---

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

||X| | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED  MARCH 31, 2005
|--- | --------------------------------------------------------------------------------------------------------------------------------------

||_| | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934 FOR THE
TRANSITION PERIOD FROM _________________ TO _________________
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|Canada                                        | 1-12497               | 33-1084375                      
|--------------------------------------------- | --------------------- | --------------------------------
|                                              |                       |                                 
|(State or other jurisdictionof incorporation) | (Commission File No.) | (IRS EmployerIdentification No.)

|204 Edison WayReno, Nevada 89502                            
|------------------------------------------------------------
|                                                            
|(Address of principal executive offices, including zip code)

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

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Act).   YES |_|  NO |X|

As  of May 5, 2005
the registrant had 58,788,789 Common Shares outstanding.

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PART I - FINANCIAL
INFORMATION

Item  1.   Financial
Statements

ALTAIR
NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Expressed in United
States Dollars)(Unaudited)

|                                                                                                                                                               | March 31, 2005 |  | December 31, 2004 |            
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- |  | ----------------- | -----------
|ASSETS                                                                                                                                                         |                |  |                   |            
|Current Assets                                                                                                                                                 |                | 
|Cash and cash equivalents                                                                                                                                      |                |  | $                 | 31,632,286 
|Accounts receivable, net                                                                                                                                       |                |  |                   | 293,101    
|Prepaid expenses and other current assets                                                                                                                      |                |  |                   | 85,321     
|                                                                                                                                                               |                |  |                   |            
|Total current assets                                                                                                                                           |                |  |                   | 32,010,708 
|                                                                                                                                                               |                |  |                   |            
|Investment in available for sale securities                                                                                                                    |                |  |                   | 597,000    
|                                                                                                                                                               |                |  |                   |            
|Property, Plant and Equipment, net                                                                                                                             |                |  |                   | 6,555,191  
|                                                                                                                                                               |                |  |                   |            
|Patents, net                                                                                                                                                   |                |  |                   | 953,673    
|                                                                                                                                                               |                |  |                   |            
|Other Assets                                                                                                                                                   |                |  |                   | 18,200     
|                                                                                                                                                               |                |  |                   |            
|Total
     Assets                                                                                                                                              |                |  | $                 | 40,134,772 
|                                                                                                                                                               |                |  |                   |            
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                           |                | 
|Current Liabilities                                                                                                                                            |                | 
|Trade accounts payable                                                                                                                                         |                |  | $                 | 274,128    
|Accrued liabilities                                                                                                                                            |                |  |                   | 1,029,254  
|Note payable, current portion                                                                                                                                  |                |  |                   | 600,000    
|                                                                                                                                                               |                |  |                   |            
|Total current liabilities                                                                                                                                      |                |  |                   | 1,903,382  
|                                                                                                                                                               |                |  |                   |            
|Note Payable, Long-Term Portion                                                                                                                                |                |  |                   | 2,331,011  
|                                                                                                                                                               |                |  |                   |            
|Commitments and Contingencies                                                                                                                                  |                | 
|                                                                                                                                                               |                | 
|Stockholders Equity                                                                                                                                           |                | 
|Common stock, no par value, unlimited shares authorized;
   58,785,289 and 49,775,694 shares issued and
   outstanding at March 31, 2005 and December 31, 2004 |                |  |                   | 91,360,031 
|Accumulated deficit                                                                                                                                            |                |  |                   | (55,461,652
|Accumulated other comprehensive income                                                                                                                         |                |  |                   | 2,000      
|                                                                                                                                                               |                |  |                   |            
|Total
     Stockholders Equity                                                                                                                                |                |  |                   | 35,900,379 
|                                                                                                                                                               |                |  |                   |            
|Total
     Liabilities and Stockholders Equity                                                                                                                |                |  | $                 | 40,134,772 
|                                                                                                                                                               |                |  |                   |            

See notes to the
consolidated financial statements.

2

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ALTAIR
NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Expressed
in United States Dollars)(Unaudited)

|                                            | Three Months Ended March 31, | 
|------------------------------------------- | ---------------------------- | 
|                                            | 2005                         | 
|Revenues                                    |                              | 
|License fees                                |                              | 
|Product sales                               |                              | 
|Commercial collaborations                   |                              | 
|Contracts and grants                        |                              | 
|                                            |                              | 
|Total revenues                              |                              | 
|                                            |                              | 
|Operating Expenses                          |                              | 
|Cost of product sales                       |                              | 
|Research and development                    |                              | 
|Sales and marketing                         |                              | 
|General and administrative expenses         |                              | 
|Depreciation and amortization               |                              | 
|                                            |                              | 
|Total operating expenses                    |                              | 
|                                            |                              | 
|Loss from Operations                        |                              | 
|                                            |                              | 
|Other (Income) Expense                      |                              | 
|Interest expense                            |                              | 
|Interest income                             |                              | 
|Loss on foreign exchange                    |                              | 
|                                            |                              | 
|Total other (income) expense, net           |                              | 
|                                            |                              | 
|                                            |                              | 
|Net Loss                                    |                              | 
|                                            |                              | 
|Loss per common share - Basic and diluted   |                              | 
|                                            |                              | 
|Weighted average shares - Basic and diluted |                              | 
|                                            |                              | 

See
  notes to the consolidated financial statements.

3

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

|                                     | Common Stock |  |              |            | AccumulatedOther   |   |                     | 
|------------------------------------ | ------------ |  | ------------ | ---------- | ------------------ | - | ------------------- | 
|                                     | Shares       |  | StatedAmount |            | AccumulatedDeficit |   | ComprehensiveIncome | 
|BALANCE, DECEMBER 31, 2004           |              |  |              | 49,775,694 |                    | $ | 65,505,630          | 
|                                     |              |  |              |            |                    |  
|Comprehensive loss:                  |              | 
|Net loss                             |              |  |              | -          |                    |   | -                   | 
|Other comprehensive income,          |              | 
|net of taxes of $0                   |              |  |              | -          |                    |   | -                   | 
|                                     |              |  |              |            |                    |  
|Comprehensive loss                   |              |  |              | -          |                    |   | -                   | 
|                                     |              |  |              |            |                    |  
|Variable accounting on stock options |              |  |              | -          |                    |   | 648,339             | 
|Exercise of stock options            |              |  |              | 1,092,000  |                    |   | 1,625,990           | 
|Exercise of warrants                 |              |  |              | 2,879,281  |                    |   | 4,259,672           | 
|Common stock issued, net of          |              | 
|issuance costs                       |              |  |              | 5,038,314  |                    |   | 19,320,400          | 
|                                     |              |  |              |            |                    |   |                     | 
|BALANCE, MARCH 31, 2005              |              |  |              | 58,785,289 |                    | $ | 91,360,031          | 
|                                     |              |  |              |            |                    |   |                     | 

See notes to the
consolidated financial statements.

