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, 2003

[ ]      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
              -----------------------------------------------------
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (775) 858-3750

[ ]      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, 2003,  based upon the average bid and asked price
of the common shares on the NASDAQ  SmallCap  Stock Market of $1.07 per share on
June 30, 2003, was approximately $36,850,000. Common Shares held by each officer
and  director  and by each other  person who may be deemed to be an affiliate of
the  Registrant  have been  excluded.  As of March 15, 2004,  the Registrant had
48,650,140 common shares outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the  Registrant's  Proxy  Statement on Schedule 14A for the
         Registrant's  2004 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..................................................................28

Item 3.    Legal Proceedings...........................................................29

Item 4.    Submission of Matters to a Vote of Security Holders.........................29


PART II................................................................................30

Item 5.    Market for the Common Shares and Related Shareholder Matters................30

Item 6.    Selected Financial Data.....................................................33

Item 7.    Management's Discussion and Analysis
           of Financial Condition and Results of Operations............................33

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk..................42

Item 8.    Financial Statements and Supplementary Data.................................42

Item 9.    Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure......................................43

Item 9A.   Controls and Procedures.....................................................43


Part III...............................................................................44

Item 10.   Directors and Executive Officers of the Registrant..........................44

Item 11.   Executive Compensation......................................................44

Item 12.   Security Ownership of Certain Beneficial Owners and Management..............44

Item 13.   Certain Relationships and Related Transactions..............................44

Item 14.  Principal Accountant Fees and Services.......................................44


Part IV................................................................................45

Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.............45
</TABLE>
                                       2


<PAGE>

                                     PART I

         This Annual  Report on Form 10-K for the year ended  December  31, 2003
(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  "Commission")  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  development-stage  Canadian company whose primary business is
developing  and  commercializing   nanomaterial  and  titanium  dioxide  pigment
technologies.  Our research,  development,  production and marketing efforts are
currently directed toward four applications of our proprietary technologies:

         o   the production of titanium dioxide pigments;

         o   the development of titanium dioxide structures in connection with a
             research  program  aimed at  developing  a  lower-cost  process for
             producing titanium metals and related alloys;

         o   a new active  pharmaceutical  ingredient that we call RenaZorb(TM),
             which is designed to be useful in the  treatment of elevated  serum
             phosphate levels in patients undergoing kidney dialysis; and

         o   the development of nanomaterials for use in various products,  such
             as thermal spray powders, dental fillings, algae removal materials,
             lithium ion batteries and fuel cells.

         In December 2003, our board of directors approved a plan to restructure
the Company in order to concentrate  resources on the nanomaterials and titanium
dioxide  pigment  applications  identified  above,  which  we  believe  are  the
applications  most likely to generate  significant  revenues in the  foreseeable
future.  Our future revenues will depend on the success of these  projects,  the
results  of our other  research  and  development  work and the  success  of our
marketing  efforts.  As a part  of the  restructuring,  we  have  determined  to
consolidate the assets related to the Altair  Centrifugal Jig (the "Altair jig")
and our Tennessee mineral property into (or under) a single  corporation,  cause
such corporation to become an SEC reporting company and distribute substantially
all of the shares of common stock of such corporation to our  shareholders.  The
completion of this spin-off process is expected to take approximately six months
and is contingent upon receipt of shareholder approval.

                                       3
<PAGE>

Our Nanomaterials and Titanium Dioxide Pigment Business
-------------------------------------------------------

Background and Description of Process

         In November 1999, we acquired all patent  applications,  technology and
tangible  assets  related  to a  hydrometallurgical  process  developed  by  BHP
Minerals  International,  Inc. ("BHP")  primarily for the production of titanium
dioxide  products from  titanium  bearing ores or  concentrates  and metal oxide
nanoparticles (the "nanomaterials and titanium dioxide pigment technology"), and
all tangible equipment and other assets used by BHP to develop and implement the
nanomaterials and titanium dioxide pigment  technologies (the "nanomaterials and
titanium dioxide pigment assets").  These assets were being developed by BHP and
had not yet been commercially  operated.  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.

         The nanomaterials and titanium dioxide pigment technology is capable of
producing  conventional  titanium dioxide pigment products that are finely-sized
powders  consisting of titanium  dioxide  crystals.  These  powders  approximate
170-300  nanometers in size.  Our  nanomaterials  and titanium  dioxide  pigment
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  (TiNano40(TM)  series),   lithium  titanate  spinel  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.

         The nanomaterials and titanium dioxide pigment technology is based on a
proprietary dense-phase crystal growth technique that controls crystal formation
using a combination  of mechanical  and fluid  dynamics and chemical and thermal
control.  The size, phase,  catalytic activity and size distribution of crystals
can be controlled within narrow limits and to specification through introduction
of small quantities of selected  chemicals  ("doping  elements")  during crystal
growth.

         The technology,  which is scaleable,  uses standard chemical processing
industry  unit  operations  that we believe  make it  suitable  for  large-scale
continuous production of highly uniform products.

Nanomaterials and Titanium Dioxide Pigment Tangible Assets

         The   nanomaterials   and  titanium   dioxide  pigment  assets  consist
principally of a production  facility located in Reno, Nevada in a building that
we  purchased  from BHP.  During  2000,  we  installed  additional  equipment to
increase  production  capacity  to a  nominal  annual  amount  of  200  tons  of
nanomaterials.  We also added a separate  pilot facility to produce large sample
quantities of product for development, test and evaluation purposes. In 2001, we
added hydration and filtering  equipment to improve  production  processing.  In
2002, we purchased  advanced milling  equipment to improve product  quality.  In
2003,  we purchased  pilot plant scale  solvent  extraction  columns to test and
improve  the  purification  unit  operation  process for the  nanomaterials  and
titanium dioxide pigment technology.

Overview of the Technology and Process

         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


                                       4
<PAGE>
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 and
fluid dynamics and chemical and thermal control.

         Our process permits  exceptional control over particle size, shape, and
crystalline form. Our titanium  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.

         We have not operated the  nanomaterials  and titanium  dioxide  pigment
technology at a commercial  scale.  Accordingly,  we cannot describe  processing
efficiencies  and costs associated with our  nanomaterials  and titanium dioxide
pigment   technology  or  compare  such  efficiencies  and  costs  to  those  of
competitors.

         In addition,  our ability to capitalize  on and develop our  technology
may be limited by the limited  amount of capital we have  available and our lack
of a substantial operating history.  Competing nanomaterials producers generally
are financially strong corporations with established customer  relationships and
operating histories. The nanomaterials  application business is a young industry
subject to rapid technological  changes,  and there is wide disparity within the
industry  with  respect  to the  composition  and  attributes  of  nanomaterials
products.  The manufacturing methods and costs to manufacture also vary greatly,
with certain methods  lending  themselves to specific niche  applications.  As a
result,  competition  within the  industry  is driven by a variety  of  factors,
principally price and product attributes.  Our marketing efforts have focused on
our ability to produce a wide range of products at attractive prices.

Plans for Development

         The nanomaterials and titanium dioxide pigment technology has potential
to produce nanomaterials,  which are sold on specialty product markets, titanium
dioxide pigments, which are commercially traded in bulk, catalyst structures and
other specialty  ceramic  products.  During 2003, our  development  efforts were
directed toward new nanomaterials products,  pharmaceutical  products,  titanium
dioxide  pigment  products,  thermal spray  powders,  electrode  grade  powders,
catalyst support and electrode structures.



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.  The AHPP uses a  dense-phase  crystal

                                       5
<PAGE>

growth  technique  which  controls  crystal  formation  using a  combination  of
mechanical  and fluid dynamics and chemical and thermal  control.  A third party
engineering study indicates 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
         -]-------------

         We intend to  benefit  from the  titanium  dioxide  pigment  technology
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.

         Research, Testing and Development
         ---------------------------------

         We have  continued  to research,  test and develop our AHPP  technology
through  development  contracts.  We have  demonstrated  the  flexibility of the
process for use on a wide variety of low-cost ilmenite feed stocks.


         In January 2004, we entered into a license  agreement  with Western Oil
Sands,  Inc. 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 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.

         The  scope of the  license  granted  to  Western  Oil  Sands  under the
agreement  will vary with  Western Oil Sands'  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 Western Oil Sands fails to complete
phase one and will  convert to a  non-exclusive  license  if  Western  Oil Sands
commences  phase two but fails to complete,  or spend at least $25 million in an
effort to complete, phase two.

         If  Western  Oil Sands  completes  phase one and  commences  phase two,
Western Oil Sands' 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 Western Oil Sands  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 Western
Oil Sands  completes phase two but, after spending more than $5 million but less
than $50 million on phase three,  does not complete phase three.  If Western Oil
Sands does not  commence,  or spends less than $5 million with respect to, phase
three, the expanded license terminates.

                                       6
<PAGE>

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

         In  addition  to our work with  Western  Oil Sands,  we have  submitted
proposals  to five  international  minerals  and energy  resources  companies to
develop and license our titanium pigment production  process.  We have completed
initial  testing  for a company  located  in the  Pacific  Rim and  submitted  a
phase-two  proposal  for the economic  evaluation  of a  demonstration  titanium
dioxide  pigment  plant  that  could be  expanded  to a  full-scale  plant  with
production  capabilities  of between  10,000 and 20,000  metric tons of titanium
dioxide  pigment per year.  We have been  informed  that this  proposal is under
consideration and subject to due diligence evaluation. If the phase-two proposal
is  accepted  in some form,  we would  expect to  generate  limited  revenues in
exchange for the testing and development  work associated with the evaluation of
a demonstration  titanium dioxide plant. A licensing agreement associated with a
full-scale  plant  may  generate  significant  revenues  in the  long-term,  but
significant up-front revenues from such an agreement are unlikely.

         We submitted phased development  proposals for the testing and economic
evaluation  of our  titanium  pigment  production  technology  to the other four
minerals and energy resources companies during the first three quarters of 2003.
We recently  entered  into a testing and  development  license with one of these
companies,  called Avireco and located in Vietnam,  and  anticipate  that we may
enter into  additional  testing  agreements  during 2004.  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  during 2004, we have
not  received a formal work  authorization.  If the results of testing by one or
more such  companies  are  positive,  we hope to enter into a long-term  license
agreement for regional exclusive use of the pigment  technology.  If one or more
of such  minerals  and energy  resources  companies  obtains  such a license and
subsequently  constructs  a  full-scale  production  plant,  we would  expect to
receive  development  fees and royalties over the long-term,  but no significant
up-front  payments.  We can provide no assurance that the results of any testing
will be  positive,  that we will  enter  into a  long-term  license  or that the
licensee  will  construct  a  full-scale  production  plant  in order to use our
technology.

         Proprietary Rights
         ------------------

         We have been awarded three US and 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.


Catalyst Support and Electrode Structures for Titanium Metals

         In July 2003 we entered into a memorandum of  understanding  (the"MOU")
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"). 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.

                                       7
<PAGE>

         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.

         Key Features
         ------------

         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 "FCC Cambridge  Process") and thereby enable a broader market use and lower
the cost of  military  applications.  Under the terms of the MOU and  subsequent
DARPA subcontract,  we will attempt to develop a low-cost  manufacturing process
for titanium dioxide pellets,  critical to the successful  commercialization  of
the FCC Cambridge  process for production of titanium metal.  Our unique process
for making the titanium dioxide pellets may provide a superior feedstock for the
FCC Cambridge process by enabling the process to work more efficiently.

         Target Markets
         --------------

         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
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 pellets used by the
FCC Cambridge  process but not ultimately to manufacture  the pellets.  We would
most likely  license the  technology  for  manufacture  of the titanium  dioxide
pellets  to  producers  of  metal  using  the FCC  Cambridge  Process  or  their
suppliers.

         Research, Testing and Development
         ---------------------------------

         We have an  active,  funded  research  program  underway  with TIMET to
optimize our product for use in their  development-stage  FCC Cambridge  Process
technology to manufacture  low-cost  titanium metal. Both our technology and the
FCC  Cambridge  Process  are in a  development  stage  and are not  expected  to
generate significant revenue for several years, if ever.

         Proprietary Rights
         ------------------

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

Pharmaceutical Products

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

                                       8
<PAGE>

(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.  We plan to conduct  additional
animal testing of RenaZorb(TM) in animals  starting in March,  2004. The testing
program is designed to directly compare RenaZorb(TM) with Renagel(TM)  (Genzyme)
and Fosrenol (Shire  Pharmaceuticals)  with regard to phosphate binding per gram
of active drug.  The testing is designed to determine  whether,  as suggested by
laboratory results and literature data, RenaZorb(TM) could require approximately
30% less drug to bind an  equivalent  amount  of  phosphate  compared  to either
Renagel or  Fosrenol.  Generally,  lower drug  dosages  often  result in smaller
tablet or capsules resulting in better patient compliance and perhaps lower side
effects.  The test protocol for the animal  testing that has been  scheduled was
reviewed  by a major  pharmaceutical  company  that has  expressed  interest  in
licensing  RenaZorb(TM).  We also expect to submit an  Investigational  New Drug
application to the FDA that provides data showing that it is reasonable to begin
tests of RenaZorb(TM) on humans. We continue to seek business relationships with
pharmaceutical  companies that can conduct  additional  testing and development,
seek  necessary  FDA  approvals  and take the  necessary  steps to bring the new
pharmaceutical ingredient and drug delivery system to market.

         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;
         o   Better patient compliance because of fewer and smaller tablets; and
         o   Lower cost than  existing  or proposed  prescription  drugs in this
             therapeutic category.

         Target Markets
         --------------

         Our pharmaceutical product RenaZorb(TM) was developed to treat elevated
phosphate levels in kidney dialysis patients. 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.  It is not our
intent  to  manufacture  pharmaceuticals  but,  rather,  to  grant  licenses  to
pharmaceutical  companies  for the  manufacture  and sale of products  developed
using our technology.  We are seeking business relationships with pharmaceutical
companies  that can  conduct  additional  testing  and  development  using their
pharmaceutical  active ingredients to coat our experimental drug delivery system
and then seek  necessary  FDA  approvals  and take the other steps  necessary to
bring the combined drug delivery system to market.

         Research, Testing and Development
         ---------------------------------

         We have performed laboratory (in vitro) tests using standard techniques
to determine  phosphate  binding  efficiencies  and kinetics for a wide range of
lanthanum compounds. We have entered into 12 confidentiality agreements relating

                                       9
<PAGE>

to the  development/licensing  of  RenaZorb(TM).  Animal testing of RenaZorb(TM)
began in December 2002 and was conducted by two pharmaceutical companies, one of
which  tested in dogs and both of which  tested in rats.  Results of these tests
were made available in March 2003, and the results showed  positive  indications
of phosphate  binding.  RenaZorb(TM)  must undergo human testing and receive FDA
approval  before it could be approved for  marketing.  Human  testing  typically
takes 1 to 2 years and, if merited by the results of animal testing, the process
of seeking  FDA  approval  typically  takes  between 3 and 5 years.  We believe,
however,  that FDA approval of  Fosrenol(TM),  a chemically  related drug, could
accelerate the approval process for 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)  (chemical name sevelmer)  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, is awaiting  United States FDA and foreign
regulatory  approvals.  Shire  announced  in March 2003 that it had  received an
approvable letter from the FDA for Fosrenol(TM). The approvable letter requested
additional data and analysis from Shire.  FDA approval is expected in the second
quarter of 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.

         The prescription  phosphate binder Renagel(TM) is relatively  expensive
(approximately  $1,300 per patient per year), has a high dosage requirement (2 x
800 mg or 4 x 400 mg  capsules/tablets  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).  Renagel  is  the  only  prescription  non-calcium  phosphate  binder
currently approved by the United States FDA.

         Fosrenol(TM)  (LCTH), for which US FDA approval is pending, is expected
to be marketed as a chewable  tablet with a proposed  dosage of 1.5 to 3.0 grams
active drug per day. As with all medicines,  Fosrenol(TM)  will probably display
some side effects but these are expected to be minor.  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 or capsule  dosage form with a projected
dosage of 0.6 to 2.0 grams per day.  Although  we have done no human  testing on
RenaZorb(TM),  we believe RenaZorb(TM) has the potential for fewer side effects,

                                       10
<PAGE>
lower cost and better patient compliance. We base these possible advantages upon
in vitro testing conducted by Altair in which RenaZorb was compared to LCTH, the
active chemical in Fosrenol.  Our in vitro testing showed that RenaZorb binds at
least 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 homologous  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  ate 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  orthophosphate  is  formed.  Based  on  laboratory  tests
conducted by Altair comparing  RenaZorb(TM)  with LCTH, the active ingredient in
Fosrenol(TM),  RenaZorb(TM)  required  30% less drug to bind the same  amount of
phosphate  and shows less  lanthanum  going into  solution in simulated  stomach
fluid at pH values of 3.0 and 4.5.  In  addition,  in  Altair's  testing,  using
methods published by AnorMED,  RenaZorb(TM)  reacts with phosphate more rapidly,
possibly  because of its high  nanomaterials-derived  surface area. 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.

