2004 and 2003
                                   (Unaudited)

                                 Quarter      Quarter     Quarter        Quarter
                                  Ended        Ended       Ended          Ended
                                 March 31      June 30   September 30  December 31
                                ----------   ----------  ------------  -----------

Year Ended December 31, 2004:
<S>                             <C>          <C>          <C>          <C>
   Revenues                     $  139,749   $  154,233   $  346,907   $  511,003
   Operating Expenses           $1,822,763   $2,283,269   $1,766,962   $2,183,853
   Net Loss                     $1,710,757   $2,154,032   $1,440,324   $1,697,167
   Loss per Common Share: (1)
     Basic and Diluted          $     0.04   $     0.04   $     0.03   $     0.03

Year Ended December 31, 2003:
   Revenues                     $   20,277   $    4,434   $   17,318   $   30,822
   Operating Expenses           $1,217,278   $1,193,110   $1,205,762   $2,241,911
   Net Loss (2)                 $1,316,994   $1,334,591   $1,329,471   $2,256,883
   Loss per Common Share: (1)
     Basic and Diluted          $     0.04   $     0.04   $     0.05   $     0.06
</TABLE>

(1) Loss per common  share is computed  independently  for each of the  quarters
presented.  Therefore,  the sum of the  quarterly  loss per common share amounts
does not necessarily equal the total for the year.

(2) The increase in net loss from the quarter  ended  September  30, 2003 to the
quarter  ended  December 31, 2003 is primarily the result of $870,000 of expense
associated  with stock options that were repriced in prior periods.  The Company
uses the variable  accounting  method to account for  repricing of stock options
and the market  price of the  Company's  stock  increased  substantially  in the
quarter ended December 31, 2003.

                                       40
<PAGE>

         Financial Statements

         The  financial  statements  required  by this Item  appear on pages F-1
through F-21 of this Form 10-K.

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

         None.

Item 9A. Controls and Procedures

         The  information  required by this Item is incorporated by reference to
the Section entitled  "Principal  Accountant Fees and Services" in the Company's
definitive proxy statement to be filed with the Commission.

     a)  Under the  supervision  and with the  participation  of our management,
         including  our  principal  executive  officer and  principal  financial
         officer,  we conducted an  evaluation  of our  disclosure  controls and
         procedures,  as such term is defined under Rule  13a-15(e)  promulgated
         under the  Securities  Exchange Act of 1934, as amended (the  "Exchange
         Act"), as of December 31, 2004. Based on this evaluation, our principal
         executive  officer and principal  financial  officer concluded that our
         disclosure  controls and procedures are effective in alerting them on a
         timely basis to material information relating to our Company (including
         its consolidated  subsidiaries)  required to be included in our reports
         filed or submitted under the Exchange Act.

     b)  There were no significant  changes  (including  corrective actions with
         regard to  significant  deficiencies  or  material  weaknesses)  in our
         internal  controls over financial  reporting  that occurred  during the
         fourth  quarter  of fiscal  2004 that has  materially  affected,  or is
         reasonably  likely to  materially  affect,  our  internal  control over
         financial reporting.

Item 9B. Other Information

         Pursuant to Nasdaq Stock Market Rule 4350(a), the Company is disclosing
herein that,  prior to September 30, 2004,  the Company relied upon an exemption
from the  requirements of Nasdaq Stock Market Rule 4350(f).  Nasdaq Stock Market
Rule 4350(f) requires that each issuer have a minimum quorum requirement for its
shareholders  meetings  of at least  33 1/3% of the  outstanding  shares  of its
voting stock. Prior to September 30, 2004,  Altair's quorum requirement was that
two shareholders be present, in person or by proxy, at a shareholders meeting.

         Altair  requested,  and relied upon,  the  exemption  from Nasdaq Stock
Market  Rule  4350(f)  prior to  September  30, 2004 on the basis that a greater
quorum requirement would be contrary to generally accepted business practices in
Canada and under the Canadian Business Corporations Act (the "CBCA").  Altair is
incorporated  under the  CBCA.  The CBCA  contains  no  quorum  requirement  for
shareholders   meetings  where  a  quorum   requirement  is  designated  in  the
corporation's  bylaws.  Consistent with the CBCA, the rules of Canada's  largest
stock exchange, the Toronto Stock Exchange, contain no quorum requirement.  As a
result,  it is commercially  acceptable  practice for corporations  incorporated
under the CBCA and other  corporations  listed on the Toronto Stock  Exchange to
have a quorum  requirement  for  shareholders  meetings  that is the same as, or
similar to, the former quorum  requirement of Altair.  As of September 30, 2004,
the Company amended  its bylaws  in order  to increase its quorum requirement to
33 1/3% of its outstanding common shares.

                                       41
<PAGE>

                                    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  and
         Related Stockholder Matters

         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.

Item 14.  Principal Accountant Fees and Services

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


                                       42
<PAGE>
                                     PART IV


Item 15.     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 Auditors'  Report are filed as part of this Annual
Report on Form 10-K:

                   o    Report of Independent Registered Public Accounting Firm

                   o    Consolidated Balance Sheets, December 31, 2004 and 2003

                   o    Consolidated  Statements of  Operations  for Each of the
                        Three Years in the Period Ended December 31, 2004

                   o    Consolidated Statements of Shareholders' Equity for Each
                        of the Three Years in the Period Ended December 31, 2004

                   o    Consolidated  Statements  of Cash  Flows for Each of the
                        Three Years in the Period Ended December 31, 2004

                   o    Notes to Consolidated Financial Statements


                  2. Financial Statement Schedule. Not applicable.

                  3.       Exhibit List
<TABLE>
<CAPTION>
                                                                      Incorporated by Reference/
Exhibit No.         Description                                       Filed Herewith (and Sequential Page #)
-----------         -----------                                       --------------------------------------
<S>   <C>           <C>                                               <C>
      3.1           Articles of Continuance                           Incorporated by reference to the Current Report on
                                                                      Form 8-K filed with the SEC on July 18, 2002.

      3.2           Bylaws                                            Filed herewith

      4.1           Form of Common Stock Certificate                  Incorporated    by   reference   to   Registration
                                                                      Statement on Form 10-SB filed with the  Commission
                                                                      on November 25, 1996, File No. 1-12497.

      4.2           Amended and Restated Shareholder Rights           Incorporated  by reference to the  Company's  Plan
                    dated October 15, 1999, between the               dated October 15, 1999, between the Current Report
                    Company and Equity Transfer Services, Inc.        on Form 8-K  filed  with the  Company  and  Equity
                                                                      Transfer Services, Inc. Commission on November 19,
                                                                      1999, File No. 1-12497.

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

                                                           43
<PAGE>

     10.2           1998 Altair International Inc. Stock Option       Incorporated  by reference to the  Company's  Plan
                    Plan adopted by Shareholders on June 11, 1998     adopted  by  Shareholders  on June 11,  Definitive
                                                                      Proxy  Statement  on Form 14A filed  1998 with the
                                                                      Commission on May 12, 1998.

     10.3           2003 Employee Wage Stock Purchase Plan            Incorporated   by  reference   to  the   Company's
                                                                      Registration  Statement  on  Form  S-8,  File  No.
                                                                      333-108419, filed with the Commission on September
                                                                      2, 2003.

     10.4           Form of Renegotiated Mineral Lease                Incorporated by reference to the Company's  Annual
                                                                      Report  on Form  10-K  filed  with the  Commission
                                                                      March 24, 2004.

     10.5           Purchase and Sale Agreement dated August 8,       Incorporated   by  reference   to  the   Company's
                    2002 between the Company and BHP Minerals         Amendment No. 1 to Registration  Statement on Form
                    International Inc. (re Edison Way property)       S-2,   File  No.   333-102592,   filed   with  the
                                                                      Commission on February 7, 2003.

     10.6           Installment Note dated August 8, 2002 (re         Incorporated   by  reference   to  the   Company's
                    Edison Way property) on February 7, 2003.         Amendment No. 1 to Registration  Statement on Form
                                                                      S-2,   File  No.   333-102592,   filed   with  the
                                                                      Commission on February 7, 2003.

     10.7           Trust Deed dated August 8, 2002 (re Edison        Incorporated   by  reference   to  the   Company's
                    Way property)                                     Amendment No. 1 to Registration  Statement on Form
                                                                      S-2,   File  No.   333-102592,   filed   with  the
                                                                      Commission on February 7, 2003.

     10.8           Technology License Agreement dated                Incorporated   by  reference   to  the   Company's
                    September 29, 2003, with Bateman Luxembourg       Quarterly  Report  on Form  10-Q  filed  with  the
                    SA *                                              Commission November 14, 2003.

     10.9           Memorandum of Understanding dated as of           Incorporated   by  reference   to  the   Company's
                    April 21, 2003, with Titanium Metals              Quarterly  Report  on Form  10-Q  filed  with  the
                    Corporation *                                     Commission November 14, 2003.