4

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

|                                                              | Three Months Ended March 31, | 
|------------------------------------------------------------- | ---------------------------- | 
|                                                              | 2005                         | 
|Cash flows from operating activities:                         |                              | 
|Net loss                                                      |                              | 
|Adjustments to reconcile net loss to net cash                 |                              | 
|used in operating activities:                                 |                              | 
|Depreciation and amortization                                 |                              | 
|Stock options issued to non-employees                         |                              | 
|Variable accounting on stock options                          |                              | 
|Securities received in payment of license fees                |                              | 
|Amortization of discount on note payable                      |                              | 
|Changes in assets and liabilities:                            |                              | 
|Accounts receivable, net                                      |                              | 
|Prepaid expenses and other current assets                     |                              | 
|Trade accounts payable                                        |                              | 
|Accrued liabilities                                           |                              | 
|                                                              |                              | 
|Net cash used in operating activities                         |                              | 
|                                                              |                              | 
|Cash flows from investing activities:                         |                              | 
|Purchase of property and equipment                            |                              | 
|                                                              |                              | 
|Net cash used in investing activities                         |                              | 
|                                                              |                              | 
|Cash flows from financing activities:                         |                              | 
|Issuance of common shares for cash, net of
    issuance costs |                              | 
|Proceeds from exercise of stock options                       |                              | 
|Proceeds from exercise of warrants                            |                              | 
|                                                              |                              | 
|Net cash provided by financing activities                     |                              | 
|                                                              |                              | 
|Net increase in cash and cash equivalents                     |                              | 
|                                                              |                              | 
|Cash and cash equivalents, beginning of period                |                              | 
|                                                              |                              | 
|Cash and cash equivalents, end of period                      |                              | 
|                                                              |                              | 
|Supplemental disclosures:                                     |                              | 
|Cash paid for interest                                        |                              | 
|                                                              |                              | 
|Cash paid for income taxes                                    |                              | 
|                                                              |                              | 

(continued)

5

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

|Supplemental
      schedule of non-cash investing and financing activities: |  | 
|--------------------------------------------------------------------------- |  | 
|For
      the three months ended March 31, 2005:                            |  | 
|-
      None                                                                |  | 
|                                                                            |  | 
|For
      the three months ended March 31, 2004:                            |  | 
|-
      None                                                                |  | 

(concluded)

See notes to the consolidated financial statements.

6

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ALTAIR
NANOTECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note  1.   Basis of
Preparation of Financial Statements

These
unaudited interim financial statements of Altair Nanotechnologies Inc. and its
subsidiaries (collectively, Altair, we or the Company)
have been prepared in accordance with the rules and regulations of the United States
Securities and Exchange Commission (the Commission). Such rules and
regulations allow the omission of certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting principles
generally accepted in the United States, so long as the statements are not misleading. In
the opinion of Company management, these financial statements and accompanying notes
contain all adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position and results of operations for the periods shown.
These interim financial statements should be read in conjunction with the audited
financial statements and notes thereto contained in our Annual Report on Form 10-K/A for
the year ended December 31, 2004, as filed with the Commission on March 10, 2005.

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

The
results of operations for the three-month period ended March 31, 2005 are not necessarily
indicative of the results to be expected for the full year.

Note  2.   Summary
of Significant Accounting Policies

Net
Loss Per Common Share  Basic earnings per share is computed using the weighted
average number of common shares outstanding during the period.  Diluted earnings per
share is computed using the weighted average number of common and potentially dilutive
shares outstanding during the period.  Potentially dilutive shares consist of the
incremental common shares issuable upon the exercise of stock options and warrants. 
Potentially dilutive shares are excluded from the computation if their effect is
antidilutive.  We had a net loss for all periods presented herein; therefore, none of
the stock options and warrants outstanding during each of the periods presented were
included in the computation of diluted loss per share as they were antidilutive.

Investment
in Available for Sale Securities Available for sale securitiesincludes
publicly-traded equity investments which are classified as available for sale and recorded
at market using the specific identification method. Unrealized gains and losses (other
than temporary impairments) are recorded in other comprehensive income, which is reported
as a component of stockholders equity. We evaluate our investments on a quarterly
basis to determine if a potential impairment exists. Our evaluation considers the
investees specific business conditions as well as general industry and market
conditions.

Accumulated
Other Comprehensive Income Accumulated other comprehensive income consists
entirely of unrealized gain on the investment in available for sale securities.

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. Management believes the net carrying amount of
long-lived assets will be recovered by future cash flows generated by commercialization of
the titanium processing technology.

7

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

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

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

|                        | Three Months Ended
March 31,
|----------------------- | ----------------------------
|                        | 2005                        
|Dividend yield          | None                        
|Expected volatility     | 103%                        
|Risk-free interest rate | 3.86%                       
|Expected life (years)   | 2.83                        

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

|                                                                                                                                              | Three Months EndedMarch 31, | 
|--------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | 
|                                                                                                                                              | 2005                        | 
|Net loss (basic and diluted) as reported                                                                                                      |                             | 
|Deduct: stock-based employee compensation                                                                                                     |                             | 
|expense included in reported net loss, net of                                                                                                 |                             | 
|$0 related tax effects                                                                                                                        |                             | 
|Add: total stock-based employee compensation
 expense determined under fair value based
 method for all awards, net of $0 related tax effects |                             | 
|                                                                                                                                              |                             | 
|Pro forma net loss                                                                                                                            |                             | 
|                                                                                                                                              |                             | 
|Loss per common share (basic and diluted):                                                                                                    |                             | 
|As reported                                                                                                                                   |                             | 
|                                                                                                                                              |                             | 
|Pro forma                                                                                                                                     |                             | 
|                                                                                                                                              |                             | 

8

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Revenue
Recognition  We recognize revenue when persuasive evidence of an arrangement
exists, delivery has occurred or service has been performed, the fee is fixed and
determinable, and collectibility is probable.  During the three months ended March
31, 2005, our revenues were derived from license fees, product sales, commercial
collaborations and contracts and grants.  License fees are recognized when the
earnings process is complete. Revenue for product sales is recognized at the time the
purchaser has accepted delivery of the product. Based on the specific terms and conditions
of each contract/grant, revenues are recognized on a time and materials basis, a
percentage of completion basis and/or a completed contract basis. Revenue under contracts
based on time and materials is recognized at contractually billable rates as labor hours
and expenses are incurred. Revenue under contracts based on a fixed fee arrangement is
recognized based on various performance measures, such as stipulated milestones.  As
these milestones are achieved, revenue is recognized.  From time to time, facts
develop that may require us to revise our estimated total costs or revenues
expected.  The cumulative effect of revised estimates is recorded in the period in
which the facts requiring revisions become known.  The full amount of anticipated
losses on any type of contract are recognized in the period in which they become known.

Recent
Accounting Pronouncements As described above in Stock-Based
Compensation, we account for stock-based compensation awards issued to employees using
the intrinsic value measurement provisions of APB 25. Accordingly, no compensation expense
has been recorded for stock options granted to employees with exercise prices greater than
or equal to the fair value of the underlying common stock at the option grant date. On
December 16, 2004, the FASB issued Statement of Financial Accounting Standards No. 123
(revised 2004) (SFAS 123R), Share-Based Payment, which eliminates the
alternative of applying the intrinsic value measurement provisions of APB 25 to stock
compensation awards issued to employees. The new standard requires enterprises to measure
the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award. That cost will be recognized over the
period during which an employee is required to provide services in exchange for the award,
known as the requisite service period (usually the vesting period).

