UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
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   JUNE30,
2008






o 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
      jurisdiction
              of
      incorporation)
            
            (Commission File
      No.)
            
            (IRS Employer
              Identification
      No.)




204
Edison Way


Reno,
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 NOo.




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer, or a smaller reporting
company.  See the definitions of “accelerated filer”, “large
accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the
Exchange Act  (Check one):





Large
      accelerated filer     o
            Accelerated
      filer                        
      xNon-accelerated
      filer       o
            Smaller
      reporting company       o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act):   YES o   NO x





As
of August 1, 2008 the registrant had 84,744,322 Common Shares
outstanding.









1




PART
      I - FINANCIAL INFORMATIONItem
      1. Financial StatementsALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED BALANCE SHEETS(Expressed
      in United States Dollars)(Unaudited)




June
      30,
            
            
            December
      31,2008
            
            
            2007ASSETSCurrent
      AssetsCash
      and cash equivalents
            
            $
            27,772,737
            
            
            $
            50,146,117Accounts
      receivable, net
            
            
            774,325
            
            
            
            1,317,819Accounts
      receivable from related party, net
            
            
            500,000
            
            
            
            -Notes
      receivable from related party
            
            
            -
            
            
            
            1,638,510Prepaid
      expenses and other current assets
            
            
            178,004
            
            
            
            799,387Total
      current assets
            
            
            29,225,066
            
            
            
            53,901,833Investment
      in Available for Sale Securities
            
            
            3,459,791
            
            
            
            4,564,814Property,
      Plant and Equipment, net
            
            
            14,999,514
            
            
            
            14,548,837Patents,
      net
            
            
            678,026
            
            
            
            720,433Other
      Assets
            
            
            622,718
            
            
            
            122,718Total
      Assets
            
            $
            48,985,115
            
            
            $
            73,858,635LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesTrade
      accounts payable
            
            $
            1,445,751
            
            
            $
            7,814,037Accrued
      salaries and benefits
            
            
            1,272,167
            
            
            
            2,239,110Accrued
      warranty
            
            
            59,088
            
            
            
            2,915,990Accrued
      liabilities
            
            
            449,791
            
            
            
            759,644Note
      payable, current portion
            
            
            600,000
            
            
            
            600,000Total
      current liabilities
            
            
            3,826,797
            
            
            
            14,328,781Note
      Payable, Long-Term Portion
            
            
            600,000
            
            
            
            1,200,000Minority
      Interest in Subsidiary
            
            
            1,208,711
            
            
            
            1,369,283Stockholders'
      EquityCommon
      stock, no par value, unlimited shares authorized;84,744,322
      and 84,068,377 shares issued andoutstanding
      at June 30, 2008 and December 31, 2007
            
            
            165,599,679
            
            
            
            163,780,176Additional
      paid in capital
            
            
            5,107,095
            
            
            
            5,489,604Accumulated
      deficit
            
            
            (125,772,567
            )
            
            
            (111,823,809
            )Accumulated
      other comprehensive loss
            
            
            (1,584,600
            )
            
            
            (485,400
            )Total
      Stockholders' Equity
            
            
            43,349,607
            
            
            
            56,960,571Total
      Liabilities and Stockholders' Equity
            
            $
            48,985,115
            
            
            $
            73,858,635See
      notes to the unaudited condensed consolidated financial
      statements.






2




ALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS(Expressed
      in United States Dollars)(Unaudited)Three
      Months Ended
            
            
            Six
      Months EndedJune
      30,
            
            
            June
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007RevenuesProduct
      sales
            
            $
            224,607
            
            
            $
            1,755,613
            
            
            $
            388,537
            
            
            $
            1,933,003Commercial
      collaborations
            
            
            992,718
            
            
            
            734,784
            
            
            
            1,513,531
            
            
            
            1,082,072Contracts
      and grants
            
            
            685,334
            
            
            
            575,471
            
            
            
            1,069,928
            
            
            
            1,191,725Total
      revenues
            
            
            1,902,659
            
            
            
            3,065,868
            
            
            
            2,971,996
            
            
            
            4,206,800Operating
      ExpensesCost
      of sales - product
            
            
            20,825
            
            
            
            2,192,476
            
            
            
            79,034
            
            
            
            2,402,738Cost
      of sales – warranty and inventory reserves
            
            
            (2,864,837
            )
            
            
            -
            
            
            
            (2,864,837
            )
            
            
            -Research
      and development
            
            
            5,111,524
            
            
            
            3,238,869
            
            
            
            10,369,558
            
            
            
            6,236,197Sales
      and marketing
            
            
            769,342
            
            
            
