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, 2001

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

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

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

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

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

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

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

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

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]

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

         The aggregate market value of the common shares held by  non-affiliates
of the  Registrant  on March 19, 2002,  based upon the closing sale price of the
common  shares on the NASDAQ  Stock  Market of $.92 per share on March 19, 2002,
was  approximately  $2,592,740.  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 19, 2002, the Registrant had 22,813,120  common
shares outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

<PAGE>

<TABLE>
<CAPTION>

                               INDEX TO FORM 10-K
                               ------------------


<S>                                                                                                         <C>
PART I.......................................................................................................1

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

Item 2.    Properties.......................................................................................25

Item 3.    Legal Proceedings................................................................................26

Item 4.    Submission of Matters to a Vote of Security Holders..............................................26


PART II.....................................................................................................26

Item 5.    Market for the Common Shares and Related Shareholder Matters.....................................26

Item 6.    Selected Financial Data..........................................................................27

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations............29

Item 8.    Financial Statements and Supplementary Data......................................................35

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............35


Part III....................................................................................................35

Item 10.   Directors and Executive Officers of the Registrant...............................................35

Item 11.   Executive Compensation...........................................................................36

Item 12.   Security Ownership of Certain Beneficial Owners and Management...................................36

Item 13.   Certain Relationships and Related Transactions...................................................36

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K..................................36
</TABLE>


                                       2
<PAGE>


                                     PART I

This Annual Report on Form 10-K for the year ended December 31, 2001 (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  International  Inc.  ("Altair" or the
"Company") are cautioned that the Company's  actual results will differ (and may
differ   significantly)  from  the  results  discussed  in  the  forward-looking
statements.  Factors that could cause or contribute to such differences  include
those factors  discussed  herein under "Factors That May Affect Future  Results"
and  elsewhere in this Form 10-K  generally.  The reader is also  encouraged  to
review  other  filings  made by the Company  with the  Securities  and  Exchange
Commission (the  "Commission")  describing  other factors that may affect future
results of the Company.

Item 1:      Business
             --------
         Certain  technical  terms  used  in the  following  description  of our
business are defined in a glossary set forth on page 16. We have identified such
terms by italicizing  them the first time they are used in the text.  Unless the
context   requires   otherwise,   all  references  to  "Altair,"  "we,"  "Altair
International  Inc.,"  or the  "Company"  in this  Form  10-K  refer  to  Altair
International  Inc.  and all of its  subsidiaries.  Altair  is  presently  doing
business under the name Altair Nanotechnologies Inc.

         In relation to the Tennessee mineral property, Altair is an exploration
stage company (as defined in Guide 7  promulgated  under the  Securities  Act of
1933, as amended),  and there is no assurance that a commercially viable mineral
deposit exists on the Tennessee mineral property or any other property leased by
Altair.  We will cease to be an  exploration  stage  company with respect to the
Tennessee mineral property only when and if we have established the existence of
a commercially minable deposit.

General
-------

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

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

         We have also leased,  and are exploring,  approximately  9,700 acres of
land near Camden,  Tennessee  (the  "Tennessee  mineral  property") to determine
whether it would be amenable to large-scale  mining for titanium and zircon. See
"--Tennessee Mineral Property."

                                       3
<PAGE>

         During 1996,  we acquired the rights to the Campbell  Centrifugal  Jig,
since modified and renamed the Altair  Centrifugal Jig (the "jig"). The jig is a
machine that uses a rotating  circular  screen and  pulsating  water to separate
valueless  mineral  particles from more valuable mineral  particles based on the
differences in their specific  gravity.  In tests, the jig has proven capable of
segregating  and  recovering  extremely  fine  mineral  particles.   Because  of
limitations  on operating  capital,  we did only limited jig testing work during
2001. See "--Jig Technology and Proprietary Rights."

         We have  experienced an operating  loss in every year of operation.  In
the  fiscal  year  ended  December  31,  2001,  we  experienced  a net  loss  of
$7,754,031.

         Altair currently has two wholly-owned subsidiaries,  Fine Gold Recovery
Systems, Inc., a Nevada corporation ("Fine Gold"), and Mineral Recovery Systems,
Inc., a Nevada corporation ("MRS"). A third subsidiary, 660250 Ontario Ltd., was
amalgamated with Altair in December 2001. It had been inactive for several years
prior  to  the   amalgamation.   Altair  also  has  two  indirect   wholly-owned
subsidiaries,  Altair Nanomaterials,  Inc., a Nevada corporation,  and Tennessee
Valley  Titanium,  Inc.,  a  Nevada  corporation.  Altair  Nanomaterials,  Inc.,
previously  known as Altair  Technologies,  Inc.,  changed its name in September
2001 to better reflect the nature of its business.

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

         Description of the Titanium Processing Technology.
         --------------------------------------------------

         On November 15, 1999,  we purchased  from BHP all patent  applications,
technology and tangible assets related to a hydrometallurgical process developed
by BHP primarily for the production of titanium  dioxide  products from titanium
bearing ores or concentrates (i.e., the titanium processing technology), and all
tangible  equipment  and other assets used by BHP to develop and  implement  the
titanium processing technology (the "titanium processing assets").  The titanium
processing  technology  is  capable  of  producing   conventional  TiO2  pigment
products. Conventional TiO2 pigments are finely-sized powders consisting of TiO2
crystals.  These  powders  may be either  anatase or rutile  phase  (shape)  and
approximate 0.17 to 0.30 microns in size. Our titanium processing  technology is
also capable of producing TiO2  nanoparticles,  a specialty  product with a size
range of 10 to 100 nanometers  (approximately one tenth the size of conventional
pigments). The primary products currently being produced in the processing plant
are TiO2 and lithium titanate nanoparticles.

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

         Titanium  Processing  Assets.  The titanium  processing  assets consist
principally  of a production  facility  located in the leased  premises.  During
2000, we installed  additional  equipment to increase  production  capacity to a
nominal  annual  amount  of 200  tons of  TiO2  nanoparticles.  We also  added a
separate  pilot  facility  to produce  large  sample  quantities  of product for
development,  test and  evaluation  purposes.  In 2001,  we added  hydration and
filtering equipment to improve production processing.

         Plans for Development of the Titanium  Pigment  Processing  Technology.
The titanium  processing  technology  has  potential  to produce  both  titanium
pigments,  which are commercially traded in bulk, and TiO2 nanoparticles,  which
are sold on  specialty  product  markets.  Our plan is to first  concentrate  on
development  of TiO2  nanoparticle  products,  which may be produced and sold in
commercial  volumes  utilizing the in-place,  200 ton per year plant in Reno. In
the  future,  we plan to work to  commercialize  a titanium  pigment  production
capability  - an  activity  we  hope  to  do  in  conjunction  with  an  as  yet
unidentified industry partner.

                                       4
<PAGE>

         We  have  transferred  our  titanium  processing  assets  and  titanium
processing technology to Altair Nanomaterials, Inc. ("Altair Nanomaterials"),  a
wholly-owned subsidiary of Altair, hired a president of Altair Nanomaterials and
hired fourteen former BHP employees who were  instrumental in the development of
our titanium  processing  technology.  Certain of these employees are continuing
research and  development  work while others are involved in marketing,  product
development,  and operation and maintenance of the production  facility.  During
2001, we generated $42,816 of revenue through sales of TiO2 and lithium titanate
nanoparticles  and other  materials.  These  products were used  principally  in
thermal spray and catalyst  applications and for  developmental  work on battery
materials.

         Products In Development Using the Titanium  Processing  Technology.  To
date,  we have  developed  TiO2  nanoparticles  and other  products we intend to
initially  produce with the titanium  processing  technology.  The  designation,
description,  potential  applications  and status of development of our products
that we have publicly announced are as follows:

<TABLE>
<CAPTION>
Product Designation            Description              Potential Applications      Status of Development & Sales
-------------------- ------------------------------- ----------------------------- -------------------------------
<S>                  <C>                             <C>                            <C>
TiNano(TM)40 VHP        This is an uncoated, high       Environmental purification,   During 2001, we sold $29,200
                     purity titanium dioxide         photocells, catalyst and      of this product to 11
                     nanoparticle  product with      similar ceramic               customers for use primarily
                     good thermal stability.         applications, self-cleaning   in the testing and
                                                     & sanitizing uses and         development of thermal spray,
                                                     thermal spray coatings.       catalyst and chemical
                                                     Intermediate for              mechanical planarization
                                                     manufacture of derivatives    applications.  We have
                                                     such as lithium titanate      received follow up orders
                                                     and barium titanate.          from two customers.

-------------------- ------------------------------- ----------------------------- -------------------------------
TiNano(TM)40 USP        This product meets US           Cosmetic and other uses       During 2001, we sold $300 of
                     Pharmacopeia specifications,    requiring USP grade           this product to two
                     exhibiting high UV absorption   material. USP grade may       customers.  We are developing
                     characteristics, and high       also be used in many of the   coating procedures to make
                     thermal stability.              VHP applications and has      TiNanoTM 40 CNPC from this
                                                     greater temperature           regulated material.
                                                     stability.

-------------------- ------------------------------- ----------------------------- -------------------------------
TiNano(TM)40 HPC        This product exhibits high UV   Environmental purification,   During 2001, we sold $615 of
                     absorption, high photo          photocells, catalysts, and    this product to three
                     catalytic activity and          similar ceramic               customers.  We intend to
                     excellent thermal stability.    applications. Also may be     discontinue this product as
                                                     used for self-cleaning and    there is no substantial
                                                     sanitizing applications.      market for it.

-------------------- ------------------------------- ----------------------------- -------------------------------
TiNano(TM)40 RPC        This product  exhibits high     Cosmetics, plastics and       During 2001, we sold $50 of
                     UV absorption.  It exhibits     coatings applications         this product to one customer.
                     reduced photo catalytic         requiring reduced
                     activity achieved using our     photochemical activity.       We are developing a
                     inorganic coating rather than                                 dispersion technology for
                     the traditional Si-Al                                         application in plastics and
                     treatment.  Also exhibits                                     organic formulations.
                     excellent thermal stability.

-------------------- ------------------------------- ----------------------------- -------------------------------
TiNano(TM)40 CNPC      This product exhibits very      Cosmetic and coating          During 2001, we sold $70 of
                     high UV absorption.  The        applications.                 this product to two
                     product is USP grade TiO2                                     customers.  We are developing
                     coated with hydrous alumina                                   a coating and dispersion
                     and silica.  The coating                                      technology.
                     substantially reduces photo
                     catalytic activity.

-------------------- ------------------------------- ----------------------------- -------------------------------
Lithium Titanate     This product is a robust        Lithium ion batteries where   During 2001, we  sold $2,209
Spinel               crystalline structure of        high charge and discharge     of lithium titanate to three
                     lithium titanate.  It           rates are desired.            customers for use in testing
                     withstands high lithium                                       and development of battery
                     insertion rates with very                                     materials.
                     little distortion.
-------------------- ------------------------------- ----------------------------- -------------------------------
</TABLE>

                                       5
<PAGE>

The products  identified  above,  and other products we are developing  with the
titanium  processing  technology,  are  generally  not  commodities  and must be
customized for a specific  application working in cooperation with the end user.
Accordingly, unless and until we receive an order containing specifications with
respect to commercial  quantities of each nanoparticle  product, that product is
necessarily  in  the   development   phase.   To  date,  we  have  not  received
specifications  with  respect  to  commercial  quantities  of  any  nanoparticle
product, and no customer has used any our nanoparticle  products in a commercial
product held for sale.

         Target Market for Products of the Titanium Processing Technology.  TiO2
nanoparticles are marketed and sold as specialty chemicals.  End users typically
work closely with suppliers to set product specifications,  which may or may not
be  subsequently  certified  for  individual  applications.   Very  little  TiO2
nanoparticle product is sold as a fungible "shelf-item" product.

         Altair's plan for TiO2 nanoparticle  market entry has been to prepare a
suite  of  products  that  have a range of  physical  and  chemical  properties.
Potential TiO2 nanoparticle end users are invited to test our basic products and
to  separately  work with us so that we may tailor a  nanoparticle  product  for
their  particular  use. We have filled 557 requests for samples of  nanoparticle
products from the 174 companies and  laboratories  that have contacted us. Based
on sales to date and sample requests,  applications for and interest in our TiO2
nanoparticles are seemingly most advanced in applications for batteries (lithium
titanate),  thermal sprays (TiO2),  solid oxide fuel cells (yettrium  stabilized
zircon) and  catalysts  (both TiO2 and yettrium  stabilized  zircon).  These are
applications from which we hope to make our first volume commercial sales.

         Research,   Testing  and   Development   of  the  Titanium   Processing
Technology. Our titanium processing technology is the result of several years of
research and  development  work done by BHP. We are  continuing the research and
development  work  to  both  improve  the  process  and  to  develop  commercial
applications  for it. Such work is being  conducted by the former BHP  employees
who became  employees of the Company on January 1, 2001.  During fiscal 2001, we
incurred  $541,000 in research and development  expenses related to the titanium
processing  technology.  During fiscal 2000, we incurred  $1,426,000 in research
and development expenses related to the titanium processing technology.

                                       6
<PAGE>

         In addition,  we are engaged in joint research and development  efforts
with potential  customers and other interested  parties.  For example, in August
2000,  we  entered  into  an  agreement  with  the  Massachusetts  Institute  of
Technology  ("MIT") to carry on joint research to develop a nanostructured  fuel
cell system for direct hydrocarbon  conversion.  The research program uses wafer
thin sheets of yettrium  stabilized  zirconia  and other  materials  produced by
Altair in conjunction  with novel  nanostructured  anode catalysts  developed by
MIT.

         The Titanium  Processing  Technology and Proprietary  Rights. BHP filed
numerous patent  applications with the United States Patent and Trademark Office
with respect to our titanium  processing  technology,  and the applications have
been  transferred  to us. We have  subsequently  filed  five  additional  patent
applications  relating to nanoparticle  technology.  All the applications are in
the review  process,  and no patents  with  respect to the  titanium  processing
technology have been granted to date.

         Competition--the   Titanium   Processing   Technology.   Our   titanium
processing  technology  is  fundamentally   different  from  current  commercial
processing  techniques.  Other processes are based on either a precipitation  of
particles  from aqueous  solution or the formation of  crystallites  from molten
droplets of titanium oxide generated in high  temperature  flame  reactors.  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,
nanoparticles  produced by our titanium processing technology retain the desired
nanoparticle size and crystalline phase. In addition, our technology is designed
to minimize process effluents needing environmental  remediation and to accept a
wide variety of naturally occurring titanium feed stocks.

         We have not operated the titanium processing technology at a commercial
scale.   Accordingly  we  cannot  describe  processing  efficiencies  and  costs
associated with our titanium processing  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.  There are  approximately  ten significant
producers  of TiO2  nanoparticles  in the world,  the largest of which  supplies
approximately  20%  of  the  market.   Competing   nanoparticle   producers  are
financially strong corporations who enjoy established customer relationships and
operating histories.

         Royalty Obligations Related to Our Titanium Processing  Technology.  We
purchased our tianium  processing  technology and tianium processing assets from
BHP pursuant to an on Asset Purchase and Sale Agreement dated November 15, 1999.
The  purchase  price  for  the  titanium  processing   technology  and  titanium
processing  assets was  $9,625,500.  In  addition,  the Asset  Purchase and Sale
Agreement also requires us to pay to BHP, until the earlier of November 15, 2014
or the date we have paid an aggregate  royalty of  AUD$105,000,000,  a quarterly
royalty equal to:

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

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

                                       7
<PAGE>

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

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

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

         Description of the Tennessee  Mineral  Property.  The Tennessee mineral
property  consists of  approximately  9,700 acres of land containing fine, heavy
minerals  that we have leased in or near Camden,  Tennessee.  We had  previously
leased  approximately  14,000 acres.  However,  during 2001,  we terminated  the
leases on approximately 4,300 acres that were distal to our core leasehold in an
effort to reduce cash  expenditures  and  concentrate  our resources on our core
holdings.