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

SFAS
123R will be effective for our fiscal year beginning January 1, 2006, and requires the use
of either the Modified Prospective Application Method or the Modified Retrospective
Method.  Under the Modified Prospective Method, SFAS 123R is applied to new awards
and to awards modified, repurchased, or cancelled after the effective date. 
Additionally, compensation cost for the portion of awards for which the requisite service
has not been rendered (such as unvested options) that are outstanding as of the date of
adoption shall be recognized as the remaining requisite services are rendered.  The
compensation cost relating to unvested awards at the date of adoption shall be based on
the grant-date fair value of those awards as calculated for pro forma disclosures under
the original SFAS123.  In addition, companies may use the Modified Retrospective
Application Method.  This method may be applied to all prior years for which the
original SFAS 123 was effective or only to prior interim periods in the year of initial
adoption.  If the Modified Retrospective Application Method is applied, financial
statements for prior periods shall be adjusted to give effect to the fair-value-based
method of accounting for awards on a consistent basis with the pro forma disclosures
required for those periods under the original SFAS 123.

Overhead
Allocation  Facilities overhead, which is comprised primarily of occupancy and
related expenses, is allocated to research and development based on labor costs.

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

9

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Note  3.   Notes
Payable

Notes
payable consisted of the following at March 31, 2005 and December 31, 2004:

|                                   | March 31, 2005 |  | December 31, 2004 |          
|---------------------------------- | -------------- |  | ----------------- | ---------
|Note payable to BHP Minerals       |                |  |                   |          
|International, Inc.                |                |  | $                 | 2,931,011
|Less current portion               |                |  |                   | 600,000  
|                                   |                |  |                   |          
|Long-term portion of notes payable |                |  | $                 | 2,331,011
|                                   |                |  |                   |          

The
note payable to BHP Minerals International, Inc. is in the face amount of $3,000,000.
Interest on the note does not begin to accrue until August 8, 2005. As a result, we
imputed the interest at a rate of 11% and reduced the face amount of the note payable by
$566,763 at the date of issuance, an amount that is being amortized to interest expense
over the life of the note. The first payment of $600,000 of principal plus accrued
interest is due February 8, 2006. Additional payments of $600,000 plus accrued interest
are due annually on February 8, 2007 through 2010.

Note  4.   Intangible Assets

Our
intangible assets consist of patents and related expenditures associated with the
nanomaterials and titanium dioxide pigment technology. In accordance with SFAS No. 142, we
are amortizing these assets over their useful lives. The amortized intangible asset
balance as of March 31, 2005 was:

|                    | GrossCarryingAmount |  | AccumulatedAmortization |           | NetCarryingAmount |  
|------------------- | ------------------- |  | ----------------------- | --------- | ----------------- | -
|Patents and related |                     |  |                         |           |                   |  
|expenditures        |                     |  | $                       | 1,517,736 |                   | $

The
weighted average amortization period for patents and related expenditures is approximately
16.5 years. Amortization expense was $21,204 for the three months ended March 31, 2005,
which represented the amortization relating to the identified intangible assets amortized
under SFAS No. 142. For each of the next five years, amortization expense relating to
intangibles is expected to be $84,816 per year. Management believes the net carrying
amount of intangible assets will be recovered by future cash flows generated by
commercialization of the titanium processing technology.

Note  5.   Related
Party Transactions

On
December 31, 2003, we entered into a consulting agreement with Advanced Technology Group
LLC (ATG), whose managing partner is David King, a Director of the Company.
The agreement stipulates that ATG will furnish consulting services in reviewing potential
federal grant opportunities and providing proposal development assistance on selected
programs for a period of one year. The agreement was subsequently extended for an
additional year through December 31, 2005. Under the terms of the agreement, ATG is paid
on a contingency basis at a rate of 6% of the first $1,000,000 in grant monies secured
from applications prepared in any calendar year plus 3.5% of any cumulative amounts over
$1,000,000. ATG also agreed to provide consulting services at a rate of $200 per hour upon
request of the Company. In March 2005, ATG performed certain consulting services for us
for which we paid $2,833.

Note  6.   Business
Segment Information

In
accordance with SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information, management views the Company as operating in four business segments:
Performance Materials, Life Sciences, Tennessee Mineral Property, and the Altair Jig.
Reportable segment data reconciled to the consolidated financial statements as of and for
the three-month periods ended March 31, 2005 and 2004 is as follows:

10

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|                                  | Net Sales |  | (Income) Loss From Operations |           | Depreciation and Amortization |   | Assets    |  
|--------------------------------- | --------- |  | ----------------------------- | --------- | ----------------------------- | - | --------- | -
|Three Months Ended March 31, 2005 |           |  |                               |           |                               |   |           |  
|Performance Materials             |           |  | $                             | 332,580   |                               | $ | 1,090,729 |  
|Life Sciences                     |           |  |                               | 695,000   |                               |   | (529,591  | )
|Tennessee Mineral Property        |           |  |                               | -         |                               |   | 3,215     |  
|Altair Jig                        |           |  |                               | -         |                               |   | 2,450     |  
|Corporate and other               |           |  |                               | -         |                               |   | 1,731,201 |  
|                                  |           |  |                               |           |                               |   |           |  
|Consolidated Total                |           |  | $                             | 1,027,580 |                               | $ | 2,298,004 |  
|                                  |           |  |                               |           |                               |   |           |  
|                                  |           | 
|Three Months Ended March 31, 2004 |           | 
|Performance Materials             |           |  | $                             | 139,749   |                               | $ | 906,417   |  
|Life Sciences                     |           |  |                               | -         |                               |   | 22,907    |  
|Tennessee Mineral Property        |           |  |                               | -         |                               |   | 62,400    |  
|Altair Jig                        |           |  |                               | -         |                               |   | 2,136     |  
|Corporate and other               |           |  |                               | -         |                               |   | 689,154   |  
|                                  |           |  |                               |           |                               |   |           |  
|Consolidated Total                |           |  | $                             | 139,749   |                               | $ | 1,683,014 |  
|                                  |           |  |                               |           |                               |   |           |  

For
the three months ended March 31, 2005, we had sales to two major customers, each of which
accounted for 10% or more of revenues. Total sales to these customers for the three months
ended March 31, 2005 and the balance of their accounts receivable at March 31, 2005 were
as follows:

|Customer                              |  | Sales
      - 3 Months
      Ended
      March 31, 2005 |   | Accounts
      Receivable at
      March 31, 2005 | 
|------------------------------------- |  | ------------------------------------------------------- | - | ------------------------------------------------- | 
|Performance
      Materials Division: |  |                                                         |   |                                                   | 
|Western
      Michigan University     |  |                                                         | $ | 109,709                                           | 
|                                      |  |                                                        
|Life
      Sciences Division:         |  |                                                        
|Spectrum
      Pharmaceuticals, Inc.  |  |                                                         |   | 695,000                                           | 

For
the three months ended March 31, 2004, we had sales to three major customers, each of
which accounted for 10% or more of revenues. Total sales to these customers for the three
months ended March 31, 2004 and the balance of their accounts receivable at March 31, 2004
were as follows:

|Customer                        |  | Sales - 3 MonthsEndedMarch 31, 2004 |   | AccountsReceivable atMarch 31, 2004 | 
|------------------------------- |  | ----------------------------------- | - | ----------------------------------- | 
|Performance Materials Division: |  |                                    
|Titanium Metals Corp.           |  |                                     | $ | 75,000                              | 
|Western Michigan University     |  |                                     |   | 20,456                              | 
|Western Oil Sands               |  |                                     |   | 42,671                              | 

11

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Note  7.   
Investment in Available for Sale Securities

Investment
in available for sale securities consists of 100,000 restricted shares of Spectrum
Pharmaceuticals, Inc. (Spectrum) common stock received in January 2005. The
shares were received as partial payment of licensing fees when Spectrum entered into a
license agreement for RenaZorb. On receipt, the shares were recorded at their
market value of $595,000 as measured by their closing price on the Nasdaq SmallCap Stock
Market. At March 31, 2005, their fair value was $597,000, representing an unrealized
holding gain of $2,000.