            409,230
            
            
            
            1,435,270
            
            
            
            789,766Notes
      receivable extinguishment
            
            
            1,721,919
            
            
            
            -
            
            
            
            1,721,919
            
            
            
            -General
      and administrative
            
            
            2,440,363
            
            
            
            2,600,818
            
            
            
            5,703,115
            
            
            
            5,212,032Depreciation
      and amortization
            
            
            639,742
            
            
            
            473,991
            
            
            
            1,213,351
            
            
            
            905,049Total
      operating expenses
            
            
            7,838,878
            
            
            
            8,915,384
            
            
            
            17,657,410
            
            
            
            15,545,782Loss
      from Operations
            
            
            (5,936,219
            )
            
            
            (5,849,516
            )
            
            
            (14,685,414
            )
            
            
            (11,338,982
            )Other
      Income (Expense)Interest
      expense
            
            
            (22,901
            )
            
            
            (31,500
            )
            
            
            (50,254
            )
            
            
            (66,500
            )Interest
      income
            
            
            248,057
            
            
            
            292,670
            
            
            
            630,394
            
            
            
            636,038(Loss)/Gain
      on foreign exchange
            
            
            (1,429
            )
            
            
            83
            
            
            
            (4,056
            )
            
            
            (285
            )Total
      other income, net
            
            
            223,727
            
            
            
            261,253
            
            
            
            576,084
            
            
            
            569,253Loss
      from continuing operations beforeminority
      interests’ share
            
            
            (5,712,492
            )
            
            
            (5,588,263
            )
            
            
            (14,109,330
            )
            
            
            (10,769,729
            )Less:  Minority
      interests’ share
            
            
            52,170
            
            
            
            157,680
            
            
            
            160,572
            
            
            
            157,680Net
      Loss
            
            $
            (5,660,322
            )
            
            $
            (5,430,583
            )
            
            $
            (13,948,758
            )
            
            $
            (10,612,049
            )Loss
      per common share - Basic and diluted
            
            $
            (0.07
            )
            
            $
            (0.08
            )
            
            $
            (0.17
            )
            
            $
            (0.15
            )Weighted
      average shares - Basic and diluted
            
            
            84,488,315
            
            
            
            69,926,260
            
            
            
            84,354,147
            
            
            
            69,596,969See
      notes to the unaudited condensed consolidated financial
      statements.







3





ALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE
      LOSS(Expressed
      in United States Dollars)(Unaudited)AccumulatedOtherAdditional
            
            
            
            
            
            Compre-Common
      Stock
            
            
            Paid
      In
            
            
            Accumulated
            
            
            hensiveShares
            
            
            Amount
            
            
            Capital
            
            
            Deficit
            
            
            Loss
            
            
            TotalBALANCE,  JANUARY
      1, 2008
            
            
            84,068,377
            
            
            $
            163,780,176
            
            
            $
            5,489,604
            
            
            $
            (111,823,809
            )
            
            $
            (485,400
            )
            
            $
            56,960,571Comprehensive
      loss:Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (13,948,758
            )
            
            
            -
            
            
            
            (13,948,758
            )Other
      comprehensive loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,099,200
            )
            
            
            (1,099,200
            )Comprehensive
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (15,047,958
            )Share-based
      compensation
            
            
            193,713
            
            
            
            1,118,780
            
            
            
            (382,509
            )
            
            
            -
            
            
            
            -
            
            
            
            736,271Exercise
      of stock options
            
            
            314,211
            
            
            
            497,238
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            497,238Exercise
      of warrants
            
            
            26,275
            
            
            
            26,275
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            26,275Recovery
      of short swing profits
            
            
            
            
            
            
            177,210
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            177,210Issuance
      of restricted stock
            
            
            141,746BALANCE,  JUNE
      30, 2008
            
            
            84,744,322
            
            
            $
            165,599,679
            
            
            $
            5,107,095
            
            
            $
            (125,772,567
            )
            
            $
            (1,584,600
            )
            
            $
            43,349,607See
      notes to the unaudited condensed consolidated financial
      statements.