Drug Delivery - TiNano Sphere(TM)
---------------------------------

         Our proposed  drug  delivery  system  involves  depositing  drugs on or
inside hollow  "wiffle  ball"  spheres made of titanium  dioxide and other metal
oxide 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;
         o   Delivery of hard to dissolve drugs;
         o   Delivery of sustained release drugs;
         o   Delivery of dual action drugs;
         o   Delivery  of  narcotics  in a  system  that is  non-defeatable  and
             reduces the chances of abuse; and
         o   Delivery of other Class 4 (restricted) drugs

         Key Features
         ------------

         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 be  released  slowly  compared  to
surface-mounted  material. An additional feature of Altair's nanomaterials based
hollow "wiffle ball" 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.

                                       11
<PAGE>

         Target Markets
         --------------

         New  Delivery  Forms and New  Drugs.  Our drug  delivery  system may be
useful in connection with drugs whose patents are expiring. On average, patented
drugs generate $200 to $400 million in sales,  with average sales margins of 90%
to 95%. The margin for generic drugs drops,  however, to 20% to 30% or less. New
dosage  forms are  patentable  and, if  patented,  may extend the drug's  patent
protection  for 20 years.  In addition,  new dosage forms may reduce the cost of
producing  various drugs,  increasing  margins if exclusive or generic,  and may
reduce undesirable side effects.

         Hard to Dissolve  Drugs.  Our drug delivery  system may also be used to
deliver drugs that work in the  gastrointestinal  tract without being  absorbed.
These types of drugs  remove  unwanted  materials  from the  digestive  systems.
Possible uses for these types of drugs include lowering cholesterol. Another use
for our drug  delivery  system  would be for  highly  insoluble  drugs that need
greater  absorption  to enter the blood  stream.  The  significant  increase  in
surface  area of our  titanium  dioxide  micro-spheres  may allow  greater  drug
absorption.  This greater  absorption  may also be used to redevelop  previously
failed  candidate drug compounds  that were  unsuccessful  because of inadequate
absorption rates or amounts.

         Sustained  Release  Drugs and Dual Action  Drugs.  We also  believe our
system may be useful in  connection  with the sustained  release of  fungicides,
including the following applications:

         o   Anti-fungal drugs;
         o   Topical anti-fungal drugs with sustained release;
         o   Tile cleaning products (mold, mildew) with residual action;
         o   Cosmetics (preservatives);
         o   Mildew prevention in paints and coatings;
         o   Fabric mildew protection;
         o   Exterior  cleaning  systems  for removal  and  prevention  of mold,
             mildew and green algae;
         o   Wood protection and preservation; and
         o   UV protection of wood.

         Research, Testing and Development
         ---------------------------------

         To date,  our research on drug  delivery  systems  involving the use of
nanomaterials has been limited to coating known drugs on the surface of titanium
dioxide 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.  We are currently  seeking  business  relationships  with
pharmaceutical  companies that can conduct  additional  testing and  development
using their pharmaceutical active ingredients to coat our nanomaterials and then
seek  necessary FDA  approvals  and take the other steps  necessary to bring the
combined drug delivery system to market.

         Proprietary Rights
         ------------------

         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."

                                       12
<PAGE>
Altium(TM) (Nanomaterials) Products

General
-------

         For the year ended  December 31, 2003, we generated  $17,602 of revenue
through sales of titanium dioxide, lithium titanate spinel and yttria stabilized
zirconia nanomaterials and other materials. These products were used principally
in thermal spray and catalyst applications and for developmental work on battery
materials.  We are also developing  nanomaterials products that may be useful in
controlling  algae  in  swimming  pools,  in  cosmetics,  in  self-cleaning  and
sanitizing and in environmental purification.

Altium(TM) 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.  Thermal spray
products have use in a variety of additional 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.

         Key Features
         ------------

         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 acid 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.

         Target Markets
         --------------

         Altair has executed an agency agreement with Global Strategy,  Inc., an
international business development  consultant,  to seek business collaborations
and identify markets for Altium(TM)  Thermal Spray Grade Powders.  These markets
include companies that service, supply equipment to, and sell powders to thermal
spray shops.

         Research, Testing and Development
         ---------------------------------

         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

                                       13
<PAGE>

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  and 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 is 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 will be characterized  and evaluated to determine various
characteristics,  including  porosity  and abrasion  resistance.  This report is
expected to be completed in the first quarter of 2004 and will be used to market
our powders.

         Proprietary Rights
         ------------------

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

Altium(TM) Lithium Titanate Spinel
----------------------------------

         We have  developed  technologies  to manufacture  nano-sized  specialty
materials  to make  electrodes  for lithium ion  batteries  that will allow very
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.  Each of these
materials,  in  large  crystalline  sizes,  is  currently  used  by the  battery
industry.

         Key Features
         ------------

         The large specific  surface area of Altium(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.

         Target Markets
         --------------

         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 energy 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.

                                       14
<PAGE>

         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 recently  extended a marketing  agreement with
Nissho  Iwai  Americas  Corporation  for product  marketing  in Japan to leading
lithium ion battery manufacturers.  In addition, we have added the capability to
make test electrodes of lithium titanates,  manganates,  and cobaltates and have
developed a testing  program for  electrode  performance  at the  University  of
Nevada, Reno.


         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.

Nanocheck(TM)
-------------

         We have  developed a nano-phase  compound that has an affinity for many
metal  oxy  anions  including  phosphate,  arsenate,  arsenite,  and  the  like.
Immediate  applications  for this material  include:  1) phosphate  removal from
swimming  pool and  aquariums  to arrest the growth of  bacteria  and 2) arsenic
removal from drinking water.

         The  correct   management  of  a  swimming  pool  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 serious health hazard. Nanocheck(TM) safely deprives algae of the phosphate
nutrients required for them to reproduce and therefore reduces 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.  We expect that Nanocheck could be
added to these point-of-entry or point-of-use treatment devices to lower arsenic
levels to compliance  levels.  Nanocheck is a  non-regenerateable  material that
would require replacement after a period of time.

         Key Feature
         -----------

         Nanocheck(TM)  is a lanthanum  based compound that can be used to treat
water for the  removal  of 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.

                                       15
<PAGE>
         Target Markets
         --------------

         We are  attempting to license and sell the  technology  to  manufacture
Nanocheck(TM)  to companies that already sell products into the water  treatment
market  including pool and spa chemical  companies and drinking water  treatment
companies.

         Research, Testing and Development
         ---------------------------------

         We have conducted in-house tests for phosphate removal in swimming pool
simulations, and a pool and spa chemical company has performed materials testing
that shows effective phosphate removal and high kinetics.  Larger scale swimming
pool tests are  expected to be  performed in the summer  months  beginning  June
2004.  We also  expect to  perform an arsenic  removal  study  during the second
quarter of 2004.

         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."

Solid Oxide Fuel Cell ("SOFC") Materials
----------------------------------------

         Altair has focused its efforts in the fuel cell area 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 recently operated its fuel cell with hydrogen
as a fuel, and the final stages of adding a compatible  ceramic  catalyst to the
cell are being  completed  by MIT  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.

         Key Feature
         -----------

         We have developed  low-cost  solid oxide fuel cell materials  using our
proprietary  nanomaterials  manufacturing  technology to produce the appropriate
physical and  chemical  characteristics  required  for our  low-cost  monolithic
fabrication design.

         Research, Testing and Development
         ---------------------------------

         We have successfully  completed our single cell program,  and we do not
have any  ongoing  research  or  development  activities  specifically  for this
program  other than the work of adding a  compatible  ceramic  catalyst  that is
being  performed  by MIT.  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.

                                       16
<PAGE>


         Proprietary Rights
         ------------------

         We have been awarded one US patent for the  application of this product
entitled "Method for producing catalyst structures."


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,  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.  In  December  2003,  WMU was  awarded a  second,  one-year
Department  of  Energy  grant  for  which  Altair  will  also  participate  as a
subcontractor.  The project is a  collaboration  involving  WMU,  Altair and the
University  of  Nevada,  Reno.  The $2  million  was  included  in  the  Omnibus
Appropriations  Bill  passed by the U.S.  House of  Representatives  December 9,
2003. WMU and Altair have a joint  partnership  for seeking  Federal support for
nanotechnology  research and  development and will utilize the new grant funding
equally.

Altium(TM) TiNano40(TM)
-----------------------

         We have developed a line of titanium dioxide nanomaterial products that
cover a range of chemical and physical characteristics suitable for a variety of
applications  that include  cosmetics,  photocatalysts,  thermal spray  powders,
self-cleaning,  solar cells,  chemical  mechanical  planarization,  plastics and
environmental remediation.

         Research, Testing and Development
         ---------------------------------

         We have completed  developing the TiNano40 series (40 nanometer nominal
particle size) and are now focusing on TiNano20 and TiNano10  products that have
nominal  particle  size  characteristics  of 20  nanometers  and 10  nanometers,
respectively. The TiNano20 product series is being developed in conjunction with
our research activities with Western Michigan University.  It is also being used
in test solar cells.  Our TiNano10  product has extremely high specific  surface
area and applications may include  commercial use as photocatalysts and catalyst
support.

         Proprietary Rights
         ------------------

         We have been awarded one US patent  protecting this technology  titled,
"Processing Aqueous Titanium Chloride Solutions to Ultrafine Titanium Dioxide."


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

         The Tennessee  mineral  property  presently  consists of  approximately
3,100 acres of land  containing  fine,  heavy minerals that we have leased in or
near Camden, Tennessee since 1996.

                                       17
<PAGE>
         Between 1996 and 2000, we conducted,  and hired consultants to conduct,
various  tests and  pre-feasibility  studies on  approximately  14,000  acres of
property in  Tennessee on which we held  mineral  leases.  Based on the positive
results  of  initial   testing  and  reports,   we  designed  and   commissioned
construction of a spiral-based  pilot plant for testing at the Tennessee mineral
property in 2000. The plant includes  dedicated  electrical  service, a lay-down
area for heavy mineral sand samples, and a combined water storage/sand placement
structure. Plant elements include a feed system, conveyors,  trommel, two stages
of cyclones,  and a five-stage spiral plant.  During 2001, we excavated 970 tons
of material from four sites on the Tennessee  mineral  property and processed it
through  the  test  facility.   Plant  operations  closely  approximated  design
expectations;  we incurred no significant  operating problems,  and 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.

         During late 2003,  our board of directors  determined  to more narrowly
focus  our  limited  resources  on  the  development  and  exploitation  of  our
nanomaterials  and  titanium  dioxide  pigment   technology  and  to  limit  our
expenditures on our centrifugal  jig and our Tennessee  mineral  property to the
minimum  amount  necessary  to  preserve  their  basic value for the short term.
Consistent  with this  determination,  during 2003,  we assessed the  properties
under lease to determine whether we could reduce lease costs while maintaining a
viable quantity of leased acreage. As a result of our assessment,  we identified
3,100  acres  that  represent  the most  important  core  holdings  to support a
potential  commercial mining venture. We renegotiated the leases with respect to
such 3,100  acres in order to extend the term of the leases and reduce the lease
payments.  The leases with respect to the remaining  acres are terminable at any
time by the  property  owners in light of our  decision  not to make any further
lease payments with respect to such leases.

         For 2004,  our board of  directors  approved  a minimum  workscope  and
budget for maintaining the Tennessee  mineral  property,  making sample products
for consumer testing and continuing baseline samples for permitting purposes. In
the meantime,  we are  consolidating the assets related to the Tennessee mineral
property,  together  with those  related to the  Altair  jig,  into (or under) a
single  corporation with the intent of causing such corporation to become an SEC
reporting   company  and,   subject  to   shareholder   approval,   distributing
substantially  all of the  shares of  common  stock of such  corporation  to our
shareholders.

The Altair Jig
--------------

Description 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.  As  currently
designed,  materials to be processed by the Altair jig are  introduced  into the
top of the Altair jig in a slurry mix with water.  The slurry is diffused across

                                       18
<PAGE>

the top of the  interior of a vertical  cylindrical  screen  which is  rotating.
Water is pulsed  through  the screen  allowing  differential  separation  in the
slurry  material.  Heavy particles pass through the screen,  are collected,  and
exit the machine in a  "concentrate"  stream.  Lighter  particles  flow down the
screen  interior,  are  collected  and exit out the  bottom of the  machine in a
separate "tails" stream.  Use of the Altair jig requires no chemical  additives.
In operation,  the Altair jig utilizes a combination of standard  mechanical jig
and centrifugal technologies. The Altair jig is of simple mechanical design with
few wear surfaces.  To compete as a viable  commercial unit, the Altair jig must
perform reliably over long time periods.  The 600+ hours that we have tested and
operated the Series 30 Jig is insufficient to give assurance as to the length of
the operating life of the Altair jig.

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

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

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

Technology License Agreement

         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. After an initial  six-month  evaluation period that
will conclude in August 2004,  Bateman is expected to have  exclusive use of the
Altair jig for  specifically  identified  applications  in selected  territories
throughout the world. 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.

Disposition of the Altair jig

         Notwithstanding  the  execution of the Bateman  agreement,  during late
2003,  our board of  directors  determined  to more  narrowly  focus our limited
resources on the development and exploitation of our  nanomaterials and titanium
dioxide pigment  technology and to limit our  expenditures on the Altair jig and
our Tennessee mineral property to the minimum amount necessary to preserve their
basic  value for the short  term.  Consistent  with this  determination,  we are


                                       19
<PAGE>

consolidating  the assets  related to the Altair jig,  together  with the assets
related to the Tennessee mineral property,  into (or under) a single corporation
with the intent of causing such  corporation to become an SEC reporting  company
and,  subject to shareholder  approval,  distributing  substantially  all of the
shares of common stock of such corporation to our shareholders.


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 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.

         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 operations 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.


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

                                       20
<PAGE>

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 in 1996.  Altair intends that Fine Gold will hold
and maintain jig technology rights, including patents.

         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,  as discussed  above, our board of
directors has  determined to more  narrowly  focus our limited  resources on the
development and exploitation of our  nanomaterials  and titanium dioxide pigment
technology  and to  limit  our  expenditures  on our  centrifugal  jig  and  our
Tennessee  mineral  property to the minimum  amount  necessary to preserve their
basic  value  for the short  term as we assess  viability  and  desirability  of
various  strategic  alternatives for disposing of the Tennessee mineral property
and the Altair jig.

         In  November   1999,   we  acquired  all  the  rights  of  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.

                                       21
<PAGE>

         We have  experienced an operating  loss in every year of operation.  In
the  fiscal  year  ended  December  31,  2003,  we  experienced  a net  loss  of
$6,237,939.

Employees
---------

         The  business of Altair is  currently  managed by Dr.  William P. Long,
Chief  Executive  Officer of the Company,  Dr. Rudi E. Moerck,  President of the
Company and Mr.  Douglas  Ellsworth,  Senior Vice  President  of the Company and
President of Altair Nanomaterials, Inc. In addition, we employ a Chief Financial
Officer, twelve employees devoted principally to research and development,  four
operating  employees  and four clerical  employees.  Aside from Dr. Long and the
Chief  Financial  Officer,  we have no  employment  agreements  with  any of our
personnel.

         During 2004, we expect to hire 5-7  additional  employees,  principally
scientific  and  technical  staff,  to assist  with  research,  development  and
production work.

Enforceability of Civil Liabilities Against Foreign Persons
-----------------------------------------------------------

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

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 significant
operating  revenues,  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.

                                       22
<PAGE>

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

We have  not  generated  any  substantial  operating  revenues  and may not ever
generate substantial revenues.
--------------------------------------------------------------------------------
         To date, we have not generated substantial revenues from operations. As
of  December  31,  2003,  we  have  generated  $340,892  of  revenues  from  our
nanomaterials  and titanium dioxide pigment  technology and $28,270 from the use
of our  centrifugal  jig in  consulting  contracts.  We have not  generated  any
revenue from our Tennessee mineral  property.  We believe that our nanomaterials
and titanium  dioxide  pigment  technology is the only one of our three lines of
business  that may  generate  significant  revenues in the  foreseeable  future.
Although we currently have approximately $1.1 million in unfulfilled contractual
commitments,  such commitments primarily relate to our provision of research and
development services or to sales of products for experimental  purposes. We have
no sales  or other  commitments  with  respect  to  on-going  revenues  from our
nanomaterials  and  titanium  dioxide  pigment  technology  and can  provide  no
assurance that we will generate additional revenues.