         Prior to our  beginning  to  acquire  leases on the  Tennessee  mineral
property in 1996,  sections of the  Tennessee  mineral  property  were leased or
owned  by each of E.I du  Pont de  Nemours  and  Company  (from  1950 to  1954),
KerrMcGee Corporation (from 1975 to 1989),  and BHP Minerals  International Inc.
(from 1991 to 1994). Each of these  predecessors  engaged in drilling,  sampling
and other  exploratory  activities on the Tennessee  mineral property but, based
upon  such  predecessors'  particular  circumstances  and the  economics  of the
period, elected to stop work and relinquish property rights.

         The  topography  of  the  Tennessee   mineral   property   consists  of
vegetation-covered  rolling  hills  comprised  of sands  deposited in an ancient
beach  environment.  Minerals on the  Tennessee  mineral  property  occur in the
Cretaceous McNairy formation, and heavy minerals comprising 2% to 8% of the sand
(by weight) are typical. The mineralized sands on the Tennessee mineral property
have not yet been  proven to be a reserve (as defined in  Regulation  S-K,  Item
802, Guide 7 promulgated under the Exchange Act), and our limited operations and
proposed plan with respect to it are exploratory in nature.

         Research and Exploration on the Tennessee Mineral Property.  From 1996,
our  exploration  activities  on the  Tennessee  mineral  property have included
geologic mapping, collection of bulk samples for metallurgical testing, drilling
of 156 auger  holes  between 30 and 100 feet deep and  preparation  of  geologic
models.  Our geologic  model also  incorporates  40 drill holes  completed by an
earlier exploration company.

         During 1997, we collected  approximately 5,000 pounds of representative
sand for testing from an exposed sand  horizon.  This sample was processed by an
independent  Florida heavy sands  producer and Altair to produce  representative
samples of  market-quality  products.  The sample  results  were  reviewed by an
independent  consulting group hired by us to prepare a pre-feasibility  study of
approximately 4,700 acres of the Tennessee mineral property known as the "Camden
Property."  The  consultants  examined  heavy  mineral  suites  from the  Camden
Property  (prepared from sands naturally  containing about 4% heavy minerals and
96% quartz) and found that titanium bearing minerals constitute about 65% of the
total heavy mineral portion of the suite,  zircon accounted for 15% of the heavy
mineral portion of each suits and the remainder was non-valuable heavy minerals.
The study, completed in July 1998, also indicated that market-quality  ilmenite,
rutile and zircon products could be produced from such heavy minerals suites and
that markets currently exist for such products.

                                       8
<PAGE>

         In August 1998, based on the consultant's  pre-feasibility  report,  we
commenced additional  feasibility testing.  This consisted of testing the use of
fine mineral  spiral  equipment in Florida on Tennessee  mineral  property sands
followed by spiral equipment  testing of Tennessee  mineral property sands at an
equipment  contractor's  facility.  In  2000,  based  on the  contractor's  test
results, we designed and commissioned construction of a spiral-based pilot plant
for testing at the Tennessee mineral  property.  The plant was erected at Camden
and testing  operations began in early 2001 (see "Location and Status of Work on
the Tennessee Mineral  Property").  Further  feasibility  testing is expected to
involve, among other things, the following:

o        drilling  and  sampling  in  order  to more  accurately  determine  the
         quantity,  quality and continuity of minerals on the Tennessee  mineral
         property;
o        examining  production costs and the market for products produced at the
         pilot facility;
o        designing and pricing  construction  costs associated with any proposed
         mining facility;
o        identifying  and  applying for the permits  necessary  for any proposed
         full-scale mining facility; and
o        attempting  to secure  financing  for any  proposed  full-scale  mining
         facility.

         Subsequent to completion of the 1998 pre-feasibility study, our further
exploration  of the  Tennessee  mineral  property has suggested the existence of
additional heavy mineral sands in an area northwest of the Camden Property known
as "Little  Benton."  Preliminary  data  indicate  that Little  Benton  contains
mineralization similar to the Camden Property. We have approximately 3,500 acres
under lease in the Little Benton area and intend to conduct  further  testing in
the future.

         Exploration   expenditures  on  the  Tennessee  mineral  property  were
$930,777 in 2001,  $1,217,966 in 2000 and $4,169,795 to date.  Expenditures have
been  incurred  for  pilot  plant  design,  fabrication  and  site  preparation,
leasehold  minimum  advance  royalty  payments,  and other  related  exploration
activities. We anticipate spending between $700,000 and $1,200,000 exploring the
Tennessee  mineral property during 2002. The amount of future  expenditures will
depend upon the availability of financial capital and the results of our ongoing
feasibility testing.

         Competition--the  Tennessee Mineral Property.  Based on the exploratory
work done to date,  we  anticipate  that the  saleable  products  which could be
produced from the Tennessee  mineral  property are ilmenite,  rutile and zircon.
Testing at the  Tennessee  mineral  property  indicates  that  Camden  ilmenites
contain from 64% to 72% titanium dioxide.  Ilmenites  commercially  traded today
typically  contain 40% to 70%  titanium  dioxide and are used  primarily  in the
production of titanium dioxide pigment, a specialty chemical used principally as
a whitener and opacifier for paper, plastics and paint.  According to the latest
U.S.  Geological  Survey  report,   ilmenite  is  the  most  abundant  naturally
occurring, commercially produced titanium mineral and supplies approximately 90%
of the world  demand for  titaniferous  material.  Such demand is  projected  to
increase at an annual  rate of 2%-3% for the  foreseeable  future.  The value of
titanium  mineral  concentrates  consumed  in the  United  States  in  2001  was
approximately  $470  million.  There are  presently  two  entities in the United
States which produce ilmenite concentrate from heavy mineral sands and virtually
all  production  is used by four  titanium  pigment  producers  whose plants are
primarily located in the southeastern U.S. Pigment producers use various methods
to process  ilmenite  concentrate into titanium dioxide pigment and require that
the concentrate  feedstock meet certain chemical and size criteria applicable to
the process being used.

         Rutile,  which generally contains greater than 95% titanium dioxide, is
also used in the production of titanium  dioxide pigment.  In pigment  products,
its  processing  costs are  significantly  less than  ilmenite due to the higher
concentration  of titanium  dioxide.  Although this greatly  enhances its market

                                       9
<PAGE>


value, rutile is much less abundant than ilmenite, representing approximately 5%
of the total heavy minerals contained in the Tennessee mineral property.

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

Location and Status of  Work on the Tennessee Mineral Property.

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

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

         During 2001,  we excavated  970 tons of material from four sites in the
Camden  leasehold  area  and  processed  it  through  the test  facility.  Plant
operations  closely   approximated   design  expectations  and  we  incurred  no
significant  operating  problems.  Processing  of the  sample  material  yielded
titanium recoveries  exceeding 80% and zirconium recoveries exceeding 90%. These
percentages  represent  the amounts of titanium  and  zirconium  recovered  as a
percentage of the total  titanium and zirconium  contained in the sample.  Heavy
mineral concentrates were subsequently processed through an off-site dry mill to
prepare sample products which are now being analyzed by interested parties.

         During 2002, we plan to produce  additional bulk  concentrates  for dry
mill  processing and marketing  purposes.  Further  development  options for the
Tennessee  Mineral  Property are being  considered  which include joining with a
qualified  partner to provide  additional  financial,  engineering and corporate
resources.



                               [OBJECT OMITTED]

                                       10
<PAGE>

The Jig
-------

         Description of the Jig. The Altair Centrifugal Jig segregates particles
based  on  differences  in  their  specific  gravity.  Such  technology  may  be
categorized as a "gravity  separation"  process.  Gravity  separators are widely
used in minerals beneficiation because of their relative simplicity, low cost of
operation  and  ability  to   continuously   treat  large  tonnage   throughput.
Preliminary  demonstration tests conducted by Altair and a previous owner of the
jig suggest that the jig may 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.

         Several prototype and demonstration  jigs have been built and tested by
Altair and  previous  owners of the jig. Our Series 12 Jig stands about six feet
tall,  requires  floor  space of about 25 square  feet and weighs  approximately
2,000 pounds. Our Series 30 Jig stands about 10 feet tall,  requires floor space
of  about 54  square  feet  and  weighs  approximately  7,000  pounds.  Recently
constructed  jigs have been  mounted on metal  frames  along with jig  auxiliary
equipment--pulse  water pump and tank and control panel--for  transport by truck
and rapid on-site installation.

         How the Jig Works.  A  conventional  jig  separates a slurry of mineral
particles as it flows across the top of a screen.  Water is periodically  pulsed
up through the screen to eliminate interparticle friction and allow differential
settling  according to the variations in the net specific  gravities of the ore.
Heavier  minerals are allowed to pass downward  through the screen while lighter
materials  flow  across  the  screen  to a  discharge  point.  The jig  operates
according  to  conventional  jig  principles  except that the screen  surface is
cylindrical  and is rotated to subject the particles to centrifugal  forces.  As
currently designed, materials to be processed by the jig are introduced into the
top of the jig in a slurry mix with water. The slurry is diffused across the top
of the interior of a vertical  cylindrical  screen  which is rotating.  Water is
pulsed  through  the  screen  allowing  differential  separation  in the  slurry
material.  Heavy particles pass through the screen, are collected,  and exit the
machine  in a  "concentrate"  stream.  Lighter  particles  flow down the  screen
interior,  are  collected  and exit out the bottom of the  machine in a separate
"tails" stream. Use of the jig requires no chemical additives.

         In operation, the jig utilizes a combination of standard mechanical jig
and centrifugal  technologies.  The jig is of simple  mechanical design with few
wear  surfaces.  To compete as a viable  commercial  unit,  the 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 jig.

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

                                       11
<PAGE>


         The primary  valuable  minerals  produced  from heavy mineral sands are
titanium and zircon. Titanium is used primarily as a basic component of titanium
dioxide,  a pigment  used  principally  as a whitener and  opacifier  for paper,
plastics,  and paint.  Zircon is used  primarily  for  foundry  molds and in the
manufacture   of  certain  types  of  glass  and  ceramics.   The  domestic  and
international markets for both of these products are well established.  Both are
commodities traded in bulk, usually under long-term contracts, and are also sold
in  50-100  lbs.  bags,  usually  traded  as a  spot-priced  product.  The  U.S.
Geological  Survey has reported that the value of titanium mineral  concentrates
consumed in the United States in 2001 was approximately  $470 million.  The U.S.
Geological  Survey  estimates  zirconium  production  for the  United  States at
approximately  100,000  metric  tons in 2001,  representing  a  market  value of
approximately  $35  million.  There  can  be  no  assurance  that  testing  will
demonstrate  that the jig can  economically  extract  heavy  minerals from heavy
minerals sands or that the jig will prove attractive to end users.

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

         We have conducted preliminary testing of our Series 30 Jig at a mineral
recovery  plant  operated  by a large heavy  mineral  sand  producer  located in
northern  Florida.  Results of the  testing  indicate  that the Series 30 Jig is
capable of producing separation results comparable in efficiency to those of the
Series 12 Jig for zircon  concentrates.  The Series 30 Jig, however, is designed
to be capable of processing  500 tons of solids per day, or more than four times
the throughput capacity of the Series 12 Jig. The volumes of solids per day that
the  Series 30 and  Series  12 Jigs are  actually  capable  of  processing  on a
sustained commercial basis have not been established.  We have also begun design
work for a larger jig that would have over twice the processing  capacity of the
Series 30 Jig.  Such  increased  capacity  would  enhance  the jig's  commercial
potential for high volume applications such as coal washing and recovery of iron
ore fines.

         The jig has multiple operating parameters,  primarily rotational speed,
pulsing pressure, and screen characteristics,  which must be adjusted to fit the
processing  requirements  of the  particular  feed stream  being  treated.  More
extensive testing is needed to identify the most efficient operating  parameters
for  specifically  identified   applications.   Furthermore,   demonstration  of
sustained operation is critical to marketing efforts.

         Although we have limited the amount of our jig testing work as a result
of limitations on operating capital, our work during 2001 yielded design changes
that enhance the jig's operating  characteristics.  We are assessing our options
for  furthering  development  of the  jig  and  may  consider  selling  the  jig
technology or licensing it to others. We are currently  negotiating an agreement
to perform jig tests for fine particle  recovery at a third  party's  processing
facility. Any such testing work will be funded by the third party.

         Jig Technology and Proprietary  Rights.  Initial patents related to the
concept of the jig as a whole were issued in the United  States,  South  Africa,
United  Kingdom,  Australia and Canada.  These patents  expired on various dates
between May 1999 and December  2000. A series of second  patents with respect to
the process by which water is pulsed through the cylindrical  screen on the jig,


                                       12
<PAGE>

a critical component  differentiating the jig from competing products, have been
issued in the United States,  South Africa,  Japan, Europe,  Australia,  Canada,
United  Kingdom,  Germany  and France.  These  patents  expire on various  dates
between January 2010 and January 2011. A third series of patents with respect to
an  efficiency  enhancing  component  of the jig have been  issued in the United
States, Europe, Australia, Japan, South Africa, Canada and Brazil. These patents
have expiration dates between April and November 2018.

         Competition  for  the  Jig.  Various  mineral  processing  technologies
perform  many  functions  similar  or  identical  to those  for which the jig is
designed.  Minerals  processing  technologies  are  generally  predicated on the
physical  and chemical  characteristics  of the  materials  being  processed.  A
minerals  processor may exploit contrasts in size,  specific gravity,  hardness,
magnetic susceptibility, electrical conductivity, and similar characteristics to
selectively  extract and concentrate mineral  constituents.  Minerals processors
also  exploit  variations  in  chemical  reactivity  and  molecular  affinity to
selectively separate minerals.

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

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

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

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

         Jig-Like Products. The jig currently faces several forms of competition
         in the  commercial  segregation of dense  particles  contained in feeds
         between  150  and  400  mesh,   including   the  Kelsey   jig,   Falcon
         concentrators  and the  Knelsen  batch  concentrator  unit,  which  are
         currently being used worldwide.

o        The  Kelsey  jig  was  developed  in  Australia   and,   although  more
         complicated  than the jig,  incorporates  similar  centrifugal  and jig
         technologies.  According to the Kelsey jig's  manufacturer,  Geo Logics
         Pty. Ltd., Kelsey jigs are in service at 25 plants worldwide.

o        The Falcon  concentrator was developed in Canada and is used mainly for
         pre-concentration   and   scavenging.   A   centrifugal   device,   its
         applications to date have been in the gold and tantalum industries.

o        The Knelsen Bowl was  developed  in Canada and is a batch  concentrator
         rather than a jig. (A batch  concentrator  differs from the jig in that
         it process a finite  "batch" of material,  is completely  emptied,  and


                                       13
<PAGE>

         then processes a completely new finite batch, while the jig processes a
         continuous flow of materials).  Our  understanding  is that the Knelsen
         Bowl is best suited to small volumes. Knelsen Bowls have been installed
         in various mining applications, primarily gold, throughout the world.

         Long term testing needs to be completed to accurately  define operating
costs  and  operating  efficiencies  associated  with  the  jig as  compared  to
competing  products.  Results from further tests or actual operations may reveal
that these  alternative  technologies  and products are better adapted to any or
all of the uses for  which the jig is  intended.  Moreover,  regardless  of test
results,  consumers  may view  any or all of such  alternative  technologies  as
technically superior to, or more cost effective than, the jig.