     10.10          Western Michigan University Project               Incorporated   by  reference   to  the   Company's
                    Agreement dated August 15, 2003                   Quarterly  Report  on Form  10-Q  filed  with  the
                                                                      Commission November 14, 2003.

     10.11          Technology Investment Agreement dated             Incorporated by reference to the Company's Current
                    January 8, 2004 between Titanium Metals           Report on Form 8-K filed  with the  Commission  on
                    Corporation and Altair Nanomaterials, Inc. *      February 3, 2004.

     10.12          License Agreement for Altair TiO2 Pigment         Incorporated by reference to the Company's Current
                    Technology between Altair Nanotechnologies,       Report on Form 8-K filed  with the  Commission  on
                    Inc. and Western Oil Sands, Inc. *                February 3, 2004.
</TABLE>

                                                           44
<PAGE>
<TABLE>
<CAPTION>

<S>                 <C>                                               <C>
     10.13          Memorandum of Understanding with                  Incorporated by reference to the Company's  Annual
                    Hosokawa Nano Particle Technology Center          Report  on Form  10-K  filed  with the  Commission
                    (USA)                                             March 24, 2004.

     10.14          Settlement Agreement with Louis Schnur et al      Incorporated   by  reference   to  the   Company's
                                                                      Amendment No. 2 to Registration  Statement on Form
                                                                      S-3,  File No.  333-117125,  filed with the SEC on
                                                                      July 30, 2004.

     10.15          Employment Agreement of Douglas Ellsworth         Incorporated   by  reference   to  the   Company's
                                                                      Quarterly  Report  on Form  10-Q  filed  with  the
                                                                      Commission November 15, 2004.

     10.16          Employment Agreement of Edward Dickinson          Incorporated   by  reference   to  the   Company's
                                                                      Quarterly  Report  on Form  10-Q  filed  with  the
                                                                      Commission November 15, 2004.

     10.17          Employment Agreement of Alan J. Gotcher,          Incorporated   by  reference   to  the   Company's
                    Ph.D.                                             Quarterly  Report  on Form  10-Q  filed  with  the
                                                                      Commission November 15, 2004.

     10.18          License Agreement dated January 28, 2005          Incorporated   by  reference  from  the  Company's
     10.18          with Spectrum Pharmaceuticals, Inc.*              Current   Report  on  Form  8-K  filed   with  the
                                                                      Commission on February 4, 2005

     10.19          Letter  Agreement dated February 11, 2005         Incorporated  by reference from the Current Report
                    between the Company and Maxim Group LLC           on Form 8-K filed by the Company on  February  15,
                                                                      2005
      21            List of Subsidiaries
                                                                      Incorporated by reference from Item 1 of this report.

     23.1           Consent of Deloitte & Touche LLP                  Filed herewith.


      24            Powers of Attorney                                Included in the Signature Page hereof.

     31.1           Rule 13-14(a)/15d-14a Certification of            Filed herewith
                    Chief Executive Officer

     31.2           Rule 13-14(a)/15d-154a Certification of           Filed herewith
                    Chief Financial Officer

     32.1           Section 1350 Certification of Chief               Filed herewith
                    Executive Officer

     32.2           Section 1350 Certification of Chief               Filed herewith
                    Financial Officer
</TABLE>

 *Portions of this Exhibit have been omitted  pursuant to Rule 24b-2,  are filed
separately with the SEC and are subject to a confidential treatment request.

                                                           45
<PAGE>

         (b) Reports on Form 8-K

                  On  November  12,  2004,  we  filed a Form 8-K to file a press
                  release   announcing   results  of  operations  and  financial
                  condition for the third quarter of fiscal year 2004.

         (c)      Exhibits

                  Exhibits  to this  Report  are  attached  following  page F-22
hereof.

         (d) Financial Statement Schedule. Not applicable.

                                       46
<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 9, 2005.

                                            ALTAIR NANOTECHNOLOGIES INC.


                                            By:       /s/ Alan J. Gotcher
                                                --------------------------------
                                                     Alan J. Gotcher,
                                                     Chief Executive Officer

                                            Date: March 9, 2005

                   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 Alan J. Gotcher 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.
<TABLE>
<CAPTION>
                        Signature                                  Title                       Date
                        ---------                                  -----                       ----
<S>                                                  <C>                                   <C>
/s/ Alan J. Gotcher                                  Chief Executive Officer and           March 9, 2005
---------------------------                          Director (Principal Executive
Alan J. Gotcher                                      Officer)


                                                                                           March 9, 2005
______________________                               Director
Rudi E. Moerck

/s/ Edward Dickinson                                 Chief Financial Officer and           March 9, 2005
---------------------------                          Secretary (Principal Financial
Edward Dickinson                                     and Accounting Officer)


/s/ Michel Bazinet                                   Director                              March 9, 2005
---------------------------
Michel Bazinet


/s/ Jon N. Bengtson                                  Director                              March 9, 2005
---------------------------
Jon N. Bengtson
</TABLE>
                                       47
<PAGE>
<TABLE>
<CAPTION>
<S>                                                  <C>                                   <C>
/s/ James I. Golla                                   Director                              March 9, 2005
---------------------------
James I. Golla


/s/ George Hartman                                   Director                              March 9, 2005
---------------------------
George Hartman


/s/ Christopher E. Jones                             Director                              March 9, 2005
---------------------------
Christopher E. Jones


/s/ David King                                       Director                              March 9, 2005
------------------
David King
</TABLE>

                                       48
<PAGE>







     Altair Nanotechnologies Inc.
     and Subsidiaries


     Consolidated  Financial Statements as of December 31, 2004 and 2003 and for
     Each of the Three Years in the Period Ended December 31, 2004 and Report of
     Independent Registered Public Accounting Firm







<PAGE>




ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES


<TABLE>
<CAPTION>

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


                                                                                              Page
                                                                                              ----

<S>                                                                                           <C>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                       F-1

FINANCIAL STATEMENTS:

  Consolidated Balance Sheets, December 31, 2004 and 2003                                     F-2

  Consolidated Statements of Operations for Each of the Three Years
    in the Period Ended December 31, 2004                                                     F-3

  Consolidated Statements of Stockholders' Equity for Each of the Three Years
    in the Period Ended December 31, 2004                                                     F-4

  Consolidated Statements of Cash Flows for Each of the Three Years in
    the Period Ended December 31, 2004                                                      F-5-F-7

  Notes to Consolidated Financial Statements                                               F-8-F-22

</TABLE>



<PAGE>



                                       F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Altair Nanotechnologies Inc.
Reno, Nevada

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Altair
Nanotechnologies  Inc. and subsidiaries  (the "Company") as of December 31, 2004
and 2003, and the related consolidated  statements of operations,  stockholders'
equity,  and cash flows for each of the three years in the period ended December
31, 2004.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial position of Altair  Nanotechnologies  Inc. and
subsidiaries  as of  December  31,  2004  and  2003,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2004, in conformity with accounting  principles  generally accepted
in the United States of America.



/s/ DELOITTE & TOUCHE LLP
-----------------------------------
Salt Lake City, Utah
March 7, 2005



<PAGE>
<TABLE>
<CAPTION>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (Expressed in United States Dollars)


                                                        December 31,    December 31,
                                                           2004             2003
                                                        ------------    -----------
                          ASSETS
Current Assets

<S>                                                     <C>             <C>
     Cash and cash equivalents                          $  7,357,843    $  3,869,669

     Accounts receivable, net                                499,599          13,324

     Prepaid expenses and other current assets               182,595          79,187
                                                        ------------    ------------
         Total current assets                              8,040,037       3,962,180


Property, Plant and Equipment, net                         6,513,907       6,618,805


Patents, net                                                 974,877       1,060,569


Other Assets                                                  18,200          18,200
                                                        ------------    ------------

                       Total Assets                     $ 15,547,021    $ 11,659,754
                                                        ============    ============

           LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities


     Trade accounts payable                             $     81,030    $     85,255

     Accrued liabilities                                     295,743         311,886
                                                        ------------    ------------

         Total current liabilities                           376,773         397,141
                                                        ------------    ------------


Note Payable, Long-Term Portion                            2,880,311       2,686,130
                                                        ------------    ------------

Commitments and Contingencies (Notes 6, 8, 9, and 11)

Stockholders' Equity
     Common stock, no par value, unlimited shares
     authorized; 49,775,694 and 43,188,362 shares
     issued and outstanding at December 31, 2004
     and 2003                                             65,505,630      54,789,896

     Accumulated deficit                                 (53,215,693)    (46,213,413)
                                                        ------------    ------------


                Total Stockholders' Equity                12,289,937       8,576,483
                                                        ------------    ------------


        Total Liabilities and Stockholders' Equity      $ 15,547,021    $ 11,659,754
                                                        ============    ============
</TABLE>

See notes to the consolidated financial statements.