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 $5,785,210 in 2003 and $7,856,711
in 2002. We will continue to experience a net operating loss until,  and if, one
of the applications of our nanomaterials and titanium dioxide pigment technology
begins generating  significant revenues.  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.

We may not be able to raise sufficient capital to meet future obligations.
--------------------------------------------------------------------------------
         As of  February  25,  2004,  we had $11.9  million  in cash,  an amount
sufficient  to fund our ongoing  operations  until  December 31, 2006 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
significant  amounts of 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;


                                       23
<PAGE>

         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; and
         o   the market's perception of the value of our centrifugal jig and our
             Tennessee   mineral  property  as  we  attempt  to  dispose  of  or
             distribute such assets.

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.

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
             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.

                                       24
<PAGE>

We have a substantial number of warrants and options outstanding and may issue a
significant number of additional shares upon exercise thereof.
--------------------------------------------------------------------------------
         As of March 15, 2004, there were outstanding warrants to purchase up to
5,416,455  shares of common stock and options to purchase up to 3,446,200 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 may  generally  occur  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 be unable to exploit  any  potential  pharmaceutical  application  of our
nanomaterials and titanium dioxide pigment technology.
--------------------------------------------------------------------------------
         We do not  presently  have the  technical  or  financial  resources  to
conduct clinical tests on, and take to market, any pharmaceutical application of
our  nanomaterials and titanium dioxide pigment  technology.  In order for us to
get  any  significant,  long-term  benefit  from  any  potential  pharmaceutical
application of our technology, the following must occur:

         o   we must enter into an evaluation  license or similar agreement with
             a pharmaceutical company under which such company would pay a fixed
             or contingent fee for the right to evaluate a pharmaceutical use of
             our technology  for a specific  period of time and for an option to
             purchase or receive a license for such use of our technology;
         o   clinical tests conducted by such pharmaceutical  company or a third
             party would have to  indicate  that the  pharmaceutical  use of our
             technology is safe, technically viable and financially viable;
         o   such pharmaceutical  company would have to apply for and obtain FDA
             approval  of  the  pharmaceutical  use of  our  technology,  or any
             related products, which would involve extensive additional testing;
             and
         o   such  pharmaceutical  company would have to successfully market the
             product incorporating our technology.

As of the date of this report, we have not entered into an evaluation license or
similar  agreement with a  pharmaceutical  company.  We may never enter into any
such  license  or  agreement.  If we do enter  into  such a license  or  similar
agreement,  we may receive  some  payments in various  stages of the testing and
evaluation  of the  pharmaceutical  application  of our  technology.  We do not,
however,  expect to receive  significant ongoing revenue unless and until an end
product incorporating the technology goes to market.

                                       25
<PAGE>

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
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 not created a production  model of our centrifugal jig and are presently
focusing our resources on other projects.
--------------------------------------------------------------------------------
         We  have  not  developed  a  production  model  of  any  series  of our
centrifugal jig and have determined to discontinue  investing significant assets
on its  development.  In October  2003,  we entered  into a  technology  license

                                       26
<PAGE>
agreement with Bateman  Luxembourg S.A. for the  manufacture,  installation  and
operation of our  centrifugal  jig. Such  agreement  permits  Bateman to opt out
after a six-month  testing period.  In addition,  the agreement does not require
Bateman to  manufacture  or utilize our  centrifugal  jig. There is no assurance
that Bateman will ever utilize our  centrifugal  jig in its projects or pay fees
to us. We do not otherwise expect to complete our own testing and development of
our centrifugal  jig and have determined to focus most of our limited  resources
on the nanomaterials and titanium dioxide pigment technology.

         Even  if we or  Bateman  were  to  complete  development  of and  begin
marketing a production model of our centrifugal jig, it may not prove attractive
to potential end users,  may be rendered  obsolete by competing  technologies or
may not recover end product at a  commercially  viable rate.  Even if technology
included in our  centrifugal  jig initially  proves  attractive to potential end
users,  performance problems and maintenance issues may limit the market for our
centrifugal jig.

         In addition,  all of the initial  patents issued on our centrifugal jig
have  expired,  and we are  unable  to  prevent  competitors  from  copying  the
technology  once protected by such patents.  Additional  patents  related to the
process  through  which water is pulsed  through the  cylindrical  screen on our
centrifugal    jig   expire    beginning   in   2010,   and   patents   for   an
efficiency-enhancing  aspect of the  cylindrical  screen expire during 2018. The
cost of enforcing patents is often significant. We may be unable to enforce even
our patents that have not yet expired.

We have  suspended  exploration  of our  Tennessee  mineral  property and do not
expect to restart testing efforts.
--------------------------------------------------------------------------------
         We have suspended feasibility testing of our Tennessee mineral property
and do not expect to start feasibility testing of our Tennessee mineral property
in the future.  If a mine is developed on the Tennessee  mineral property in the
future,  which may or may not occur, the development will likely occur under the
control of another party,  and our financial  interest in the  development  will
likely be limited, and may be nonexistent.

Our  disposition of centrifugal jig and our Tennessee  mineral  property may not
enhance the value of our common stock.
--------------------------------------------------------------------------------
         We have  determined to consolidate  the assets related to the Tennessee
mineral  property and the Altair jig into (or under) a single  corporation  with
the intent of causing such  corporation to become an SEC reporting  company and,
subject to shareholder approval, distributing substantially all of the shares of
common  stock  of such  corporation  to our  shareholders.  We may  not  receive
shareholder approval for such spin-off. If shareholder approval is not received,
our  alternatives  will be  limited,  and we may be  compelled  to  abandon  any
interest in the Tennessee  mineral property and the Altair jig. Such abandonment
would  likely  involve  out of pocket  costs for  remediation  of the  Tennessee
mineral  property and would  eliminate any  possibility  of Altair  shareholders
receiving any benefit from  Altair's  investment in the Altair jig and Tennessee
mineral  property.  Even if the proposed  spin-off is approved and effected,  we
expect that the shares of the spin-off  corporation  will have a very low market
value in the  short-term  and can  provide no  assurance  that such  shares will
increase in value over time.

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

                                       27
<PAGE>
$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.

Operations using the nanomaterials and titanium dioxide pigment technology,  our
centrifugal  jig 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,  our  centrifugal  jig  or our  Tennessee  mineral
property is subject to federal,  state and local  environmental laws. Under such
laws, we may be jointly and severally  liable with prior property owners for the
treatment,  cleanup,  remediation  and/or  removal of any  hazardous  substances
discovered at any property 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  two 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.

We are dependent on key personnel.
--------------------------------------------------------------------------------
         Our  continued  success  will  depend  to a  significant  extent on the
services of Dr. Rudi Moerck,  our  President,  Doug  Ellsworth,  our Senior Vice
President and the senior vice  president of our new life sciences  division that
we intend to  recruit.  Our failure to recruit a competent  life  sciences  Vice
President,  or the loss or  unavailability  of Dr. Moerck or Mr. Ellsworth 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.

         In addition,  we have recently announced the pending resignation of our
Chief  Executive  Officer and as a director,  Dr.  William P. Long.  Although we
intend to recruit a new  Chairman  of Board of  Directors,  we do not  presently
intend to hire a replacement  Chief Executive  Officer.  Dr. Long's efforts have
been instrumental in the strategic decision making, capital raising, shareholder
relations  and other aspects of our business.  The  resignation  of Dr. Long may
have a material adverse effect on these or other aspects of our operations.

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.

                                       28
<PAGE>

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;
         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.

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 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. In addition,  we lease 900 square
feet of office space at 1725 Sheridan  Avenue,  Suite 140, Cody,  Wyoming 82414,
which serves as an administrative  office for Altair and its  subsidiaries.  Our
lease for the Cody, Wyoming office space may be terminated by either party on 30
days' prior written notice.

         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.

                                       29
<PAGE>

         We no longer view the Tennessee  mineral  property as being  materially
important to our business.  We have determined to limit our  expenditures on our
Tennessee  mineral property to the minimum  necessary to preserve its core value
for the short term and are in the process of consolidating the assets related to
the  Tennessee  mineral  property  and the  Altair  jig into (or under) a single
corporation  with the  intent  of  causing  such  corporation  to  become an SEC
reporting   company  and,   subject  to   shareholder   approval,   distributing
substantially  all of the  shares of  common  stock of such  corporation  to our
shareholders.

         Consistent with the  determination to minimize expenses with respect to
the Tennessee  mineral  property,  during 2003, we assessed the properties under
lease to  determine  whether we could  reduce  lease costs while  maintaining  a
viable quantity of leased acreage. As a result of our assessment,  we identified
3,100 acres then subject to mineral  leases that  represent  the most  important
core holdings to support a potential  commercial mining venture. We renegotiated
the leases  with  respect to such 3,100 acres in order to extend the term of the
leases and reduce the lease  payments.  The leases with respect to the remaining
acres once included in the Tennessee mineral property are terminable at any time
by the property  owners in light of our  decision not to make any further  lease
payments with respect to such leases.

         The  renegotiated  leases on the Tennessee  mineral  property grant MRS
certain exclusive rights,  including the right to explore,  test, mine, extract,
process, and sell any minerals or other materials found on the land, in exchange
for the payment of minimum annual advance royalty payments prior to commencement
of production on the properties  (or after  commencement  of production,  to the
extent  production  royalty payments do not equal nominal royalty payments) and,
thereafter,  production  royalty  payments in an amount equal to a percentage of
the value of  minerals  mined and sold from the  property.  See the Notes to the
Consolidated  Financial Statements for information  regarding present and future
minimum advance royalty payments. The leases typically are for a minimum term of
ten years,  and may be extended  indefinitely  at MRS'  option,  provided MRS is
actively conducting exploration,  development,  or mining operations. The leases
are cancelable by MRS at any time, and are cancelable by the lessor in the event
MRS  breaches  the terms of the lease.  The  minerals on the  Tennessee  mineral
property  have not proven to be a reserve,  our  historic  operations  plan with
respect to it is  exploratory in nature,  and we presently are  conducting  only
minimal  maintenance  operations  with respect to such  property.  The Tennessee
mineral property is accessed by public roads and, to our knowledge, has not been
used in prior mining operations.


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,  nor are we aware of any threatened suit, action or
other legal proceedings which management  believes will materially and adversely
affect the business or operations of Altair or its subsidiaries.


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

         We did not submit any matters to a vote of security  holders during the
fourth quarter of the 2003 fiscal year.


                                       30
<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, 2002                         Low         High
                                                        ---------    ---------

          1st Quarter.......                              $0.750       $1.560
          2nd Quarter.......                              $0.370       $1.140
          3rd Quarter.......                              $0.300       $0.930
          4th Quarter.......                              $0.450       $0.800

 Fiscal Year Ended December 31, 2003                         Low         High
                                                        ---------    ---------

          1st Quarter.......                              $0.310       $0.560
          2nd Quarter.......                              $0.300       $1.480
          3rd Quarter.......                              $0.730       $1.650
          4th Quarter.......                              $1.120       $2.900

         The last sale price of our common  shares,  as  reported  on the Nasdaq
SmallCap Market, on March 14, 2004 was $2.62 per share.

Outstanding Shares and Number of Shareholders
---------------------------------------------
         As of March 15,  2004,  the  number of common  shares  outstanding  was
48,650,140 held by approximately 500 holders of record.  In addition,  as of the
same date, we have reserved  4,514,200  common shares for issuance upon exercise
of options that have been, or may be,  granted  under our employee  stock option
plans and 5,416,455  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, 2003:

                                       31
<PAGE>
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------
                                        Number of                               Number of securities
                                     securities to be                         remaining available for
                                    issued upon future                             issuance under
                                       exercise of       Weighted-average       equity compensation
                                       outstanding       exercise price of       plans (excluding
                                    options, warrants   outstanding options,  securities reflected in
                                       and rights       warrants and rights        column (a))
Plan Category                             (a)                  (b)                    (c)
-----------------------------------------------------------------------------------------------------
<S>                                    <C>                    <C>                  <C>
Equity compensation plans
approved by security holders           3,663,600              $3.11                1,235,000
-----------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders              None                 N/A                  348,552
-----------------------------------------------------------------------------------------------------
              Total                    3,663,600              $3.11                1,583,552
-----------------------------------------------------------------------------------------------------
</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, 2003.


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.

                                       32
<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.


                                       33
<PAGE>


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,         2003           2002            2001            2000            1999
                                  ------------------------------------------------------------------------------

STATEMENTS OF OPERATIONS
<S>                               <C>             <C>             <C>             <C>             <C>
Sales                             $     72,851    $    253,495    $     42,816    $       --      $       --
Cost of sales                     $     62,159    $     93,583    $     18,175    $       --      $       --
Operating expenses                $  5,795,902    $  8,016,623    $  6,046,173    $  6,647,367    $  3,729,534
Interest expense                  $    454,415    $  1,151,388    $  1,881,077    $    215,216    $      1,966
Interest income                   $     (1,879)   $     (2,105)   $   (148,980)   $    (83,440)   $   (134,811)
(Gain) loss on foreign exchange   $        193    $        835    $        402    $   (864,669)   $    160,619
Loss on extinguishment of debt    $       --      $    914,667    $       --      $       --      $       --
Gain on forgiveness of debt       $       --      $       --      $       --      $       --      $    (67,442)
Net Loss                          $  6,237,939    $  9,921,496    $  7,754,031    $  5,914,474    $  3,689,866
Basic and diluted net loss per
     common share                 $       0.19    $       0.40    $       0.39    $       0.34    $       0.24
Cash dividends declared per
     common share                 $       --      $       --      $       --      $       --      $       --

                                  ==============================================================================
BALANCE SHEET DATA
Working capital                   $  3,565,039    $   (204,365)   $    (81,154)   $    234,714    $ (5,931,717)
Total assets                      $ 11,659,754    $  8,914,405    $ 10,853,243    $ 16,651,770    $ 13,365,848
Long-term obligations             $  2,686,130    $  3,905,040    $  1,462,060    $  2,689,493    $       --
Current liabilities               $    397,141    $    604,503    $    714,689    $  3,741,366    $  7,578,083
Net shareholders' equity          $  8,576,483    $  4,404,862    $  8,676,494    $ 10,220,911    $  5,787,765
</TABLE>


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

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

Overview
--------

         From  inception  through  the  end  of  1999,  our  business  consisted
principally of the exploration of mineral  properties and the development of the
Altair  Centrifugal  Jig. In November 1999, we acquired all patent  applications
and technology related to a hydrometallurgical process developed by BHP Minerals
International, Inc. ("BHP") primarily for the production of (1) titanium dioxide
("TiO2") products from titanium bearing ores or concentrates and (2) metal oxide
nanoparticles (the "nanomaterials and titanium dioxide pigment  technology") and
all tangible equipment and other assets (the "nanomaterials and titanium dioxide
pigment  assets")  used by BHP to develop and implement  the  nanomaterials  and

                                       34
<PAGE>

titanium  dioxide pigment  technology.  The  nanomaterials  and titanium dioxide
pigment  technology has potential to produce both titanium  pigments,  which are
commercially  traded in bulk,  and  nanoparticles,  which are sold on  specialty
product  markets.  At the time, the  nanomaterials  and titanium dioxide pigment
technology was in development stage and not in commercial operation.

         When  we  acquired  the  nanomaterials  and  titanium  dioxide  pigment
technology  and  related  assets,  we  expected  to  be  able  to  produce  TiO2
nanoparticles for sale in established markets within a short period of time. Our
expectation  was  that  revenues  from  these  sales,   combined  with  external
financing,  would provide adequate cash flow to fund our development  activities
for the  nanomaterials  and titanium dioxide pigment  technology,  the Tennessee
mineral  property  and the Altair  jig.  We  underestimated  the  difficulty  of
entering the markets for TiO2  nanoparticles with the result that sales revenues
have been below  expectations and our external financing needs have been greater
than anticipated.

         During  much of the period from 2001  through  2003,  we suffered  cash
shortages as our share price declined and financing  became more  difficult.  In
response to this,  we reduced cash  expenditures  to the extent  possible  while
still  continuing  to develop the  nanomaterials  and titanium  dioxide  pigment
technology.  At the same time, we reduced expenditures for the Tennessee mineral
property and jig and finally suspended work on these assets during 2003.

         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 and (3) license and  evaluate our
pigment   production   process   for  the   production   of  TiO2   pigment  and
pigment-related products from titanium-bearing oil sands. In addition, we have a
pharmaceutical  product  in  development.  Future  revenues  will  depend on the
success of these  projects,  the results of our other  research and  development
work and the success of our marketing efforts.