Note  8.   Other
Transactions

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

12

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Item  2.   MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF  OPERATIONS

The
following discussion summarizes the material changes in our financial condition between
December 31, 2004 and March 31, 2005 and the material changes in our results of operations
and financial condition between the three-month periods ended March 31, 2004 and March 31,
2005. This discussion should be read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations included in the Companys
Annual Report on Form 10-K/A for the year ended December 31, 2004.

Overview

We
are a Canadian company, with principal assets and operations in the United States, whose
primary business is developing and commercializing nanomaterial and titanium dioxide
pigment technologies. We are organized into two divisions, a Performance Materials
Division and a Life Sciences Division. Our research, development, production and marketing
efforts are currently directed toward six market applications that utilize our proprietary
technologies:

|The
Performance  Materials Division.
|------------------------------------

| |  | Advanced
Materials
| | - | ------------------

| |  | The
marketing of titanium dioxide pigments;
| | - | -------------------------------------------

| |  | The
marketing and production of nano-structured powders for thermal spray applications;
| | - | ---------------------------------------------------------------------------------------

| |  | The
development of nano-structured powders for nano-sensor applications;
| | - | ------------------------------------------------------------------------

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

| |  | Air
and Water Treatment
| | - | -----------------------

| |  | The
development of photovoltaics for air cleansing.
| | - | ---------------------------------------------------

| |  | The
marketing and production of Nanocheck  phosphate binding materials for
prevention of algae growth.
| | - | -------------------------------------------------------------------------------------------------------

| |  | Alternative
Energy
| | - | ------------------

| |  | The
development of materials for high performance batteries, photovoltaics for hydrogen
generation and fuel cells.
| | - | ------------------------------------------------------------------------------------------------------------------

|The
Life Sciences Division.
|---------------------------

| |  | Pharmaceutical
Products
| | - | -----------------------

| |  | The
co-development of RenaZorb, a test-stage active pharmaceutical ingredient, which is
designed to be useful in the treatment of elevated serum phosphate levels in patients
undergoing kidney dialysis.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Chemical
Delivery Products
| | - | --------------------------

| |  | The
development of TiNano Spheres, which are rigid, hollow, porous, high surface
area ceramic micro structures that are derived from Altairs proprietary process
technology.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Biocompatible
Materials
| | - | -----------------------

| |  | The
development of nanomaterials for use in various products for dental fillings.
| | - | ---------------------------------------------------------------------------------

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

We
have generated, and expect to continue to generate, revenues from license fees, product
sales, commercial collaborations, contracts and grants.

General Outlook

During
the quarter ended March 31, 2005, we licensed RenaZorb to Spectrum Pharmaceuticals,
Inc. (Spectrum) and recognized $695,000 of licensing revenue in connection
with the licensing agreement. Prior to this transaction, substantially all of our revenues
came from commercial collaborations, grants and other research or development work which
we have undertaken primarily in order to benefit from the resulting technology. Our gross
profit margins on such research and development work is very low, and in order that we may
be profitable in the long run, our business plan focuses on the development of products
and technologies that we expect will eventually bring a substantial amount of
higher-margin revenues from licensing, product sales and other sources.

13

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

| |  | We
must complete animal testing of our RenaZorb product demonstrating specified
result levels for RenaZorb, which we expect to be performed by September 2005.
Successful completion of this milestone under our license agreement with Spectrum will
result in Spectrums release of the associated milestone payment to Altair, an
additional 100,000 restricted shares of Spectrum common stock. In the meantime, Altair
and  Spectrum are continuing with their development work, and Altair will receive
additional  revenues if and when specified milestone results are achieved.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| |  | The
initial phase of work for the Western Oil Sands license agreement is approximately 80%
complete. In order for this project to move toward commercialization, we must
successfully  complete the initial phase, it must be determined that the oil sands
tailings have  sufficient titanium to allow the process to be economically viable and
Western Oil Sands  must decide to proceed with phase two.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Although
it is not essential that all of these projects be successful in order to permit
substantial long-term revenue growth, we believe that full commercialization of several of
our technologies will be necessary in order to expand our revenues enough to create a
likelihood of our becoming profitable in the long term. We are optimistic with respect to
our current key projects, as well as others we are pursuing, but recognize that, with
respect to each, there are development, marketing, partnering and other risks to be
overcome.

Recent Business
Developments

On
March 10, 2005, we announced that Rudi Moerck, our former President, was terminated and
that Alan J. Gotcher, our Chief Executive Officer, assumed the additional responsibilities
of President.

Performance
Materials Division

Altair Hydrochloride
Pigment Process

In
April 2005, we signed a memorandum of understanding with Bateman Engineering BV
(Bateman) to form a joint venture combining our hydrochloride pigment process
technology with Batemans engineering, design and construction expertise. The joint
venture, Altairnano-Bateman Titania, Inc., will offer customers an integrated resource for
technology development, engineering, design and construction of pigment processing
projects. The joint venture will be funded entirely by Altair and Bateman, with each
having equal shareholding and voting control. We expect the joint venture to help in
marketing the hydrochloride pigment process, particularly in developing countries which
have little or no local production capacity. We subsequently announced that two projects
have been initiated involving Altairnano-Bateman Titania, Inc.

14

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Battery Applications

In
December 2004, we completed work under a National Science Foundation grant for development
of electrode nanomaterials for next generation lithium ion power sources where the results
of our research indicated that our materials provide a significant improvement over
conventional lithium ion battery materials. We have submitted a proposal for a second
phase project totaling $500,000 to continue and expand the work of phase 1. We expect to
learn the result of our proposal during July 2005. In February 2005, we announced the
development of new battery electrode materials that will allow the manufacture of
rechargeable batteries with three times the power and much faster recharge times than
existing lithium ion batteries.

In April 2005, we signed a partnering agreement with Advanced Battery Technologies,
Inc. (ABAT), a U.S. and Chinese-owned company, for the development of lithium
polymer batteries in China. The agreement covers the incorporation of our battery
electrode nanomaterials into ABATs existing polymer battery product lines on a
testing and development basis. It specifically focuses on development of high power,
lithium polymer batteries for use in electric vehicles where long life cycles and fast
charge times are desirable. We have provided ABAT with sample nanomaterials for their use
in design and development of the batteries. A multi-phased material and battery
performance testing program is being designed and will be conducted to refine the product
and process specifications for the electrode materials and new battery products. We
anticipate that ABAT will be able to produce batteries for testing in standard battery
test protocols and in real world tests using electric vehicles (i.e. cars and buses) in
late 2005.