                                      F-2
<PAGE>
<TABLE>
<CAPTION>

                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (Expressed in United States Dollars)


                                                         Year Ended December 31,
                                               -------------------------------------------
                                                  2004            2003            2002
                                              ------------    ------------    ------------
<S>                                           <C>             <C>             <C>
Revenues:
     Product sales                            $      7,503    $      8,602    $    134,925

     Commercial collaborations                     552,499          27,696         118,570

     Contracts & grants                            591,890          36,553            --
                                              ------------    ------------    ------------

       Total revenues                            1,151,892          72,851         253,495
                                              ------------    ------------    ------------
Operating Expenses

     Cost of product sales                           1,361           1,731          53,122

     Research and development                    2,098,758       1,961,744       1,541,575

     General and administrative expenses         5,052,175       3,015,829       2,757,845

     Depreciation and amortization                 904,553         878,757         997,708

     Asset impairment                                 --              --         2,759,956
                                              ------------    ------------    ------------

       Total operating expenses                  8,056,847       5,858,061       8,110,206
                                              ------------    ------------    ------------

Loss from Operations                             6,904,955       5,785,210       7,856,711
                                              ------------    ------------    ------------
Other (Income) Expense:

     Interest expense                              194,180         454,415       1,151,388

     Interest income                               (96,229)         (1,879)         (2,105)

     Loss (gain) on foreign exchange                  (626)            193             835

     Loss on extinguishment of debt                   --              --           914,667
                                              ------------    ------------    ------------

       Total other expense, net                     97,325         452,729       2,064,785
                                              ------------    ------------    ------------

Net loss                                         7,002,280       6,237,939       9,921,496

Preferential Warrant Dividend                         --           592,486          48,666
                                              ------------    ------------    ------------
Net Loss Applicable to Shareholders           $  7,002,280    $  6,830,425    $  9,970,162
                                              ============    ============    ============

Loss per common share - Basic and diluted     $       0.14    $       0.19    $       0.40
                                              ============    ============    ============

Weighted average shares - Basic and diluted     48,677,283      36,222,026      24,975,837
                                              ============    ============    ============
</TABLE>

See notes to the consolidated financial statements.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      (Expressed in United States Dollars)
<S>                                         <C>          <C>            <C>             <C>
                                                 Common Stock
                                          ---------------------------
                                                            Stated       Accumulated
                                             Shares         Amount         Deficit          Total
                                          ------------   ------------   ------------    ------------
BALANCE,  JANUARY 1, 2002                   22,694,142   $ 38,089,320   $(29,412,826)   $  8,676,494

Stock options issued to non-employees             --           27,601           --            27,601
Shares issued under Employee Stock

   Purchase Plan                               161,550         92,183           --            92,183

Stock warrants issued                             --          347,773           --           347,773

Preferential warrant dividend                     --           48,666        (48,666)           --

Shares issued for settlement of debt         1,500,090        975,000           --           975,000

Shares issued for interest                     299,304        292,208           --           292,208

Shares issued for services                     400,000        279,500           --           279,500

Exercise of warrants                           286,169        300,477           --           300,477

Common stock issued                          4,903,093      3,335,122           --         3,335,122

Net loss                                          --             --       (9,921,496)     (9,921,496)
                                          ------------   ------------   ------------    ------------

BALANCE,  DECEMBER 31, 2002                 30,244,348     43,787,850    (39,382,988)      4,404,862

Stock options issued to non-employees             --           64,346           --            64,346

Variable accounting on stock options              --          903,668           --           903,668
Shares issued under Employee Stock

   Purchase Plan                               873,480        606,675           --           606,675

Stock warrants issued                             --          101,416           --           101,416

Preferential warrant dividend                     --          592,486       (592,486)           --

Shares issued for settlement of debt           695,052        280,000           --           280,000

Shares issued for interest                     277,169        133,315           --           133,315

Shares issued for services                     213,102         89,297           --            89,297

Exercise of stock options                      478,100        488,836           --           488,836

Exercise of warrants                         3,210,328      3,417,109           --         3,417,109

Common stock issued                          7,196,783      4,324,898           --         4,324,898

Net loss                                          --             --       (6,237,939)     (6,237,939)
                                          ------------   ------------   ------------    ------------
BALANCE,  DECEMBER 31, 2003                 43,188,362     54,789,896    (46,213,413)      8,576,483
</TABLE>
                                                                  (continued)
                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      (Expressed in United States Dollars) (continued)


<S>                                         <C>            <C>           <C>               <C>
BALANCE,  DECEMBER 31, 2003                 43,188,362     54,789,896    (46,213,413)      8,576,483


Stock options issued to non-employees             --          270,560           --           270,560
Modification of stock options issued to
employee                                          --           39,000           --            39,000

Variable accounting on stock options              --          136,212           --           136,212

Shares issued for services                     200,000        413,000           --           413,000

Exercise of stock options                      561,900        902,109           --           902,109

Exercise of warrants                         5,825,432      8,954,853           --         8,954,853

Net loss                                          --             --       (7,002,280)     (7,002,280)
                                          ------------   ------------   ------------    ------------

BALANCE,  DECEMBER 31, 2004                 49,775,694   $ 65,505,630   $(53,215,693)   $ 12,289,937
                                          ============   ============   ============    ============
</TABLE>


See notes to the consolidated financial statements.

                                      F-4(A)
<PAGE>
<TABLE>
<CAPTION>
                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (Expressed in United States Dollars)

                                                                  Year Ended December 31,
                                                          -----------------------------------------
                                                             2004           2003           2002
                                                          -----------    -----------    -----------
Cash flows from operating activities:
<S>                                                       <C>            <C>            <C>
     Net loss                                             $(7,002,280)   $(6,237,939)   $(9,921,496)
     Adjustments to reconcile net loss to net cash
       used in operating activities:

       Depreciation and amortization                          904,553        878,757        997,708

       Shares issued for services                             413,000         89,297        203,500

       Shares issued for interest                                --          133,315        292,208

       Stock options issued to non-employees                  270,560         64,346         27,601

       Modification of stock options issued to employee        39,000           --             --

       Variable accounting on stock options                   136,212        903,668           --

       Issuance of stock warrants                                --          101,416        108,556

       Amortization of discount on note payable               194,182        181,090        384,616

       Amortization of debt issuance costs                       --             --          404,567

       Asset impairment                                          --             --        2,759,956

       Loss on extinguishment of debt                            --             --          914,667

       Loss on disposal of fixed assets                        34,716         25,661           --
     Changes in assets and liabilities:

       Accounts receivable                                   (486,275)       119,535       (128,705)

       Prepaid expenses and other current assets             (103,408)       (56,589)         6,899

       Other assets                                              --             --           (2,000)

       Trade accounts payable                                  (4,225)      (247,461)       (30,974)

       Accrued liabilities                                    (16,143)        40,099        107,072

       Deferred revenue                                          --             --          (40,972)
                                                          -----------    -----------    -----------

Net cash used in operating activities                      (5,620,108)    (4,004,805)    (3,916,797)
                                                          -----------    -----------    -----------
                                                                     (continued)
</TABLE>

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (Expressed in United States Dollars)

                                                            Year Ended December 31,
                                                   -----------------------------------------
                                                      2004            2003           2002
                                                   -----------    -----------    -----------
<S>                                                <C>            <C>           <C>
Cash flows from investing activities:
     Purchase of property and equipment               (748,680)       (92,400)    (2,525,916)
     Proceeds received from sale of property and
       equipment                                          --            4,675           --
                                                   -----------    -----------    -----------


Net cash used in investing activities                 (748,680)       (87,725)    (2,525,916)
                                                   -----------    -----------    -----------

Cash flows from financing activities:
     Issuance of common shares for cash, net of
     issuance costs                                       --        4,324,898      3,335,122
     Issuance of shares under Employee Stock

     Purchase Plan                                        --          606,675         92,183

     Proceeds from exercise of stock options           902,109        488,836           --

     Proceeds from exercise of warrants              8,954,853      3,417,109        300,477

     Issuance of related party notes                      --             --            6,243

     Issuance of notes payable                            --             --        2,505,040

     Payment of notes payable                             --       (1,120,000)          --

     Payment of related party notes                       --             --         (149,243)

     Payment on capital lease                             --             --           (2,312)
                                                   -----------    -----------    -----------


Net cash provided by financing activities            9,856,962      7,717,518      6,087,510
                                                   -----------    -----------    -----------


Net increase (decrease) in cash and equivalents      3,488,174      3,624,988       (355,203)


Cash and cash equivalents, beginning of year         3,869,669        244,681        599,884
                                                   -----------    -----------    -----------


Cash and cash equivalents, end of year             $ 7,357,843    $ 3,869,669    $   244,681
                                                   ===========    ===========    ===========

Supplemental disclosures:

Cash paid for interest                                 None       $   140,009         None
                                                   ===========    ===========    ===========

Cash paid for income taxes                             None            None           None
                                                   ===========    ===========    ===========
</TABLE>

                                                                  (continued)


                                      F-6
<PAGE>

                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (Expressed in United States Dollars)


Supplemental  schedule of non-cash investing and financing  activities:
For the year ended December 31, 2004:
-------------------------------------
    - None

For the year ended December 31, 2003:
-------------------------------------
   - We issued  695,052 common shares to Doral 18, LLC in payment of $280,000 of
principal on our note payable. The conversion of the note resulted in additional
interest expense of $133,315 (See Note 6).
   - On or about June 2, 2003, we repriced warrants, held by a shareholder,  for
796,331 common shares.  The repriced  warrants have an incremental fair value of
$176,472 and have been accounted for as a preferential warrant dividend.
   - In September  2003, we entered an agreement with a shareholder  wherein the
shareholder  agreed to exercise  631,882  warrants that had an exercise price of
$1.00 each. In return, we issued the shareholder  631,882 new warrants having an
exercise price of $1.75 each. The new warrants have a fair value of $416,014 and
have been accounted for as a preferential warrant dividend.