4





ALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed
      in United States Dollars)(Unaudited)Six
      Months EndedJune
      30,2008
            
            
            2007Cash
      flows from operating activities:Net
      loss
            
            $
            (13,948,758
            )
            
            $
            (10,612,049
            )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
      and amortization
            
            
            1,213,351
            
            
            
            905,049Minority
      interest in operations
            
            
            (160,572
            )
            
            
            (157,680
            )Securities
      received in payment of license fees
            
            
            -
            
            
            
            (13,580
            )Share-based
      compensation
            
            
            736,271
            
            
            
            1,801,335Loss
      on disposal of fixed assets
            
            
            95,965
            
            
            
            -Accrued
      interest on notes receivable
            
            
            (83,409
            )
            
            
            (21,021
            )Changes
      in operating assets and liabilities:Accounts
      receivable, net
            
            
            543,494
            
            
            
            (230,468
            )Accounts
      receivable from related party, net
            
            
            (500,000
            )
            
            
            (20,268
            )Notes
      receivable from related party
            
            
            1,721,919
            
            
            
            (607,852
            )Product
      inventories
            
            
            -
            
            
            
            (851,658
            )Prepaid
      expenses and other current assets
            
            
            621,383
            
            
            
            196,662Other
      assets
            
            
            (500,000
            )
            
            
            -Trade
      accounts payable
            
            
            (6,489,489
            )
            
            
            599,453Accrued
      salaries and benefits
            
            
            (966,943
            )
            
            
            118,877Accrued
      warranty
            
            
            (2,856,902
            )
            
            
            13,500Accrued
      liabilities
            
            
            (309,853
            )
            
            
            423,654Net
      cash used in operating activities
            
            
            (20,883,543
            )
            
            
            (8,456,046
            )Cash
      flows from investing activities:Sale
      of available for sale securities
            
            
            -
            
            
            
            14,375,000Interest
      on available for sale securities
            
            
            5,823
            
            
            
            (18,075,895
            )Purchase
      of property and equipment
            
            
            (1,596,383
            )
            
            
            (2,412,507
            )Net
      cash used in investing activities
            
            
            (1,590,560
            )
            
            
            (6,113,402
            )(continued)





5





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




Six
      Months EndedJune
      30,2008
            
            
            2007Cash
      flows from financing activities:Issuance
      of common shares for cash
            
            
            -
            
            
            
            3,000,000Proceeds
      from exercise of stock options
            
            
            497,238
            
            
            
            94,491Proceeds
      from exercise of warrants
            
            
            26,275
            
            
            
            -Proceeds
      from recovery of short swing profits
            
            
            177,210
            
            
            
            -Payment
      of notes payable
            
            
            (600,000
            )
            
            
            (600,000
            )Minority
      interest
            
            
            
            
            
            
            2,000,000Net
      cash provided by financing activities
            
            
            100,723
            
            
            
            4,494,491Net
      decrease in cash and cash equivalents
            
            
            (22,373,380
            )
            
            
            (10,074,957
            )Cash
      and cash equivalents, beginning of period
            
            
            50,146,117
            
            
            
            12,679,254Cash
      and cash equivalents, end of period
            
            $
            27,772,737
            
            
            $
            2,604,297Supplemental
      disclosures:Cash
      paid for interest
            
            $
            126,000
            
            
            $
            168,000Cash
      paid for income taxes
            
            
            None
            
            
            
            None




Supplemental
      schedule of non-cash investing and financing activities:For
      the six months ended June 30, 2008:-
      We made property and equipment purchases of $121,203, which are included
      in trade accounts payable at June 30, 2008.-
      We had an unrealized loss on available for sale securities of
      $319,200.-
      We issued 143,079 shares of restricted stock to employees having a fair
      value of approximately $303,000
      for which no cash will be received.For
      the six months ended June 30, 2007:-
      We made property and equipment purchases of $91,497, which are included in
      trade accounts payable at June 30, 2007.-
      We had an unrealized gain on available for sale securities of
      $400,800.-
      We issued 75,575 shares of restricted stock to employees having a fair
      value of approximately $237,000 for which no cash will be
      received.-
      We received 1,000,000 shares of common stock valued at $106,518 in
      connection with the Phoenix January 2007 purchase agreement. The
      investment was recorded with an offset to deferred
      revenue.(concluded)See
      notes to the unaudited condensed consolidated financial
      statements.






6


ALTAIR
NANOTECHNOLOGIES INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





Note
1.  Basis of Preparation of Consolidated Financial Statements





These
unaudited interim condensed consolidated 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 of America, so long as the statements are not
misleading.  In the opinion of Company management,
these consolidated financial statements and accompanying notes contain all
adjustments (consisting of only normal recurring items) necessary to present
fairly the financial position and results of operations for the periods
shown.  These unaudited interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto contained in our Annual Report on
Form 10-K for the year ended December 31, 2007, as filed with the Commission on
March 14, 2008.





The
results of operations for the six-month period ended June 30, 2008 are
not necessarily indicative of the results to be expected for the full
year.