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

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

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

         Altair  International  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,  and
then to Altair  International  Inc. in November 1996.  Altair is currently doing
business  under  the name  "Altair  Nanotechnologies  Inc."  and is  considering
proposing  an amendment  to its  incorporation  documents in order to change its
legal name to "Altair Nanotechnologies Inc." during 2002.

         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 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,  and
Altair  intends that MRS will  continue to lease or acquire and explore  mineral
properties in the future, particularly properties that contain minerals that may
be processed with the jig.

         Altair  Nanomaterials,  Inc. was incorporated in 1998 as a wholly-owned
subsidiary  of MRS and  holds  all of the  Company's  interest  in our  titanium
pigment  processing  technology  and related  assets.  The remaining  100% owned
subsidiary,  Tennessee  Valley  Titanium,  does not presently have any assets or
operations.

                                       14
<PAGE>

Government Regulation and Environmental Concerns.

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

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

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

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


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

         The  business of Altair is  currently  managed by Dr.  William P. Long,
President and Chief Executive  Officer of the Company and Mr. C. Patrick Costin,
Vice  President of the Company and  President of MRS and Fine Gold. In addition,
we employ a Chief Financial  Officer,  a Vice  President,  a President of Altair
Nanomaterials,  Inc.  and 23  additional  employees.  Aside from Dr.  Long,  Mr.
Costin, the Chief Financial Officer, and the President of Altair  Nanomaterials,
Inc., we have no employment agreements with any of our personnel.

         During 2001,  we hired two plant  operators  and, in January  2002,  we
hired a Vice  President  for  marketing.  During 2002,  we expect to hire sales,
marketing and production employees for the titanium pigment processing business.
The quantity and timing of new hires will be dependent on business activity.  We
do  not  otherwise   anticipate  that  the  number  of  Company  employees  will
significantly  increase until we have sufficient sales and business  activity to
warrant it.

                                       15
<PAGE>


Where You Can Find More Information
-----------------------------------

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

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

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

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

                                       16
<PAGE>

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

         Amenability means responsiveness of an ore deposit to processing.

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

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

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

         Beneficiate means to improve the grade of ore by processing.

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

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

         Coal washing  means  processing  of  pulverized  coal to remove ash and
pyrite. Pyrite is a yellowish-brown mineral sulfide containing iron and sulphur.
Pyrite is an  undesirable  component  of coal  because  sulphur  dioxide  gas is
released when it is burned with coal.

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

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

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

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

         Lithium titanate  is a compound of lithium, titanium and oxygen.

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

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

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

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

                                       17
<PAGE>

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

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

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

         Suite means an assemblage of minerals  which  naturally  occur together
(i.e. a mineral suite).

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

         Tantalum  is rare metal  that is  ductile  (i.e.  not  brittle)  easily
fabricated, highly resistant to corrosion by acids, and a good conductor of heat
and  electricity  and has a high melting point.  The major use for tantalum,  as
tantalum  metal powder,  is in the production of electronic  components,  mainly
tantalum  capacitors.  Major end uses for tantalum  capacitors  include portable
telephones, pagers, personal computers, and automotive electronics.

         Yettrium  is an element on the periodic table.

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,   uncertainties  regarding  the
development  and  commercialization  of the  jig,  uncertainties  regarding  the
quality, quantity and grade of minerals on the Tennessee mineral property, risks
related to our proposed  development and exploitation of our titanium processing
technology  and  titanium  processing  assets and  uncertainties  regarding  our
ability to obtain  capital  sufficient to continue our operations and pursue our
proposed business strategy.

                                       18
<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. We
have not  generated  revenues  from  the jig and are  scaling  back  development
efforts in the near future.  We have generated only $42,816 of sales revenues in
our  nanoparticle  business and have not completed  exploration of the Tennessee
mineral  property.  We can  provide  no  assurance  that we will  ever  generate
revenues from the jig or the Tennessee mineral property or that we will generate
substantial revenues from the titanium processing technology.

We may continue to experience significant losses from operations.
-----------------------------------------------------------------

         We have  experienced a loss from  operations in every fiscal year since
our inception. Our losses from operations in 2000 were $6,647,367 and our losses
from  operations in 2001 were  $6,021,532.  We will continue to experience a net
operating loss until, and if, the titanium processing technology, the jig and/or
the Tennessee mineral property begin generating  significant  revenues.  Even if
any or all such products or projects begin generating  significant revenues, the
revenues may not exceed our costs of production and operating  expenses.  We may
not ever realize a profit from operations.

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

         As of December 31, 2001, we had $599,884 in cash, and a working capital
deficit of $81,154.  Although we have raised  additional  capital since December
31, 2001,  we do not expect that this  capital,  when  combined  with  projected
revenues  from  nanoparticle  sales,  will be  sufficient  to fund  our  ongoing
operations. Accordingly, we will need to raise significant amounts of additional
capital in the future in order to sustain our ongoing  operations  and  continue
the testing and  additional  development  work  necessary  to place the titanium
processing  technology  into  continuous  operation.  In addition,  we will need
additional  capital for testing and development of the jig or exploration of the
Tennessee mineral  property.  If we determine to construct and operate a mine on
the Tennessee mineral property,  we will need to obtain a significant  amount of
additional capital to complete construction of the mine and commence operations.

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

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

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

                                       19
<PAGE>

Our  competitors  may be able to raise  money  and  exploit  opportunities  more
rapidly, easily and thoroughly than we can.
--------------------------------------------------------------------------------

        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 have better access to capital and other  significant  resources
than we do and, as a result, may be able to exploit  acquisition and development
opportunities more rapidly, easily or thoroughly than we can.

The sale of  common  shares  issued  upon the  exercise  of  exchange  rights or
warrants may place  downward  pressure on the market price of our common  shares
and encourage short selling.
--------------------------------------------------------------------------------

         The sale in the open market of common shares issuable upon the exercise
of exchange rights under existing and recently terminated notes and warrants may
place downward  pressure on the market price of our common  shares.  Speculative
traders may  anticipate  the  exercise of  exchange  rights or warrants  and, in
anticipation  of a decline in the market price of our common  shares,  engage in
short sales of our common  shares.  Such short sales  could  further  negatively
affect the market price of our common shares.

We have pledged substantial assets to secure the Secured Term Note.
--------------------------------------------------------------------------------

         We have  pledged all of the  intellectual  property,  fixed  assets and
common  stock  of  Altair  Nanomaterials,  Inc.,  our  second-tier  wholly-owned
subsidiary,  to secure  repayment  of a Secured  Term Note with a face  value of
$2,000,000  issued on December 28, 2001.  Altair  Nanomaterials,  Inc.  owns and
operates the titanium  processing  technology we acquired from BHP in 1999.  The
Secured Term Note is also secured by a pledge of the common stock and  leasehold
assets of Mineral Recovery Systems,  Inc., which owns and operates our leasehold
interests in the Camden, Tennessee area. If we default on the Secured Term Note,
severe  remedies  will be  available  to the  holder of the  Secured  Term Note,
including immediate seizure and disposition of all pledged assets.


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

         Virtually any proposed use of the titanium processing  technology,  the
jig or the Tennessee  mineral  property  would be subject to federal,  state and
local  environmental  laws.  Under such laws,  we may be jointly  and  severally
liable with prior property owners for the treatment, cleanup, remediation and/or
removal of 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.  We might use hazardous substances and,
if we do, we will be subject to substantial risks that environmental remediation
will be required.


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

         We are an Ontario corporation,  and a majority of our directors and our
Canadian  legal counsel are residents of Canada.  As a result,  investors may be
unable to effect  service of process upon such persons  within the United States
and may be unable to enforce  court  judgments  against such persons  predicated
upon civil  liability  provisions  of the United States  securities  laws. It is


                                       20
<PAGE>


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.

We are dependent on key personnel.
----------------------------------

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

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

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

The market price of our common shares is extremely volatile.
------------------------------------------------------------

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

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

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

|X|      Positive or negative announcements by us or our competitors;

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

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

We may be delisted  from the Nasdaq  National  Market if the price of our common
shares does not remain above $1.00 per share or if our shareholders' equity does
not exceed $10,000,000 after November 1, 2002.
--------------------------------------------------------------------------------
                                       21
<PAGE>

         Effective  February 12, 1998,  Nasdaq adopted a rule requiring that the
minimum  bid price for  shares of common  stock  listed on the  Nasdaq  National
Market equal or exceed $1.00 per share.  During the month prior to the date this
Form 10-K was filed  with the SEC,  the price of our  common  shares  fell below
$1.00 on several  occasions.  As a matter of practice,  Nasdaq generally gives a
company a notice of  delisting  if its common  stock  trades  below $1.00 for 30
consecutive trading days. After receiving the notice, the company will generally
be delisted if the trading  price for its common  stock has not exceed $1.00 for
10  consecutive  days within 90 days of the date of the notice.  (Nasdaq is not,
however,  required to give a company any grace period and may delist a company's
stock immediately after violation of an applicable  rule.)  Accordingly,  if the
price of our common shares trades below $1.00 for a sustained period of time, or
if Nasdaq decides to delist our common shares based upon a one-time violation of
the bid-price rule, we may be delisted from the Nasdaq National Market.

         In  addition,  on  November  1,  2002,  we will  become  subject to new
continued listing requirements.  Under these new continued listing requirements,
we must have at least $10 million in stockholders'  equity, or alternatively,  a
market  capitalization,  total assets or total  revenue of $50 million  combined
with, among other things, a minimum bid price of $3.00 per share. As of December
31, 2001, our stockholders' equity was $8,676,494 and our market capitalization,
total assets and total revenue are substantially  less than $50 million.  If our
stockholders'  equity does not  increase to  $10,000,000  or more by November 1,
2002   (or   if   we   don't    comply    with    the   $50    million    market
capitalization/asset/revenue  and $3.00 bid price continued listing requirements
at that time), we may be delisted from the Nasdaq National Market.

         Following  such  delisting,  our common shares would likely be eligible
for  quotation  on the Nasdaq  Small Cap,  Nasdaq  OTC  Bulletin  Board or other
quotation  service.  Nonetheless,  even if our  common  shares  are quoted on an
alternative  quotation  service,  the fact of  being  delisted  from the  Nasdaq
National  Market  will  likely  have a negative  affect on the price and trading
volume for our common  shares.  Once  delisted,  our common  shares would not be
eligible for relisting until,  among other things, our common stock traded at or
above $5.00 per share for a sustained period of time.

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

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

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

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 shares.  We
currently intend to retain any future earnings,  if any, for use in our business
and,  therefore,  do not anticipate paying dividends on our common shares in the
foreseeable future.

                                       22
<PAGE>

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

         In the short run, we plan to use the titanium processing  technology to
produce  TiO2  nanoparticles.  TiO2  nanoparticles  are TiO2  crystals  that are
approximately  one-tenth the size of  conventional  pigmentary  TiO2  particles.
Because  of  their  small  size,   photocatalytic   and  ultraviolet   shielding
capabilities and other unique characteristics, TiO2 nanoparticles sell at a much
higher price than  conventional  TiO2 particles and are used in products such as
specialty surface coatings, UV protectant cosmetics and battery components.

         TiO2  nanoparticles  and other products we intend to initially  produce
with the titanium  processing  technology  generally  must be  customized  for a
specific  application  working in  cooperation  with the end user.  We are still
testing and customizing our TiO2 nanoparticle  products for various applications
and have no  long-term  agreements  with end users to  purchase  any of our TiO2
nanoparticle  products.  If we are  unable to  customize  our TiO2  nanoparticle
products to the  satisfaction of customers or are otherwise unable to obtain any
long-term  commitments from end-users of our TiO2 nanoparticle  products, we may
be unable to recoup our  investment in the titanium  processing  technology  and
titanium processing equipment.

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

o        there may be insufficient demand for such products;

o        despite strong  initial  demand for any such  products,  the market for
         such  products  may  contract  as a result of a decrease  in demand for
         goods incorporating such products or other events;

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

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


Our costs of production may be too high to permit profitability.
----------------------------------------------------------------

         We have not produced any mineral products using our titanium processing
technology and equipment on a commercial  basis.  Our actual costs of production
may exceed those of competitors  and, even if our costs of production are lower,
competitors may be able to sell TiO2 and other products at a lower price than is
economical for Altair.

         In addition, even if our initial costs are as anticipated, the titanium
processing  equipment may break down, prove unreliable or prove inefficient in a
commercial  setting. If so, related costs, delays and related problems may cause
production of TiO2 nanoparticles and related products to be unprofitable.


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

         We have not completed  testing of, or developed a production  model of,
any series of the jig. We do not expect to complete  testing and  development of


                                       23
<PAGE>

the jig during the coming year and have  determined to focus most of our limited
resources  on the  titanium  processing  technology  and the  Tennessee  mineral
property. We may never develop a production model of the jig.


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

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

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

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

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

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

         All of the initial  patents issued on the jig have expired,  and we are
unable to prevent 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 the 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,  especially outside of North
America. Accordingly, we may be unable to enforce even our patents that have not
yet expired.

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

         We are  currently in the process of conducting  feasibility  testing of
the Tennessee mineral property.  Because we are at an early stage of testing, we
are  unable to  provide  any  assurance  that  mining of the  Tennessee  mineral
property is feasible or to identify all processes that we would need to complete
before we could commence a mining operation on the Tennessee  mineral  property.
To the extent early  feasibility  testing  yields  positive  results,  we expect
feasibility testing to involve, among other things, the following:

o        operating  a  pilot  mining  facility  to  determine  mineral  recovery
         efficiencies and the quality of end products;
o        additional drilling and sampling in order to more accurately  determine
         the  quantity,  quality and  continuity  of  minerals on the  Tennessee
         mineral property;
o        examining  production costs and the market for products produced at the
         pilot facility;
o        designing any proposed mining facility;
o        identifying  and  applying for the permits  necessary  for any proposed
         full-scale mining facility; and
o        attempting  to secure  financing  for any  proposed  full-scale  mining
         facility.

         Our  test  production  at  the  pilot  plant,   economic  analysis  and
additional exploration activities may indicate any of the following:

o        that the Tennessee  mineral property does not contain heavy minerals of
         a sufficient quantity, quality or continuity to permit any mining;
o        that production costs exceed anticipated revenues;
o        that  end  products  do  not  meet  market   requirements  or  customer
         expectations;
o        that there is an  insufficient  market for  products  minable  from the
         Tennessee mineral property; or
o        that  mining  the   Tennessee   mineral   property  is  otherwise   not
         economically or technically feasible.

         Even  if we  conclude  that  mining  is  economically  and  technically
feasible  on the  Tennessee  mineral  property,  we may be unable to obtain  the
capital, resources and permits necessary to mine the Tennessee mineral property.
Market  factors,  such as a decline  in the price  of, or demand  for,  minerals
recoverable  at  the  Tennessee  mineral  property,  may  adversely  affect  the
development  of mining  operations  on such  property.  In addition,  as we move
through the testing  process,  we may identify  additional items that need to be
researched and resolved before any proposed mining operation could commence.

We cannot  forecast the life of any potential  mining  operation  located on the
Tennessee mineral property.
--------------------------------------------------------------------------------

         We have not explored and tested the Tennessee  mineral  property enough
to establish the existence of a commercially minable deposit (i.e. a reserve) on
such property.  Until such time as a reserve is established  (of which there can
be no  assurance),  we cannot  provide an estimate as to how long the  Tennessee
mineral property could sustain any proposed mining operation.

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

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

                                       24
<PAGE>

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

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

Item 2.      Properties

         We  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 the corporate headquarters 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.