For the year ended December 31, 2002:
-------------------------------------
   - We issued 50,000 common shares in payment of financing fees associated with
the Doral 18, LLC 2001 Note. The common shares had a fair value of $76,000 which
was recorded as debt issue cost on the balance sheet.
    - In connection with the  extinguishment  of the Doral 18, LLC 2001 Note, we
issued  1,500,000  shares of our common stock to reduce our note payable balance
by $600,000. We also issued to Doral 18, LLC a warrant for 750,000 common shares
that had a fair value of $239,217,  as determined by the  Black-Scholes  pricing
model. As a result of this transaction,  we recorded a loss on extinguishment of
debt of $914,667.
   - We entered into a note  payable with BHP with a face amount of  $3,000,000.
There is no interest  due on the note for the first 36 months.  As a result,  we
imputed  the  interest  and  reduced  the face  amount  of the note  payable  by
$566,763. The imputed interest expense for the period was $24,786.
    - We repriced  warrants,  held by a shareholder,  for 582,500 common shares.
The repriced  warrants have an  incremental  fair value of $48,666 and have been
accounted for as a preferential warrant dividend.


                                                                  (concluded)
See notes to the consolidated financial statements.


                                      F-7
<PAGE>

ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

         Description  of Business-- We are a Canadian  company,  with  principal
assets and operations in the United States, whose primary business is developing
and commercializing  nanomaterial and titanium dioxide pigment technologies.  We
also provide contract  research services on select projects where we can utilize
our  resources  to  develop  intellectual   property  and/or  new  products  and
technology.

         Through September 30, 2004, we considered ourselves to be a development
stage  company.   However,   our  contract  research  business,   utilizing  our
proprietary  nanoparticle production technology,  has grown considerably through
new research and development  contracts.  We believe that the contracts  entered
into and the revenues generated from them establish our nanoparticle  production
technology as a commercially accepted technology. Accordingly, effective October
1, 2004, we no longer consider ourselves to be a development stage company.

         Principles  of  Consolidation--The  consolidated  financial  statements
include the accounts of Altair  Nanotechnologies  Inc. and its subsidiaries (the
"Company")  which  include (1) Altair US Holdings,  Inc.,  (2) Mineral  Recovery
Systems, Inc. ("MRS"), (3) Fine Gold Recovery Systems, Inc. ("FGRS"), (4) Altair
Nanomaterials,  Inc. ("ANI"),  and (5) Tennessee Valley Titanium,  Inc. ("TVT"),
(collectively referred to as the "Company"), all of which are 100% owned. All of
the subsidiaries are incorporated in the United States of America.  Intercompany
transactions and balances have been eliminated in consolidation.

         Basis  of   Presentation--The   accompanying   consolidated   financial
statements  have been prepared on a going concern basis which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  As shown in the  consolidated  financial  statements for the years
ended  December 31, 2004,  2003, and 2002, we incurred net losses of $7,002,280,
$6,237,939, and $9,921,496,  respectively. At December 31, 2004 and 2003, we had
stockholders' equity of $12,289,937 and $8,576,483, respectively.

         The  consolidated  financial  statements do not include any adjustments
relating to the  recoverability  and classification of recorded asset amounts or
the amounts and  classification of liabilities that might be necessary should we
be unable to continue as a going concern. Our continuation as a going concern is
dependent  upon  our  ability  to  generate  sufficient  cash  flow to meet  our
obligations on a timely basis, to obtain additional  financing or refinancing as
may be required,  to develop  commercially  viable  products and processes,  and
ultimately  to establish  profitable  operations.  We have  financed  operations
through operating revenues and through the issuance of equity securities (common
stock,  convertible  debentures,  stock  options and  warrants),  and debt (term
notes). Until we are able to generate positive operating cash flows,  additional
funds will be required to support  operations.  We believe that current  working
capital,  cash receipts from  anticipated  sales,  and funding  through sales of
common  stock will be  sufficient  to enable us to continue  as a going  concern
through 2006.

                                      F-8
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Use  of  Estimates--The   preparation  of  the  consolidated  financial
statements in conformity with accounting  principles  generally  accepted in the
United States of America  requires that we make estimates and  assumptions  that
affect the  reported  amounts  of assets  and  liabilities,  and  disclosure  of
contingent  assets and  liabilities  at the date of the  consolidated  financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

         Cash and Cash  Equivalents--Cash and cash equivalents are highly liquid
investments  with an original  maturity of three months or less from the date of
purchase. Cash equivalents are recorded at cost, which approximates fair value.

         Accounts  Receivable--Accounts  receivable consists of amounts due from
customers for services and product  sales,  net of an allowance for losses of $0
and $466 at December 31, 2004 and 2003, respectively. We determine the allowance
for  doubtful  accounts by  reviewing  each  customer  account and  specifically
identifying any potential for loss.

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

                 Furniture and office equipment        3-7 years
                 Vehicles                              5 years
                 Nanoparticle production  equipment    5-10 years
                 Building and improvements             30 years

         Patents--Patents  related to the nanoparticle production technology are
carried at cost and  amortized  on a  straight-line  basis over their  estimated
useful lives, which range from 14 to 20 years.

         Research  and  Development   Expenditures--  The  costs  of  materials,
equipment,  or  facilities  that are  acquired or  constructed  for a particular
research and  development  project and that have no alternative  future uses (in
other research and  development  projects or otherwise) are expensed as research
and  development  costs  at the  time  the  costs  are  incurred.  Research  and
development  expenditures  related to materials and equipment or facilities that
are acquired or  constructed  for research and  development  activities and that
have alternative future uses (in research and development projects or otherwise)
are  capitalized   when  acquired  or  constructed.   Research  and  development
expenditures,  which  include the cost of  materials  consumed  in research  and
development activities,  salaries, wages and other costs of personnel engaged in
research and development, costs of services performed by others for research and
development on behalf of the company and indirect costs are expensed as research
and development costs when incurred.

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

         Stock-Based  Compensation--Our  stock  option  plans are subject to the
provisions  of  Statement of Financial  Accounting  Standards  ("SFAS") No. 123,
Accounting  for  Stock-Based  Compensation.  Under the  provisions  of SFAS 123,
employee and director stock-based  compensation expense is measured using either
the intrinsic-value  method as prescribed by Accounting Principles Board ("APB")
Opinion No. 25,  Accounting  for Stock  Issued to  Employees,  or the fair value
method  described  in SFAS  123.  We  have  elected  to  follow  the  accounting
provisions  of APB 25 for our employee and  director  stock-based  awards and to
furnish the pro forma disclosures required under SFAS 123.

                                      F-9
<PAGE>

         We account for stock options and warrants  issued to  non-employees  in
accordance with SFAS 123. In calculating pro forma compensation,  the fair value
of each stock option is  estimated on the date of grant using the  Black-Scholes
option-pricing model and the following weighted average assumptions:

                                   2004        2003       2002
                                  --------    -------    --------
        Dividend yield             None        None       None
        Expected volatility           61%        65%         67%
        Risk-free interest rate     3.17%      2.33%       2.19%
        Expected life (years)         5.4        4.1         5.0

         To estimate  compensation  expense that would be recognized  under SFAS
123 for all stock-based awards, we have used the modified  Black-Scholes  option
pricing model. If we had accounted for our stock options issued to employees and
directors using the accounting  method  prescribed by SFAS 123, our net loss and
loss per share would be as follows:

<TABLE>
<CAPTION>
                                                      2004            2003           2002
                                                   -----------    -----------    -----------
<S>                                                <C>            <C>            <C>
Net loss applicable to shareholders (basic and
   diluted) as reported                            $ 7,002,280    $ 6,830,425    $ 9,970,162
Deduct: stock-based employee compensation
   expense included in reported net loss, net of
   $0 related tax effects                             (445,772)      (903,668)          --
Add: total stock-based employee compensation
   expense determined under fair value based
   method for all awards, net of $0 related
   tax effects                                       1,536,945        590,908        235,823
                                                   -----------    -----------    -----------