Restructuring Plans and Progress
--------------------------------

         In December 2003,  the board of directors of Altair  approved a plan to
restructure the Company in order to concentrate  resources on the  nanomaterials
and  titanium  dioxide  pigment  business.  The  reorganization  is  intended to
maximize management focus on nanomaterials,  nanotechnology and material science
in targeted  markets for TiO2  pigment,  TiO2  electrodes  for  titanium  metal,
pharmaceutical  delivery  structures,   pharmaceuticals,  dental  materials  and
nanostructured  materials for lithium ion batteries and fuel cells. As a part of
the restructuring, we have taken, or are in the process of taking, the following
steps:

         o   We are creating a new life sciences division that will focus on the
             continued development of pharmaceutical delivery structures (TiNano
             Spheres(TM)),  dental materials and new nano-based  pharmaceuticals
             including  Altair's  lead  drug  candidate,  RenaZorb(TM).  We  are
             presently  implementing a search for a senior vice president of the
             new life sciences division.

         o   We are  consolidating  the assets related to the Altair Jig and our
             Tennessee  mineral  property  into (or under) a single  corporation
             with  the  intent  to  cause  such  corporation  to  become  an SEC
             reporting company and distribute substantially all of the shares of
             common  stock of such  corporation  to our  shareholders  (with any
             non-distributed  shares being  retained by Altair).  This  spin-off
             will, we believe,  give  shareholders  of Altair the opportunity to


                                       35
<PAGE>

             participate in any success management of the spin-off entity has in
             generating  revenue  from the Altair jig or the  Tennessee  mineral
             property but will permit  Altair and its  management to focus their
             efforts  on the  development  of  the  nanomaterials  and  tiatnium
             dioxide pigment technology. The completion is this spin-off process
             is expected to take approximately six months and is contingent upon
             receipt  of  shareholder   approval.   Accumulated  losses  at  our
             subsidiary  companies which  conducted the exploration  work at the
             Tennessee  mineral  property and development work on the Altair jig
             assets total $17.6 million as of December 31, 2003.

         o   We have  announced the  resignation,  effective May 1, 2004, of Dr.
             William P. Long as our Chief  Executive  Officer and as a director.
             Following the  resignation.  Dr. Long is expected to be involved in
             the proposed  consolidation  and spin-off of our mineral assets and
             to serve as President  and a director of the spin-off  entity.  Dr.
             Rudi E Moerck,  our  President,  will  become our senior  executive
             officer  and  will be  responsible  for our  day-to-day  operations
             implementing  our  strategic  plan.  We also  intend to  commence a
             search for a new  non-executive  Chairman of its Board of Directors
             to work with Dr. Moerck and the remainder of the board of directors
             in their  efforts to focus the  resources  on Altair on  generating
             revenue and increasing value for shareholders.

         We expect to continue our restructuring efforts during the coming year.
We expect that future changes will not be structural,  but will relate primarily
to  decisions  regarding  allocation  of  resources  among  existing or proposed
projects  as we attempt to evaluate  the  various  projects we are working on or
considering,  determine  which have the best potential for short- and long- term
revenue generation and focus most of our resources on such projects.

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

         In late 2003, our share price rose significantly with the result that a
large  number of warrants  and options were  exercised,  thus  providing a large
(relative to our working  capital  needs)  inflow of cash to the  Company.  This
continued through January 2004 such that we now have funds available to meet our
needs for  approximately  three  years at current  working  capital  expenditure
levels. In January 2004, a shelf  registration  statement went effective for the
sale of 5,000,000 common shares. We believe this will significantly increase our
financing  flexibility and our ability to raise funds for continued  development
of the nanomaterials and titanium dioxide pigment business.

         During 2003, we concentrated our resources on research, development and
marketing  associated  with  the  nanomaterials  and  titanium  dioxide  pigment
technology.  We  generated  sales  revenues  of $72,851 in 2003 but  incurred an
operating  loss  of  $5,785,210.   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. We expect
to continue this method of financing until sales revenues are sufficient to fund
our operating requirements.

         Our cash and short-term investments increased from $244,681 at December
31, 2002 to $3,869,669 at December 31, 2003 due  principally  to the issuance of
common  shares and the  exercise  of options and  warrants  to  purchase  common
shares.

         Security  Issuances.  During  2003,  we sold  7,196,783  common  shares
together with  5,105,277  warrants in private  placements  for gross proceeds of
$4,324,898.  The warrants are  exercisable at prices ranging from $1.00 to $2.00
and expire on the  earlier of five years from the date of issue or on  specified
dates after the closing  price  equals or exceeds  prices  ranging from $3.50 to
$4.00.
                                       36
<PAGE>

         From September  through  December 2003, the trading price of our shares
increased  significantly.  As a result of this,  3,210,328  warrants and 478,100
options  were  exercised,  resulting  in net  proceeds to us of  $3,417,109  and
$488,836, respectively.

         We established an Employee Stock Purchase Plan ("ESPP") in August 2002.
During the year ended December 31, 2003, we issued 873,480 shares under the ESPP
with net proceeds to us of $606,675.

         Also  during  2003,  we issued  972,221  common  shares in  payment  of
principal and interest on the Doral 18, LLC note,  and we issued  213,102 common
shares to vendors for services provided to the Company.

         Notes Payable. In addition to the common shares issued to Doral 18, LLC
in payment of  principal  and  interest  on the  note,,  we made cash  principal
payments of  $1,120,000  against the note payable in 2003.  The note was paid in
full in September 2003.

         In August 2002, we issued a note payable in the amount of $3,000,000 to
BHP Minerals International, Inc. for purchase of the land, building and fixtures
in Reno,  Nevada where our nanomaterials and titanium dioxide pigment assets are
located.  Interest,  at the rate of 7%,  begins to accrue in August 2005 and the
first principal payment of $600,000 is due in February 2006. Additional payments
of $600,000  plus accrued  interest  are due  annually in February  2007 through
2010.

         Capital   Commitments.   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, 2003:
<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*  $     --     $  600,000   $1,200,000   $1,200,000

Mineral Leases                      940,367      160,605      339,510      303,918      136,334

Contractual Service Agreements      798,683      686,183      112,500         --           --
                                 ----------   ----------   ----------   ----------   ----------
Total Contractual Obligations    $4,739,050   $  846,788   $1,052,010   $1,503,918   $1,336,334
                                 ==========   ==========   ==========   ==========   ==========
</TABLE>

         *   Before discount of $313,870.

         At December 31, 2003,  we had no  significant  commitments  for capital
asset expenditures.

         Current and Expected  Liquidity.  At December 31, 2003, we had cash and
cash  equivalents  of  $3,869,669,  an  amount  sufficient  to  fund  our  basic
operations through December 31, 2004. From December 31, 2003 through the date of
this report, we received cash from the exercise of warrants and stock options in
an amount  sufficient to fund our  operations for  approximately  two additional
years.

         In 2004, we expect to generate limited revenues from contract  services
utilizing  our  nanomaterials  and  titanium  dioxide  pigment  technology.   In
addition, we hope to generate revenues through the licensing of RenaZorb(TM),  a
potential  drug we developed  that may be useful in phosphate  control in kidney
dialysis  patients.  A drug of  similar  compounds  has been  submitted  for FDA
approval  with a decision  expected  during the second  quarter of 2004. If this
similarly  compounded  drug is  approved,  we expect to be able to  negotiate  a
license  agreement for RenaZorb(TM)  with one or more  pharmaceutical  companies

                                       37
<PAGE>

during 2004. We are uncertain what the terms of such license agreement would be,
but pharmaceutical license agreements often involve up-front or staged payments,
in addition to royalties  once the drug is approved by the FDA and marketed.  We
can,  however,  provide  no  assurance  that we will  enter  into such a license
agreement or that such license agreement would involve any significant  up-front
payments.

         Although  we have  entered an  agreement  to license and  evaluate  our
pigment   production   process   for  the   production   of  TiO2   pigment  and
pigment-related  products from titanium-bearing oil sands, and we have submitted
proposals  to five  international  minerals  and energy  resources  companies to
develop  and license  our  titanium  pigment  production  process,  we cannot be
certain that such  evaluations  will be  successful  or that we will  eventually
license  the  technology  to  additional  parties.  If we were  able  to  obtain
additional  licenses for the technology,  we would expect to receive development
fees and royalties over the long-term,  but no significant up-front payments. In
the near term,  in the absence of a significant  up-front  payment in connection
with the  licensing  of  RenaZorb(TM),  we expect to  continue  to  finance  our
operations principally through the issuance of equity securities.

         Although we currently have capital sufficient to fund our operations at
current levels, we expect our capital needs to increase during 2004 and 2005. We
expect  to hire  additional  personnel  in  order  to  satisfy  our  contractual
obligations under existing and anticipated services agreements. In addition, our
management is focused on facilitating  the  commercialization  of one or more of
its products in the foreseeable future. Substantially all of our products are at
a conceptual or development  stage and, if we are to  commercialize  one or more
products  ourselves  (as opposed to  licensing it for  commercialization  by the
licensee),  we will likely be required to hire  additional  employees,  purchase
additional equipment,  and engage the research,  marketing and other services of
third parties. This may require significant  additional capital. We also believe
that our  efforts  to find  strategic  partners  would be  enhanced  if we had a
stronger balance sheet.

         Accordingly,  we may raise  additional  capital during 2004 or 2005. We
would most  likely  generate  such  financing  through  the  issuance  of equity
securities in one or more private  placements of common  shares  (probably  with
accompanying re-sale registration rights and warrants to purchase common shares)
or public  offerings  of our  common  shares.  We do not expect to, but may also
issue debt securities or enter into loan or capital leasing  arrangements,  with
one or more financial  institutional  investors.  Any  financing,  especially an
issuance of equity  securities in a public offering or large private  placement,
may dilute existing  shareholders and have an adverse effect on the market price
of our common shares.  We can provide no assurance that, if we determine to seek
additional  financing,  we  will be able to  obtain  additional  financing  at a
reasonable cost, or at all.

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 and stock-based  compensation.  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.

                                       38
<PAGE>

         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.  At December 31, 2003,  the carrying value of these
             assets was  $7,616,746,  or 65% 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 continuing technology rights protection.

         o   Stock-Based  Compensation.  We have two stock  option  plans  which
             provide for the issuance of stock  options to employees and service
             providers.  Although  Statement of Financial  Accounting  Standards
             ("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  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 No. 123, but
             we also  issue  warrants  and  options  to  non-employees  that are
             recognized as expense when issued in accordance with the provisions
             of SFAS No. 123. We calculate  compensation  expense under SFAS No.
             123 using a modified  Black-Scholes  option  pricing  model.  In so
             doing,  we estimate  certain key  variables  used in the model.  We
             believe the estimates we use are appropriate and reasonable.

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

         Operating  losses  totaled  $6,237,939  ($.19 per  share)  for the 2003
fiscal year,  $9,921,496 ($0.40 per share) for the 2002 fiscal year,  $7,754,031
($0.39 per share) for the 2001  fiscal  year and  $45,519,844  ($4.83 per share)
from April 9, 1973 (date of inception) to December 31, 2003.  Principal  factors
contributing  to the losses  during these  periods were the lack of  substantial
revenues coupled with the incurrence of operating expenses.

Fiscal Year 2003 vs. 2002

         During 2003, we generated  $55,249 of revenues  from contract  research
work and other  contracted  services  and $17,602 of  revenues  from the sale of
nanoparticle products. The revenues from contract research work includes $36,553
earned under an agreement with Western Michigan University for research services
involving  a  technology  used in the  detection  of  chemical,  biological  and
radiological  agents.  This work is being billed at cost with no contribution to
margin.  As a  result,  gross  margin as a  percentage  of sales was 15% in 2003
versus 63% in 2002.  During 2004,  we expect our sales to increase but we do not
expect to realize an operating profit.

                                       39
<PAGE>

         We have significantly  reduced our expenditures for mineral exploration
and  development  in  order to  conserve  cash for  operating  requirements  and
development of the  nanomaterials  and titanium dioxide pigment  technology.  In
addition,  certain employees who were previously involved in mineral exploration
and development have been reassigned to research and development work, primarily
titanium  pigment  process  development.  Accordingly,  mineral  exploration and
development  expenses decreased by $443,268 from $598,977 in 2002 to $155,709 in
2003. In December 2003, our board of directors directed management to review the
viability and desirability of various strategic  alternatives for the Altair Jig
and our Tennessee  mineral  property,  including  their  possible sale, use in a
joint venture, spin-off to shareholders or abandonment.

         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.
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,  research and  development  expenses  increased by $318,320 from
$587,137 in 2002 to $905,457 in 2003.

         Professional  fees  decreased  by  $136,203  from  $712,530  in 2002 to
$576,327 in 2003 primarily due to a decrease in consulting fees. 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 $218,925  whereas the options and warrants issued in
2003 had a fair  value of  $91,998.  In  addition  to this,  cash  payments  for
consulting  decreased  by  $48,848  due to a  decrease  in  services  purchased.
Accounting fees decreased by $18,452,  from $126,929 in 2002 to $107,688 in 2003
due to a decrease in audit fees.  These  decreases in consulting  and accounting
fees were  partially  offset  by an  increase  in legal  fees of  $58,024,  from
$234,838 in 2002 to $292,862 in 2003, the increase being  attributable to patent
work, financing transactions and general corporate matters.

         Our general and  administrative  expenses  increased  by $919,337  from
$2,360,315  in 2002 to  $3,279,652  in 2003  primarily due to an increase in the
fair value of certain  repriced stock  options.  The trading price of our common
shares  increased  significantly in December 2003, thus resulting in an increase
in the fair value of stock options  repriced in prior  periods of $870,068.  The
fair value of stock  options and warrants  granted also  increased by $46,080 in
2003.  Investor relations expenses increased by $235,925 from $53,277 in 2002 to
$289,202 in 2003 as a result of increased  investor  relations programs aimed at
increasing investor awareness of Altair.  Insurance expense increased by $11,123
from $143,297 in 2002 to $154,420 in 2003 as a result of increased  premiums for
liability  insurance.  Partially  offsetting  these  increases was a decrease in
general office  expenses of $146,629 (from $710,791 in 2002 to $564,161 in 2003)
and a decrease in technical  operating  costs of $103,909 (from $356,918 in 2002
to  $253,009  in 2003),  both of which  occurred  as a result of our  efforts to
reduce operating costs.

         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.

                                       40
<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.

Fiscal Year 2002 vs. 2001

         During  2002,  we  generated  $134,925  of  revenues  through  sales of
titanium  dioxide  nanoparticles,   lithium  titanate  nanoparticles  and  other
materials.  Titanium  dioxide  nanoparticle  sales  included  $62,073  sold to a
customer  for  use in  commercial  thermal  spray  applications.  Revenues  also
included $90,300 earned under a services agreement entered into with a materials
company  in  September  2002.  Under the terms of the  agreement,  we tested the
materials  company's mineral  concentrates in the production of titanium dioxide
pigments  using our titanium  processing  technology.  The testing was conducted
over a  five-month  period and  generated  total  revenues  of  $109,000  at its
completion in early 2003.  Also included in revenues in 2002 was $28,270  earned
from a consulting  project  involving use of the Altair jig to recover  titanium
dioxide from pigment processing waste.

         During  2002,  we  suffered  from a shortage of working  capital  which
forced us to reassess  planned  expenditures  for our development  projects.  We
elected to concentrate our resources on the development of the nanomaterials and
titanium  dioxide  pigment  technology  and  suspend  development  work  on  the
Tennessee  mineral  property  and jig.  As a result  of this,  expenditures  for
mineral exploration and development  decreased from $930,777 in 2001 to $598,977
in 2002.

         During 2002, our research and development ("R&D") efforts were directed
toward  pharmaceuticals,  the titanium  pigment process,  batteries,  catalysts,
thermal spray  coatings and fuel cells.  R&D expense  increased from $559,454 in
2001 to $587,137 in 2002,  primarily as a result of  increased  staff time being
devoted  to these  R&D  projects  with a  resulting  decrease  in time  spent on
construction projects and administrative and general activities.

         Professional services,  which consist principally of legal,  consulting
and  audit  expenses,  increased  from  $593,088  in 2001 to  $712,530  in 2002.
Consulting  expenses  increased  from  $238,000  in 2001 to  $347,000  in  2002,
primarily as a result of our efforts to locate and secure additional  financing.
Legal fees increased  from $197,000 in 2001 to $235,000 in 2002,  primarily as a
result of the preparation of regulatory  filings and other documents  associated
with financing activities and costs associated with patent  applications.  These
increases were partially offset by a decrease in audit expenses of $27,000.