         Altair  Nanomaterials  Inc.  leases 20,000  square feet of  production,
laboratory, testing and office space at 204 Edison Way, Reno, Nevada, 89502. The
monthly  rent for the space is $16,153,  and  although  the initial  term of the
lease  expired on December  31,  2000,  it is subject to  automatic  renewal for
six-month  periods at  inflation-adjusted  rent until terminated by Altair.  The
lease  grants us a right of first  refusal in the event BHP proposes to sell the
building  and  property  subject  to the  lease and  includes  an  agreement  to
negotiate in good faith with respect to our possible  purchase of such  building
and property.

         Fine Gold and MRS lease 5,700  square feet of office space at 230 South
Rock Boulevard,  Suite 21, Reno,  Nevada 89502.  The lease for the Reno,  Nevada
offices  expired on January 31, 2002 but has been continued on a  month-to-month
basis with the  provision  that either party may terminate the lease on 30 days'
prior written notice. MRS leases  approximately  1,550 square feet of laboratory
space  at 7950  Security  Circle,  Reno,  Nevada  89506,  for  its  jig  testing
operations. The test facility lease may be terminated by either party upon eight
weeks  prior  written  notice.  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.

         The Tennessee mineral property consists of approximately 9,700 acres of
real  property  located near Camden,  Tennessee,  which MRS leases from multiple
owners of the real  property.  Such leases grant MRS certain  exclusive  rights,
including  the right to explore,  test,  mine,  extract,  process,  and sell any
minerals or other  materials  found on the land,  in exchange for the payment of
minimum annual advanced  royalty payments prior to commencement of production on
the properties (or after  commencement of production,  to the extent  production
royalty  payments  do not  equal  nominal  royalty  payments)  and,  thereafter,
production  royalty  payments in an amount equal to a percentage of the value of
minerals  mined and sold from the  property.  See 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  Altair 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 yet proven to be a reserve,  and our  operations  and proposed
plan  with   respect   to  it  are   exploratory   in   nature.   See  "Item  1.
Business--Tennessee   Mineral  Property."  The  Tennessee  mineral  property  is
accessed  by public  roads  and,  to our  knowledge,  has not been used in prior
mining operations.

                                       25
<PAGE>


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 2001 fiscal year.


                                     PART II


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


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

         Our common  shares are traded on the Nasdaq  National  Market under the
symbol "ALTI." The following table sets forth,  for the periods  indicated,  the
high and low bid  quotations  for our common  shares,  as reported on the Nasdaq
National Market.
<TABLE>
<CAPTION>

Fiscal Year Ended December 31, 2000                                 Low                High
                                                        ----------------    ----------------

<S>      <C>                                                     <C>                 <C>
         1st Quarter                                             $3.563              $9.250
         2nd Quarter                                              2.000               5.375
         3rd Quarter                                              1.000               4.469
         4th Quarter                                              0.688               3.375

Fiscal Year Ended December 31, 2001                                 Low                High
                                                        ----------------    ----------------

         1st Quarter                                             $1.000              $3.406
         2nd Quarter                                             $1.969              $2.890
         3rd Quarter                                             $1.230              $2.710
         4th Quarter                                             $1.010              $1.790
</TABLE>

The  quotations  set forth above reflect  inter-dealer  prices,  without  retail
mark-up, mark down or commission and may not represent actual transactions.  The
last sale price of our common shares, as reported on the Nasdaq National Market,
on March 26, 2002 was $1.21 per share.

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

         As of March 22,  2002,  the  number of common  shares  outstanding  was
22,813,120 held by 467 holders of record.  In addition,  as of the same date, we
have reserved 5,241,700 common shares for issuance upon exercise of options that
have  been,  or may be,  granted  under  our  employee  stock  option  plans and
4,837,007 common shares for issuance upon exercise of outstanding warrants.

                                       26
<PAGE>


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.

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.

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

Item 6.      Selected Financial Data

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

                                       27
<PAGE>

<TABLE>
<CAPTION>

For the Year Ended December 31,           2001             2000              1999             1998             1997
                                   -----------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<S>                                   <C>              <C>              <C>              <C>              <C>
Revenues                              $    42,816      $     None       $     None       $     None       $     None
Operating expenses                    $ 6,046,173      $  6,647,367     $  3,729,534     $  3,842,441     $  2,885,043
Interest expense                      $ 1,881,077      $    215,216     $      1,966     $    959,612     $     43,497
Interest income                       $  (148,980)     $    (83,440)    $   (134,811)    $   (335,037)    $    (70,059)
(Gain) loss on foreign exchange       $       402      $   (864,669)    $    160,619     $     17,109     $  $ 123,612
(Gain) on forgiveness of debt                -                 -             (67,442)         (25,805)            -
Loss on redemption of convertible
    debentures                        $      -         $       -        $      -         $    193,256   $         -
Net Loss                              $ 7,754,031      $  5,914,474     $  3,689,866     $  4,651,576     $  2,982,093
Basic and diluted net loss per
     common share from operations     $       .39      $    $  0.34     $       0.24     $       0.31     $       0.21
Cash dividends declared per
     common share                            -                 -                -                -                 -
Deficit, beginning of year            $21,606,378      $ 15,691,904     $ 12,002,038     $  7,350,462     $  4,368,369
Net loss                                7,754,031         5,914,474        3,689,866        4,651,576        2,982,093
Preferential warrant dividend              52,417             -                -                -                -
                                   -----------------------------------------------------------------------------------
Deficit end of year                   $29,412,826      $ 21,606,378     $ 15,691,904     $ 12,002,038     $  7,350,462
                                   ===================================================================================
BALANCE SHEET DATA
Working capital                       $   (81,154)    $     234,714     $ (5,931,717)    $  3,008,789     $  7,480,153
Total assets                          $10,853,243     $  16,651,770     $ 13,365,848     $  7,103,267     $ 12,956,079
Long-term obligations                 $ 1,462,060     $   2,689,493     $      -         $     31,091     $ 4,774,420
Current liabilities                   $   714,689     $   3,741,366     $  7,578,083     $    222,431     $   712,810
Net shareholders' equity              $ 8,676,494     $  10,220,911     $  5,787,765     $  6,849,745     $ 7,468,849
</TABLE>


         The  following  Supplementary  Financial  Information  for  the  fiscal
quarters  ended March 31, June 30,  September  30 and December 31 in each of the
years  2000 and 2001 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  which was
determined by comparing annual financial data with 3rd quarter financial data).

<TABLE>
<CAPTION>

          Supplementary Financial Information by Quarter, 2001 and 2000
                                                Quarter Ended     Quarter Ended     Quarter Ended     Quarter Ended
                                                   March 31          June 30        September 30       December 31
                                                   --------          -------        ------------       -----------
<S>                                             <C>              <C>               <C>               <C>
Year Ended December 31, 2001:
  Sales                                               None             None               None           $42,816
  Gross Margin                                        None             None               None            18,175
  Net loss                                      $1,903,774       $2,335,304         $1,600,556        $1,914,397
  Loss per common share: (1)
        Basic and Diluted                            $0.10            $0.12              $0.08             $0.09

Year Ended December 31, 2000:
  Sales                                               None             None               None              None
  Gross Margin                                        None             None               None              None
  Net loss                                        $904,997       $1,335,728         $1,881,245        $1,792,504
  Loss per common share: (1)
        Basic and Diluted                            $0.06            $0.08              $0.10             $0.09
</TABLE>

                                       28
<PAGE>

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


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

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

Overview
--------

         From  inception  through  the  end  of  1993,  our  business  consisted
principally  of the  exploration  of  mineral  properties  for  acquisition  and
exploration.  During  1994,  our  focus  changed  as we  became  engaged  in the
acquisition,  development and testing of mineral processing equipment for use in
the recovery of fine, heavy mineral particles including gold,  titanium,  zircon
and  environmental  contaminants.  Since that time, we have continued  exploring
mineral  properties  on which  we  might  use our  patented  mineral  processing
equipment.

         In 1996, we acquired all patent rights to the Campbell Centrifugal Jig,
since modified and renamed the Altair Centrifugal Jig. Since April 1996, we have
acquired mineral leaseholds on approximately 9,700 acres of land in Tennessee. A
prefeasibility  study  issued  in July 1998  confirmed  the  existence  of heavy
minerals and suggests that the property warrants further  exploration.  Based on
the  results  of  these  independent   studies,  we  have  initiated  additional
feasibility testing.

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


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

         Operating losses before  extraordinary  items totaled $7,754,031 ($0.39
per share) for the 2001 fiscal year,  $5,914,474  ($0.34 per share) for the 2000
fiscal  year,  and  $3,757,308  ($0.24  per  share)  for the 1999  fiscal  year.
Principal factors  contributing to the losses during these periods were the lack
of  substantial  revenues  coupled with the  incurrence  of operating  expenses.
Fiscal Year 2001 vs. 2000

                                       29
<PAGE>

         During 2001, Altair Nanomaterials generated $42,816 of revenues through
sales of TiO2 nanoparticles, lithium titanate nanoparticles and other materials.
TiO2 nanoparticle sales represented 70% of revenues during 2001 with the primary
application  for this product being thermal spray  coatings.  Sales  revenues in
2001  included  $16,985  of  previously  deferred  revenues  for  which  product
shipments were made in 2001.

         Mineral exploration and development  expenses decreased from $1,217,966
in 2000 to $930,777 in 2001.  During 2000,  we began  construction  of a mineral
processing  pilot plant at the Tennessee  mineral  property.  In connection with
such  construction,  we incurred  $413,000 of costs for  permitting,  design and
construction of the plant site and ancillary facilities, and $388,000 for design
and fabrication of the processing  equipment.  During 2001, we incurred $188,000
of  costs  to  complete  construction  of  the  pilot  plant.  This  decline  in
construction  costs from 2000 to 2001 was partially  offset by the incurrence of
operating costs at the plant.

         Research and development  expense  decreased from $1,555,472 in 2000 to
$559,454 in 2001. On January 1, 2001, we hired fourteen former BHP employees who
had been involved in the development of the titanium processing  technology that
we acquired from BHP in November 1999. When we acquired the titanium  processing
technology,  we  entered  into a  services  agreement  with BHP  under  which we
obtained  the  services of these  fourteen  individuals,  and certain  other BHP
employees,  for the period November 15, 1999 through December 31, 2000. In 2000,
the cost associated with this services  agreement was $1,368,000 and was charged
to research and  development  expense.  During 2001, of the  $1,190,000 in total
salaries  and  overheads,  $354,000 was  allocated  to research and  development
expense, resulting in a decrease of $996,000 in research and development expense
in 2001 from 2000.

         Professional services,  which consist principally of legal,  consulting
and audit expenses,  increased from $366,275 in 2000 to $593,088 in 2001. In the
first quarter of 2001, we hired new auditors to audit our financial  statements.
As a result of this,  our audit fees  increased from $26,000 in 2000 to $157,000
in 2001. We also  experienced an increase in legal fees from $176,000 in 2000 to
$198,000 in 2001, primarily as a result of preparation of regulatory filings and
other documents associated with recent financing activities. Consulting expenses
increased from $164,000 in 2000 to $238,000 in 2001,  also as a result of recent
financing activities.

         General and administrative expenses increased by $553,396 to $2,824,646
in 2001,  compared to  $2,271,250 in 2000.  Salaries and overheads  increased by
$820,000 to  $1,268,000  in 2001,  compared to $448,000 in 2000,  as a result of
hiring the fourteen former BHP employees, the president of Altair Nanomaterials,
a  marketing  manager  and a  general  counsel.  With  respect  to the  titanium
processing  technology,  we  experienced  an increase in expenses of $245,000 to
$610,000 in 2001, compared to $365,000 for 2000, for operating  supplies,  small
tools,  maintenance,  office  supplies and  production of product  samples.  Our
general corporate expenses  decreased by $508,000 to $738,000 in 2001,  compared
to $1,246,000 for 2000,  principally due to a decrease in expense recognized for
options granted to employees and service providers.

         Depreciation   and  amortization   expense   decreased  by  $98,196  to
$1,138,208 in 2001, compared to $1,236,404 for 2000,  principally as a result of
lengthening  the  amortization  periods of  certain  patents.  The  amortization
periods were extended to equal the patent lives.

                                       30
<PAGE>

         On December  15,  2000,  we and an investor  entered  into a Securities
Purchase  Agreement  pursuant  to which we issued to the  investor a  $7,000,000
Asset-Backed  Exchangeable Term Note (the "2000 Note") and a Warrant to purchase
350,000  common shares at an initial  exercise  price of $3.00 at any time on or
before  December 15, 2005 (the  "Warrant").  The 2000 Note,  Warrant and related
rights were sold to the  investor in exchange  for  $7,000,000  (less  financing
fees).  Proceeds from the 2000 Note were allocated between the 2000 Note and the
Warrant; the portion allocated to the Warrant resulted in a discount on the 2000
Note which was being  accreted  to  interest  expense  over the term of the 2000
Note. Interest expense for 2001 was $1,881,077,  compared to interest expense of
$215,216 in 2000. The increase  results from interest expense of $805,000 on the
2000 Note,  amortization  of the Warrant  discount of $403,000,  amortization of
debt issue  costs of $100,000  and  interest  related to the  issuance of common
shares as payment of principal  and  interest on the 2000 Note of  $301,000.  In
addition to this,  interest  expense of  $240,000  was  incurred  related to the
estimated  fair value of warrants  issued to the  investor  in exchange  for the
waiver of  penalties  that would have accrued due to late  effectiveness  of the
registration  statement  associated  with the 2000 Note and  modification to the
2000 Note terms involving the redemption of exchange amounts.  At the same time,
interest  income  increased  in 2001  over  2000 due to  interest  earned on the
proceeds received from the 2000 Note.


         The  purchase  price for the  titanium  processing  technology  that we
acquired  from  BHP  was  stated  in  Australian  dollars  and  was  payable  in
installments  through  August  2000.  During  2000,  the  United  States  dollar
strengthened  against  the  Australian  dollar  resulting  in a gain on  foreign
exchange of $864,000.

Fiscal Year 2000 vs. 1999

         Mineral exploration and development expenses increased from $714,893 in
1999  to  $1,217,966  in  2000,   principally  due  to  costs  incurred  in  the
construction  of the mineral  processing  pilot plant at the  Tennessee  mineral
property.  Construction  began in 2000 and total  construction costs of $801,000
were incurred during that year. This increase was partially  offset by decreases
in other mineral exploration expenses at the Tennessee mineral property.

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

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

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

                                       31
<PAGE>

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

         Depreciation  expense  in  2000  increased  over  1999 as a  result  of
depreciation  on the titanium  processing  technology  and  titanium  processing
assets acquired from BHP.

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

         Interest  on  long-term  debt  increased  by  $79,000 in the year ended
December  31, 2000 over the  comparable  period of 1999 due to interest  paid in
connection with the rescheduling of the second installment due BHP from February
15, 2000 to May 15,  2000.  It further  increased  by  $129,000  due to interest
charges associated with the 2000 Note, which we issued in December 2000.

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

Carrying Value of Assets

         We have recorded our investments in the titanium processing  technology
and  titanium  processing  assets and the  centrifugal  jig at actual  cost.  We
depreciate  such assets  using the  straight-line  method  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  titanium  processing  technology  and  titanium
processing  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


                                       32
<PAGE>

nanoparticle product sales in 2000. We completed  construction of the processing
facility  and made a  single  small  sale of  nanoparticles  in  2000,  and then
generated  $42,816 of sales  revenues in 2001. We  underestimated  the length of
time  required  for  sample  analysis  and  product  acceptance  by  prospective
customers  and by  their  customers  and,  as a  result,  we have not yet made a
substantial amount of nanoparticle sales. We presently estimate that significant
nanoparticle sales will begin during the second half of 2002 and that cash flows
from future  nanoparticle  sales will be in excess of the carrying  value of the
assets.  The delay in sales,  combined  with cash outlays for  construction  and
operation,  has affected our cash  position  and  financing  plans as more fully
described in "Liquidity and Capital Resources" below.