Catalyst Support and
Electrode Structures for Titanium Metals

In
January 2004, we entered into a contract with Titanium Metals Corporation
(TIMET) to provide custom oxide feedstocks for a titanium metal research
program funded by the Department of Defense, Defense Advanced Research Projects Agency
(DARPA). We became a subcontractor for the DARPA program with responsibility
to design and develop a titanium oxide electrode structure and supply TIMET optimized
titanium oxide feedstock to produce 50 pounds of titanium metal per day in batch
production demonstrations. During 2004, we provided TIMET with over 100 pounds of titania
electrodes in accordance with the agreement, the first phase of which expired on December
31, 2004. In April 2005, TIMET was notified by DARPA that a six-month extension of the
project was granted. In connection with the extension, we expect to sign a contract with
TIMET during the second quarter of 2005 under which we may supply up to 200 pounds of
titania electrodes.

Thermal Spray Grade
Powders

In
March 2005, we announced that two papers had recently been published describing the
durability of our titanium dioxide nanoparticles when used as coatings on titanium metal
or other high performance metal alloys. Dr. R. S. Lima and Dr. B. R. Marple, at the
National Research Council of Canada, conducted tests which demonstrated that Altairs
nano-structured particles deliver superior strength and durability, compared to
traditional materials, when used as a coating on surfaces. Altair nanosized titanium
dioxide materials act as crack arresters that enhance toughness, a critical factor in
coatings applied to materials used in harsh environments. Coating strength increased
significantly as the porosity of the Altair material was 2.5 times less than that of
conventionally applied traditional materials. Drs. Lima and Marple also demonstrated that
the coatings can be applied with a lower cost, high velocity oxy-fuel process, versus the
traditional method of air plasma spray, which may provide a significant cost improvement
for these coatings.

Air Cleansing

In
February 2005, we entered into a partnership agreement with Genesis Air to produce
specialized, surface activated, nano-sized titanium dioxide compounds for use in an
innovative HVAC air cleaning system. The system is marketed by Genesis Air domestically
and internationally. Under the terms of the partnership agreement, Altair will provide
Genesis with product design services, proprietary nano-sized titanium dioxide materials
and ongoing chemical engineering support services.

15

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Life Sciences
Division

RenaZorb
Products

In
January 2005, we signed a licensing agreement with Spectrum Pharmaceuticals, Inc. which
grants Spectrum exclusive worldwide rights to develop, market and sell RenaZorb. We
are currently producing the quantities of RenaZorb required for use in animal
testing and expect that it will be performed by September 2005. We have also filed
numerous national patent applications in other countries to protect our RenaZorbTMintellectual property.

TiNano Spheres

In
March 2005, a patent application was filed for the TiNano Sphere drug
delivery technology platform.

Other

With
respect to the Tennessee mineral property, we are continuing our efforts to terminate
leases and draft a remediation plan. Remediation work, which involves, among other things,
the removal of the pilot plant and related facilities and restoration of the property,
will begin after the remediation plan is approved by the applicable regulatory
authorities. Costs of remediation are uncertain until such plan approval is obtained and
the scope of the work is determined. We expect this process to continue through the second
quarter of 2005.

A
major minerals processing firm is currently testing our Centrifugal Jig. While the
Centrifugal Jig is not believed to be a core part of our business going forward, the
carrying costs associated with the Jig are minimal, and we plan to retain it at least
until the minerals processing firm has completed its testing and development work. We may
be able to generate limited revenue (through licensing fees or through a sale transaction)
from the Centrifugal Jig in the foreseeable future.

Liquidity and
Capital Resources

| | Current
and Expected Liquidity
| | ------------------------------

Our
cash and short-term investments increased from $7,357,843 at December 31, 2004 to
$31,632,286 at March 31, 2005 due primarily to the sale of 5,000,000 common shares on
February 14, 2005, which provided net proceeds of $19.2 million, and the exercise of stock
options and warrants which provided $6.1 million. We intend to use these funds for working
capital, capital expenditures, research and development activities and the possible
acquisition of other technologies.

We
expect to see an increase in our net cash outflow to approximately $550,000 per month in
2005 compared to average cash outflow of $530,000 per month in 2004. During the latter
half of 2004 and early 2005, we added nine new employees in both technical and
administrative positions in order to meet the demand for contract research services,
comply with regulatory requirements and improve our marketing capabilities. This increase
in staffing, combined with increased expenses for patent work, RenaZorb
development, other internal R&D projects, capital asset expenditures, and compliance
with the Sarbanes-Oxley Act, will significantly increase our expenses. However, we expect
an increase in revenue in 2005 that will largely offset these increased expense levels.

During
the remainder of 2005, we expect to generate revenues from licensing, product sales,
commercial collaborations, contracts and grants by utilizing our nanomaterials and
titanium dioxide pigment technology. We currently have four contracts in place that will
generate revenues in 2005. These are:

| |  | a
licensing agreement with Spectrum Pharmaceuticals, Inc. for RenaZorb under
which we realized $695,000 of revenue in the first quarter of 2005. We expect to  receive
approximately $500,000 of additional revenue during the remainder of 2005 in the  form of
restricted shares of Spectrum common stock, contingent on successful completion of
animal testing;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a
contract with Western Oil Sands, Inc. for the production of titanium dioxide pigment and
pigment-related products from oil sands. We have approximately $100,000 of work remaining
to be done on an existing contract and expect to enter into a second phase contract for
additional work in 2005.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a
contract with Western Michigan University to develop nanosensors for the detection of
chemical, biological and radiological agents. We have approximately $150,000 of work to
be  done under existing contracts during the remainder of 2005.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | an
agreement with the University of Nevada, Las Vegas Research Foundation to act as a
subcontractor under a $3,000,000 grant awarded to them by the U.S. Department of Energy
for joint research activities related to solar hydrogen production. We have approximately
$300,000 of work remaining to be done in 2005 under the agreement.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16

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

At
May 5, 2005, we had 58,788,789 common shares issued and outstanding. As of that same date,
there were outstanding warrants to purchase up to 1,867,453 shares of common stock and
options to purchase up to 2,621,700 shares of common stock.

| | Capital
Commitments
| | -------------------

The
following table discloses aggregate information about our contractual obligations and the
periods in which payments are due as of March 31, 2005:

|Contractual Obligations        |  | Total |   | Less Than1 Year |   | 1-3 Years |           | 4-5 Years |   | After5 Years | 
|------------------------------ |  | ----- | - | --------------- | - | --------- | --------- | --------- | - | ------------ | 
|Notes Payable                  |  |       | $ | 3,000,000       | * | $         | 600,000   |           | $ | 1,200,000    | 
|Interest on notes payable      |  |       |   | 525,000         |   |           | 105,000   |           |   | 294,000      | 
|Mineral Leases**               |  |       |   | 124,509         |   |           | 40,362    |           |   | 56,548       | 
|Contractual Service Agreements |  |       |   | 238,700         |   |           | 176,200   |           |   | 62,500       | 
|Unfulfilled Purchase Orders    |  |       |   | 117,327         |   |           | 117,327   |           |   | -            | 
|                               |  |       |   |                 |   |           |           |           |   |             
|Total Contractual Obligations  |  |       | $ | 4,005,536       |   | $         | 1,038,889 |           | $ | 1,613,048    | 
|                               |  |       |   |                 |   |           |           |           |   |             

* Before discount of $68,989.
** Although we expect to terminate substantially all mineral leases by mid-2005, the obligations are included
because they are not yet terminated.