Pro forma net loss applicable to shareholders      $ 8,093,453    $ 6,517,665    $10,205,985
                                                   ===========    ===========    ===========

Loss per common share (basic and diluted):
   As reported                                     $      0.14    $      0.19    $      0.40
                                                   ===========    ===========    ===========
   Pro forma                                       $      0.17    $      0.18    $      0.41
                                                   ===========    ===========    ===========
</TABLE>


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

                                   2004        2003       2002
                                  --------    -------    --------
        Dividend yield             None        None       None
        Expected volatility           61%        65%         67%
        Risk-free interest rate     3.55%      3.16%       2.19%
        Expected life (years)         5.3        5.0         5.0


                                      F-10
<PAGE>

         Long-Lived  Assets--We evaluate the carrying value of long-term assets,
including  intangibles,  when events or circumstance indicate the existence of a
possible impairment,  based on projected  undiscounted cash flows, and recognize
impairment  when  such  cash  flows  will  be less  than  the  carrying  values.
Measurement of the amounts of impairments,  if any, is based upon the difference
between  carrying  value and fair  value.  Events or  circumstances  that  could
indicate the  existence of a possible  impairment  include  obsolescence  of the
technology,  an absence  of market  demand for the  product,  and/or  continuing
technology  rights  protection.  As  discussed  in Note 3, during the year ended
December 31, 2002, we recorded an asset impairment charge of $2,759,956  related
to the jig assets.

         Revenue  Recognition-- We recognize revenue when persuasive evidence of
an arrangement exists, delivery has occurred or service has been performed,  the
fee is fixed and determinable,  and collectibility is probable. During 2004, our
revenues were derived principally from three sources: commercial collaborations,
contract research and development and product sales. Based on the specific terms
and  conditions of each  contract/grant,  revenues are  recognized on a time and
materials  basis, a percentage of completion  basis and/or a completed  contract
basis.  Revenue for product  sales is  recognized  at the time the purchaser has
accepted  delivery of the product.  Revenue  under  contracts  based on time and
materials  is  recognized  at  contractually  billable  rates as labor hours and
expenses are incurred.  Revenue under contracts based on a fixed fee arrangement
is  recognized  based  on  various  performance  measures,  such  as  stipulated
milestones. As these milestones are achieved,  revenue is recognized.  From time
to time,  facts develop that may require us to revise our estimated  total costs
or revenues expected.  The cumulative effect of revised estimates is recorded in
the period in which the facts requiring  revisions become known. The full amount
of  anticipated  losses on any type of contract are  recognized in the period in
which they become known.

         For the year ended  December 31,  2004,  we sold  titanium  dioxide and
lithium  titanate  nanoparticles,  and other  materials,  to customers  totaling
$7,503.  Revenue also includes  $552,499 earned under  commercial  collaboration
agreements for the development of new products,  processes and/or  technologies,
and $591,890 earned for research and  development  work done under contracts and
grants.

         Overhead Allocation-- Facilities overhead, which is comprised primarily
of  occupancy  and  related  expenses,  is  initially  recorded  in general  and
administrative  expenses and then allocated to research and development based on
labor costs.

         Net Loss per Common  Share-- Basic earnings per share is computed using
the weighted  average  number of common  shares  outstanding  during the period.
Diluted  earnings  per share is computed  using the weighted  average  number of
common  and  potentially   dilutive  shares   outstanding   during  the  period.
Potentially  dilutive shares consist of the  incremental  common shares issuable
upon the exercise of stock options and warrants. Potentially dilutive shares are
excluded from the computation if their effect is antidilutive. We had a net loss
for all  periods  presented  herein;  therefore,  none of the stock  options and
warrants outstanding during each of the periods presented,  as discussed in Note
7, were  included  in the  computation  of  diluted  loss per share as they were
antidilutive.  Stock  options and  warrants  to  purchase a total of  7,865,431,
14,122,431  and  13,231,871  shares  of  common  stock  were  excluded  from the
calculations  of diluted  loss per share for the years ended  December 31, 2004,
2003 and 2002, respectively.

         Recent  Accounting  Pronouncements--As  described  above in Stock Based
Compensation, we account for stock-based compensation awards issued to employees
using the intrinsic  value  measurement  provisions of APB 25.  Accordingly,  no
compensation  expense has been recorded for stock  options  granted to employees


                                      F-11
<PAGE>

with exercise  prices  greater than or equal to the fair value of the underlying
common  stock at the option grant date.  On December  16, 2004,  the FASB issued
Statement of Financial Accounting Standards No. 123 (revised 2004),  Share-Based
Payment ("SFAS 123R") which eliminates the alternative of applying the intrinsic
value measurement  provisions of Opinion 25 to stock compensation  awards issued
to  employees.  The new  standard  requires  enterprises  to measure the cost of
employee services received in exchange for an award of equity  instruments based
on the grant-date fair value of the award. That cost will be recognized over the
period during which an employee is required to provide  services in exchange for
the award, known as the requisite service period (usually the vesting period).

         We have not yet  quantified  the effects of the  adoption of SFAS 123R,
but it is expected that the new standard will result in significant  stock-based
compensation expense. The pro forma effects on net loss and loss per share if we
had applied the fair value recognition  provisions of original SFAS 123 on stock
compensation  awards  (rather than  applying  the  intrinsic  value  measurement
provisions  of Opinion  25) are  disclosed  above in Stock  Based  Compensation.
Although such pro forma effects of applying  original SFAS 123 may be indicative
of the effects of adopting SFAS 123R,  the  provisions  of these two  statements
differ in some important respects. The actual effects of adopting SFAS 123R will
be dependent on numerous  factors  including,  but not limited to, the valuation
model  chosen by the Company to value  stock-based  awards,  the  assumed  award
forfeiture  rate,  the  accounting  policies  adopted  concerning  the method of
recognizing the fair value of awards over the requisite service period,  and the
transition method (as described below) chosen for adopting SFAS 123R.

         SFAS 123R will be effective for our fiscal  quarter  beginning  July 1,
2005, and requires the use of either the Modified Prospective Application Method
or the Modified  Retrospective  Method.  Under the Modified  Prospective Method,
SFAS 123R is  applied  to new awards  and to awards  modified,  repurchased,  or
cancelled  after the effective  date.  Additionally,  compensation  cost for the
portion of awards for which the requisite service has not been rendered (such as
unvested  options)  that are  outstanding  as of the date of  adoption  shall be
recognized as the remaining  requisite  services are rendered.  The compensation
cost relating to unvested  awards at the date of adoption  shall be based on the
grant-date  fair value of those awards as calculated  for pro forma  disclosures
under  the  original  SFAS123.  In  addition,  companies  may use  the  Modified
Retrospective  Application Method. This method may be applied to all prior years
for which the original SFAS 123 was  effective or only to prior interim  periods
in the year of  initial  adoption.  If the  Modified  Retrospective  Application
Method is applied,  financial  statements for prior periods shall be adjusted to
give  effect  to the  fair-value-based  method  of  accounting  for  awards on a
consistent basis with the pro forma disclosures required for those periods under
the original SFAS 123.

         Comprehensive  Loss--The only component of comprehensive  loss in 2004,
2003, and 2002 was net loss.

         Deferred  Income  Taxes--We  use the asset and  liability  approach for
financial  accounting and reporting for income taxes.  Deferred income taxes are
provided for temporary  differences  in the bases of assets and  liabilities  as
reported  for  financial  statement  purposes and income tax  purposes.  We have
recorded  a  valuation  allowance  against  all net  deferred  tax  assets.  The
valuation  allowance  reduces  deferred tax assets to an amount that  represents
management's  best  estimate of the amount of such deferred tax assets that more
likely than not will be realized.

                                      F-12
<PAGE>

         Fair Value of Financial  Instruments--Our financial instruments such as
cash and cash  equivalents and long-term debt, when valued using market interest
rates,  would not be  materially  different  from the amounts  presented  in the
consolidated financial statements.

         Reclassifications--Certain  reclassifications  have  been made to prior
period amounts to conform to classifications adopted in the current year.

3. ASSET IMPAIRMENT

         During the quarter ended June 30, 2002, we made the determination  that
certain assets of the Company were impaired.  Due to a shortage of cash, we made
the decision to reduce expenditures associated with exploring and developing the
Tennessee  mineral  property to the minimum amount required to maintain it. As a
result,  development activities were delayed,  including our intended use of the
jig to enhance the  recovery of heavy  minerals  on the  property.  We could not
determine when and if the jig would generate  substantial  revenues and profits.
This,  in  combination  with our lack of funds to  further  develop  the jig for
commercial use, caused us to believe that the jig assets were impaired. Since we
could not determine  when adequate  funds would be available to further  develop
and utilize the jig, we recorded an impairment  charge related to the jig assets
in the amount of $2,759,956,  which  represented the remaining net book value of
the jig patents and related  expenditures of $2,366,155 and the jigs included in
property, plant, and equipment of $393,801.

4. PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consisted of the following as of December
31, 2004 and 2003:
<TABLE>
<CAPTION>
                                                         2004                  2003
                                                   ------------------    ------------------
<S>                                                      <C>                   <C>
        Machinery and equipment                          $ 7,726,679           $ 7,144,365
        Building                                           2,335,979             2,335,979
        Vehicles                                              16,678               129,734
        Furniture, office equipment & other                  201,314                75,749
                                                   ------------------    ------------------

        Total                                             10,280,650             9,685,827
        Less accumulated depreciation                    (3,766,742)           (3,067,022)
                                                   ------------------    ------------------
        Total property and equipment                     $ 6,513,907           $ 6,618,805
                                                   ==================    ==================
</TABLE>
         Depreciation  expense for the years ended December 31, 2004,  2003, and
2002 totaled $818,861, $793,077, and $770,250, respectively.

5.       PATENTS

         Patents consisted of the following at December 31, 2004 and 2003:
<TABLE>
<CAPTION>
                                                          2004                  2003
                                                    ------------------    -----------------
<S>                                                       <C>                  <C>
        Patents and patent applications                   $ 1,517,736          $ 1,517,736
        Less accumulated amortization                       (542,859)            (457,167)
                                                    ------------------    -----------------
        Total patents and patent applications              $  974,877          $ 1,060,569
                                                    ==================    =================
</TABLE>

                                      F-13
<PAGE>

     All patents are being amortized on a straight-line  basis over their useful
lives with a weighted average  amortization  period of approximately 16.5 years.
Amortization  expense was $85,692 for the year ended  December 31,  2004,  which
represented the amortization  relating to the identified intangible assets still
required  to be  amortized  under  SFAS 142.  For each of the next  five  years,
amortization expense relating to intangibles is expected to be $85,680 per year.
Amortization  expense  was  $85,680  for the year ended  December  31,  2003 and
$227,458  for the year ended  December  31,  2002,  which  included  $141,779 of
amortization related to jig patents that was recorded prior to an adjustment for
asset impairment at June 30, 2002.

6. NOTES PAYABLE

         Notes payable consisted of the following at December 31, 2004 and 2003:
<TABLE>
<CAPTION>
                                             December 31, 2004          December 31, 2003
                                           -----------------------    -----------------------
<S>                                                 <C>                        <C>
Note payable to BHP Minerals
   International, Inc.                              $   2,880,311              $   2,686,130

Less current portion                                            -                          -
                                           -----------------------    -----------------------
Long-term portion of notes payable                  $   2,880,311              $   2,686,130
                                           =======================    =======================
</TABLE>

         On August 8, 2002, we entered into a purchase and sale  agreement  with
BHP Minerals International, Inc. ("BHP") wherein we purchased the land, building
and fixtures in Reno,  Nevada where our titanium  processing assets are located.
In connection with this transaction, BHP also agreed to terminate our obligation
to pay  royalties  associated  with the sale or use of the  titanium  processing
technology.  In return, we issued to BHP a note in the amount of $3,000,000,  at
an interest rate of 7%,  secured by the property we acquired.  Interest does not
begin to accrue until August 8, 2005.  As a result,  we imputed the interest and
reduced the face amount of the note payable by $566,763, an amount that is being
amortized to interest  expense over the life of the note.  The first  payment of
$600,000 of principal plus accrued interest is due February 8, 2006.  Additional
payments of $600,000 plus accrued  interest are due annually on February 8, 2007
through 2010.

7. STOCK OPTIONS AND WARRANTS

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

                                      F-14
<PAGE>

         Stock option activity for the years ended December 31, 2004,  2003, and
2002 is summarized as follows:
<TABLE>
<CAPTION>
                                            2004                       2003                      2002
                                   -----------------------    -----------------------    ----------------------
                                                Weighted                   Weighted                  Weighted
                                                 Average                    Average                   Average
                                                Exercise                   Exercise                  Exercise
                                     Shares       Price         Shares       Price         Shares      Price
                                   ------------ ----------    ------------ ----------    ----------- ----------

<S>                                  <C>           <C>          <C>           <C>         <C>           <C>
Outstanding at beginning of year     3,668,600     $ 3.11       4,061,700     $ 3.83      3,666,700     $ 4.38

Granted during the year              1,055,000       2.03       1,010,000       1.10        975,000       0.94

Cancelled/ Expired                   (868,000)       5.31       (925,000)       6.20      (580,000)       1.93

Exercised                            (561,900)       1.61       (478,100)       1.02              -          -
                                   ------------ ----------    ------------ ----------    ----------- ----------

Outstanding at end of year           3,293,700     $ 2.28       3,668,600     $ 3.11       4,061,700     $ 3.83
                                   ============ ==========    ============ ==========    =========== ==========

Options exercisable at year end      2,708,700     $ 2.41       3,181,100     $ 3.38      3,410,700     $ 4.26
                                   ============ ==========    ============ ==========    =========== ==========
Weighted average fair value of
   options granted during the year                 $ 1.15                     $ 0.51                    $ 0.64
                                                ==========                 ==========                ==========
</TABLE>
         The  following  table  summarizes   information   about  stock  options
outstanding at December 31, 2004:
<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>
 $0.47 to $1.06          890,000            5.5       $   0.98          640,000          $   0.96

 $1.12 to $1.59          751,500            3.0           1.26          684,000              1.25

 $2.00 to $2.09          728,500            2.5           2.03          561,000              2.02

 $2.25 to $6.85          923,700            3.2           4.56          823,700              4.75
                   -------------- -------------- --------------    -------------    --------------

                       3,293,700            3.6       $   2.28        2,708,700          $   2.41
                   ============== ============== ==============    =============    ==============
</TABLE>


                                      F-15
<PAGE>
         We have elected to follow the  measurement  provisions of APB 25, under
which no  recognition  of expense is required in  accounting  for stock  options
granted to  employees  and  directors  for which the  exercise  price  equals or
exceeds the fair market value of the stock at the grant date.  Generally,  stock
options are granted at an option  price at or greater  than fair market value on
the date of grant. We recorded compensation expense of $136,212 and $903,668 for
stock  options that had been  previously  repriced and are  accounted  for under
variable  accounting in accordance  with APB 25 for the year ended  December 31,
2004 and 2003, respectively.

         We follow  the  measurement  provisions  of SFAS 123 for stock  options
issued to non-employees.  We recorded compensation expense of $270,560, $64,346,
and  $27,601  for stock  options  granted to  non-employees  for the years ended
December 31, 2004, 2003, and 2002, respectively.

         Warrants--Warrant activity for the years ended December 31, 2004, 2003,
and 2002 is summarized as follows:
<TABLE>
<CAPTION>
                                            2004                         2003                        2002
                                  -------------------------    -------------------------    ------------------------
                                                 Weighted                    Weighted                     Weighted
                                                 Average                      Average                     Average
                                                 Exercise                    Exercise                     Exercise
                                    Warrants      Price         Warrants       Price         Warrants      Price
                                  ------------- -----------    ------------ ------------    ------------ -----------
<S>                                 <C>            <C>           <C>            <C>           <C>           <C>
Outstanding at beginning of year    10,453,831     $  1.71       9,170,171      $  1.92       4,612,007     $  2.92

Issued                                  60,000        2.50       5,331,827         1.31       5,069,333        1.41

Expired                              (116,668)        3.14       (837,839)         2.72       (225,000)        9.00

Exercised                          (5,825,432)        1.54     (3,210,328)         1.38       (286,169)        1.05
                                  ------------- -----------    ------------ ------------    ------------ -----------

Outstanding at end of year           4,571,731     $  1.90      10,453,831      $  1.71       9,170,171     $  1.92
                                  ============= ===========    ============ ============    ============ ===========

Currently exercisable                4,571,731     $  1.90      10,453,831      $  1.71       9,170,171     $  1.92
                                  ============= ===========    ============ ============    ============ ===========
</TABLE>
         The following table summarizes  information about warrants  outstanding
at December 31, 2004:
<TABLE>
<CAPTION>
                                  Warrants Outstanding                     Warrants Exercisable
                       --------------------------------------------    -----------------------------
                                       Weighted
                                        Average        Weighted                         Weighted
                                       Remaining       Average                           Average
     Range of                         Contractual      Exercise                         Exercise
 Exercise Prices         Warrants    Life (Years)       Price            Warrants         Price
 ---------------       ------------- --------------- --------------    -------------- --------------
<S>                    <C>                 <C>       <C>                   <C>         <C>
      $1.00            1,756,627           3.3       $  1.00               1,756,627   $  1.00

  $1.20 to $2.00       1,576,475           2.9       $  1.88               1,576,475   $  1.88

  $2.50 to $5.00       1,238,629           2.0       $  3.20               1,128,629   $  3.20
                       ------------- -------------- ---------------    -------------- --------------

                       4,571,731           2.8       $  1.90               4,461,731   $  1.87
                       ============= ============== ===============    ============== ==============
</TABLE>
                                      F-16
<PAGE>

         The warrants were issued in conjunction  with debt offerings,  issuance
of common stock, and payment for outside  services.  To estimate expense related
to the issuance of  warrants,  we have used the  modified  Black-Scholes  option
pricing model using a life equal to the maximum  contractual  life. The warrants
expire on various dates ranging from February 2005 to December 2008.