         We intend to use our  centrifugal  jig to enhance the recovery of heavy
minerals at our Tennessee mineral property,  and it also has the potential to be
sold or licensed to others on a commercial basis.  Marketing efforts for the jig
have focused on large volume  applications such as coal cleaning,  heavy mineral
sand separations and iron ore processing.  Such  applications  require potential
jig purchasers to make  significant  capital  investments and  reengineering  of
plant processes. As a result, potential purchasers in this arena require lengthy
equipment  evaluations and long testing periods.  Since 2000, we have redirected
company  resources,  staff and liquid assets to support the titanium  processing
technology  and Camden  exploration  effort and away from  marketing  the jig to
others. We are currently  negotiating an agreement to perform jig tests for fine
particle recovery at a third party's  processing  facility,  and we have entered
into discussions with potential jig manufacturers and distributors for marketing
the  jig  to a  wider  array  of  market  applications  under  licensing  and/or
distributorship  agreements.  We retain  ownership of the fundamental  technical
characteristics of the jig through patent  protections.  We estimate that future
revenues to be derived  from jigs placed into  commercial  operation  will be in
excess of the carrying value of the assets.

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

         We generated  $42,816 of sales revenues in 2001 but incurred a net loss
of $7,754,031. At December 31, 2001, our accumulated deficit was $29,412,826, or
an increase of  $7,806,448  over the  accumulated  deficit at December 31, 2000.
This  increase was due to the net loss for the year and a  preferential  warrant
dividend  of  $52,417  recorded  in  connection  with the  repricing  of certain
warrants during 2001.

         Our  cash and  short-term  investments  decreased  from  $3,585,729  at
December  31, 2000 to $599,884 at December 31, 2001,  due to the  incurrence  of
operating  costs and the effect of financing  transactions  which are  described
below.

         On December  15,  2000,  we and an investor  entered  into a Securities
Purchase  Agreement  pursuant to which we issued the 2000 Note and the Warrants.
The 2000 Note,  Warrant and related rights were sold to the investor in exchange
for $7,000,000 (less financing fees).  Among certain other covenants,  we agreed
to maintain a letter of credit in favor of the  investor  in an amount  equal to
57.15% of the principal  balance of the 2000 Note until certain  conditions were
met,  after which the required  amount would be reduced to 50% of the  principal
balance of the 2000 Note. The letter of credit was secured by cash proceeds from
issuance of the 2000 Note equal to the face amount of the letter of credit. Such
cash  proceeds are  reflected as  restricted  cash in the  Consolidated  Balance
Sheets.

         The 2000 Note was in the principal  amount of $7,000,000  with interest
at a rate of 10% per  annum.  Under  the 2000  Note,  we were  required  to make
monthly  payments  on or  before  the  15th  day of each  calendar  month in the
principal  amount of  $291,667  plus  accrued  interest  (the  "Monthly  Payment
Amount"). The 2000 Note was due and payable in full on December 15, 2003.

                                       33
<PAGE>

         We had the option to redeem the Monthly  Payment  Amount in cash. If we
elected not to redeem the Monthly Payment  Amount,  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
the applicable  "Exchange Price." The Exchange Price for any date was the lesser
of (a) a fixed  exchange  price of $3.00 as adjusted,  or (b) the average of the
lowest three daily  trading  prices of the common  shares  during the 15 trading
days ending on the day before an exchange right was exercised. The 2000 Note was
secured by a pledge of the  intellectual  property  and  common  stock of Altair
Nanomaterials, Inc. and the common stock of Mineral Recovery Systems, Inc.

         During 2001, we made cash  payments of principal  and interest  against
the 2000 Note of $1,894,000 and $387,000,  respectively,  and paid $1,220,000 of
principal  and  interest  through the  exchange of 824,800  shares of our common
stock in  accordance  with the  terms of the 2000  Note.  In  addition,  we made
payments  of  principal  and  interest  against  the 2000  Note of  $97,743  and
$244,941,  respectively,  through cancellation of call options on 228,456 shares
of our common stock.

         On December  28,  2001,  we entered  into a  Termination  and  Issuance
Agreement  with the holder of the 2000 Note under which the letter of credit was
terminated,  $2,500,733 of cash securing the letter of credit was transferred to
the investor, and the 2000 Note was exchanged for a new Secured Term Note ("2001
Note") having a face amount of $2,000,000. The interest rate on the 2001 Note is
11% per annum payable monthly.  Under the 2001 Note, we are not required to make
monthly  payments of principal  but are required to pay accrued  interest at the
end of every month. We have the right to redeem the monthly  interest payment in
cash. If we elect not to redeem the monthly  interest payment amount in cash, on
each due  date,  the  investor  automatically  receives  the  right to  exchange
(immediately or at any later date during the term) the monthly  interest payment
amount into common shares at the applicable  exchange price.  The exchange price
for any date is equal to 75% of the average of the  closing  price of our common
stock for the five trading days ending on the trading day immediately  preceding
the  respective  due date for payment of interest.  The principal  amount of the
2001 Note is not convertible  into or exchangeable  for common shares and is due
and payable in cash on March 31, 2003.

         In  connection  with the 2001 Note,  we issued to the investor  200,000
warrants to purchase  common shares at an exercise price of $1.50.  The warrants
are  exercisable  at any time on or before the earlier of (a) December 15, 2006,
and (b) the date 60 days  after the market  price of the common  shares has been
equal to or greater  than $12.00 for five  consecutive  days.  In  addition,  we
agreed to revise the exercise price of the 350,000 warrants issued with the 2000
Note to $1.50. We also issued to the investor a conditional  warrant to purchase
up to 500,000 common shares.  The  conditional  warrant  expires on the later of
March 31,  2003 or the date the 2001 Note has been paid in full.  The warrant is
subject to a vesting  schedule  under which 25,000  common  shares vest when the
closing  price of our common stock  exceeds  $2.00 per share for a period of ten
consecutive  trading  days.   Thereafter,   additional  common  shares  vest  in
increments  of 25,000 on the day  following  the first  time the  closing  price
exceeds a number greater than $2.00 that is evenly divisible by .5 (e.g.  $2.50,
$3.00,  $3.50) for ten consecutive  trading days. To date, no shares have vested
under the  conditional  warrant.  The warrant  exercise price is $.01 per common
share.

         Under the terms of the 2001  Note,  we are  required  to have a minimum
cash  and cash  equivalents  balance  of  $250,000  at the end of each  calendar
quarter  and at any time the closing  price of our common  shares has been below
$1.00 per share for three consecutive trading days.

         The 2001 Note is  secured  by a pledge of the  equipment,  intellectual
property  and  common  stock of  Altair  Nanomaterials,  and by a pledge  of the
leaseholds and common stock of MRS.

                                       34
<PAGE>

         During 2001, we sold  2,031,691  common shares  together with 2,766,668
warrants in private  placements for gross  proceeds of $2,650,000.  The warrants
are  exercisable at prices ranging from $1.50 to $5.00 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 $2.50 to $8.00.  Also during 2001,
65,000 options were exercised providing us with gross proceeds of $130,000.

         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. The warrants had been previously  issued with exercise prices
ranging from $4.00 to $8.00.  All 713,333  warrants were exercised  resulting in
proceeds to us of $713,333.

         At December 31, 2001, we had cash and cash equivalents of $599,884,  an
amount which,  together with proceeds received from a private placement in early
2002 (as discussed  below),  is sufficient to fund our basic operations  through
April 30, 2002.  After April 30, 2002, we will require  additional  financing to
provide working capital to fund our day-to-day operations.  We will also require
additional financing to continue our development work on the titanium processing
technology and the Tennessee  mineral  property,  and to expand our nanoparticle
production facility when, and if, current capacity cannot keep pace with product
sales. We expect to generate funds through  additional private placements of our
common stock and warrants to purchase our common stock,  additional exercises of
warrants and sales of titanium  dioxide  nanoparticles.  On March 11,  2002,  we
entered  into a stock  subscription  agreement  with a  private  investor  which
provides for the sale,  for  $1,000,000  on or before May 31,  2002,  of 666,667
common  shares and  1,000,002  warrants  to purchase  common  shares at exercise
prices  between  $2.00 and $3.00 per  share.  As of March 20,  2002,  we have no
commitments  to provide  additional  financing or to purchase  titanium  dioxide
nanoparticles.

Item 8.      Financial Statements and Supplementary Data.

The financial  statements required by this Item appear on pages F-1 through F-22
of this Form 10-K.


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

         None.

                                    Part III

Item 10.     Directors and Executive Officers of the Registrant

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

                                       35
<PAGE>



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

         (a)      Documents Filed

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

            o        Independent Auditors' Report of Deloitte & Touche LLP

            o        Consolidated Balance Sheets, December 31, 2001 and 2000

            o        Consolidated Statements of Operations for Each of the Three
                     Years in the Period  Ended  December  31,  2001 and for the
                     Period from April 9, 1973 (Date of  Inception)  to December
                     31, 2001

            o        Consolidated  Statements of Shareholders' Equity from April
                     9, 1973 (Date of Inception) to December 31, 2001

            o        Consolidated Statements of Cash Flows for Each of the Three
                     Years in the Period  Ended  December  31,  2001 and for the
                     Period from April 9, 1973 (Date of  Inception)  to December
                     31, 2001

            o        Notes to Consolidated Financial Statements
                                       36
<PAGE>



   2.       Financial Statement Schedule.  Not applicable.

   3.       Exhibit List

                                       37
<PAGE>

<TABLE>
<CAPTION>

  Exhibit No.               Exhibit                              Incorporated by Reference/ Filed Herewith
------------   ---------------------------------------------    ------------------------------------------------
    <S>       <C>                                               <C>
                                                                Incorporated by reference to Registration
    3.1.1     Articles of Incorporation of the Registrant       Statement on Form 10-SB filed with the
                                                                Commission on November 25, 1996.
                                                                Incorporated by reference to Amendment No. 1

    3.1.2     Amendment to Articles of Incorporation of         to Registration Statement on Form 10 filed
              the Registrant dated November 6, 1996             with the Commission on December 23, 1996.
                                                                Incorporated by reference to Registration

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

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

              Form of Doral Warrant (Issued December 15,        Incorporated by reference to the Company's
      4.3     2000)                                             Current Report on Form 8-K filed with the SEC
                                                                on December 26, 2000.

                                                                Incorporated by reference to the Company's
      4.5     $2,000,000 Secured Term Note                      Current Report on Form 8-K filed with the SEC
                                                                on January 4, 2002.

              Warrant to Purchase Common Stock (Issued          Incorporated by reference to the Company's
      4.6     December 28, 2001)                                Current Report on Form 8-K filed with the SEC
                                                                on January 4, 2002.

              Warrant to Purchase Common Stock                  Incorporated by reference to the Company's
      4.7     (Conditional) (Issued December 28, 2001)          Current Report on Form 8-K filed with the SEC
                                                                on January 4, 2002.

                                                                Incorporated by reference to Amendment No. 2
      4.8     Amendment No. 1 to Stock Purchase Warrants        to Current Report on Form 8-K/A filed with the
                                                                SEC on January 2, 2002.
                                                                Incorporated by reference to Registration
                                                                Statement on Form S-3, File No. 333-76820,
      4.9     Form of Series 2001C Warrant                      filed with the Commission on January 16, 2002.
                                                                Incorporated by reference to Registration
                                                                Statement on Form S-3, File No. 333-76820,
     4.10     Form of Series 2001D Warrant                      filed with the Commission on January 16, 2002.
                                                                Incorporated by reference to Registration
                                                                Statement on Form S-3, File No. 333-76820,
     4.11     Form of Series 2001E Warrant                      filed with the Commission on January 16, 2002.
                                                                Incorporated by reference to Registration
                                                                Statement on Form S-3, File No. 333-76820,
     4.12     Form of Series 2001F Warrant                      filed with the Commission on January 16, 2002.
                                                                Incorporated by reference to Registration
                                                                Statement on Form S-3, File No. 333-76820,
</TABLE>

                                      38
<PAGE>

<TABLE>
<CAPTION>

  Exhibit No.               Exhibit                              Incorporated by Reference/ Filed Herewith
------------   ---------------------------------------------    ------------------------------------------------
    <S>       <C>                                               <C>
    4.13     Form of Series 2001G Warrant                      filed with the Commission on January 16, 2002.
                                                                Incorporated by reference to the Company's
                                                                Annual Report on Form 10-K filed with the
              Employment Agreement between Altair               Commission on March 31, 1998, as amended by
     10.1     International Inc. and William P. Long            Amendment No. 1 to Annual Report on Form
              dated January 1, 1998                             10-K/A filed on May 15, 1998.

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

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

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

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

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

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

              Stock Pledge Agreement dated December 15,         Incorporated by reference to the Company's
     10.8     2000 (Mineral Recovery Systems common             Current Report on Form 8-K filed with the
              stock).                                           Commission on December 26, 2000.

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

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

                                                                Incorporated by reference to the Company's
    10.11     Note Termination and Issuance Agreement           Current Report on Form 8-K filed with the SEC
                                                                on January 4, 2002.

                                                                Incorporated by reference to the Company's
    10.12     Registration Rights Agreement                     Current Report on Form 8-K filed with the SEC
                                                                on January 4, 2002.

                                                                Incorporated by reference to the Company's
    10.13     First Amendment to Stock Pledge Agreement         Current Report on Form 8-K filed with the SEC
                                                                on January 4, 2002.

       23     Auditor's Consent                                 Filed herewith.

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

                                      39
<PAGE>
<PAGE>


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

         The  Company  filed a Current  Report on Form 8-K on January 4, 2002 in
which it reported  the  termination  of the 2000 Note,  the issuance of the 2001
Note and related transactions.

         The Company filed an Amendment No. 2 to Current Report on Form 8-K/A on
January 4, 2002  (amending the Current  Report on Form 8-K filed on December 26,
2000) in which it reported the  termination  of the 2000 Note,  the amendment of
certain   warrants   issued  in  connection  with  the  2000  Note  and  related
transactions.

         (c)      Exhibits

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

         (d)      Financial Statement Schedule

                  Not applicable.




                                       40
<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 28, 2002.

                                              ALTAIR INTERNATIONAL INC.