Critical Accounting
Policies and Estimates

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

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

| |  | Long-Lived
assets. Our long-lived assets consist principally of the nanomaterials and  titanium
dioxide pigment assets, the intellectual property (patents and patent  applications)
associated with those assets, and a building. At March 31, 2005, the  carrying value of
these assets was $7,277,666, or 18% of total assets. We evaluate the  carrying value of
long-lived assets when events or circumstances indicate that an  impairment may exist. In
our evaluation, we estimate the net undiscounted cash flows  expected to be generated by
the assets, and recognize impairment when such cash flows will  be less than the carrying
values. Events or circumstances that could indicate the  existence of a possible
impairment include obsolescence of the technology, an absence of  market demand for the
product, and/or the partial or complete lapse of technology rights  protection.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

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| |  | Stock-Based
Compensation. We have two stock option plans which provide for the issuance of  common
stock options to employees and service providers. Although SFAS No. 123,  Accounting
for Stock Based Compensation, encourages entities to adopt a  fair-value-based method
of accounting for stock options and similar equity instruments, it  also allows an entity
to continue measuring compensation cost for stock-based compensation  for employees and
directors using the intrinsic-value method of accounting prescribed by  APB 25, Accounting
for Stock Issued to Employees. We have elected to follow  the accounting
provisions of APB 25 and to furnish the pro forma disclosures required  under SFAS 123
for employees and directors, but we also issue warrants and options to  non-employees
that are recognized as expense when issued in accordance with the provisions  of SFAS
123. We calculate compensation expense under SFAS 123 using a modified  Black-Scholes
option pricing model. In so doing, we estimate certain key assumptions used  in the
model. We believe the estimates we use, which are presented in Note 2 of the Notes  to
Consolidated Financial Statements included above in this Form 10-Q, are appropriate and
reasonable. As explained in Note 2 to the Consolidated Financial Statements, the
Financial  Accounting Standards Board has issued a revision to SFAS 123 that eliminates
the  alternative of applying the intrinsic value measurement provisions of APB 25. We are
required to adopt the revised SFAS 123 no later than January 1, 2006. Although we have
not  yet quantified the effects of adoption, it is expected that the new standard will
result  in significant additional expense, depending upon the nature and amount of
stock-based  compensation awards which may be granted.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Revenue
Recognition. We recognize revenue when persuasive evidence of an arrangement  exists,
delivery has occurred or the service has been performed, the fee is fixed and
determinable, and collectibility is probable.  During the three months ended March
31, 2005, our revenues were derived from license fees, product sales, commercial
collaborations and contracts and grants.  License fees are recognized when the
earnings process is complete. Revenue for product sales is recognized at the time the
purchaser has accepted delivery of the product. Based on the specific terms and
conditions  of each contract or grant, revenues are recognized on a time and materials
basis, a  percentage of completion basis and/or a completed contract basis. Revenue under
contracts  based on time and materials is recognized at contractually billable rates as
labor hours  and expenses are incurred. Revenue under contracts based on a fixed fee
arrangement is  recognized based on various performance measures, such as stipulated
milestones.  As  these milestones are achieved, revenue is recognized.  From
time to time, facts  develop that may require us to revise our estimated total costs or
revenues  expected.  The cumulative effect of revised estimates is recorded in the
period in  which the facts requiring revisions become known.  The full amount of
anticipated  losses on any type of contract is recognized in the period in which it
becomes known.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Overhead
Allocation. Facilities overhead, which is comprised primarily of occupancy and  related
expenses, is initially recorded in general and administrative expenses and then
allocated monthly to research and development expense based on labor costs. Facilities
overhead allocated to research and development projects may be chargeable when invoicing
customers under certain research and development contracts.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Results of Operations

Three Months Ended
March 31, 2005 Compared to Three Months Ended March 31, 2004

The
net loss for the quarter ended March 31, 2005, which was the first quarter of our 2005
fiscal year, totaled $2,245,959 ($.04 per share) compared to a net loss of $1,710,757
($.04 per share) in the first quarter of 2004.

18

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Total
revenues for the three months ended March 31, 2005 were $1,027,580. We recorded $695,000
of license fees as the result of licensing RenaZorb, a potential drug candidate for
patients with kidney disease. Additional licensing revenues are contingent upon the
achievement of various milestones in the testing and development of RenaZorb,
receipt of regulatory approvals and subsequent sale of RenaZorb products by our
licensing partner. We had no licensing revenue during the quarter ended March 31, 2004.

Revenues
from contracts and grants increased by $192,750, from $20,456 in the quarter ended March
31, 2004 to $213,206 in the same quarter of 2005. Revenues were generated under three
contracts to (1) provide research involving a technology used in the detection of
chemical, biological and radiological agents, (2) supply nano-sized anode and cathode
materials for design and development of high capacity lithium ion battery and super
capacitor applications, and (3) provide research utilizing nanotechnology processes for
the production and commercialization of solar-based hydrogen technologies. At March 31,
2005, our backlog of work under existing contracts was approximately $700,000. We
anticipate that $400,000 to $500,000 of this work may be completed during the remainder of
2005.

Revenues
from commercial collaborations decreased from $117,671 in the first quarter of 2004 to
$96,266 in the first quarter of 2005 as a result of the completion of work on a project to
provide custom oxide feedstocks for a titanium metal research program funded by the
Department of Defense. The primary contractor has received a six-month extension to
continue work and we expect to continue as a subcontractor in the extension period. A
contract is expected to be signed during the second quarter of 2005.

Research
and development (R&D) expenses increased by $388,865, from $392,670 in the
quarter ended March 31, 2004 to $781,535 in the same quarter of 2005. Labor costs
increased significantly, from $188,000 in the first quarter of 2004 to $359,000 in the
same quarter of 2005 due to new employee additions, salary increases and benefit cost
increases. Costs also increased primarily as a result of expenditures on new contract
R&D projects, including battery materials and materials for use in solar hydrogen
production, increased expenditures for internal R&D, including battery materials and
pigment processing technology, and temporary employees hired for R&D projects.

Sales
and marketing expenses increased by $598,300, from $132,138 in the first quarter of 2004
to $730,438 in the first quarter of 2005. The increase is due to payment of a $500,000 fee
to a consultant in connection with the RenaZorb licensing agreement,
increased payroll expense resulting from the addition of a senior vice president of sales
and marketing in January 2005, and increased business development activities.

General
and administrative expenses increased by $489,022, from $1,076,413 in first quarter of
2004 to $1,565,435 in the first quarter of 2005. Stock option compensation expense, a
non-cash item, increased by $532,000 from the first quarter of 2004 to the first quarter
of 2005, as a result of an increase in the value of repriced stock options that were
repriced during 2001 through 2003. Legal expenses increased by $116,000 from the first
quarter of 2004 to the first quarter of 2005, primarily due to increased patent attorney
fees paid in connection with new patent work. Accounting and audit fees increased by
$39,000 from the first quarter of 2004 to the first quarter of 2005 due to fee increases.
These cost increases were partially offset by a decrease in investor relations expense of
$143,000. This resulted from a cutback in our investor relations programs.

Interest
income increased by $83,338 from the first quarter of 2004 to the first quarter of 2005
due to the significant increase in cash available for investment that was generated
through the sale of common shares and the exercise of warrants and options in early 2005.

Forward-Looking
Statements

This
Quarterly Report on Form 10-Q (this Report) contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. 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. Statements in this report
regarding the ability of the Company to raise working capital necessary to fund our
operations, development of the nanomaterials and titanium dioxide pigment processing
technology and assets (including for pharmaceutical and battery uses), and other future
activities are forward-looking statements. You should 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.