8. OTHER TRANSACTIONS

         On April 16, 2002, we reduced the exercise price of 582,500 outstanding
warrants to $1.05 per share for the period April 26, 2002 through June 30, 2002.
The warrants had been previously  issued with exercise prices ranging from $3.50
to $5.00. As a result of these  repricings,  we recorded a preferential  warrant
dividend of $48,666 as of the repricing  date. A total of 286,169  warrants were
exercised prior to the expiration date.

         On or about June 2,  2003,  we reduced  the  exercise  price of 796,331
warrants  to $1.00 per share.  As a result of these  repricings,  we  recorded a
preferential warrant dividend of $176,472 as of the repricing date. The warrants
had been previously issued with exercise prices ranging from $2.50 to $4.50.

         In September  2003,  we entered into an  agreement  with a  shareholder
wherein the shareholder agreed to exercise 631,882 warrants that had an exercise
price of $1.00  each.  In  return,  we issued  to the  shareholder  631,882  new
warrants  having an exercise  price of $1.75 each.  The new warrants have a fair
value of $416,014 and were recorded as a preferential warrant dividend.

         On August 6, 2002, we adopted an Employee  Stock Purchase Plan ("ESPP")
which  allows  employees  to purchase  common  shares at the fair  market  value
through payroll deductions. Through December 31, 2003, a total of 864,584 common
shares  were  issued  under the ESPP at prices  ranging  from $0.33 to $2.10 per
share.

9.       LEASES

         Operating   Leases--We  lease  certain  premises  and  equipment  under
operating leases, all of which are on a month-to-month basis.

         Lease  expense for the years ended  December 31, 2004,  2003,  and 2002
totaled $28,207, $33,239, and $207,265, respectively.

         Mineral  Leases--During  2004,  the Company  decided to  terminate  the
mineral leases on the Tennessee mineral property,  dispose of the related assets
and  remediate  the  subject  property  to the  extent  required  by  regulatory
authorities.  During the quarter ended December 31, 2004, leases  representing a
total of 4,750 acres were  terminated.  At that time,  we  reversed  $162,025 of
accrued  advance  royalty  payments  that  were no  longer  owed.  We  expect to
terminate  the leases on the  remaining  3,950 acres during the first quarter of
2005.  The  minimum  annual  advance  royalty  payments  on these 3,950 acres at
December 31, 2004 are as follows:

         Year ending December 31:
                                     2005   $ 47,815

                                     2006     53,139

                                     2007     43,042

                                     2008     39,197

                                     2009     29,900

                               Thereafter     71,482

                                      F-17
<PAGE>
         The Company has incurred royalties of $14,675,  $147,467,  and $129,691
for the years ended December 31, 2004, 2003, and 2002, respectively.

10. INCOME TAXES

         Because  of the net  operating  losses  and a  valuation  allowance  on
deferred  tax assets,  there was no provision  for income taxes  recorded in the
accompanying consolidated financial statements for the three years in the period
ended December 31, 2004.

         A  reconciliation  of the  federal  statutory  income  tax rate and our
effective income tax rates is as follows:
<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                            ----------------------------------------
                                               2004           2003           2002
                                           -----------    -----------    -----------
<S>                                        <C>            <C>            <C>
Federal statutory income taxes (benefit)   $(2,450,798)   $(2,390,649)   $(3,489,557)

Meals and entertainment                          3,875          3,821          3,470

Valuation allowance                          2,446,923      2,386,828      3,486,087
                                           -----------    -----------    -----------

    Total                                  $      --      $      --      $      --
                                           ===========    ===========    ===========
</TABLE>

         The components of the deferred tax assets consisted of the following as
of December 31, 2004 and 2003:

                                          2004            2003
                                       ------------    ------------
Deferred tax assets:

     Net operating loss carryforward   $ 10,570,378    $  8,174,014

     Basis difference in assets             175,722         493,242

     Allowance for bad debts                   --               163
                                       ------------    ------------

  Total deferred tax assets              10,746,100       8,667,419

Deferred tax liabilities:

     Accrued vacation                       (35,839)        (27,012)

Valuation allowance                     (10,710,262)     (8,640,407)
                                       ------------    ------------


Total deferred tax assets              $       --      $       --
                                       ============    ============

         The net operating loss  carryforwards  total $30,201,080 as of December
31, 2004 and will expire at various dates as follows:

                                  2005-2009    $  1,385,536
                                  2010-2014    $  2,267,080
                                  2015-2019    $  2,045,989
                                  2020-2024    $ 24,502,475

                                      F-18
<PAGE>

11. COMMITMENTS AND CONTINGENCIES

         Litigation--We are currently not aware of any  investigations,  claims,
or  lawsuits  which we  believe  could  have a  material  adverse  effect on our
consolidated financial position or on our consolidated results of operations.

         Significant  Contracts--In  July 2003 we entered into a  memorandum  of
understanding (the "MOU") with Titanium Metals Corporation  ("TIMET") to provide
custom oxide feedstocks for a four-year,  titanium metal research program funded
by  the  Department  of  Defense,  Defense  Advanced  Research  Projects  Agency
("DARPA").  The MOU sets up a  relationship  under  which  TIMET and Altair will
explore  opportunities  for  collaboration  and funding of  development  work in
connection with the DARPA program. The DARPA program's goal is to lower the cost
of titanium  metal and  titanium  metal  alloys to enable a broader  market use.
DARPA is  specifically  interested in lowering the cost to provide for a broader
use in military applications such as aerospace and weapons systems. During 2003,
we received  $9,000 in  connection  with the MOU  agreement.  In January 2004 we
became a  subcontractor  for the  DARPA  program  and were  awarded  a  $150,000
contract from TIMET to design and develop a titanium oxide  electrode  structure
and provide TIMET  optimized  titanium  oxide  feedstock to produce 50 pounds of
titanium metal per day in batch production  demonstrations.  During 2004, we met
the contract and project goals and were awarded an additional  $80,000  contract
to supply testing quantities of customized nano-sized coating materials.

         In September  2003, we entered into an agreement with Western  Michigan
University  ("WMU")  to  provide  research  services  and  materials  to support
research  involving a technology  used in the detection of chemical,  biological
and radiological agents. The teaming/research  agreement with WMU, funded by the
Department of Energy,  provides for total  payments to Altair of $356,500 over a
two-year  period.  During  2003,  we received  $36,600 in  connection  with this
research  agreement.  Total revenues generated by Altair under this agreement in
2004 were  $287,580.  In September  2004, the DOE awarded a stage 2 contract for
the project under which we will continue joint  development work for the design,
synthesis and  characterization  of  nanosensors  for chemical,  biological  and
radiological  agents.  Altair  will  receive  an  additional  $672,000  over the
two-year  term of the stage 2 contract.  Revenues of $203,740  were  recorded in
2004 under this contract.

         In January 2004, we entered into a license  agreement  with Western Oil
Sands, Inc. with respect to its possible use of the Altair Hydrochloride Pigment
Process   ("AHPP")  for  the   production  of  titanium   dioxide   pigment  and
pigment-related  products at the Athabasca Oil Sands Project in Alberta, Canada,
and elsewhere.  Upon execution of the agreement, we granted Western Oil Sands an
exclusive,  conditional  license to use the AHPP on heavy minerals  derived from
oil sands in Alberta,  Canada.  The agreement  also  contemplates a three-phase,
five-year  program  pursuant to which the parties will work  together to further
evaluate, develop and commercialize the AHPP. In the first phase of the program,
Western Oil Sands is expected to spend $650,000  ($500,000 of which is scheduled
to be paid to Altair for work  performed)  to evaluate the AHPP and confirm that
the AHPP will produce pigment from oil sands.  Assuming phase one is successful,
Western  Oil  Sands may elect to  commence  phase  two,  the  construction  of a
demonstration  titanium pigment production facility using the AHPP. If phase two
is  successful,  Western  Oil Sands  may  elect to  commence  phase  three,  the
construction  and  operation  of  a  full-scale   commercial   titanium  pigment
production  facility using the AHPP.  Revenues of $314,359 were recorded in 2004
under this contract.

         In June 2004, we were awarded a National  Science  Foundation  grant of
$100,000 to fund joint  development  work on next  generation  lithium ion power
sources  with  Hosokawa  Micron's  Nanoparticle  Technology  Center and  Rutgers
University's Energy Storage Research Group. The grant was effective July 1, 2004

                                      F-19
<PAGE>

and the project was  substantially  complete at December 31, 2004.  We expect to
supply nano-sized anode and cathode materials for design and development of high
capacity lithium ion battery and super capacitor applications. Nanomaterials are
expected to improve the  performance  of these  systems and enable  their use in
applications where immediate high power delivery is necessary.