Note
2.  Summary of Significant Accounting Policies





Cash, Cash Equivalents and Investment
in Available for Sale Securities (short-term) -Cash and cash
equivalents consist principally of bank deposits and institutional money market
funds.  Short-term investments that are highly liquid have
insignificant interest rate risk and maturities of 90 days or less are
classified as cash and cash equivalents.  Investments that do not meet
the definition of cash equivalents are classified as held-to-maturity or
available-for-sale.





Our cash
balances are maintained in bank accounts that are insured by the Federal Deposit
Insurance Corporation (“FDIC”) up to a maximum of $100,000.  At June
30, 2008 and December 31, 2007, we had cash deposits of approximately $127,000
and $8.7 million, respectively, in excess of FDIC insurance limits.





Investment inAvailable for SaleSecurities(long-term)-Available for
sale securities (long-term)includes
publicly traded equity investments that are classified as available for
sale and recorded at market using the specific identification
method.  Unrealized gains and losses (except for other than temporary
impairments) are recorded in other comprehensive loss, which is reported as
a component of stockholders’ equity.  We evaluate our investments on a
quarterly basis to determine if a potential other than temporary impairment
exists.  Our evaluation considers the investees’ specific business
conditions as well as general industry and market conditions.





Accumulated Other ComprehensiveLoss-Accumulated other
comprehensive loss consists entirely of unrealized loss/(gain) on
the investment in available for sale securities. The components of
comprehensive loss for the six-month periods ended June 30, 2008 and
2007 are as follows:





Six
      months endedJune
      30,2008
            
            
            2007Net
      loss
            
            $
            13,948,758
            
            
            $
            10,612,049Unrealized
      loss/(gain) on investment in availablefor
      sale securities
            
            
            1,099,200
            
            
            
            (400,800
            )Comprehensive
      loss
            
            $
            15,047,958
            
            
            $
            10,211,249







7




Long-Lived Assets -We
evaluate the carrying value of long-term assets, including intangible assets,
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.





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 on the basis 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.





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 collectability is
probable.  Our revenues were derived from product sales, commercial
collaborations and contracts and grants. Revenue from product sales is
recognized upon delivery of the product, unless specific contractual terms
dictate otherwise.  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 is recognized in the period in which it becomes
known.  Payments received in advance relating to the future
performance of services or deliveries of products are deferred until the
performance of the service is complete or the product is
shipped.  Upfront payments received in connection with certain rights
granted in contractual arrangements are deferred and amortized over the related
time period over which the benefits are received.  Based on specific
customer bill and hold agreements, revenue is recognized when the inventory is
shipped to a third party storage warehouse, the inventory is segregated and
marked as sold, the customer takes the full rights of ownership and title to the
inventory upon shipment to the warehouse per the bill and hold
agreement.  When contract terms include multiple components that are
considered separate units of accounting, the revenue is attributed to each
component and revenue recognition may occur at different points in time for
product shipment, installation, and service contracts based on substantial
completion of the earnings process.





Accrued Warranty - We provide
a limited warranty for battery packs and energy storage systems.  A
liability is recorded for estimated warranty obligations at the date products
are sold.  Since these are new products, the estimated cost of
warranty coverage is based on cell and module life cycle testing and compared
for reasonableness to warranty rates on competing battery
products.  As sufficient actual historical data is collected on the
new product, the estimated cost of warranty coverage will be adjusted
accordingly.  The liability for estimated warranty obligations may
also be adjusted based on specific warranty issues identified.





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





Minority
Interest – In April 2007, the Company and The Sherwin-Williams
Company (“Sherwin”) entered into an agreement to form AlSher Titania LLC, a
Delaware limited liability company (“AlSher”).  AlSher is a joint
venture combining certain technologies of the Company and Sherwin in order to
develop and produce titanium dioxide pigment for use in paint and coatings and
nano titanium dioxide materials for use in a variety of applications, including
those related to removing contaminants from air and water.  Pursuant
to a Contribution Agreement dated April 24, 2007 among Altairnano, Sherwin, and
AlSher, Altairnano contributed to AlSher an exclusive license to use
Altairnano’s technology (including its hydrochloride pigment process) for the
production of titanium dioxide pigment and other titanium containing materials
(other than battery or nanoelectrode materials) and certain pilot plant assets
with a net book value of $3,110,000.  Altairnano received no
consideration for the license granted to AlSher other than its ownership
interest in AlSher.  Sherwin agreed to contribute to AlSher cash and a
license agreement related to a technology for the manufacture of titanium
dioxide using the digestion of ilmenite in hydrochloric acid.  As a
condition to enter into the second phase of the joint venture, we agreed to
complete the pigment pilot processing plant and related development activities
by January 2008.  The 100 ton pigment pilot processing plant was
commissioned in February 2008 and the costs associated with this effort were
partially reimbursed by AlSher.  Altairnano contributes any work in
process and fixed assets associated with completion of the pigment pilot
processing plant to the AlSher joint venture.  For each reporting
period, AlSher is consolidated with the Company’s subsidiaries because the
Company has a controlling interest in AlSher and any inter-company transactions
are eliminated (refer to Note 1 – Basis of Preparation of Consolidated Financial
Statements).  The minority shareholder’s interest in the net assets
and net income or loss of AlSher are reported as minority interest in subsidiary
on the condensed consolidated balance sheet and as minority interest share in
the condensed consolidated statement of operations, respectively.