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


                   POWER OF ATTORNEY AND ADDITIONAL SIGNATURES

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

<TABLE>
<CAPTION>

    Signature                                                Title                             Date
    ---------                                                -----                             ----
<S>                                                  <C>                                   <C>
/s/ William P. Long                                  President and Chief Executive         March 28, 2002
-------------------                                  Officer and Director (Principal
    William P. Long                                  Executive Officer)



/s/ Edward Dickinson                                 Chief Financial Officer and           March 28, 2002
--------------------                                 Secretary  (Principal Financial
    Edward Dickinson                                 and Accounting Officer)



/s/ James I. Golla                                   Director                              March 28, 2002
------------------
    James I. Golla

/s/ George Hartman                                   Director                              March 28, 2002
------------------
    George Hartman


/s/ Robert Sheldon                                   Director                              March 28, 2002
------------------
    Robert Sheldon
</TABLE>

                                      41
<PAGE>
Altair International Inc.
and Subsidiaries
(An Exploration Stage Company)

Consolidated Financial Statements as of December 31,  2001 and 2000 and for Each
of the Three Years in the Period Ended December 31, 2001 and for the Period from
April 9, 1973 (Date of Inception) to December 31, 2001 and Independent Auditors'
Report


                                     42

<PAGE>

<TABLE>
<CAPTION>

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

                                                                                                              Page
                                                                                                              ----

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

FINANCIAL STATEMENTS:

  Consolidated Balance Sheets, December 31, 2001 and 2000                                                      F-2

  Consolidated Statements of Operations for Each of the Three Years
    in the Period Ended December 31, 2001 and for the Period from April 9, 1973
    (Date of Inception) to December 31, 2001                                                                   F-3

  Consolidated Statements of Shareholders' Equity for the Period from April 9, 1973
    (Date of Inception) to December 31, 2001                                                                F-4 -  F-7

  Consolidated Statements of Cash Flows for Each of the Three Years in
    the Period Ended December 31, 2001 and for the Period from April 9, 1973
    (Date of Inception) to December 31, 2001                                                                F-8 - F-10

  Notes to Consolidated Financial Statements                                                               F-11 - F-22
</TABLE>

                                      43
<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

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

         We have audited the accompanying  consolidated balance sheets of Altair
International,   Inc.  (an   exploration   stage   company)   and   subsidiaries
(collectively  referred to as the  "Company")  as of December 31, 2001 and 2000,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period  ended  December  31, 2001,
and for the period from April 9, 1973 (date of  inception) to December 31, 2001.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits. The Company's  consolidated  financial  statements for the period
from April 9, 1973 (date of  inception)  to December  31,  1997 were  audited by
other auditors whose report,  dated February 17, 2000,  expressed an unqualified
opinion on those statements.  The 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 related to the amounts  included for such
prior periods, is based solely on the report of such other auditors.

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

In our  opinion,  based on our 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, 2001 and 2000,  and the
results of its  operations and its cash flows for each of the three years in the
period ended  December 31, 2001,  and for the period from April 9, 1973 (date of
inception)  to December 31,  2001,  in  conformity  with  accounting  principles
generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. The Company is an exploration
stage enterprise engaged in developing mineral processing  equipment,  producing
titanium dioxide products,  and exploring and developing mineral properties.  As
discussed in Note 1 to the  consolidated  financial  statements,  the  Company's
operating  losses  raise  substantial  doubt  about its ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note 1. The  consolidated  financial  statements do not include any  adjustments
that might result from the outcome of these uncertainties.  In addition, because
the Company is still in the exploration stage, there have been no adjustments to
record potential impairments on long-term assets.



/S/ DELOITTE & TOUCHE LLP
-------------------------
    DELOITTE & TOUCHE LLP
    Salt Lake City, Utah
    March 15, 2002
                                      F-1
<PAGE>

<TABLE>
<CAPTION>

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

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
(Expressed in United States Dollars)
--------------------------------------------------------------------------------
                                     ASSETS
                                     ------
                                                                           2001                     2000
                                                                       ------------             ------------
CURRENT ASSETS:
<S>                                                                    <C>                      <C>
  Cash and cash equivalents                                            $    599,884             $  1,335,729
  Restricted cash                                                              --                  2,250,000
  Other current assets                                                       33,651                  390,351
                                                                       ------------             ------------
           Total current assets                                             633,535                3,976,080

RESTRICTED CASH                                                                --                  1,750,000

PROPERTY AND EQUIPMENT, Net                                               5,987,950                6,601,917

PATENTS AND RELATED EXPENDITURES, Net                                     3,739,864                4,111,740

OTHER ASSETS                                                                491,894                  212,033
                                                                       ------------             ------------
TOTAL ASSETS                                                           $ 10,853,243             $ 16,651,770
                                                                       ============             ============
                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES:
  Accounts payable and accrued liabilities                             $    528,405             $    158,642
  Notes payable - current portion                                              --                  3,500,004
  Loans payable - related parties                                           143,000
  Capital lease obligations - current portion                                 2,312                   24,763
  Deferred revenue                                                           40,972                   57,957
                                                                       ------------             ------------
           Total current liabilities                                        714,689                3,741,366
                                                                       ------------             ------------
NOTES PAYABLE, Long-term portion                                          1,462,060                2,687,181
                                                                       ------------             ------------
CAPITAL LEASE OBLIGATIONS, Long-term portion                                   --                      2,312
                                                                       ------------             ------------
COMMITMENTS AND CONTINGENCIES
  (Notes 1, 3, 6, 7, 8, 9, 10, 11, and 12)

SHAREHOLDERS' EQUITY:
  Common stock, no par value, unlimited shares authorized;
    22,694,142 and 19,325,488 shares issued and outstanding
    at December 31, 2001 and 2000                                        38,089,320               32,388,589
  Stock subscription receivable                                                --                   (561,300)
  Deficit accumulated during the development stage                      (29,412,826)             (21,606,378)
                                                                       ------------             ------------
           Total shareholders' equity                                     8,676,494               10,220,911
                                                                       ------------             ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                             $ 10,853,243             $ 16,651,770
                                                                       ============             ============
</TABLE>


               See notes to the consolidated financial statements.

                                      F-2
<PAGE>

<TABLE>
<CAPTION>

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

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001 AND
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------


                                                                                                          Period April  9,
                                                                                                            1973 (Date of
                                                                        Year Ended December 31,             Inception) to
                                                             ------------------------------------------      December 31,
                                                                  2001           2000            1999           2001
                                                             ----------      ----------      ----------       ---------
<S>                                                        <C>                <C>            <C>           <C>
SALES                                                      $     42,816            None            None    $     42,816

COST OF SALES                                                    18,175            None            None          18,175
                                                             ----------      ----------      ----------       ---------
GROSS MARGIN                                                     24,641            None            None          24,641
                                                             ----------      ----------      ----------       ---------
OPERATING EXPENSES:
  Mineral exploration and development                           930,777    $  1,217,966    $    714,893       5,918,665

  Research and development                                      559,454       1,555,472         354,462       3,128,959
  Professional services                                         593,088         366,275         252,337       2,563,912
  General and administrative expenses                         2,824,646       2,271,250       1,899,759      11,847,482
  Depreciation and amortization                               1,138,208       1,236,404         508,083       4,517,414
                                                             ----------      ----------      ----------       ---------
           Total operating expenses                           6,046,173       6,647,367       3,729,534      27,976,432
                                                             ----------      ----------      ----------       ---------
LOSS FROM OPERATIONS                                          6,021,532       6,647,367       3,729,534      27,951,791
                                                             ----------      ----------      ----------       ---------
OTHER EXPENSE (INCOME):
  Interest expense                                            1,881,077         215,216           1,966       3,383,951
  Interest income                                              (148,980)        (83,440)       (134,811)       (813,840)
  Loss (gain) on foreign exchange                                   402        (864,669)        160,619        (558,777)
                                                             ----------      ----------      ----------       ---------
           Total other expense (income), net                  1,732,499        (732,893)         27,774       2,011,334
                                                             ----------      ----------      ----------       ---------
LOSS BEFORE EXTRAORDINARY ITEMS                               7,754,031       5,914,474       3,757,308      29,963,125
                                                             ----------      ----------      ----------       ---------
EXTRAORDINARY ITEMS:
  Gain on forgiveness of debt                                      --              --           (67,442)       (795,972)
  Loss on redemption of convertible debentures
                                                                                                                193,256
                                                             ----------      ----------      ----------       ---------
           Total extraordinary items                               --              --           (67,442)       (602,716)
                                                             ----------      ----------      ----------       ---------
NET LOSS                                                      7,754,031       5,914,474       3,689,866      29,360,409

PREFERENTIAL WARRANT DIVIDEND                                    52,417            --              --            52,417
                                                             ----------      ----------      ----------       ---------
NET LOSS APPLICABLE TO SHAREHOLDERS                        $  7,806,448    $  5,914,474    $  3,689,866    $ 29,412,826
                                                             ==========      ==========      ==========       =========

LOSS BEFORE EXTRAORDINARY ITEMS AND
  PREFERENTIAL WARRANT DIVIDEND PER COMMON
  SHARE - Basic and diluted                                $       0.39    $       0.34    $       0.24    $       4.14

EFFECT OF EXTRAORDINARY ITEMS ON
  EARNINGS PER SHARE - Basic and diluted                           0.00            0.00           (0.01)          (0.08)
                                                             ----------      ----------      ----------       ---------
LOSS PER COMMON SHARE - Basic and diluted                  $       0.39    $       0.34    $       0.23    $       4.06
                                                             ----------      ----------      ----------       ---------
WEIGHTED AVERAGE SHARES - Basic and diluted                  20,063,473      17,371,214      15,472,075       7,231,574
                                                             ==========      ==========      ==========       =========


              See notes to the consolidated financial statements.


</TABLE>

                                      F-3

<PAGE>

<TABLE>
<CAPTION>

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

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

                                                                                            Deficit
                                                      Common Stock                        Accumulated
                                                  ----------------------     Stock         During the
                                                                Stated    Subscription   Development
                                                   Shares       Amount     Receivable       Stage            Total
                                                 ---------     ---------   ---------      ----------       ----------
<S>                                              <C>         <C>           <C>         <C>               <C>
APRIL 9, 1973 (DATE OF INCEPTION)                     None          None       None             None           None

Common stock issued                                101,668   $   387,073       $-               --      $   387,073

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

Common stock issued                                 40,000       240,770       --               --          240,770
Common stock issued for management fees              1,280         7,004       --               --            7,004
Net loss                                              --            --         --            (78,606)       (78,606)
                                                 ---------     ---------   ---------      ----------       ----------
BALANCE,  DECEMBER 31, 1985                        142,948       634,847       --           (440,178)       194,669

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

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

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

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

              See notes to the consolidated financial statements.

</TABLE>

                                      F-4
<PAGE>

<TABLE>
<CAPTION>

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

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
-------------------------------------------------------------------------------

                                                                                             Deficit
                                                      Common Stock                         Accumulated
                                                  ----------------------       Stock        During the
                                                                Stated      Subscription   Development
                                                   Shares       Amount       Receivable       Stage            Total
                                                 ---------     ---------     ---------      ----------      ----------
<S>                                              <C>         <C>           <C>         <C>               <C>
BALANCE,  DECEMBER 31, 1989                      1,929,254   $ 1,600,847   $      --      $(1,648,175)   $   (47,328)

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

Common stock issued                                266,667       196,994          --             --          196,994
Common stock issued for property                    28,333        17,146          --             --           17,146
Net loss                                              --            --            --         (258,209)      (258,209)
                                                 ---------     ---------     ---------      ----------      ----------
BALANCE,  DECEMBER 31, 1991                      2,415,919     2,085,671          --       (2,136,509)       (50,838)

Common stock issued                              1,086,753       443,237          --             --          443,237
Common stock issued for property                   115,000        49,249          --             --           49,249
Common stock issued for settlement of debt          55,177        24,155          --             --           24,155
Net loss                                              --            --            --         (353,665)      (353,665)
                                                 ---------     ---------     ---------      ----------      ----------
BALANCE, DECEMBER 31, 1992                       3,672,849     2,602,312          --       (2,490,174)       112,138

Common stock issued                                 48,000        36,393          --             --           36,393
Common stock issued for property                    46,667        55,012          --             --           55,012
Net loss                                              --            --            --         (193,323)      (193,323)
                                                 ---------     ---------     ---------      ----------      ----------
BALANCE,  DECEMBER 31, 1993                      3,767,516     2,693,717          --       (2,683,497)        10,220

Common stock issued                                600,000       131,329          --             --          131,329
Common stock issued for shares of subsidiary       750,000       257,187          --             --          257,187
Common stock issued for royalties                   83,333        33,641          --             --           33,641
Net loss                                              --            --            --         (227,860)      (227,860)
                                                 ---------     ---------     ---------      ----------      ----------
BALANCE,  DECEMBER 31, 1994                      5,200,849     3,115,874          --       (2,911,357)       204,517

Common stock issued                              2,700,000       875,529          --             --          875,529
Exercise of stock options                          247,000        53,553          --             --           53,553
Exercise of stock warrants                         350,000       171,458          --             --          171,458
Net loss                                              --            --            --         (424,109)      (424,109)
                                                 ---------     ---------     ---------      ----------      ----------
BALANCE,  DECEMBER 31, 1995                      8,497,849     4,216,414          --       (3,335,466)       880,948
                                                 ---------     ---------     ---------      ----------      ----------
                                                                                                          (Continued)
              See notes to the consolidated financial statements.

</TABLE>

                                      F-5
<PAGE>

<TABLE>
<CAPTION>

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

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
-------------------------------------------------------------------------------

                                                                                                  Deficit
                                                      Common Stock                              Accumulated
                                                   -------------------------       Stock         During the
                                                                    Stated      Subscription   Development
                                                     Shares         Amount        Receivable       Stage            Total
                                                   ---------       ---------      ---------      ----------       ----------
<S>                                              <C>         <C>           <C>         <C>               <C>
BALANCE,  DECEMBER 31, 1995                        8,497,849    $  4,216,414   $       --      $ (3,335,466)   $    880,948

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

Exercise of stock options                            362,500       1,530,406           --              --         1,530,406
Stock options issued to non-employees                   --           528,555           --              --           528,555
Stock options issued to employees                       --            62,800           --              --            62,800
Exercise of stock warrants                           443,949       1,038,788           --              --         1,038,788
Net loss                                                --              --             --        (2,982,093)     (2,982,093)
                                                   ---------       ---------      ---------      ----------       ----------
BALANCE,  DECEMBER 31, 1997                       15,492,745      14,819,311           --        (7,350,462)      7,468,849

Stock options issued to non-employees                   --           841,944           --              --           841,944
Stock options issued to employees                       --            15,420           --              --            15,420
Common stock cancelled                              (723,065)           --             --              --              --
Common stock issued for convertible debenture        387,735       3,061,444           --              --         3,061,444
Exercise of stock options                             17,500         113,664           --              --           113,664
Net loss                                                --              --             --        (4,651,576)     (4,651,576)
                                                   ---------       ---------      ---------      ----------       ----------
BALANCE,  DECEMBER 31, 1998                       15,174,915      18,851,783           --       (12,002,038)      6,849,745

Stock options issued to non-employees                   --           765,386           --              --           765,386
Common stock issued                                  300,000       1,862,500           --              --         1,862,500
Net loss                                                --              --             --        (3,689,866)     (3,689,866)
                                                   ---------       ---------      ---------      ----------       ----------
BALANCE,  DECEMBER 31, 1999                       15,474,915      21,479,669           --       (15,691,904)      5,787,765

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

          See notes to consolidated financial statements. (Continued)
                                      F-6
<PAGE>

<TABLE>
<CAPTION>

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

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
-------------------------------------------------------------------------------

                                                                                                  Deficit
                                                      Common Stock                              Accumulated
                                                   -------------------------       Stock         During the
                                                                    Stated      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           None    $(29,412,826)   $  8,676,494
                                                                                                                  (Concluded)
</TABLE>


                See notes to consolidated financial statements.