         In November  2004, we entered into an agreement  with the University of
Nevada,  Las  Vegas  Research  Foundation  to act  as a  subcontractor  under  a
$3,000,000  grant  awarded  to them by the U.S.  Department  of Energy for joint
research  activities related to solar hydrogen production at a refilling station
that is under  development  in Las  Vegas.  The  agreement,  which is  effective
through  December  31,  2005,  provides  for  payments to Altair of $400,000 for
research  and  development  work  utilizing  nanotechnology  processes  for  the
production and  commercialization  of  solar-based  hydrogen  technologies.  The
agreement,  which has a work scope  totaling  $500,000,  contains a cost-sharing
provision that requires Altair to share project costs in the amount of $100,000.

12. RELATED PARTY TRANSACTIONS

         On December 31,  2003,  we entered  into a  consulting  agreement  with
Advanced  Technology Group LLC ("ATG"),  whose managing partner is David King, a
Director  of the  Company.  The  agreement  stipulates  that  ATG  will  furnish
consulting  services in reviewing  potential  federal  grant  opportunities  and
providing proposal  development  assistance on selected programs for a period of
one year. Under the terms of the agreement,  ATG is paid on a contingency  basis
at a  rate  of  6%  of  the  first  $1,000,000  in  grant  monies  secured  from
applications  prepared in any calendar year plus 3.5% of any cumulative  amounts
over  $1,000,000.  ATG also agreed to provide  consulting  services at a rate of
$200 per hour upon  request of the  Corporation.  In October  2004,  we paid ATG
$6,000 in fees in connection  with  securing a $100,000  grant from the National
Science  Foundation  for  development of  nano-structured  electrodes for use in
lithium ion  ultra-capacitors.  Also in October 2004, we paid ATG $4,500 in fees
for consulting work in connection with product marketing.

13. BUSINESS SEGMENT INFORMATION

         In  accordance  with SFAS No.  131,  Disclosure  about  Segments  of an
Enterprise and Related Information, management views the Company as operating in
four business segments:  Performance Materials, Life Sciences, Tennessee Mineral
Property, and the Altair Jig.

         The  Performance  Materials  segment  produces  advanced  materials for
paints,  coatings,  sensors,   alternative  energy  devices  and  materials  for
improving   process   technologies.   The   Life   Sciences   segment   produces
pharmaceutical  products,  drug  delivery  products  and dental  materials.  The
Tennessee  Mineral  Property  segment,  which was involved in the exploration of
mineral properties,  is being disposed of and the Altair Jig segment is inactive
with a zero net book value for its assets and minimal operating costs.

         The  accounting  policies of these  business  segments  are the same as
described in Note 1 to the consolidated  financial  statements.  During 2004, we
reorganized our nanomaterials and titanium dioxide pigment  technology  business
segment into two distinct segments: Performance Materials and Life Sciences and,
as such, the  information  presented below for 2003 and 2002 has been revised to
reflect this change.

         Reportable  segment  data  reconciled  to  the  consolidated  financial
statements  as of and for the fiscal years ended  December 31, 2004,  2003,  and
2002 is as follows:

                                      F-20
<PAGE>
<TABLE>
<CAPTION>

                                                           Depreciation
                                               Loss From        and
                                 Net Sales     Operations  Amortization     Assets
                                -----------   -----------   -----------   -----------

2004:
-----
<S>                             <C>           <C>           <C>           <C>
   Performance Materials        $ 1,151,892   $ 4,475,013   $   839,974   $ 5,567,685
   Life Sciences                       --         250,855         1,307       104,534
   Tennessee Mineral Property          --          12,142          --            --
   Altair Jig                          --           9,264          --            --
   Corporate and other                 --       2,157,680        63,272     9,874,802
                                -----------   -----------   -----------   -----------

Consolidated Total              $ 1,151,892   $ 6,904,955   $   904,553   $15,547,021
                                ===========   ===========   ===========   ===========

2003:
-----
   Performance Materials        $    72,851   $ 2,771,433   $   809,344   $ 5,362,003
   Life Sciences                       --          51,451          --            --
   Tennessee Mineral Property          --         155,709          --          40,418
   Altair Jig                          --          27,729          --            --
   Corporate and other                 --       2,778,888        69,413     6,257,333
                                -----------   -----------   -----------   -----------

Consolidated Total              $    72,851   $ 5,785,210   $   878,757   $11,659,754
                                ===========   ===========   ===========   ===========

2002:
-----
   Performance Materials        $   225,225   $ 2,456,771   $   792,399   $ 6,274,732
   Life Sciences                       --            --            --            --
   Tennessee Mineral Property          --         598,977          --          18,200
   Altair Jig                        28,270     2,929,010       163,343        10,270
   Corporate and other                 --       1,871,953        41,966     2,611,203
                                -----------   -----------   -----------   -----------

Consolidated Total              $   253,495   $ 7,856,711   $   997,708   $ 8,914,405
                                ===========   ===========   ===========   ===========
</TABLE>


         For the year  ended  December  31,  2004,  we had sales to three  major
customers,  each of which accounted for 10% or more of revenues and all of which
were made in the performance  materials  business segment.  Total sales to these
customers for the year ended December 31, 2004 and the balance of their accounts
receivable at December 31, 2004 were as follows:

                                  Sales - Year Ended    Accounts Receivable at
       Customer                   December 31, 2004       December 31, 2004
-------------------------------  --------------------- -------------------------
Western Michigan University            $491,320            $319,739
Titanium Metals Corp.                   152,550              39,382
Western Oil Sands                       314,359              67,191


                                      F-21
<PAGE>

         For the year  ended  December  31,  2003,  we had sales to three  major
customers,  each of which accounted for 10% or more of revenues and all of which
were made in the performance  materials  business segment.  Total sales to these
customers for the year ended December 31, 2003 and the balance of their accounts
receivable at December 31, 2003 were as follows:

                                  Sales - Year Ended     Accounts Receivable at
       Customer                   December 31, 2003        December 31, 2003
-------------------------------  --------------------- -------------------------
        Western Michigan University     $ 36,553           $ 12,620
        New Zealand Steel                 18,696               --
        Titanium Metals Corp.              9,000               --


         For the year  ended  December  31,  2002,  we had  sales to four  major
customers,  each of which accounted for 10% or more of revenues.  Total sales to
these  customers  for the year ended  December 31, 2002 and the balance of their
accounts receivable at December 31, 2002 were as follows:

                                  Sales - Year Ended     Accounts Receivable at
       Customer                   December 31, 2002        December 31, 2002
-------------------------------  --------------------- -------------------------
        New Zealand Steel               $ 90,300           $ 55,500
        FW Gartner                        62,073             62,073
        Inframat Corp.                    42,403               --
        Kerr-McGee Corp.                  28,270             10,270

         Of these  sales,  $28,270  relates to the Altair  Jig  segment  and the
remainder relates to the performance materials business segment.

14. SUBSEQUENT EVENTS

         On January 28, 2005, we signed a RenaZorb(TM)  licensing agreement with
Spectrum  Pharmaceuticals,  Inc.  ("Spectrum")  which grants Spectrum  exclusive
worldwide  rights to develop,  market and sell  RenaZorb(TM),  a potential  drug
candidate for patients with kidney disease, for human therapeutic and diagnostic
applications.  Upon  signing  the  agreement,  Spectrum  issued  to  us  100,000
restricted  shares of their common stock,  purchased 38,314 restricted shares of
our common stock at the then current  market value of $2.61 per share,  and also
paid us $100,000 in connection with the licensing agreement. Additional payments
by Spectrum are contingent  upon the  achievement  of various  milestones in the
testing,  regulatory  approval  and sale of  RenaZorb(TM).  Under the terms of a
contract with RBC Capital Markets Corporation  ("RBC"), we are required to pay a
transaction  fee of  $750,000  to RBC for  their  assistance  in  arranging  the
transaction.

         On February 14, 2005,  we sold  5,000,000  common  shares that had been
registered previously in a shelf registration.  The sales were made at $4.05 per
share with net proceeds to the Company,  after expenses,  of approximately $19.2
million.  The placement agent also received a warrant to purchase 250,000 shares
of our common stock at $5.27 per share.  The warrant has a four-year term. Using
a  Black-Scholes  pricing  model,  we estimate  these  warrants  have a value of
approximately $581,000 at their date of issuance.

         On March 4, 2004,  the  closing  market  price of our common  stock was
$4.07 per share and, as of that date, the value of the Company's repriced common
stock  options had  increased by $762,000  over their value at December 31, 2004
when the closing market price was $2.71 per share.  The value of repriced common
stock  options  increases or  decreases  with changes in the market price of our
common stock.

                                      F-22