         During 2002, we reduced our general and administrative expenses as much
as possible in order to conserve cash. As a result,  these expenses decreased by
$464,331 to  $2,360,315  in 2002,  compared  to  $2,824,646  in 2001.  The major
components of general and administrative expenses that decreased in 2002 were:

         o   Investor  relations - these  expenses  decreased by $283,000  (from
             $336,000 to $53,000)  due to a  significant  reduction  in investor
             relations programs.
         o   Rents - Our purchase of the building that we  previously  rented at
             204 Edison Way in Reno,  Nevada,  and the  relocation of staff from
             rented  office  space  to  the  purchased  building  resulted  in a
             reduction of rents expense by $67,000 (from $274,000 to $207,000).
         o   Sample  costs  - these  decreased  by  $64,000  (from  $173,000  to
             $109,000) due to the purchase of raw  materials in bulk  quantities
             as opposed to smaller lots, and less labor being required in sample
             production.
                                       41
<PAGE>

         o   Bank charges - these  decreased by $28,000 (from $34,000 to $6,000)
             due to a decrease in fees for a letter of credit  associated with a
             term note. The letter of credit was terminated in 2001.
         o   Stock options  expense - this  decreased by $105,000 (from $105,000
             to zero) due to a reduction in options granted.
         o   Other -  expenses  for such  items as  tools,  operating  supplies,
             laboratory supplies and temporary labor decreased by $138,000 (from
             $459,000 to $321,000) as a result of our efforts to reduce costs.

         These decreases were partially  offset by an increase in property taxes
of $87,000  (from $1,000 to $88,000),  and an increase in property and liability
insurance  expenses of $47,000 (from $96,000 to $143,000).  In addition,  salary
expense increased by $84,000 (from $1,143,000 to $1,227,000) due to a payment in
connection with an employment agreement.

         In November  2002, we entered into a note  amendment  agreement with an
investor  who held a  $2,000,000  term note  issued by us in December  2001.  In
accordance  with the  terms of the note  amendment  agreement,  we issued to the
investor  1,500,000  common  shares and a warrant for 750,000  common  shares in
return for a reduction  in the  principal  balance of the note by  $600,000  and
changes to certain  terms  contained  in the prior  note.  We then issued to the
investor  an amended  term note in the  amount of  $1,400,000.  Under  generally
accepted accounting principles, the transaction is recorded as an extinguishment
of debt and the issuance of a new note.  Accordingly,  costs associated with the
issuance of the 1,500,000  common shares and warrant for 750,000  common shares,
together with the write off of costs incurred in the issuance of the prior note,
were recorded as a loss on extinguishment of debt in the amount of $914,667.

         During  the  second  quarter of 2002,  due to a  shortage  of cash,  we
elected to reduce  expenditures on the Tennessee  mineral  property to a minimal
amount. As a result of this, development activities were delayed,  including our
intended use of the Altair jig to enhance the recovery of heavy  minerals on the
property. Since we could not determine when adequate funds would be available to
further  develop and utilize  the Altair jig, we recorded an  impairment  of jig
assets in the amount of  $2,759,956.  This  impairment  charge had the effect of
reducing the Altair jig assets' depreciable balance to zero, thereby terminating
further depreciation charges. As a result, depreciation and amortization expense
decreased by $140,500 to $997,708 in 2002 compared to $1,138,208 for 2001.

         Interest  expense  decreased  from  $1,881,077 in 2001 to $1,151,388 in
2002 due  principally to a reduction in the balance of our term note for much of
the year 2002.

         During most of 2001, we had a restricted  cash balance  associated with
the term note of between  $2,500,000  and $4,000,000  that was earning  interest
income.  In  December  2001,  we  terminated  the  term  note,  transferred  the
restricted cash to the holder of the note and issued a new term note in a lesser
amount.  As a result  of this,  cash  balances  available  for  investment  were
significantly  reduced during 2002 and interest income declined from $148,980 in
2001 to $2,105 in 2002.


Carrying Value of Assets
------------------------

         We have  recorded our  investments  in the  nanomaterials  and titanium
dioxide pigment  technology and the  nanomaterials  and titanium dioxide pigment
assets at actual cost. We depreciate such assets using the straight-line  method

                                       42
<PAGE>

over their  estimated  useful life.  The asset carrying value is the actual cost
less accumulated depreciation.  We assess the carrying values of these assets on
a quarterly  basis by  comparing  the  projected  undiscounted  cash flows to be
generated  by the  assets  to the  carrying  costs  of the  assets.  In order to
determine  the  projected  cash  flows  related  to  these  assets,  we use  the
information  and feedback  obtained  from  prospective  customers  together with
general information as to product markets, competitive forces and our production
capability to arrive at  assumptions  with respect to sales volumes and pricing.
We next  estimate  costs  of sales  based on  engineering  analysis  and  actual
experience. Operating margins are then calculated based on these assumptions and
compared to the carrying cost of the assets.  Delays in revenue  generation  may
make the recoverability of our assets less likely.

         When  we  acquired  the  nanomaterials  and  titanium  dioxide  pigment
technology  and  related  assets from BHP,  the core  technology  for  producing
titanium dioxide nanoparticles was completely developed, a pilot plant was under
construction,  and we believed the titanium  processing  technology and titanium
processing  assets had near-term  commercial  value. We expected to complete the
pilot plant as a processing facility and begin generating sales revenues through
nanoparticle product sales in 2000. We completed  construction of the processing
facility,  and  since  that  time we  have  generated  $195,342  from  sales  of
nanoparticles,  $36,553 from  contract  research  work and $108,996 from service
revenues  associated with the technology.  In 2003, we entered into an agreement
to license and evaluate our pigment  production  process for the  production  of
TiO2 pigment and pigment-related  products from  titanium-bearing oil sands, and
we submitted  proposals  to five  international  minerals  and energy  resources
companies to develop and license our titanium  pigment  production  process.  We
have also  developed  RenaZorb(TM)  for the  treatment of  hyperphosphatemia  in
kidney dialysis  patients and we are currently  seeking  business  relationships
with   pharmaceutical   companies  that  can  conduct   additional  testing  and
development,  seek necessary FDA approvals and take the other steps necessary to
bring the new product to market. If testing is successful,  we expect to license
RenaZorb(TM) to a pharmaceutical  manufacturer.  We presently estimate that cash
flows  from  future  nanoparticle  sales and fees from  licensing  the  titanium
pigment  production  process and RenaZorb(TM)  will be in excess of the carrying
value of the assets.

         As  discussed  above in "Results of  Operations  - Fiscal Year 2002 vs.
2001",  a cash shortage  during 2002 required that we delay  development  of the
Tennessee  mineral  property and jig. Since we could not determine when adequate
funds  would be  available  to further  develop  and  utilize the Altair jig, we
recorded an impairment  of jig assets in the amount of $2,759,956 in 2002.  This
impairment  charge had the effect of reducing  the Altair jig  assets'  carrying
cost to zero.


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  2002 and 2003  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).

                                       43
<PAGE>
<TABLE>
<CAPTION>
                  Supplementary Financial Information by Quarter, 2003 and 2002
                                           (Unaudited)

                                    Quarter Ended      Quarter Ended      Quarter Ended      Quarter Ended
                                      March 31            June 30          September 30       December 31
                                    -------------      -------------      -------------      -------------
Year Ended December 31, 2003:
<S>                                   <C>                <C>                <C>                <C>
   Sales                              $   20,277         $    4,434         $   17,318         $   30,822
   Gross Margin                       $    5,327         $    3,496         $      612         $    1,257
   Net Loss (1)                       $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

Year Ended December 31, 2002:
   Sales                              $   48,937         $    4,734         $   45,089         $  154,735
   Gross Margin                       $   18,762         $    3,583         $   28,387         $  109,180
   Net Loss                           $1,679,531         $4,588,254         $1,531,005         $2,122,706
   Loss per Common Share: (2)
     Basic and Diluted                $     0.07         $     0.19         $     0.06         $     0.08
</TABLE>
(1)  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.
(2)  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.

         Financial  Statements.  The financial  statements required by this Item
appear on pages F-1 through F-26 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,  president
              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, 2003.
              Based  on  this  evaluation,   our  principal  executive  officer,
              president  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  have  been no  significant  changes  (including  corrective
              actions  with  regard  to  significant  deficiencies  or  material
              weaknesses)  in our  internal  controls or in other  factors  that
              could  significantly  affect these controls subsequent to the date
              of the evaluation referenced in paragraph (a) above.
                                       44
<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

         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.


                                       45
<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    Independent Auditors' Report of Deloitte & Touche LLP

                  o    Consolidated Balance Sheets, December 31, 2003 and 2002

                  o    Consolidated  Statements  of  Operations  for Each of the
                       Three Years in the Period Ended December 31, 2003 and for
                       the  Period  from April 9, 1973  (Date of  Inception)  to
                       December 31, 2003

                  o    Consolidated  Statements  of  Shareholders'  Equity  from
                       April 9, 1973 (Date of Inception) to December 31, 2003

                  o    Consolidated Statements of Cash Flows for
                                    Each of the Three Years in the Period  Ended
                                    December  31,  2003 and for the Period  from
                                    April  9,  1973  (Date  of   Inception)   to
                                    December 31, 2003

                  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>
                                                                      Incorporated by reference to the Current
      3.1           Articles of Continuance                           Report on Form 8-K filed with the SEC on July
                                                                      18, 2002.

      3.2           Bylaw No. 1                                       Incorporated by reference to the Current Report on
                                                                      Form 8-K filed with the SEC on July 18, 2002.


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

                                                                      Incorporated by reference to the Company's
                    Amended and Restated Shareholder Rights           Current Report on Form 8-K filed with the
      4.2           Plan dated October  15,  1999,  between the       Commission on November 19, 1999, File No.
                    Company and Equity Transfer Services, Inc.        1-12497.
</TABLE>
                                       46
<PAGE>
<TABLE>
<CAPTION>
<S>                 <C>                                               <C>
                    Employment Agreement between Altair               Annual Report on Form 10-K filed with the
     10.1           International Inc. and William P. Long            Commission on March 31, 1998, as amended by
                    dated January 1, 1998                             Amendment No. 1 to Annual Report on Form
                                                                      10-K/A filed on May 15, 1998.


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


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

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


                                                                      Incorporated by reference to the Company's
     10.5           2003 Employee Wage Stock Purchase Plan            Registration Statement on Form S-8, File No.
                                                                      333-108419, filed with the Commission on
                                                                      September 2, 2003.

     10.6           Form of Renegotiated Mineral Lease                Filed herewith.

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

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


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


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



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


                    Western Michigan University Project               Incorporated by reference to the Company's
     10.12          Agreement dated August 15, 2003                   Quarterly Report on Form 10-Q filed with the
                                                                      Commission November 14, 2003.
</TABLE>
                                       47
<PAGE>
<TABLE>
<CAPTION>
<S>                 <C>                                               <C>
                    Technology Investment Agreement dated             Incorporated by reference to the Company's
     10.13          January 8, 2004 between Titanium Metals           Current Report on Form 8-K filed with the
                    Corporation and Altair Nanomaterials, Inc. *      Commission on February 3, 2004.


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


                    Memorandum of Understanding with
     10.15          Hosokawa Nano Particle Technology Center          Filed herewith.
                    (USA)
                                                                      Incorporated by reference from Item 1 of this
      21            List of Subsidiaries                              report.


     23.1           Consent of Deloitte & Touche LLP                  Filed herewith.

      24            Powers of Attorney                                Included in the Signature Page hereof.

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

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

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

                    Section 1350 Certification of Chief
     32.1           Executive Officer                                 Filed herewith

     32.2           Section 1350 Certification of President           Filed herewith

                    Section 1350 Certification of Chief
     32.3           Financial Officer                                 Filed herewith

</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.

         (b)      Reports on Form 8-K

         No  current  reports on Form 8-K were filed  during the  quarter  ended
December 31, 2003.

         (c)      Exhibits

                  Exhibits  to this  Report  are  attached  following  page F-26
hereof.

         (d) Financial Statement Schedule. Not applicable.

                                       48
<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 25, 2004.

                                            ALTAIR NANOTECHNOLOGIES INC.


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


                                            Date: March 25, 2004


                   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 Rudi E. Moerck 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/ William P. Long                                  Chief Executive Officer and           March 25, 2004
---------------------------                          Director (Principal Executive
William P. Long                                      Officer)


/s/ Rudi E. Moerck                                   President and Director                March 25, 2004
---------------------------
Rudi E. Moerck


/s/ Edward Dickinson                                 Chief Financial Officer and           March 25, 2004
---------------------------                          Secretary (Principal Financial
Edward Dickinson                                     and Accounting Officer)



/s/ Jon N. Bengtson                                  Director                              March 25, 2004
---------------------------
Jon N. Bengtson

/s/ James I. Golla                                   Director                              March 25, 2004
---------------------------
James I. Golla
</TABLE>

                                       49
<PAGE>
<TABLE>
<CAPTION>
<S>                                                  <C>                                   <C>
/s/ George Hartman                                   Director                              March 25, 2004
---------------------------
George Hartman


/s/ David King                                       Director                              March 25, 2004
---------------------------
David King
</TABLE>


                                       50
<PAGE>





     Altair Nanotechnologies Inc.
     and Subsidiaries
     (A Development Stage Company)

     Consolidated  Financial Statements as of December 31, 2003 and 2002 and for
     Each of the Three Years in the Period  Ended  December 31, 2003 and for the
     Period  from April 9, 1973 (Date of  Inception)  to  December  31, 2003 and
     Independent Auditors' Report


                                       51
<PAGE>


Altair nanotechnologies inc. and subsidiaries
(A Development Stage Company)

<TABLE>
<CAPTION>

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

                                                                                                           Page
                                                                                                           ----
<S>                                                                                                        <C>
INDEPENDENT AUDITORS' REPORT                                                                               F-1

FINANCIAL STATEMENTS:

  Consolidated Balance Sheets, December 31, 2003 and 2002                                                  F-2

  Consolidated  Statements  of  Operations  for Each of the  Three  Years in the
    Period Ended December 31, 2003 and for the Period from April 9, 1973
    (Date of Inception) to December 31, 2003                                                               F-3

  Consolidated Statements of Shareholders' Equity for the Period from April 9, 1973
    (Date of Inception) to December 31, 2003                                                               F-4 - F-8

  Consolidated  Statements  of Cash  Flows  for Each of the  Three  Years in the
    Period Ended December 31, 2003 and for the Period from April 9, 1973
    (Date of Inception) to December 31, 2003                                                               F-9 - F-12

  Notes to Consolidated Financial Statements                                                               F-13 - F-25

</TABLE>



                                       52
<PAGE>

INDEPENDENT AUDITORS' REPORT


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

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Altair
Nanotechnologies   Inc.  (a   development   stage   company)  and   subsidiaries
(collectively  referred to as the  "Company")  as of December 31, 2003 and 2002,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period  ended  December  31, 2003,
and for the period from April 9, 1973 (date of  inception) to December 31, 2003.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits. The Company's  consolidated  financial
statements for the period from April 9, 1973 (date of inception) to December 31,
1997 were  audited by other  auditors  whose  report,  dated  February 17, 2000,
expressed an unqualified opinion on those statements.  The financial  statements
for the period from April 9, 1973 (date of inception)  through December 31, 1997
reflect a net loss of  $7,350,462  of the related  totals.  The other  auditors'
report has been  furnished to us and our  opinion,  insofar as it relates to the
amounts  included for such prior periods,  is based solely on the report of such
other auditors.

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

In our  opinion,  based on our audit  and the  report  of other  auditors,  such
consolidated  financial statements present fairly, in all material respects, the
financial  position  of the Company as of  December  31, 2003 and 2002,  and the
results of its  operations and its cash flows for each of the three years in the
period ended  December 31, 2003,  and for the period from April 9, 1973 (date of
inception)  to December 31,  2003,  in  conformity  with  accounting  principles
generally accepted in the United States of America.