19

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Among
the key factors that may have a direct bearing on the Companys future results and
value are various risks and uncertainties including, but not limited to, the following:

We may continue
to experience significant losses from operations.

We
have experienced a loss from operations in every fiscal year since our inception. Our
losses from operations were $6,904,955 in 2004 and $2,298,004 in the quarter ended March
31, 2005. We will continue to experience a net operating loss at least until the
applications of our nanomaterials and titanium dioxide pigment technology begin generating
revenues in excess of our operating expenses. Even if any or all applications of the
nanomaterials and titanium dioxide pigment technology begin generating such revenues, the
revenues may not exceed our costs of production and operating expenses. We may not ever
realize a profit from operations.

Our patents and
other protective measures may not adequately protect our proprietary intellectual
property, and we may be infringing on the rights of others.

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

| |  | Our
pending patent applications may not be granted for various reasons, including the
existence of similar patents or defects in the applications;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
patents we have been granted may be challenged, invalidated or circumvented because of
the pre-existence of similar patented or unpatented intellectual property rights or for
other reasons;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Parties
to the confidentiality and invention agreements may have such agreements declared
unenforceable or, even if the agreements are enforceable, may breach such agreements;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
costs associated with enforcing patents, confidentiality and invention agreements or
other intellectual property rights may make aggressive enforcement cost prohibitive;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Even
if we enforce our rights aggressively, injunctions, fines and other penalties may be
insufficient to deter violations of our intellectual property rights; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Other
persons may independently develop proprietary information and techniques that,  although
functionally equivalent or superior to our proprietary intellectual information  and
techniques, do not breach our patented or unpatented proprietary rights.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

We have a
substantial number of warrants and options outstanding and may issue a significant number
of additional shares upon exercise thereof.

As
of May 5, 2005, there were outstanding warrants to purchase up to 1,867,453 shares of
common stock and options to purchase up to 2,621,700 shares of common stock.The
existence of such warrants and options, and any additional warrants and options we issue
in the future, may hinder future equity offerings, and the exercise of such warrants and
options may further dilute the interests of all shareholders. The shares of common stock
issuable upon the exercise of many of our outstanding warrants are subject to resale
registration statements, and all of our options are subject to a registration statement on
Form S-8. Accordingly, future resale of the shares of common stock issuable on the
exercise of such warrants and options in most cases occurs immediately after exercise and
may have an adverse effect on the prevailing market price of the shares of common stock.

20

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Our competitors
have more resources than we do, which may give them a competitive advantage.

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

We may not be
able to generate substantial revenues from the licensing of RenaZorb.

On
January 28, 2005, we entered into a license agreement with Spectrum Pharmaceuticals, Inc.
under which we granted Spectrum the exclusive worldwide rights to develop, market and sell
RenaZorb, a potential drug candidate for patients with kidney disease, for
human therapeutic and diagnostic applications. Under the terms of the license, we will not
generate substantial recurring revenues unless and until Spectrum completes clinical
testing of RenaZorbTMand applies for and receives marketing approval from the
FDA and similar regulatory agencies worldwide, begins marketing products containing
RenaZorb and experiences substantial, sustained market penetration with such
products. There are substantial risks associated with that process, including the
following:

| |  | further
testing conducted by Spectrum may indicate that RenaZorb is less  effective than
existing products, is unsafe, has significant side effects or is otherwise  not viable;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Spectrum
may be unable to obtain FDA or other regulatory approval of RenaZorb for technical,
political or other reasons or, even if it obtains such approval, may not  obtain such
approval on a timely basis;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | products
containing RenaZorb may not be accepted in the market for various  reasons,
including questions about its efficacy, safety and side effects or because of  poor
marketing by Spectrum;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Spectrum
may terminate the license agreement, experience financial or other problems or  otherwise
fail to effectively test, seek approval for and market RenaZorb;  and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | prior
to or following regulatory approval, superior products may be developed and  introduced
into the market.
| | - | --------------------------------------------------------------------------------------------------------------

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

Our nanomaterial
technology with potential applications in rechargeable batteries has not been incorporated
into any commercial products.

We
are still testing and developing our Altairnano Lithium Titanate Spinel
nanomaterial technology, which has potential applications in rechargeable batteries.
Although we have entered a partnering agreement with ABAT for the development of lithium
polymer batteries in China and have supplied them with nanomaterials for their use in
design and development of the batteries, the project is in the early stages and
substantial design, development and testing work remains to be done. Even if ABAT or other
potential partners are successful in producing battery products with our nanomaterial
technology:

| |  | products
utilizing the technology may not exhibit expected charge rates, discharge rates  or
durability, or may otherwise not prove competitive with existing technologies or those
being created by other persons;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | products
incorporating the technology may not meet the distinct needs of potential  customers,
applications or industries; and
| | - | ------------------------------------------------------------------------------------------------------------------------------

| |  | marketing
and branding efforts by us, a  potential strategic partner or others may be insufficient
to attract a sufficient  number of customers.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------

21

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We may not
benefit from licenses to use our technology for titanium dioxide pigment production.

Because
of our relatively small size and limited resources, we do not plan to use our titanium
processing technology for large-scale production of titanium dioxide pigments. We have
entered into discussions with various minerals and materials companies about licensing our
technology to such entities for large-scale production of titanium dioxide pigments. To
date, we have entered into a license agreement with only one such entity, Western Oil
Sands, Inc. Under our license agreement with Western Oil Sands, we expect to receive a
limited amount of revenue during the early testing and development phase of the agreement
but will receive significant royalties only if Western Oil Sands and licensees of Western
Oil Sands determine in their discretion, after testing at a demonstration plant, to
construct or license the construction of a full-scale titanium pigment production
facility. If we enter into other license agreements, we expect that, as with the Western
Oil Sands agreement, we would not receive significant revenues from such licenses unless
and until feasibility testing yielded positive results and the licensee determined, in its
discretion, to construct and operate a titanium pigment production facility.

We may not be
able to sell nanoparticles produced using the nanomaterials and titanium dioxide pigment
technology.

We
plan to use the nanomaterials and titanium dioxide pigment technology to produce titanium
dioxide nanoparticles. Titanium dioxide nanoparticles and other products we intend to
initially produce with the nanomaterials and titanium dioxide pigment technology generally
must be customized for a specific application working in cooperation with the end-user. We
are still testing and customizing our titanium dioxide nanoparticle products for various
applications and have no long-term agreements with end-users to purchase any of our
titanium dioxide nanoparticle products. We may be unable to recoup our investment in the
nanomaterials and titanium dioxide pigment technology and nanomaterials and titanium
dioxide pigment equipment for various reasons, including the following:

| |  | products
utilizing our titanium dioxide nanoparticle products, most of which are in the  research
or development stage, may not be completed or, if completed, may not be readily  accepted
by expected end-users;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | we
may be unable to customize our titanium dioxide nanoparticle products to meet the
distinct needs of potential customers;
| | - | ---------------------------------------------------------------------------------------------------------------------------

| |  | potential
customers may purchase from competitors because of perceived or actual quality  or
compatibility differences;
| | - | -----------------------------------------------------------------------------------------------------------------------

| |  | our
marketing and branding efforts may be insufficient to attract a sufficient number of
customers; and
| | - | -------------------------------------------------------------------------------------------------------

| |  | because
of our limited funding, we may be unable to continue our development efforts until  a
strong market for nanoparticles develops.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

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

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

We have issued a
$3,000,000 note to secure the purchase of the land and the building where our
nanomaterials and titanium dioxide pigment assets are located.