                                      F-7
<PAGE>

<TABLE>
<CAPTION>

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

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

                                                                                                           Period April 9,
                                                                                                            1973 (Date of
                                                                         Year Ended December 31,            Inception) to
                                                                ------------------------------------------    December 31,
                                                                   2001           2000            1999           2001
                                                                -----------   -----------      -----------    -----------
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
<S>                                                         <C>             <C>             <C>             <C>
  Net loss                                                  $ (7,754,031)   $ (5,914,474)   $ (3,689,866)   $(29,360,409)
  Adjustments to reconcile net loss to net cash used
    in development activities:
    Depreciation and amortization                              1,138,208       1,236,404         508,083       4,517,414
    Shares issued for services                                      --              --              --            99,926
    Shares issued for settlement of debt                            --              --              --            75,228
    Shares issued for interest                                   819,755            --              --           823,827
    Shares issued for property                                      --              --              --           159,166
    Issuance of stock options to non-employees                   158,089         424,063         765,386       3,003,540
    Issuance of stock options to employees                          --              --              --            78,220
    Issuance of stock warrants                                   396,123         420,182            --           816,305
    Amortization of discount on note payable                     403,021          12,052            --           415,073
    Amortization of debt issuance costs                          100,000            --              --           100,000
    Loss on redemption of convertible debenture                     --              --              --           193,256
    Gain on forgiveness of debt                                     --              --           (67,442)       (795,972)
    Loss on disposal of fixed assets                                --              --              --             1,945
    Loss (gain) on foreign currency translation                      402        (864,669)        160,619        (559,179)
    Deferred financing costs written off                            --              --              --           515,842
    Changes in assets and liabilities (net of effects
      of acquisition):
      Restricted cash                                          4,000,000      (4,000,000)           --              --
      Other current assets                                        14,016         990,579         172,512       1,700,947
      Other assets                                                   886        (169,606)           --          (168,720)
      Accounts payable and accrued liabilities                   369,763         (75,161)         48,734         259,191
      Deferred revenue                                           (16,985)         57,957            --            40,972
                                                                -----------   -----------      -----------    -----------
           Net cash used in development activities              (370,753)     (7,882,673)     (2,101,974)    (18,083,428)
                                                                -----------   -----------      -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Asset acquisition (see Note 3)                                    --              --        (2,422,417)     (2,422,417)
  Purchase of property and equipment                            (158,296)       (226,612)       (207,048)     (1,294,675)
  Disposal (purchase) of patents and related expenditures          5,933            --           (76,135)     (1,882,187)
                                                                -----------   -----------      -----------    -----------
           Net cash used in investing activities                (152,363)       (226,612)     (2,705,600)     (5,599,279)
                                                                -----------   -----------      -----------    -----------
                                                                                                               (Continued)
</TABLE>

                See notes to consolidated financial statements.

                                      F-8
<PAGE>

<TABLE>
<CAPTION>

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

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

                                                                                                           Period April 9,
                                                                                                            1973 (Date of
                                                                         Year Ended December 31,            Inception) to
                                                            --------------------------------------------     December 31,
                                                                   2001           2000           1999           2001
                                                              -----------    -----------      -----------    -----------
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
<S>                                                         <C>             <C>             <C>             <C>
  Issuance of common shares for cash,
  net of issuance costs                                     $  2,650,000    $  8,904,029    $  1,862,500    $ 18,173,659
  Collection of stock subscription receivable                    561,300            --              --           561,300
  Issuance of convertible debenture                                 --              --              --         5,000,000
  Proceeds from exercise of stock options                        130,000         335,778            --         2,708,491
  Proceeds from exercise of warrants                             713,333            --              --         4,617,328
  Issuance of related party notes                                168,000            --              --           168,000
  Issuance of notes payable                                         --         7,000,000            --         7,000,000
  Payment of notes payable                                    (4,385,599)     (6,498,931)         (6,191)    (11,196,044)
  Payment of related party notes                                 (25,000)           --              --           (25,000)
  Payment on capital lease                                       (24,763)           --              --           (24,763)
  Purchase of call options                                          --          (449,442)           --          (449,442)
  Redemption of convertible debentures                              --              --              --        (2,250,938)
                                                              -----------    -----------      -----------    -----------
  Net cash (used in) provided by financing activities           (212,729)      9,291,434       1,856,309      24,282,591

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                          (735,845)      1,182,149      (2,951,265)        599,884

CASH AND CASH EQUIVALENTS, Beginning of period                 1,335,729         153,580       3,104,845            None
                                                              -----------    -----------      -----------    -----------
CASH AND CASH EQUIVALENTS, End of period                    $    599,884    $  1,335,729    $    153,580    $    599,884
                                                              ===========    ===========      ===========    ===========

                                                                                          Year Ended December 31,
                                                                                   -----------------------------------
                                                                                      2001          2000         1999
                                                                                   ---------      --------     -------
SUPPLEMENTAL DISCLOSURES:
  Cash paid for interest                                                           $ 386,557      $ 85,929     $ 1,966
                                                                                   ---------      --------     -------
  Cash paid for income taxes                                                            None          None        None
                                                                                   =========      ========     =======
                                                                                                          (Continued)
</TABLE>
                See notes to consolidated financial statements.

                                      F-9
<PAGE>
ALTAIR INTERNATIONAL INC. and subsidiaries
(An Exploration Stage Company)


CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

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, 2001. 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 have 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 have
     an incremental fair value of $199,222.


For the year ended December 31, 2000:

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

o        We  issued  1,003,626  shares of  common  stock as part of a  repricing
     agreement (see Note 8).

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

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

o        We cancelled  call options on 19,222  shares of our common stock to pay
     $18,221 of interest on the 2000 Note.


For the year ended December 31, 1999:

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

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


See notes to consolidated financial statements.                  (Concluded)
                                      F-10
<PAGE>

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

1.       DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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

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

      Principles  of  Consolidation  -  The  consolidated  financial  statements
      include the accounts of Altair  International  Inc.  and its  subsidiaries
      which include (1) Mineral  Recovery  Systems,  Inc.  (MRS),  (2) Fine Gold
      Recovery Systems, Inc. (FGRS), (3) Altair  Nanomaterials,  Inc. (ANI), and
      (4) Tennessee Valley Titanium,  Inc. (TVT),  (collectively  referred to as
      the "Company"), all of which are 100% owned. 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, 2001,  2000, and 1999, we incurred net losses
      of $7,754,031,  $5,914,474,  and $3,689,866,  respectively,  and since the
      date of inception  have  incurred  cumulative  losses of  $29,360,409.  At
      December 31, 2001 and 2000, we had stockholder's  equity of $8,676,494 and
      $10,220,911,  respectively.  At December  31,  2001,  current  liabilities
      exceeded current assets by $81,154. However, at December 31, 2000, current
      assets  exceeded  current  liabilities  by $234,714.  These  factors among
      others may raise substantial doubt about the Company's ability to continue
      as a going concern.

      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.  Because the
      Company is still in the exploration  stage, there have been no adjustments
      to record potential  impairment on long-term assets. 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  the titanium  processing
      technology,  the Tennessee mineral  property,  and the centrifugal jig. We
      have  financed  operations   primarily  through  the  issuance  of  equity
      securities  (common  stock,  convertible  debentures,  stock  options  and
      warrants), and by the issuance of 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.

                                      F-11
<PAGE>
ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

      Debt  Issuance  Costs - Debt  issuance  costs  are  recorded  at cost  and
      amortized  over the life of the note  payable,  which ranged from 15 to 24
      months.  Debt issuance costs totaled $475,694 and $195,833 at December 31,
      2001 and 2000, respectively.

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

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

      Long-Lived  Assets - We evaluate the carrying  value of long-term  assets,
      including intangibles,  when events or circumstance indicate the existence
      of a possible impairment,  based on 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.
                                      F-12
<PAGE>

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

      Revenue  Recognition - Revenue is recognized at the time the purchaser has
      accepted delivery of the product. For the year ended December 31, 2001, we
      sold  titanium  dioxide  and  lithium  titanate  nanoparticles,  and other
      materials,  to customers involved in research activities totaling $42,816.
      To date,  none of our sales have been  utilized by customers in commercial
      products held for sale.

      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.

      Recent Accounting  Pronouncements-SFAS No. 133,  Accounting for Derivative
      Instruments  and  Hedging  Activities,   as  amended,  requires  that  all
      derivative instruments,  including certain derivative instruments embedded
      in other contracts and hedging activities,  be recognized as either assets
      or liabilities at fair market value. We adopted the standard on January 1,
      2001.  There has been no impact on our  financial  statements  of adopting
      this statement.

      SFAS No. 140,  Accounting for Transfers and Servicing of Financial  Assets
      and  Extinguishments  of Liabilities - A Replacement of FASB Statement No.
      125,  requires  disclosures  related to  securitization  transactions  and
      collateral.  We adopted this statement at January 1, 2001.  There has been
      no impact on our financial statements of adopting this statement.

      In June 2001, the Financial  Accounting  Standards  Board ("FASB")  issued
      SFAS No. 141, Business  Combinations.  SFAS No. 141 establishes accounting
      and  reporting  standards for business  combinations  and is effective for
      business  combinations  initiated  after June 30,  2001.  We adopted  this
      statement  at July 1,  2001.  There has been no  impact  on our  financial
      statements of adopting this statement.

      In June  2001,  the FASB also  issued  SFAS No.  142,  Goodwill  and Other
      Intangible  Assets.  SFAS No. 142  establishes  accounting  and  reporting
      standards for goodwill and intangible assets,  requiring annual impairment
      testing  for  goodwill  and  intangible  assets,  and the  elimination  of
      periodic  amortization of goodwill and certain intangibles.  We will adopt
      the  provisions  of SFAS No.  142 in 2002.  Net  intangible  assets  as of
      December 31, 2001 are $3,739,864. We have not yet completed an analysis of
      the impact of the adoption of the statement.  The impairment analysis will
      be completed by June 30, 2002 as required by SFAS No. 142.

      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 No.
      143 is effective  for the year ending  December 31,  2003.  Management  is
      currently  evaluating the impact of this pronouncement on the consolidated
      financial statements.

      In  August  2001,  the  FASB  issued  SFAS  No.  144,  Accounting  for the
      Impairment  or  Disposal  of  Long-Lived  Assets.  SFAS No. 144  addresses
      accounting  and  reporting  for the  impairment  or disposal of long-lived
      assets,  including the disposal of a segment of business.  SFAS No. 144 is
      effective for the year ending  December 31, 2002.  Management is currently
      evaluating the impact of this pronouncement on the consolidated  financial
      statements.
                                      F-13
<PAGE>
ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

      Comprehensive Income - The only component of comprehensive income in 2001,
      2000, and 1999 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 deferred tax
      assets.

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

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

      Deferred  Revenue - We entered  into a sales  contract  on October 6, 2000
      with a customer for titanium dioxide  nanoparticles  under which the total
      contract  amount  was  prepaid.  During  2001,  $16,476  of  products  was
      delivered under the contract and recognized as sales revenues.

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

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

3.       ACQUISITION OF CERTAIN ASSETS

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

      The purchase price for the assets and technology was 15,000,000 Australian
      dollars (AUD$),  or $9,625,500 U.S. dollars (US$), and was payable in four
      equal installments.  The first installment was paid at closing on November
      16, 1999, the second and third  installments were paid on May 12, 2000 and
      the remaining installment was paid on August 1, 2000. The installments due
      in AUD$ were  translated  into US$ at the date of payment  and the related
      foreign  currency gain (loss) was recorded as other income or expense.  We
      are also  required to pay to BHP,  until the earlier of (1)  November  15,
      2014 or (2) the date we have  paid an  aggregate  royalty  of  105,000,000
      AUD$, a quarterly  royalty of from 1.5% to 3% of certain  titanium dioxide
      products  produced and 3% of other products sold. As of December 31, 2001,
      $922 of royalties were payable under this agreement.

      In connection with the Asset Purchase  Agreement,  we entered into a lease
      with BHP pursuant to which we lease  approximately  20,000  square feet of
      laboratory and testing space at BHP's testing facility in Reno, Nevada for
      a monthly rent of $16,153.  The lease is subject to automatic  renewal for
      six-month periods at  inflation-adjusted  rent until terminated by us. The
      lease grants us a right of first  refusal in the event BHP intends to sell
      the building and property subject to the lease.

                                      F-14
<PAGE>
ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

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

4.       PROPERTY AND EQUIPMENT

      Property and equipment  consisted of the following as of December 31, 2001
      and December 31, 2000:

                                                   2001                2000
                                                ----------          ----------
      Furniture and office equipment              $ 75,833           $ 82,582
      Vehicles                                     125,031            125,031
      Centrifugal jig equipment                    649,065            644,632
      Jig testing equipment                         45,128             45,128
      Pigment production equipment               6,974,548          6,822,679
                                                ----------          ----------
      Total                                      7,869,605          7,720,052
      Less accumulated depreciation             (1,881,655)        (1,118,135)
                                                ----------          ----------

      Total property and equipment             $ 5,987,950        $ 6,601,917
                                                ===========         ===========

      Depreciation expense for the years ended December 31, 2001, 2000, and 1999
      totaled $772,268, $751,846, and $169,234, respectively.

5.       PATENTS AND RELATED EXPENDITURES

Patents and related expenditures consisted of the following at December 31, 2001
and December 31, 2000:

                                                   2001               2000
                                                ----------         ----------
      Pigment production patent applications    $ 1,517,736        $ 1,523,670
      Centrifugal jig patents                     4,210,987          4,210,987
      Royalty agreement                             424,881            424,881
      Mineral recovery technology rights            243,000            243,000
                                                 ----------         ----------
                                                  6,396,604          6,402,538
      Less accumulated amortization              (2,656,740)        (2,290,798)
                                                 ----------         ----------

      Total patents and related expenditures    $ 3,739,864        $ 4,111,740
                                               ===========        ===========
                                      F-15
<PAGE>

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

6.       NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

      Notes payable consisted of the following at December 31, 2001 and 2000:

                                                      2001            2000
                                                  -----------      -----------
      Note payable to Doral 18, LLC              $  1,867,857      $ 7,000,000
      Less current portion                                          (3,500,004)
      Less discount resulting from allocation
      of debt proceeds to warrant                   (405,797)        (812,815)
                                                  -----------      -----------
      Long-term portion of notes payable          $ 1,462,060      $ 2,687,181
                                                  ===========      ===========

         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. At the same time, we
         acquired  call  options on 247,678  shares of our common  stock held by
         Doral 18, LLC.

         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 on or before the 15th day of
         each calendar  month in the  principal  amount of $291,667 plus accrued
         interest.  We had the right to redeem the  monthly  payment  amounts in
         cash at any time  throughout the term of the 2000 Note and could prepay
         the 2000 Note in  $250,000  increments  at any time at a price equal to
         115% of the sum of outstanding  principal and accrued  interest.  If we
         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 the applicable exchange price. The
         exchange  price  for any date was the  lesser  of (a) a fixed  exchange
         price of $3.00,  subject  to  adjustment,  and (b) the  average  of the
         lowest three daily  trading  prices of the common  shares during the 15
         trading days ending on the day before an exchange  right was exercised.
         At its option,  the holder of the 2000 Note could reduce at fair market
         value the number of shares subject to the call option described in Note
         8 in lieu of receiving shares upon the exercise of exchange rights. The
         2000 Note was due and payable in full on December 15, 2003.

         During 2000, we paid $18,221 of interest  through the  cancellation  of
         call options on 19,222 shares of our common stock.

         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.  In  addition,  we paid  $97,743  of
         principal  and  $244,941  of  interest  on the 2000  Note  through  the
         cancellation  of call  options on 228,456  shares of our common  stock.
         Doral also  converted  $644,804 of  principal  and $273,731 of interest
         payable on the 2000 Note into  824,800  shares of common  stock.  These
         conversions  resulted in additional  interest expense of $301,888 which
         is equal to the  difference  between the fair value of the stock at the
         date  of  conversion  and  the  conversion  price  stated  on the  note
         agreement.