/s/ DELOITTE & TOUCHE LLP
-----------------------------
Salt Lake City, Utah
March 10, 2004



                                      F-1
<PAGE>

<TABLE>
<CAPTION>
ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
(Expressed in United States Dollars)
---------------------------------------------------------------------------------------------

ASSETS                                                            2003              2002
<S>                                                           <C>             <C>
CURRENT ASSETS:
 Cash and cash equivalents                                     $ 3,869,669    $    244,681
 Accounts receivable, net                                           13,324         132,859
 Other current assets                                               79,187          22,598
                                                              ------------    ------------

           Total current assets                                  3,962,180         400,138

PROPERTY, PLANT AND EQUIPMENT, Net                               6,618,805       7,349,818

PATENTS, Net                                                     1,060,569       1,146,249

OTHER ASSETS                                                        18,200          18,200
                                                              ------------    ------------

TOTAL ASSETS                                                  $ 11,659,754    $  8,914,405
                                                              ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Trade accounts payable                                      $     85,255    $    332,716
  Accrued liabilities                                              311,886         271,787
                                                              ------------    ------------

           Total current liabilities                               397,141         604,503
                                                              ------------    ------------

NOTES PAYABLE, Long-term portion                                 2,686,130       3,905,040
                                                              ------------    ------------

COMMITMENTS AND CONTINGENCIES
  (Notes 6, 8, 9, and 11)

SHAREHOLDERS' EQUITY:
  Common stock, no par value, unlimited shares authorized;
    43,188,362 and 30,244,348 shares issued and outstanding
    at December 31, 2003 and 2002                               54,789,896      43,787,850
  Deficit accumulated during the development stage             (46,213,413)    (39,382,988)
                                                              ------------    ------------

           Total shareholders' equity                            8,576,483       4,404,862
                                                              ------------    ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                    $ 11,659,754    $  8,914,405
                                                              ============    ============
</TABLE>

See notes to the consolidated financial statements.

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

ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2003 AND
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
----------------------------------------------------------------------------------------------------------------


                                                                                                 Period April 9,
                                                                                                 1973 (Date of
                                                             Year Ended December 31,             Inception) to
                                                  -------------------------------------------    December 31,
                                                      2003            2002            2001            2003
<S>                                              <C>             <C>             <C>            <C>
SALES                                            $     72,851    $    253,495    $     42,816    $    369,162
COST OF SALES                                          62,159          93,583          18,175         173,917
                                                 ------------    ------------    ------------    ------------

GROSS MARGIN                                           10,692         159,912          24,641         195,245
                                                 ------------    ------------    ------------    ------------

OPERATING EXPENSES:
  Mineral exploration and development                 155,709         598,977         930,777       6,673,351
  Research and development                            905,457         587,137         559,454       4,621,553
  Professional services                               576,327         712,530         593,088       3,852,769
  General and administrative expenses               3,279,652       2,360,315       2,824,646      17,487,449
  Depreciation and amortization                       878,757         997,708       1,138,208       6,393,879
  Asset impairment                                       --         2,759,956            --         2,759,956
                                                 ------------    ------------    ------------    ------------

           Total operating expenses                 5,795,902       8,016,623       6,046,173      41,788,957
                                                 ------------    ------------    ------------    ------------

LOSS FROM OPERATIONS                                5,785,210       7,856,711       6,021,532      41,593,712
                                                 ------------    ------------    ------------    ------------

OTHER EXPENSE (INCOME):
  Interest expense                                    454,415       1,151,388       1,881,077       4,989,754
  Interest income                                      (1,879)         (2,105)       (148,980)       (817,824)
  Gain on foreign exchange                                193             835             402        (557,749)
  Loss on extinguishment of debt                         --           914,667            --           914,667
  Gain on forgiveness of debt                            --              --              --          (795,972)
  Loss on redemption of convertible debentures           --              --              --           193,256
                                                 ------------    ------------    ------------    ------------

           Total other expense, net                   452,729       2,064,785       1,732,499       3,926,132
                                                 ------------    ------------    ------------    ------------

NET LOSS                                            6,237,939       9,921,496       7,754,031      45,519,844

PREFERENTIAL WARRANT DIVIDEND                         592,486          48,666          52,417         693,569
                                                 ------------    ------------    ------------    ------------

NET LOSS APPLICABLE TO SHAREHOLDERS              $  6,830,425    $  9,970,162    $  7,806,448    $ 46,213,413
                                                 ============    ============    ============    ============

LOSS PER COMMON SHARE--Basic and diluted         $       0.19    $       0.40    $       0.39    $      4.83
                                                 ============    ============    ============    ============

WEIGHTED AVERAGE SHARES--Basic and diluted         36,222,026      24,975,837      20,063,473       9,566,710
                                                 ============    ============    ============    ============
</TABLE>

See notes to the consolidated financial statements.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
-----------------------------------------------------------------------------------------------------------
                                                                                       Deficit
                                                                                     Accumulated
                                                    Common Stock          Stock       During the
                                                ---------------------  Subscription   Development
                                                 Shares       Amount    Receivable      Stage       Total
                                               ----------   ---------   ---------   -----------    --------
<S>                                            <C>          <C>         <C>         <C>            <C>
APRIL 9, 1973 (DATE OF INCEPTION)                    --          --     $    --     $      --          --

Common stock issued                               101,668     387,073        --            --       387,073
Net loss                                             --          --          --        (361,572)   (361,572)
                                               ----------   ---------   ---------   -----------    --------

BALANCE,  DECEMBER 31, 1984                       101,668     387,073        --        (361,572)     25,501

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

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

Common stock issued for property                    3,333      18,058        --            --        18,058
Acquisition of subsidiary                         780,000      44,551        --            --        44,551
Common stock issued for underwriter bonus           4,000           1        --            --             1
Net loss                                             --          --          --        (210,667)   (210,667)
                                               ----------   ---------   ---------   -----------    --------

BALANCE,  DECEMBER 31, 1986                       930,281     697,457        --        (650,845)     46,612

Common stock issued for property                    6,667       8,027        --            --         8,027
Flow through shares                               298,650     463,301        --            --       463,301
Common stock issued for rights offering           257,822     253,947        --            --       253,947
Net loss                                             --          --          --        (696,642)   (696,642)
                                               ----------   ---------   ---------   -----------    --------

BALANCE,  DECEMBER 31, 1987                     1,493,420   1,422,732        --      (1,347,487)     75,245

Common stock issued for services                   16,667      14,592        --            --        14,592
Common stock issued                                16,667      14,592        --            --        14,592
Common stock issued in settlement of debt         233,333      51,073        --            --        51,073
Net loss                                             --          --          --        (149,316)   (149,316)
                                               ----------   ---------   ---------   -----------    --------

BALANCE,  DECEMBER 31, 1988                     1,760,087   1,502,989        --      (1,496,803)      6,186

Common stock issued                               127,500      75,058        --            --        75,058
Common stock issued in settlement of lawsuit       41,667      22,800        --            --        22,800
Net loss                                             --          --          --        (151,372)   (151,372)
                                               ----------   ---------   ---------   -----------    --------

BALANCE,  DECEMBER 31, 1989                     1,929,254   1,600,847        --      (1,648,175)    (47,328)
                                               ----------   ---------   ---------   -----------    --------

                                                                                                 (Continued)
</TABLE>

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
-----------------------------------------------------------------------------------------------------------
                                                                                       Deficit
                                                                                     Accumulated
                                                    Common Stock          Stock       During the
                                                ---------------------  Subscription   Development
                                                 Shares       Amount    Receivable      Stage       Total
                                               ----------   ---------   ---------   -----------    --------
<S>                                            <C>         <C>          <C>         <C>            <C>
BALANCE,  DECEMBER 31, 1989                    1,929,254   $1,600,847   $  --       $(1,648,175)   $ (47,328)

Common stock issued                              133,333      218,882      --              --        218,882
Exercise of stock options                         33,333       18,240      --              --         18,240
Common stock issued for property                  11,666       11,674      --              --         11,674
Common stock issued for services                  13,333       21,888      --              --         21,888
Net loss                                            --           --        --          (230,125)    (230,125)
                                               ---------   ----------   ----------  -----------    ---------

BALANCE,  DECEMBER 31, 1990                    2,120,919    1,871,531      --        (1,878,300)      (6,769)

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

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

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

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

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

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

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

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

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

BALANCE,  DECEMBER 31, 1995                    8,497,849    4,216,414      --        (3,335,466)     880,948
                                               ---------   ----------   ----------  -----------    ---------
                                                                                                  (Continued)
</TABLE>

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
-----------------------------------------------------------------------------------------------------------------------
                                                                                            Deficit
                                                                                          Accumulated
                                                    Common Stock              Stock       During the
                                                ---------------------      Subscription   Development
                                                  Shares         Amount     Receivable       Stage            Total
                                                -----------    ----------- ------------   ------------    ------------
<S>                                               <C>          <C>           <C>          <C>             <C>
BALANCE,  DECEMBER 31, 1995                       8,497,849    $ 4,216,414   $    --      $ (3,335,466)   $    880,948

Common stock issued                                 554,027      1,637,307        --              --         1,637,307
Exercise of stock options                           702,000        526,850        --              --           526,850
Exercise of stock warrants                        3,012,463      2,471,219        --              --         2,471,219
Stock options issued to non-employees                  --          285,503        --              --           285,503
Common stock issued for acquisition of TMI        1,919,957      2,521,469        --              --         2,521,469
Net loss                                               --             --          --        (1,032,903)     (1,032,903)
                                                -----------    -----------   ---------    ------------    ------------

BALANCE,  DECEMBER 31, 1996                      14,686,296     11,658,762        --        (4,368,369)      7,290,393

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

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

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

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

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

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

Stock options issued to non-employees                  --          424,063        --              --           424,063
Stock subscription receivable                          --             --      (561,300)           --          (561,300)
Stock warrants issued                                  --        1,245,050        --              --         1,245,050
Exercise of stock options                            71,300        335,778        --              --           335,778
Common stock issued                               3,779,273      8,904,029        --              --         8,904,029
Net loss                                               --             --          --        (5,914,474)     (5,914,474)
                                                -----------    -----------   ---------    ------------    ------------
BALANCE,  DECEMBER 31, 2000                      19,325,488     32,388,589    (561,300)    (21,606,378)     10,220,911
                                                -----------    -----------   ---------    ------------    ------------

                                                                                                          (Continued)
</TABLE>
                                      F-6
<PAGE>
<TABLE>
<CAPTION>
ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
---------------------------------------------------------------------------------------------------------------
                                                                                    Deficit
                                                                                  Accumulated
                                              Common Stock             Stock       During the
                                        -------------------------  Subscription   Development
                                          Shares          Amount     Receivable       Stage            Total
                                        -----------    ----------- ------------   ------------    ------------

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

Stock options issued to non-employees          --          158,089        --              --           158,089
Stock subscription receivable                  --             --       561,300            --           561,300
Stock warrants issued                          --          776,469        --              --           776,469
Preferential warrant dividend                  --           52,417        --           (52,417)           --
Shares issued for settlement of debt        824,800      1,220,423        --              --         1,220,423
Exercise of stock options                    65,000        130,000        --              --           130,000
Common stock expired                       (266,170)          --          --              --              --
Exercise of warrants                        713,333        713,333        --              --           713,333
Common stock issued                       2,031,691      2,650,000        --              --         2,650,000
Net loss                                       --             --          --        (7,754,031)     (7,754,031)
                                        -----------    -----------   ---------    ------------    ------------

BALANCE,  DECEMBER 31, 2001              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
                                        -----------    -----------   ---------    ------------    ------------

                                                                                                    (Continued)
</TABLE>

                                      F-7
<PAGE>
<TABLE>
<CAPTION>
ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
--------------------------------------------------------------------------------------------------------------
                                                                                    Deficit
                                                                                  Accumulated
                                              Common Stock             Stock       During the
                                        -------------------------  Subscription   Development
                                          Shares        Amount      Receivable       Stage            Total
                                        -----------  -----------   ------------   ------------    ------------

<S>                                     <C>          <C>           <C>            <C>             <C>
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
                                        ==========   ===========   ===========    ============    ===========

                                                                                                  (Concluded)
</TABLE>

See notes to consolidated financial statements.


                                      F-8
<PAGE>
<TABLE>
<CAPTION>
ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2003 AND
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
-------------------------------------------------------------------------------------------------------------------------
                                                                                                        Period April 9,
                                                                                                         1973 (Date of
                                                                                                         Inception) to
                                                                      Year Ended December 31,            December 31,
                                                          ----------------------------------------------
                                                                2003           2002           2001            2003
<S>                                                         <C>            <C>            <C>            <C>
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
  Net loss                                                  $(6,237,939)   $(9,921,496)   $(7,754,031)   $(45,519,844)
  Adjustments to reconcile net loss to net cash used
  in development activities:
  Depreciation and amortization                                 878,757        997,708      1,138,208       6,393,879
  Shares issued for services                                     89,297        203,500           --           392,723
  Shares issued for interest                                    133,315        292,208        820,157       1,249,752
  Issuance of stock options to non-employees                     64,346         27,601        158,089       3,095,487
  Issuance of stock options to employees                           --             --             --            78,220
  Variable accounting on stock options                          903,668           --             --           903,668
  Issuance of stock warrants                                    101,416        108,556        396,123       1,026,277
  Amortization of discount on note payable                      181,090        384,616        403,021         980,779
  Amortization of debt issuance costs                              --          404,567        100,000         504,567
  Asset impairment                                                 --        2,759,956           --         2,759,956
  Loss on extinguishment of debt                                   --          914,667           --           914,667
  Loss on redemption of convertible debenture                      --             --             --           193,256
  Gain on forgiveness of debt                                      --             --             --          (795,972)
  Loss on disposal of fixed assets                               25,661           --             --            27,606
  Gain on foreign currency translation                             --             --             --          (559,581)
  Deferred financing costs written off                             --             --             --           515,842
Changes in assets and liabilities (net of effects
      of acquisition):
      Restricted cash                                              --             --        4,000,000            --
      Accounts receivable                                       119,535       (128,705)        (4,154)        (13,324)
      Other current assets                                      (56,589)         6,899         18,170       1,655,411
      Other assets                                                 --           (2,000)           886        (170,720)
      Accounts payable                                         (247,461)       (30,974)       369,763          93,286
      Accrued liabilities                                        40,099        107,072           --            34,641
      Deferred revenue                                             --          (40,972)       (16,985)           --
                                                            -----------    -----------    -----------    ------------
           Net cash used in development activities           (4,004,805)    (3,916,797)      (370,753)    (26,239,424)
                                                            -----------    -----------    -----------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Asset acquisition                                                --             --             --        (9,625,154)
  Purchase of property and equipment                            (92,400)    (2,525,916)      (158,296)     (3,753,825)
  Proceeds received from sale of property and equipment           4,675           --             --             4,675
  Disposal (purchase) of patents and related expenditures          --             --            5,933      (1,882,187)
                                                            -----------    -----------    -----------    ------------
           Net cash used in investing activities                (87,725)    (2,525,916)      (152,363)    (15,256,491)
                                                            -----------    -----------    -----------    ------------

                                                                                                          (Continued)
</TABLE>

                                      F-9
<PAGE>
<TABLE>
<CAPTION>
ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2003 AND
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
------------------------------------------------------------------------------------------------------------------------
                                                                                                         Period April 9,
                                                                                                          1973 (Date of
                                                                                                          Inception) to
                                                                        Year Ended December 31,            December 31,
                                                              -----------------------------------------
                                                                 2003            2002            2001          2003
<S>                                                           <C>            <C>            <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common shares for cash, net of issuance costs   $ 4,324,898    $ 3,335,122    $ 2,650,000    $ 25,833,679
  Collection of stock subscription receivable                        --             --          561,300         561,300
  Issuance of shares under Employee Stock Purchase Plan           606,675         92,183           --           698,858
  Issuance of convertible debenture                                  --             --             --         5,000,000
  Proceeds from exercise of stock options                         488,836           --          130,000       3,197,327
  Proceeds from exercise of warrants                            3,417,109        300,477        713,333       8,334,914
  Issuance of related party notes                                    --            6,243        168,000         174,243
  Issuance of notes payable                                          --        2,505,040           --        19,130,540
  Payment of notes payable                                     (1,120,000)          --       (4,385,599)    (14,663,579)
  Payment of related party notes                                     --         (149,243)       (25,000)       (174,243)
  Payment on capital lease                                           --           (2,312)       (24,763)        (27,075)
  Purchase of call options                                           --             --             --          (449,442)
  Redemption of convertible debentures                               --             --             --        (2,250,938)
                                                              -----------    -----------    -----------    ------------
        Net cash provided by (used in) financing activities     7,717,518      6,087,510       (212,729)     45,365,584
                                                              -----------    -----------    -----------    ------------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                          3,624,988       (355,203)      (735,845)      3,869,669

CASH AND CASH EQUIVALENTS
  Beginning of period                                             244,681        599,884      1,335,729            --
                                                              -----------    -----------    -----------    ------------

  End of period                                               $ 3,869,669    $   244,681    $   599,884    $  3,869,669
                                                              ===========    ===========    ===========    ============
</TABLE>
                                                  Year Ended December 31,
                                                  -----------------------
                                            2003           2002          2001

SUPPLEMENTAL DISCLOSURES:
  Cash paid for interest                  $ 140,000     $    --        $ 386,557
                                          =========     =========      =========
  Cash paid for income taxes              $    --       $    --        $    --
                                          =========     =========      =========

                                                                  (Continued)

                                      F-10
<PAGE>
ALTAIR NANOTECHNOLOGIES INC. and subsidiaries
(A Development Stage Company)


CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
--------------------------------------------------------------------------------


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

For the year ended December 31, 2003:

o    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).

o    On or about June 2, 2003, we repriced warrants, held by a shareholder,  for
     796,331 common shares.  The repriced warrants had an incremental fair value
     of $176,472 and have been accounted for as a preferential warrant dividend.

o    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 the  shareholder  631,882  new
     warrants  having an exercise  price of $1.75 each.  The new  warrants had a
     fair  value of  $416,014  and have  been  accounted  for as a  preferential
     warrant dividend.