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

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

As
of April 27, 2005, we had $30.4 million in cash, an amount which we believe will be
sufficient to fund our ongoing operations for approximately four to five years at current
expenditure levels. However, we may use our existing capital sooner than projected in
connection with an unanticipated transaction, litigation or other unplanned event. We may
also use more capital than projected as we expand our research, development and marketing
efforts. Unless we experience a significant increase in revenue, we will need to raise
additional capital in the future in order to sustain our ongoing operations, continue
unfinished testing and additional development work and, if certain of our products have
been commercialized, produce and market such products.

22

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

| |  | market
factors affecting the availability and cost of capital generally;
| | - | ------------------------------------------------------------------------

| |  | the
price, volatility and trading volume of our shares of common stock;
| | - | -----------------------------------------------------------------------

| |  | our
financial results, particularly the amount of revenue we are generating from  operations;
| | - | ---------------------------------------------------------------------------------------------

| |  | the
amount of our capital needs;
| | - | --------------------------------

| |  | the
markets perception of nanotechnology and/or chemical stocks;
| | - | -----------------------------------------------------------------

| |  | the
economics of projects being pursued; and
| | - | --------------------------------------------

| |  | the
markets perception of our ability to generate revenue through the licensing or use
of our nanoparticle technology for pharmaceutical, pigment production, nanoparticle
production and other uses.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Operations using
the nanomaterials and titanium dioxide pigment technology or our Tennessee mineral
property may lead to substantial environmental liability.

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

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

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

We are dependent
on key personnel.

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

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

Our
articles of incorporation authorize the issuance of an unlimited number of shares of
common stock that may be issued without any action or approval by our stockholders. In
addition, we have two stock option plans and a stock purchase plan that have potential for
diluting the ownership interests of our stockholders. The issuance of any additional
shares of common stock would further dilute the percentage ownership of our company held
by existing stockholders.

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The market price
of our common stock may increase or decrease dramatically at any time for any or no
apparent reason.

The
market price of our common stock, like that of the securities of other early stage
companies, may be highly volatile. Our stock price may change dramatically as the result
of announcements of our quarterly results, new products or innovations by us or our
competitors, uncertainty regarding the viability of the nanomaterials and titanium dioxide
pigment technology, significant customer contracts, significant litigation or other
factors or events that would be expected to affect our business, financial condition,
results of operations and future prospects. In addition, the market price for our common
stock may be affected by various factors not directly related to our business or future
prospects, including the following:

| |  | Intentional
manipulation of our stock price by existing or future shareholders or a  reaction by
investors to trends in our stock rather than the fundamentals of our business;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A
single acquisition or disposition, or several related acquisitions or dispositions, of a
large number of our shares;
| | - | ----------------------------------------------------------------------------------------------------------------------

| |  | The
interest of the market in our business sector, without regard to our financial
condition, results of operations or business prospects;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------

| |  | Positive
or negative statements or projections about our company or our industry, by  analysts,
stock gurus and other persons;
| | - | ------------------------------------------------------------------------------------------------------------------------------

| |  | The
adoption of governmental regulations or government grant programs and similar
developments in the United States or abroad that may enhance or detract from our ability
to offer our products and services or affect our cost structure;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Economic
and other external market factors, such as a general decline in market prices due  to
poor economic indicators or investor distrust; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Speculation
by short sellers of our common stock or other persons who stand to profit from  a rapid
increase or decrease in the price of our common stock.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------

We have never
declared a cash dividend and do not intend to declare a cash dividend in the foreseeable
future.

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

We are subject
to various regulatory regimes, and may be adversely affected by allegations that we have
not complied with governing rules and laws.

In
light of our status as a public company and our lines of business, we are subject to a
variety of laws and regulatory regimes in addition to those applicable to all businesses
generally.  For example, we are subject to the reporting requirements applicable to
Canadian and United States reporting issuers, such as the Sarbanes-Oxley Act of 2002, the
rules of the Nasdaq SmallCap Market and certain state and provincial securities laws. We
are also subject to state and federal environmental, health and safety laws, and rules
governing department of defense contracts   Such laws and rules change
frequently and are often complex.  In connection with such laws, we are subject to
periodic audits, inquiries and investigations.  Any such audits, inquiries and
investigations may divert considerable financial and human resources and adversely affect
our execution of our business plan.   In addition, through such audits,
inquiries and investigations, we or a regulator have from time to time determined, and
may  in the future determine, that we are out of compliance with one or more governing
rules or  laws.  Remedying such non-compliance may divert additional financial and
human  resources.  In addition, in the future, we may be subject to a formal charge
or  determination that we have materially violated a governing law, rule or regulation.  Any
charge, and particularly any determination, that we had materially violated a  governing
law would likely have a material adverse effect on the market price of our  stock, our
ability to execute our business plan and our ability to retain and attract  qualified
management.

Item  3.   Quantitative
and Qualitative Disclosures About Market Risk

We
do not have any derivative instruments, commodity instruments, or other financial
instruments for trading or speculative purposes, nor are we presently at material risk for
changes in interest rates on foreign currency exchange rates.

24

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Item  4.   Controls
and Procedures

(a)
Based on the evaluation of our disclosure controls and procedures (as defined
in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) required by paragraph
(b) of Rules 13a-15 or 15d-15, our chief executive officer and our chief financial officer
have concluded that, as of March 31, 2005, our disclosure controls and procedures were
effective.

(b)
We are not presently required to conduct quarterly evaluations of our internal control
over financial reporting pursuant to paragraph (d) of Rules 13a-15 or 15d-15 promulgated
under the Exchange Act. We are, however, in the process of designing, evaluating and
implementing internal controls in anticipation of the date when we will become subject to
such evaluation requirements.

PART II 
OTHER INFORMATION

Item  6.   Exhibits

| | a) | See
Exhibit Index attached hereto.
| | -- | ----------------------------------

25

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SIGNATURES

Pursuant
to the requirements 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.

| | Altair
Nanotechnologies Inc.
| | ----------------------------

|May 13, 2005 | By:  /s/ Alan J. Gotcher                
|------------ | ----------------------------------------
|             |                                         
|Date         | Alan J. Gotcher, Chief Executive Officer

|May 13, 2005 | By:  /s/ Edward H. Dickinson                
|------------ | --------------------------------------------
|             |                                             
|Date         | Edward H. Dickinson, Chief Financial Officer

26

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EXHIBIT INDEX

|Exhibit No. | Exhibit                                              | Incorporated by Reference/
Filed Herewith
|----------- | ---------------------------------------------------- | -----------------------------------------
|10.1        | Letter agreement with RBC Dain Rauscher Inc.         | Filed herewith                           
|31.1        | Section 302 Certification of Chief Executive Officer | Filed herewith                           
|31.2        | Section 302 Certification of Chief Financial Officer | Filed herewith                           
|32.1        | Section 906 Certification of Chief Executive Officer | Filed herewith                           
|32.2        | Section 906 Certification of Chief Financial Officer | Filed herewith                           

27

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