         On June 7, 2001, we entered into an agreement with Doral under which we
         were  granted  the  option  to redeem up to  $1,652,252  of the  unpaid
         monthly payment amounts with the addition of a 10% redemption  premium.
         In addition,  Doral agreed to waive the penalties  associated with late
         effectiveness of the  registration  statement and gave us the option to

                                      F-16
<PAGE>
 ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------


         redeem  the  unexercised  portion  of  exchange  rights  that  are  not
         exercised within 90 days of becoming  exercisable.  In return for this,
         we granted  Doral  warrants to  purchase  300,000  common  shares at an
         exercise price of $3.00. The warrants expire on the earlier of December
         15, 2005 or the date 60 days  following the fifth day the closing price
         of our common shares equals or exceeds $12.00. The warrants have a fair
         value of $346,354 of which  $239,562 has been  amortized  into interest
         expense during the year ended  December 31, 2001. The remaining  amount
         will be recognized over the life of the note.

         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 has an
         interest rate of 11% per annum (see below). Interest is due and payable
         monthly.  If interest is not paid,  Doral  automatically  receives  the
         right to  exchange  (immediately  or at any later date during the term)
         the monthly interest payment amount into common stock at the applicable
         exchange price.  The exchange price for any date is equal to 75% of the
         average of the closing  price of our common  stock for the five trading
         days ending on the trading day immediately preceding the respective due
         date for payment of interest.  The principal amount of the 2001 Note is
         due and payable on March 31, 2003.

         In connection with the 2001 Note, 200,000 warrants were issued to Doral
         to purchase  common stock at an exercise  price of $1.50.  The warrants
         are  exercisable  at any time on or before the earlier of (a)  December
         15, 2006,  or (b) the date 60 days after the market price of the common
         stock has been equal to or  greater  than  $12.00 for five  consecutive
         days.  The  warrants  have an  estimated  fair  value  of  $74,733,  as
         determined using the Black-Scholes pricing model.

         In addition,  the exercise price of 650,000 warrants  previously issued
         to Doral in conjunction with the 2000 Note were repriced from $3.00 per
         share to $1.50 per share.  The repriced  warrants  have an  incremental
         fair value of $199,222,  as determined using the Black-Scholes  pricing
         model.

         Doral also  received  contingent  warrants  to  purchase  up to 500,000
         shares of common stock.  The warrants  expire on the later of March 31,
         2003 or the date the 2001 Note has been paid in full.  The warrants are
         subject to a vesting schedule under which 25,000 shares of common stock
         vest when the closing price of our common stock exceeds $2.00 per share
         for a period of ten consecutive  trading days.  Thereafter,  additional
         shares  of  common  stock  vest  in  increments  of  25,000  on the day
         following  the first time the closing  price  exceeds a number  greater
         than $2.00 that is evenly divisible by .5 (e.g.  $2.50,  $3.00,  $3.50)
         for ten  consecutive  trading days. The warrant  exercise price is $.01
         per common share.  The fair value of these  warrants will be recognized
         if and/or when such contingencies are resolved and the warrants vest.

         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 not  considered to result in a  substantially  different debt
         instrument.  Accordingly,  although  the  note  has a  face  amount  of
         $2,000,000, the carrying amount of the note on the date of modification
         remains at $1,867,857  and the  difference  between this amount and the
         face  amount of  $2,000,000  will be recorded  as  additional  interest
         expense  over the life of the note.  The new  warrants  issued  and the
         repricing of the  existing  warrants  were  recorded at a fair value of
         $273,955 and represent  additional debt modification  costs. Such costs
         are being  amortized using the interest method over the new term of the
         debt.

         The proceeds of the 2000 Note were  allocated  between the debt and the
         warrants based on relative fair values on the date of issuance. Because
         the 2001 Note was not  substantially  different from the 2000 Note, the
         remaining unamortized discount on the note payable is being accreted to
         interest expense over the term of the 2001 Note.

                                      F-17
<PAGE>
ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

         Under the terms of the 2001 Note, we are required to maintain a minimum
         cash  and  cash  equivalents  balance  of  $250,000  at the end of each
         calendar  quarter and at any time the closing price of our common stock
         has been below $1.00 per share for three or more  trading  days.  As of
         December 31, 2001, we complied with these requirements.

         The 2001 Note is  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.

         We have  long-term  capital  leases 4  related  to the  acquisition  of
         equipment.  Long-term capital lease obligations as of December 31, 2001
         are as follows:

         Year ending December 31, 2002                  $ 2,353
         Less amounts representing interest                 (41)
         Less current portion                            (2,312)
                                                         ------

         Total                                            None
                                                         ------



         The gross book value of equipment  under capital  leases was $46,395 at
         December 31, 2001 and 2000. The  amortization  expense  associated with
         these capital leases is included in depreciation expense.

7.       STOCK OPTIONS AND WARRANTS

         Stock Options - We have stock option plans administered by the Board of
         Directors  that  provide  for the  granting  of options  to  employees,
         officers, directors and other service providers of the Company. Options
         granted under the plans  generally  are granted with an exercise  price
         equal to the market value of a common share at the date of grant,  have
         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, 2001,  2000 and
         1999 is summarized as follows:
<TABLE>
<CAPTION>

                                            2001                       2000                      1999
                                 ------------------------- ------------------------- --------------------------
                                                  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                            2,958,700   $  5.37          3,060,000    $ 5.92       1,965,000    $  6.61
Granted during the year              1,368,000      2.12            420,000      3.86       1,550,000       5.74
Cancelled                             (595,000)     4.14           (450,000)     7.80        (455,000)      8.30
Exercised                              (65,000)     2.00            (71,300)     4.71
                                     ---------   --------          ---------   --------      --------   ----------

Outstanding at end of year           3,666,700   $  4.38          2,958,700    $ 5.37       3,060,000     $ 5.92
                                     =========   =========         =========   =========     =========   =========
Options exercisable at year end      2,999,700   $  4.84          2,153,700    $ 5.45       1,835,000     $ 5.64
                                     =========   =========         =========   =========     =========   =========

Weighted average fair value of
  options granted during year                    $  1.70                       $ 3.24                     $ 2.83
                                                 =========                    =========                  =========
</TABLE>
                                      F-18
<PAGE>

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

         The  following  table  summarizes   information   about  stock  options
         outstanding at December 31, 2001:
<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
---------------                -----------    ------------      -----                -----------      -----

<C>                                <C>           <C>           <C>                     <C>         <C>
$2.00 to$ 2.10                       973,000       4.0           $ 2.00                  411,000     $ 2.00
$2.25 to$ 4.00                       825,000       2.9             2.62                  795,000       2.61
$4.38 to$ 6.75                     1,008,700       2.3             5.09                  933,700       5.14
$6.79 to$ 10.00                      860,000       1.6             7.93                  860,000       7.93
-----   -------                      -------       ---             ----                  -------       ----

                                   3,666,700       2.7           $ 4.38                2,999,700     $ 4.84
                                   =========       ===           ======                =========     ======
</TABLE>


         We have elected to follow the measurement provisions of APB Opinion No.
         25, under which no recognition of expense is required in accounting for
         stock options  granted to employees for which the exercise price equals
         or  exceeds  the fair  market  value of the  stock at the  grant  date.
         Generally,  stock  options are granted at an option price at or greater
         than fair market value on the date of grant.  We recorded  compensation
         expense of $158,089,  $424,063,  and $765,386 for stock options granted
         to non-employees for the years ended December 31, 2001, 2000, and 1999,
         respectively.

         We  have  adopted  the  disclosure-only  provisions  of SFAS  No.  123,
         Accounting  for  Stock-Based  Compensation.  To  estimate  compensation
         expense  that  would be  recognized  under  SFAS 123,  we have used the
         modified  Black-Scholes  option pricing model.  If we had accounted for
         our stock options using the accounting  method  prescribed by SFAS 123,
         our net loss and loss per share would be as follows:

<TABLE>
<CAPTION>

                                                                 2001             2000                1999
                                                             -----------       -----------         -----------
<S>                                                          <C>               <C>                  <C>
Net loss (both basic and diluted):
  As reported                                                $ 7,754,031       $ 5,914,474          $ 3,689,866
  Pro forma                                                    9,228,721         9,637,609            4,628,960

Loss per common share (both basic and diluted):
  As reported                                                       0.39              0.34                 0.23
  Pro forma                                                         0.46              0.56                 0.30
</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:

                                    2001             2000             1999
                                   ------           ------           ------
Dividend yield                     None             None             None
Expected volatility                   81 %             93 %            75 %
Risk-free interest rate             4.76 %           6.40 %          5.80 %
Expected life (years)                5.0              4.6             5.0

                                      F-19
<PAGE>

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999,
AND FOR THE PERIOD APRIL 9, 1973 (DATE OF INCEPTION) TO DECEMBER 31, 2001
(Expressed in United States Dollars)
--------------------------------------------------------------------------------

         Warrants - Warrant  activity  for the years ended  December  31,  2001,
         2000, and 1999 is summarized as follows:
<TABLE>
<CAPTION>

                                                  2001                      2000                      1999
                                      ----------------------      --------------------      --------------------
                                               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                              1,883,672     $ 5.175         150,000     $ 8.50       180,000    $ 16.72
Granted during the year                3,441,668        1.24       1,733,672       4.89       150,000       8.50
Expired                                                                                      (180,000)     16.72
Exercised                               (713,333)       1.00
                                       ---------        ----       ---------       ----       -------       ----
Outstanding at end of year             4,612,007     $  2.92       1,883,672     $5.175       150,000     $ 8.50
                                       =========     =======       =========     ======       =======     ======
</TABLE>




         The warrants were issued in conjunction  with debt offerings,  issuance
         of common stock, and payment for outside services.  The warrants expire
         on various  dates  ranging from March 2002 to July 2006.  Most warrants
         contain  provisions  whereby the expiration  date is accelerated if our
         Common Shares close at or above specified  prices ranging from $2.50 to
         $14.00 per share.

8.       OTHER TRANSACTIONS

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

         Pursuant to an assignment  and agreement  dated  December 15, 2000, the
         equity fund referred to in the preceding  paragraph  transferred all of
         its  remaining  rights  under  the  common  stock  purchase  agreement,
         including  its right to reprice  the  remaining  500,521 of the initial
         1,251,303  shares,  to Doral 18, LLC (Doral) (see Note 6).  Pursuant to
         this  purchase   agreement,   Doral  exercised  its  right  to  reprice
         approximately  70,928 of the initial shares and received 247,678 Common
         Shares. In exchange for approximately  $1,650,000, we bought from Doral
         and  terminated  all remaining  rights under the common stock  purchase
         agreement,  including all remaining  repricing  rights.  In conjunction
         with this buyout,  Doral  granted us a call option to purchase  247,678
         Common Shares for a nominal  exercise price.  Between December 15, 2000
         and  December 28,  2001,  we paid $97,743 of principal  and $244,941 of
         interest  on the $7 million  10%  Asset-Backed  Exchangeable  Term Note
         through the  cancellation  of call options on the 247,678 Common Shares
         (see Note 6).

         In 2001,  we received  payment of $561,300  from an investor on a stock
         subscription receivable.

         On March 26,  2001,  266,170  shares of common  stock held in escrow as
         part of the 1999 TransMar, Inc. merger agreement were cancelled because
         the assets acquired from TransMar,  Inc. did not generate the cash flow
         required by the escrow agreement.

                                      F-20
<PAGE>

         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.

9.       LEASES

         Operating  Leases - We  lease  certain  premises  and  equipment  under
         operating  leases.  As of  December  31,  2001,  future  minimum  lease
         payments under non-cancelable operating leases were $5,415 due in 2002.

         Lease  expense for the years ended  December 31, 2001,  2000,  and 1999
         totaled $304,330, $283,964, and $104,622, respectively.

         Mineral Leases - Our subsidiary,  MRS, has entered into various mineral
         leases for a 100% interest in approximately  9,700 acres of land in the
         state of Tennessee,  United States with minimum annual advance  royalty
         payments as follows:

         Year ending December 31:
           2002                                             $    139,761
           2003                                                  157,537
           2004                                                  248,411
           2005                                                  254,807
           2006                                                  254,807
           Thereafter                                            355,405



         The mineral leases are subject to a production  royalty;  however,  MRS
         will  receive a credit  against  production  royalties  for all advance
         royalties  paid. The lessors can only terminate the leases upon failure
         of MRS to make the minimum  payments  as  required  by the leases.  The
         Company has paid  royalties of $87,593,  $101,559,  and $55,440 for the
         years ended  December 31, 2001,  2000,  and 1999,  respectively.  As of
         December 31, 2001, we owed $8,868 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, 2001.

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

<TABLE>
<CAPTION>
                                                                                  Year Ended December
                                                               ------------------------------------------------
                                                               2001              2000               1999

<S>                                                           <C>               <C>                <C>
Federal statutory income taxes (benefit)                      $ (2,713,911)     $ (2,010,921)      $ (1,254,554)
Meals and entertainment                                                601             1,824              2,349
Valuation allowance                                              2,713,310         2,009,097          1,252,205
                                                                 ---------         ---------          ---------

    Total                                                            None              None               None
                                                                 ---------         ---------          ---------
</TABLE>

                                      F-21
<PAGE>


         The components of the deferred tax assets consisted of the following as
         of December 31, 2001 and 2000:
                                                2001               2000
                                            ----------         ----------
Deferred tax assets:
  Net operating loss carryforward           $ 6,238,645        $ 3,349,475
  Unrealized loss                                80,359             24,312
                                            ----------         ----------
  Total deferred tax assets                   6,319,004          3,373,787

Deferred tax liabilities
 - basis difference in assets                  (879,780)          (725,740)

Valuation allowance                          (5,439,224)        (2,648,047)
                                             ----------         ----------

Total deferred tax assets                         None              None
                                             ==========         ==========




         The net operating loss  carryforwards  total $17,824,699 as of December
         31, 2001 will expire at various dates beginning in 2001 through 2020.

11.      COMMITMENTS AND CONTINGENCIES

         Employment  Agreement - Under the current employment  agreement between
         Altair and our president,  Dr. William P. Long, Dr. Long is entitled to
         receive  200,000  Common Shares in the event (i) voting control of over
         35% of the issued  stock is acquired  in a merger,  takeover or similar
         transaction (a "change of control") and Dr. Long's employment agreement
         is  terminated  within 180 days before or at any time after such change
         of  control,  or  (ii)  absent  a  change  of  control,  if Dr.  Long's
         employment  agreement is terminated  for any reason except by Dr. Long,
         by mutual consent, by Altair for cause, or at the end of the term.

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

12.      RELATED PARTY TRANSACTIONS

         During the year ended  December 31, 2001,  officers made loans to us of
         $168,000. These are short-term,  unsecured,  non-interest bearing loans
         payable  on demand,  the  proceeds  of which were used to meet  working
         capital needs. A total of $25,000 was repaid during 2001.

13.      SUBSEQUENT EVENT

         On March 11, 2002, we entered into a stock subscription  agreement with
         a private investor which provides for the sale of 666,667 common shares
         and 1,000,002  warrants to purchase  common  shares at exercise  prices
         between  $2.00 and $3.00 per share for  $1,000,000 on or before May 31,
         2002.

                                     ******

                                      F-22
<PAGE>

                                                                     Exhibit 23
                         INDEPENDENT AUDITORS' CONSENT
                         -----------------------------


We consent to the  incorporation  by reference in  Registration  Statement  Nos.
333-76820, 333-54092, 333-36462, 333-45511 of Altair International, Inc. on Form
S-3  and  Registration   Statement  Nos.   333-64495  and  333-33481  of  Altair
International, Inc. on Form S-8 of our report dated March 25, 2002, appearing in
this Annual Report on Form 10-K of Altair International, Inc. for the year ended
December 31, 2001.



/s/DELOITTE & TOUCHE LLP
------------------------
   DELOITTE & TOUCHE LLP

   Salt Lake City, Utah
   March 27, 2002

                                      44
<PAGE>