For the year ended December 31, 2002:

o    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 issuance cost on the balance sheet.

o    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.

o    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 $71,803.

o    We repriced warrants, held by a shareholder, for 582,500 common shares. The
     repriced  warrants had an  incremental  fair value of $48,666 and have been
     accounted for as a preferential warrant dividend.



                                                                  (Continued)

                                      F-11
<PAGE>
ALTAIR NANOTECHNOLOGIES INC. and subsidiaries
(A Development Stage Company)


CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
--------------------------------------------------------------------------------


For the year ended December 31, 2001:

o    In  connection  with  amendments  to the Doral 18, LLC 2000 Note, we issued
     warrants for 300,000 shares of common stock.  The warrants had an estimated
     fair value of $346,354 of which  $239,562 has been  amortized into interest
     expense during the year ended December 31, 2003. The remaining  amount will
     be recognized over the life of the note.

o    We  cancelled  call  options on 228,456  shares of our common  stock to pay
     $97,743 of  principal  and  $244,941  of interest on the Doral 18, LLC 2000
     Note.  In addition,  the  cancellation  of the call options  resulted in an
     additional interest expense of $210,568.

o    In  accordance  with the  terms of our  Doral 18,  LLC 2000  Note,  we paid
     $644,804 of  principal  and  $273,731 of interest  through the  issuance of
     824,800 shares of our common stock. In addition, the conversion of the note
     resulted in an additional interest expense of $301,888.

o    We repriced warrants, held by a shareholder, for 713,333 common shares. The
     repriced  warrants had an  incremental  fair value of $52,417 and have been
     accounted for as a preferential warrant dividend.

o    In  connection  with the 2001  Note  issued  to Doral  18,  LLC,  we issued
     warrants for 200,000  common  shares.  The  warrants had an estimated  fair
     value of $74,733.  We also repriced  existing  warrants for 650,000  common
     shares from $3.00 per share to $1.50 per share.  The repriced  warrants had
     an incremental fair value of $199,222.



See notes to consolidated financial statements.                    (Concluded)

                                      F-12
<PAGE>

ALTAIR NANOTECHNOLOGIES INC. and subsidiaries
(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2003
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

1.       DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description  of  Business--Altair  Nanotechnologies  Inc., a  development  stage
company,  is  incorporated in Canada and has been engaged in the business of (1)
development, production, and sale of metal oxide nanoparticles, sale of contract
services,  and  sale of  intellectual  property  licenses,  all  related  to our
nanomaterials  and  titanium  dioxide  pigment  technology,  (2)  exploring  and
developing  mineral  properties in the United States, and (3) developing mineral
processing  equipment  (a  centrifugal  jig) for use in the recovery of fine and
heavy  mineral  particles.  In December  2003,  the board of directors of Altair
approved a plan to restructure the Company in order to concentrate  resources on
the  nanomaterials  and  titanium  dioxide  pigment  business.  As a part of the
restructuring, on March 9, 2004, we determined to consolidate the assets related
to the  centrifugal  jig and our  Tennessee  mineral  property into (or under) a
single  corporation,  cause such corporation to become an SEC reporting company,
and  distribute  substantially  all  of the  shares  of  common  stock  of  such
corporation  to our  shareholders.  The  completion of this spin-off  process is
contingent  upon receipt of shareholder  approval and is anticipated to occur in
2004.

Principles of Consolidation--The  consolidated  financial statements include the
accounts of Altair  Nanotechnologies Inc. and its subsidiaries 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,
2003,  2002,  and 2001, we incurred net losses of  $6,237,939,  $9,921,496,  and
$7,754,031,  respectively,  and  since  the  date  of  inception  have  incurred
cumulative  losses  of  $45,519,844.  At  December  31,  2003 and  2002,  we had
stockholder's equity of $8,576,483 and $4,404,862, 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  successful  operations.  We are  in the  process  of  developing  and
commercializing  our nanomaterials and titanium dioxide pigment  technology.  We
have financed  operations  primarily  through the issuance of equity  securities
(common stock,  convertible debentures,  stock options and warrants), and by the
issuance  of debt (term  notes).  Additional  funds will be required to complete
development  activities.  We believe that current working capital, cash receipts
from  anticipated  sales,  and  funding  through  sales of common  stock will be
sufficient to enable us to continue as a going concern through 2006.  Subsequent
to December 31, 2003, we have received cash proceeds of approximately $8 million
from the exercise of stock options and warrants.
                                      F-13
<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. Cash equivalents
are recorded at cost, which approximates fair value.

Accounts Receivable--Accounts  receivable consists of amounts due from customers
for sales of products and  services,  net of an allowance for losses of $466 and
$3,203 at December 31, 2003 and 2002, respectively.

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
                  Pigment production equipment           5-10 years
                  Building                               30 years

Patents--Patents  related to the pigment  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.

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

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

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

Stock-Based  Compensation--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 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.

We are required to implement the provision of SFAS 123 for stock-based awards to
other than  employees and  directors.  We account for stock options and warrants
issued to non-employees in accordance with SFAS 123.

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:

                                      F-14
<PAGE>
<TABLE>
<CAPTION>

                                                      2003           2002          2001
<S>                                               <C>            <C>           <C>
Net loss applicable to shareholders:
  As reported                                     $ 6,830,425    $ 9,970,162   $7,806,448
  Deduct stock-based employee compensation
    expense included in reported net loss            (903,668)          --           --
  Add stock-based employee compensation
    expense determined under value based
    method for all awards                             590,908        235,823    1,474,690
                                                  -----------    -----------   ----------

  Pro forma                                       $ 6,517,665    $10,205,985   $9,281,138
                                                  ===========    ===========   ==========

Loss per common share (both basic and diluted):
  As reported                                     $      0.19    $      0.40   $     0.39
                                                  ===========    ===========   ==========
  Pro forma                                       $      0.18    $      0.41   $     0.46
                                                  ===========    ===========   ==========
</TABLE>


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


                                 2003             2002             2001

Dividend yield                    None             None             None
Expected volatility               65 %             67 %             81 %
Risk-free interest rate         3.02 %           2.19 %           4.76 %
Expected life (years)              4.8              5.0              5.0


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.

Revenue  Recognition--Revenue  is  recognized  at the  time  the  purchaser  has
accepted  delivery of the product or after the service has been  performed.  For
the year ended December 31, 2003, we sold titanium  dioxide and lithium titanate
nanoparticles,  and other materials, to customers totaling $17,602. Revenue also
includes  $18,696  earned under a services  agreement  with a materials  company
where we tested the company's mineral concentrates in the production of titanium
dioxide pigments using our titanium processing technology. In addition,  revenue
includes $36,553 earned from contract research work done under an agreement with
Western Michigan University.

Net Loss Per Common  Share--Basic  net loss per common  share is  calculated  by
dividing net loss by the weighted  average  number of common shares  outstanding
during the period.  The existence of stock options,  warrants,  and  convertible
debentures  does not  affect  the  calculation  of net loss per share on a fully
diluted  basis  because the effect of  including  the  additional  common  stock
equivalents would be antidilutive.

                                      F-15
<PAGE>

Recent  Accounting  Pronouncements--In  June 2001, the FASB issued SFAS No. 143,
Accounting for Asset  Retirement  Obligations,  which requires asset  retirement
obligations   to  be  recognized   when  they  are  incurred  and  displayed  as
liabilities.  SFAS 143 was effective for the year ended December 31, 2003.  Upon
adoption of SFAS 143, we recorded an accrual for asset retirement obligations of
$19,754.

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation-Transition and Disclosure. SFAS 148 amends SFAS No. 123, Accounting
for Stock-Based  Compensation,  to provide  alternative methods of transition to
SFAS  123's  fair  value  method  of   accounting   for   stock-based   employee
compensation.  SFAS 148 also amends the  disclosure  provisions  of SFAS 123 and
Accounting  Principles Board (APB) Opinion No. 28, Interim Financial  Reporting,
to require disclosure in the summary of significant  accounting  policies of the
effects of an entity's  accounting  policy with respect to stock-based  employee
compensation on reported net income and earnings per share in annual and interim
financial  statements.  We adopted this statement  effective January 1, 2003 but
have elected,  as permitted under SFAS 123, to continue to follow the accounting
provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees,  and
to furnish the pro forma disclosures required under SFAS 148.

In  November  2002,  the  FASB  issued  Financial   Accounting  Standards  Board
Interpretation   No.   ("FIN")  45,   Guarantor's   Accounting   and  Disclosure
Requirements for Guarantees,  Including  Indirect  Guarantees of Indebtedness of
Others,  which requires the guarantor to recognize as a liability the fair value
of the obligation at the inception of the guarantee. The disclosure requirements
in FIN 45 are effective for  financial  statements of interim or annual  periods
ending after December 15, 2002.  Management  believes we have no guarantees that
are  required to be  disclosed  in the  financial  statements.  The  recognition
provisions are to be applied on a prospective  basis to guarantees  issued after
December 31, 2002. The adoption of the recognition  provisions of FIN 45 did not
have a material impact on our consolidated financial statements.

On April 30, 2003,  the FASB issued SFAS No. 149,  Amendment of Statement 133 on
Derivative  Instruments  and Hedging  Activities.  SFAS 149 amends and clarifies
accounting for derivative instruments,  including certain derivative instruments
embedded in other contracts,  and for hedging activities under SFAS 133. The new
guidance  amends  SFAS  133  for  decisions  made  as  part  of the  Derivatives
Implementation  Group ("DIG") process that  effectively  required  amendments to
SFAS 133, and decisions made in connection with other FASB projects dealing with
financial  instruments  and in connection with  implementation  issues raised in
relation  to  the   application   of  the   definition   of  a  derivative   and
characteristics  of a  derivative  that  contains  a  financing  component  that
warrants special reporting in the statement of cash flows. SFAS 149 is effective
for  contracts  entered  into or  modified  after June 30,  2003 and for hedging
relationships  designated  after June 30, 2003. The adoption of SFAS 149 did not
have a material impact on our consolidated financial statements.

SFAS No. 150, Accounting for Certain Financial  Instruments with Characteristics
of both  Liability  and  Equity,  was issued in May 2003.  SFAS 150  establishes
standards  for  how  an  issuer   classifies  and  measures  certain   financial
instruments with  characteristics  of both liability and equity in its statement
of financial position. SFAS 150 is effective for the Company for new or modified
financial  instruments  beginning  June 1, 2003,  and for  existing  instruments
beginning  August 1,  2003.  The  adoption  of SFAS 150 did not have a  material
impact on our consolidated financial statements.

In  December  2003,  the  FASB  issued  Financial   Accounting  Standards  Board
Interpretation  No.  ("FIN") 46 (revised),  Consolidation  of Variable  Interest
Entities,  which is an interpretation  of ARB 51 and addresses  consolidation by
business  enterprises  of  variable  interest  entities.  FIN  46  is  effective

                                      F-16
<PAGE>

immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after June
15, 2003, to variable  interest entities in which an enterprise holds a variable
interest that it acquired  before February 1, 2003. We adopted this statement on
July 1, 2003. We do not have any variable  interest  entities as of December 31,
2003.

Comprehensive  Income--The only component of comprehensive income in 2003, 2002,
and 2001 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.

Deferred  Revenue--We  entered  into a sales  contract on October 6, 2000 with a
customer  for  titanium  dioxide  nanoparticles  under which the total  contract
amount was prepaid.  During 2002,  $40,972 of products was  delivered  under the
contract and recognized as sales revenues.

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 the 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 have been delayed, including our intended use of
the jig to enhance the  recovery of heavy  minerals  on this  property.  We have
utilized the jig to perform tests for fine particle  recovery at a third party's
facility,  entered into a license  agreement with respect to the Altair jig, and
continue to seek  manufacturers  and  distributors  for  marketing the jig under
licensing and/or distributorship  agreements. We could not determine when and if
the jig will 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
have  recorded an impairment  charge  related to the jig assets in the amount of
$2,759,956, which represents 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.

During 2003,  we assessed the carrying  value of our  long-lived  assets at each
reporting  state as we have continued to experience net losses.  We assessed the
carrying  value  of  the  titanium   processing   technology  and  titanium  and
nanoparticle   processing  assets  by  analyzing  future  estimated  cash  flows
associated with these assets over the succeeding  ten-year period.  These assets
have begun generating sales revenues, we have entered into development contracts
and  non-disclosure  agreements with companies  interested in joint  development
and/or  testing of certain  nanomaterials  products,  and we are in  discussions
regarding  licensing of our technology to others.  In our future  estimated cash
flow analysis,  we examined  product  markets,  assessed our  opportunities  for


                                      F-17
<PAGE>

market  entry  and  sales  based on  current  sales  and/or  customer  interest,
including samples supplied and development  agreements signed, and estimated the
costs,  including capital costs,  associated with the generation of revenues. At
the same time, we took into  consideration  recent  developments with respect to
licensing our  technology to others and  pharmaceutical  applications  that have
significant  revenue potential,  and estimated future cash flows associated with
these activities.  Based on our future estimated cash flow analysis,  we believe
that  the  titanium   nanoparticle   processing   technology  and  titanium  and
nanoparticle processing assets are not impaired as of December 31, 2003.

4.       PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following as of December 31, 2003
and 2002:

                                                     2003            2002

           Furniture and office equipment        $    75,749    $    82,113
           Vehicles                                  129,734        125,031
           Pigment production equipment            7,144,365      7,162,641
           Building                                2,335,979      2,335,978
                                                 -----------    -----------

           Total                                   9,685,827      9,705,763
           Less accumulated depreciation          (3,067,022)    (2,355,945)
                                                 -----------    -----------

           Total property, plant and equipment   $ 6,618,805    $ 7,349,818
                                                 ===========    ===========


Depreciation  expense for the years ended  December  31,  2003,  2002,  and 2001
totaled $793,077, $770,250, and $772,268, respectively.

5.       PATENTS

Patents consisted of the following at December 31, 2003 and 2002:

                                                       2003            2002

          Pigment production patents               $ 1,517,736    $ 1,517,736
          Less accumulated amortization               (457,167)      (371,487)
                                                   -----------    -----------
          Total patents                            $ 1,060,569    $ 1,146,249
                                                   ===========    ===========

      Patents  are being  amortized  over  their  useful  lives  with a weighted
      average  amortization  period of  approximately  16.5 years.  Amortization
      expense  was  $85,680  for  the  year  ended  December  31,  2003,   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 will be $85,680 per
      year.  Amortization  expense was $365,940 and $484,558 for the years ended
      December 31, 2001 and 2000, respectively.

                                      F-18
<PAGE>

6.       NOTES PAYABLE

Notes payable consisted of the following at December 31, 2003 and 2002:

                                                      2003         2002

Note payable to BHP Minerals International, Inc.   $2,686,130   $2,505,040
Note payable to Doral 18, LLC                            --      1,400,000
Less current portion                                     --           --
                                                   ----------   ----------

Long-term portion of notes payable                 $2,686,130   $3,905,040
                                                   ==========   ==========


On December 15, 2000, pursuant to a securities  purchase  agreement,  we sold to
Doral 18, LLC  ("Doral") a $7 million 10%  Asset-Backed  Exchangeable  Term Note
(the "2000 Note") and detachable  warrants to purchase  350,000 common shares at
$3.00 per share.  Net proceeds of $4 million from the 2000 Note were placed in a
restricted  bank  account to secure a letter of credit and were  scheduled to be
released as principal  payments were made. Under the 2000 Note, we were required
to make  monthly  payments  in the  principal  amount of $291,667  plus  accrued
interest and we had the right to redeem the monthly  payment  amounts in cash at
any time.  If we elected not to redeem the monthly  payment  amount in cash,  on
each due date, the holder of the 2000 Note  automatically  received the right to
exchange  (immediately or at any later date during the term) the monthly payment
amount into common shares at a specified  exchange price.  The 2000 Note was due
and payable in full on December 15, 2003.

During 2001, we made cash principal payments of $1,894,394, interest payments of
$286,557,  and incurred  additional interest expense of $100,000 related to fees
to extend the registration  statement  associated with the 2000 Note. Doral also
converted  $644,804 of principal  and  $273,731 of interest  payable on the 2000
Note into 824,800 shares of common stock.

On December 28,  2001, a  Termination  and  Issuance  Agreement  was signed with
Doral.  The 2000 Note was  exchanged  for a new note ("2001 Note") having a face
amount of  $2,000,000.  In addition,  the letter of credit  discussed  above was
terminated and  $2,500,733 of restricted  cash securing the letter of credit was
paid to Doral. The 2001 Note had an interest rate of 11% per annum with interest
payments due monthly. If interest was not paid, Doral automatically received the
right to exchange (immediately or at any later date during the term) the monthly
interest  payment amount into common stock at a specified  exchange  price.  The
principal  amount of the 2001 Note was due and payable on March 31, 2003 but was
amended during 2002 prior to being paid.

During the first quarter of 2002, a total of $53,644 of monthly interest payment
amounts were  exchanged by Doral for 59,599  common  shares.  The  conversion of
these shares  resulted in additional  interest  expense of $16,095.  On April 2,
2002, we entered an agreement with Doral whereby Doral agreed to waive,  for the
period March 27, 2002 through  September  27, 2002, a provision of the 2001 Note
that required us to maintain a cash and cash equivalents balance of $250,000 any
time our common shares closed at less than $1.00 per share for three consecutive
trading days. In addition,  Doral agreed to amend, for the period March 27, 2002
through  September  27, 2002, a provision of the 2001 Note which  required us to
have a cash and cash  equivalents  balance  of at least  $250,000  at the end of
every  quarter.  Such amount was reduced to  $125,000.  In return,  we prepaid a
total of $110,904  of  interest  on the 2001 Note for the period  March 27, 2002
through  September  27,  2002  by  issuing  Doral  143,791  common  shares.  The
conversion of these shares resulted in additional interest expense of $35,762.

                                      F-19
<PAGE>

On September 23, 2002,  we entered an agreement  with Doral whereby Doral agreed
to waive, for the period September 28, 2002 through January 1, 2003, a provision
of the 2001  Note  that  required  us to  maintain  a cash and cash  equivalents
balance of  $250,000  any time our common  shares  closed at less than $1.00 per
share for three  consecutive  trading days. In addition,  Doral agreed to amend,
for the period  September  28, 2002 through  January 1, 2003, a provision of the
2001 Note which  required us to have a cash and cash  equivalents  balance of at
least $250,000 at the end of every quarter. Such amount was reduced to $125,000.
In return,  we prepaid a total of $57,260 of  interest  on the 2001 Note for the
period September 28, 2002 through January 1, 2003 by issuing Doral 95,914 common
shares.  The conversion of these shares resulted in additional  interest expense
of $18,543.

On November  21, 2002,  a Second  Amended and Restated  Secured Term Note ("2002
Note") was signed with Doral. At closing,  we issued to Doral  1,500,000  common
shares in exchange  for a reduction of the  principal  amount  outstanding  from
$2,000,000 to  $1,400,000.  We also issued to Doral a warrant for 750,000 common
shares in exchange for Doral's  agreement to (i) extend the due date of the 2002
Note to March 31, 2004, (ii) eliminate the  requirement  that we maintain a cash
and cash  equivalents  balance of $250,000  any time our common  shares close at
less  than  $1.00  per  share for  three  consecutive  trading  days,  and (iii)
eliminate the requirement that we have a cash and cash equivalents balance of at
least  $250,000 at the end of every  quarter.  The fair value of the warrant was
$239,217 and was  calculated by using the modified  Black-Scholes  pricing model
with the following  assumptions:  risk-free rate of 3.2%,  expected yield of 0%,
volatility of 68%, and expected life of 5 years.  The warrant was exercisable at
$1.00 per share and was  exercised  by Doral on December 2, 2003.  The 2002 Note
had an  interest  rate of 11% with the  interest  payable  monthly in cash.  The
principal amount may be prepaid at any time with a 5% prepayment penalty.  Under
the terms of the 2002 Note,  a  conversion  right with  respect to  $280,000  of
principal  accrues on each of March 1, 2003,  June 1, 2003,  September  1, 2003,
December  1, 2003 and March 1, 2004.  If the  amount  that would be subject to a
conversion right was prepaid prior to the date of accrual, such conversion right
did not accrue. Once a conversion right accrued, the principal amount subject to
that  conversion  right could not be prepaid  unless all  principal  amounts not
subject to a conversion  right had been prepaid in full. Each  conversion  right
gave Doral the right to convert the subject  principal amount into common shares
at a conversion  price equal to the lesser of (a) $1.00 per share and (b) 70% of
the average of the closing  price of our common shares for the five trading days
ending  on the  trading  day  immediately  preceding  the  date  on  which  that
conversion  right  accrued.  Because this was a contingent  embedded  beneficial
conversion  feature,  no amounts  were  allocated to the  beneficial  conversion
feature pending resolution of the contingency.

In  accordance  with EITF  96-19,  Debtor's  Accounting  for a  Modification  or
Exchange of Debt  Instruments,  the  exchange of the notes  discussed  above was
considered to result in a substantially different debt instrument.  Accordingly,
the fair value of the warrants  issued,  the unamortized  debt discount and debt
issuance  costs  associated  with the original note and the debt issuance  costs
associated with the new note were recorded as a loss on  extinguishment  of debt
in the amount of $914,667.

Doral elected to convert the $250,000 of principal under their  conversion right
which  accrued on March 1, 2003,  and,  as a result,  we issued  695,052  common
shares to Doral. The conversion of these shares resulted in additional  interest
expense of $133,315 for which we issued an additional  277,169 common shares. We
subsequently  made cash principal  payments of $280,000 each on May 29, 2003 and
August 28,  2003,  and we paid the  remaining  principal  amount of  $560,000 on
September 15, 2003. We recorded  additional  interest expense of $56,000 related
to prepayment penalties.

The 2002 Note was secured by a pledge of the  equipment,  intellectual  property
and common  stock of ANI, and by a pledge of the  leasehold  interest in mineral
deposits and common stock of MRS.
                                      F-20
<PAGE>

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.

Stock option  activity for the years ended December 31, 2003,  2002, and 2001 is
summarized as follows:
<TABLE>
<CAPTION>

                                            2003                     2002                      2001
                                   ----------------------   ----------------------    ----------------------
                                                 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    4,061,700    $   3.83    3,666,700    $   4.38     2,958,700    $   5.37
Granted during the year             1,010,000        1.10      975,000        0.94     1,368,000        2.12
Cancelled/Expired                    (925,000)       6.20     (580,000)       1.93      (595,000)       4.14
Exercised                            (483,100)       1.02         --       --            (65,000)       2.00
                                   ----------    --------   ----------    --------    ----------    --------

Outstanding at end of year          3,663,600    $   3.11    4,061,700    $   3.83     3,666,700    $   4.38
                                   ==========    ========   ==========    ========    ==========    ========

Options exercisable at year end     3,181,100    $   3.38    3,410,700    $   4.26     2,999,700    $   4.84
                                   ==========    ========   ==========    ========    ==========    ========

Weighted average fair value of
  options granted during year                    $   0.51                 $   0.64                  $   1.70
                                                 ========                 ========                  ========
</TABLE>

                                      F-21
<PAGE>

The following table summarizes  information  about stock options  outstanding at
December 31, 2003:
<TABLE>
<CAPTION>
                                                                                              Stock Options
                                             Stock Options Outstanding                         Exercisable
                                    --------------------------------------------       -----------------------------
                                    Weighted
                                                        Average      Weighted                            Weighted
                                                       Remaining     Average                             Average
         Range of                        Number       Contractual    Exercise               Number       Exercise
         Exercise Prices              Outstanding    Life (Years)     Price              Exercisable      Price

<S>                                     <C>               <C>        <C>                    <C>          <C>
         $0.47 to $1.20                 1,196,900         3.9        $ 1.04                 951,900      $  1.04
         $1.22 to $2.05                 1,028,000         2.8          1.77                 790,500         1.81
         $2.25 to $4.94                   779,000         1.4          3.93                 779,000         3.93
         $6.125 to $10.00                 659,700         0.05         7.98                 659,700         7.98
                                        ---------       --------     --------            -----------     --------

                                        3,663,600         2.4        $ 3.11               3,181,100      $  3.38
                                        =========       ========     ========            ===========     =======
</TABLE>

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 $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, 2003.

We follow the  measurement  provisions of SFAS 123 for stock  options  issued to
non-employees.  We  recorded  compensation  expense  of  $64,346,  $27,601,  and
$158,089 for stock options granted to non-employees for the years ended December
31, 2003, 2002, and 2001, respectively.

Warrants--Warrant activity for the years ended December 31, 2003, 2002, and 2001
is summarized as follows:
<TABLE>
<CAPTION>

                                       2003                       2002                       2001
                             ------------------------    ----------------------    ----------------------
                                             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                      9,170,171    $   1.92     4,612,007    $   2.92     1,883,672    $   5.18
Granted during the year        5,331,827        1.31     5,069,333        1.41     3,441,668        1.24
Expired                         (837,839)       2.72      (225,000)       9.00          --       --
Exercised                     (3,210,328)       1.38      (286,169)       1.05      (713,333)       1.00
                             -----------    ---------    ---------    ---------    ---------    ---------

Outstanding at end of year    10,453,831    $   1.71     9,170,171    $   1.92     4,612,007    $   2.92
                             ===========    =========    =========    =========    =========    =========

</TABLE>

                                      F-22
<PAGE>

The  following  table  summarizes  information  about  warrants  outstanding  at
December 31, 2003:
<TABLE>
<CAPTION>

                                         Warrants Outstanding                         Warrants Exercisable
                           ------------------------------------------------     --------------------------------
                                                 Weighted
                                                  Average       Weighted                             Weighted
                                                 Remaining      Average                              Average
Range of                         Number         Contractual     Exercise              Number         Exercise
Exercise Prices               Outstanding      Life (Years)      Price             Exercisable        Price

<C>      <C>                  <C>                  <C>          <C>                  <C>           <C>
$0.45 to $1.00                2,697,386            4.1          $  0.98              2,697,386     $  0.98
$1.20 to $1.50                3,150,107            3.3             1.45              3,150,107        1.45
$1.75 to $2.00                3,069,374            4.0             1.90              3,069,374        1.90
$2.50 to $6.00                1,536,965            2.8             3.12              1,536,965        3.12
                             ----------        -------          -------             ----------     -------
                             10,453,832            3.6          $  1.71             10,453,832     $  1.71
                             ==========        =======          =======             ==========     =======
</TABLE>

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 March 2004 to September 2008.  Most warrants  contain
provisions whereby the expiration date is accelerated if our common shares close
at or above specified  prices for specified  periods of time, the prices ranging
from $2.50 to $8.00 per share.

8.       OTHER TRANSACTIONS

On October  18,  2001,  we reduced  the  exercise  price of 255,000  outstanding
warrants to $1.00 per share for a period of 45 days and we reduced the  exercise
price of 458,333  outstanding  warrants to $1.00 per share through  December 14,
2001.  As a result of these  repricings,  we  recorded  a  preferential  warrant
dividend of $52,417 as of the repricing  date. The warrants had been  previously
issued with exercise prices ranging from $4.00 to $8.00.

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.

                                      F-23
<PAGE>

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, 2003,  2002,  and 2001 totaled
$33,239, $207,265, and $304,330, respectively.

Mineral Leases--Our subsidiary, MRS, has entered into various mineral leases for
a 100% interest in approximately  8,700 acres of land in the state of Tennessee,
United  States.  During  2003,  MRS  renegotiated  the  leases  on 3,100  acres,
representing  the most important  core holdings,  in order to extend the term of
the leases and reduce the advance royalty payments. It has effectively abandoned
the mineral leases on the remaining 5,600 acres, but the leases remain in effect
until  terminated  by the lessor for  nonpayment.  The  minimum  annual  advance
royalty payments for the 8,700 acres under lease are as follows:

             Year ending December 31:
               2004                                        $ 160,605
               2005                                          165,763
               2006                                          173,747
               2007                                          159,385
               2008                                          144,533
               Thereafter                                    136,334

The  mineral  leases are  subject to a  production  royalty;  however,  MRS will
receive a credit against  production  royalties for all advance  royalties paid.
Upon failure of MRS to make the minimum payments as required by the leases,  the
remedies of the lessors are limited to  termination  of the leases.  The Company
has incurred  royalties of $147,467,  $129,691,  and $87,593 for the years ended
December 31, 2003,  2002,  and 2001,  respectively.  As of December 31, 2003, we
owed $193,571 of royalty payments to lessors.

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, 2003.

A  reconciliation  of the federal  statutory  income tax rate and our  effective
income tax rates is as follows:
<TABLE>
<CAPTION>

                                                  Year Ended December 31,
                                         -----------------------------------------
                                             2003           2002           2001

<S>                                      <C>            <C>            <C>
Federal statutory income tax (benefit)   $(2,390,649)   $(3,489,557)   $(2,713,911)
Meals and entertainment                        3,821          3,470            601
Valuation allowance                        2,386,828      3,486,087      2,713,310
                                         -----------    -----------    -----------

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


                                      F-24
<PAGE>
The  components  of the  deferred tax assets  consisted  of the  following as of
December 31, 2003 and 2002:

                                        2003            2002
Deferred tax assets:
  Net operating loss carryforward   $ 8,174,014    $ 10,502,652
  Basis difference in assets            493,242            --
  Allowance for bad debts                   163            --
  Unrealized loss                          --           172,557
                                    -----------    ------------

  Total deferred tax assets           8,667,419      10,675,209

Deferred tax liabilities:
  Basis difference in assets               --        (1,748,777)
  Allowance for bad debts                  --            (1,121)
  Accrued vacation                      (27,012)           --

Valuation allowance                  (8,640,407)     (8,925,311)
                                    -----------    ------------

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


The net operating  loss  carryforwards  total  approximately  $23,000,000  as of
December  31, 2003 and will expire at various  dates  beginning  in 2004 through
2023.

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.

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.  In December 2003, WMU was awarded a second,  one-year  Department of
Energy  grant for which Altair will also  participate  as a  subcontractor.  The
project is a  collaboration  involving WMU, Altair and the University of Nevada,
Reno. The $2 million was included in the Omnibus  Appropriations  Bill passed by
the U.S. House of Representatives  December 9, 2003. WMU and Altair have a joint
partnership  for  seeking  Federal  support  for  nanotechnology   research  and
development and will utilize the new grant funding equally.

                                      F-25
<PAGE>

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.

12.      RELATED PARTY TRANSACTIONS

During the year ended December 31, 2002, officers made loans to us of $6,243 and
we repaid loans from  officers of $149,243.  These were  short-term,  unsecured,
non-interest bearing loans payable on demand, the proceeds of which were used to
meet working  capital  needs.  There were no related party loans  outstanding at
December 31, 2003 and 2002.

13.      BUSINESS SEGMENT INFORMATION

In accordance with SFAS No. 131,  Disclosure about Segments of an Enterprise and
Related  Information,  management  views the  Company  as being  three  business
segments:  Nanomaterials  and Titanium  Dioxide  Pigment  Technology,  Tennessee
Mineral Property, and the jig.

Reportable segment data reconciled to the consolidated  financial  statements as
of and for the fiscal  years  ended  December  31,  2003,  2002,  and 2001 is as
follows:

                                      F-26
<PAGE>


                                                  Loss from
                                       Net Sales  Operations      Assets

2003:
  Nanomaterials and Titanium Dioxide
    Pigment Technology                 $ 72,851   $2,822,884   $ 5,362,003
  Tennessee Mineral Property               --        155,709        40,418
  The Jig                                  --         27,729          --
  Unallocated                              --      2,778,888     6,257,333
                                       --------   ----------   -----------

Consolidated total                     $ 72,851   $5,785,210   $11,659,754
                                       ========   ==========   ===========

2002:
  Nanomaterials and Titanium Dioxide
    Pigment Technology                 $225,225   $2,456,771   $ 6,274,732
  Tennessee Mineral Property               --        598,977        18,200
  The Jig                                28,270    2,929,010        10,270
  Unallocated                              --      1,871,953     2,611,203
                                       --------   ----------   -----------

Consolidated total                     $253,495   $7,856,711   $ 8,914,405
                                       ========   ==========   ===========

2001:
  Nanomaterials and Titanium Dioxide
    Pigment Technology                 $ 45,816   $2,783,647   $ 6,752,399
  Tennessee Mineral Property               --        930,777        16,200
  The Jig                                  --        300,913     2,929,930
  Unallocated                              --      2,006,195     1,154,714
                                       --------   ----------   -----------

Consolidated total                     $ 45,816   $6,021,532   $10,853,243
                                       ========   ==========   ===========

                                   * * * * *

                                      F-27
<PAGE>