8




Net Loss Per Common Share- Basic loss per
share is computed using the weighted average number of common shares outstanding
during the period.  Diluted loss 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, as well
as unvested restricted stock.  Potentially dilutive shares are excluded
from the computation if their effect is anti-dilutive.  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 or unvested restricted
stock were included in the computation of diluted loss per share as they were
anti-dilutive.





Recent Accounting Pronouncements-   In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51”.  SFAS
No. 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary.  It clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements.  This
Statement also changes the way the consolidated income statement is
presented.  It requires consolidated net income to be reported at
amounts that include the amounts attributable to both the parent and the
noncontrolling interest.  It also requires disclosure, on the face of
the consolidated statement income, of the amounts of the consolidated net income
attributable to the parent and to the noncontrolling interest.  SFAS
No. 160 will be effective for our Company on January 1, 2009. We do
not believe the adoption of SFAS No. 160 for our consolidated
noncontrolling interest, effective January 1, 2009, will have a material
impact on our consolidated financial
statements.




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





Note
3.  Fair Value Measurements





Effective
January 1, 2008, we adopted SFAS 157, Fair Value Measurements, for
all financial instruments accounted for at fair value on a recurring
basis.  SFAS 157 establishes a new framework for measuring fair
value and expands related disclosures.  Broadly, the SFAS 157
framework requires fair value to be determined based on the exchange price that
would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants.  SFAS 157 establishes
market or observable inputs as the preferred source of values, followed by
assumptions based on hypothetical transactions in the absence of market
inputs.





The
valuation techniques required by SFAS 157 are based upon observable and
unobservable inputs. Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect our market assumptions.
These two types of inputs create the following fair value
hierarchy:




Level 1 
      -
            Quoted
      prices for identical instruments in active
  markets.




Level 2 
      -
            Quoted
      prices for similar instruments in active markets; quoted prices for
      identical or similar instruments in markets that are not active; and
      model-derived valuations whose inputs are observable or whose significant
      value drivers are observable.




Level 3 
      -
            Significant
      inputs to the valuation model are
unobservable.




We
maintain policies and procedures to value instruments using the best and most
relevant data available.




9




When
available, we use quoted market prices to determine the fair value of investment
securities, such as our investment in Spectrum stock as discussed below, and
they are included in Level 1.  When quoted market prices are
unavailable in the principal or most advantageous market, quoted prices for
similar instruments in active markets are utilized in addition to model-derived
valuations for investments, such as the auction rate notes discussed below, and
they are included in Level 2.  We currently do not hold any
investments that require Level 3 evaluations.





Investment
in Available for Sale Securities





Investment
in available for sale securities (long-term) includes auction rate corporate
notes and investments in common stock as discussed below.





The
auction rate corporate notes are long-term instruments with expiration dates
through 2017.  Through the third quarter of 2007, the interest was
settled and the rate reset every 7 to 28 days and historically these investments
were classified as short-term investments.  However, in the fourth
quarter of 2007 due to a change in the liquidity of the auction rate market,
sell orders have exceeded bid orders in that market, and the interest rate
relating to these investments was reset to a contractual rate of London
Interbank Offering Rate plus 50 basis points.  The auction rate
markets have been slow to recover.  As such we evaluated these
investments at June 30, 2008 to determine if they were impaired.  Our
evaluation included consultation with our investment advisors, assessment of the
strength of the financial institution paying the interest on these investments,
ratings of the underlying collateral, prices of similar instruments, and current
indicative bid prices.  Based on this analysis we estimate that at
June 30, 2008 their fair value was approximately $3,120,000, representing a
cumulative unrealized holding loss of approximately $780,000.  Based
on our evaluation and our ability and intent to hold the investment for a
reasonable period of time sufficient for an expected recovery of fair value, we
do not consider this investment to be other than temporarily impaired at June
30, 2008.





Investment
in available for sale securities (long-term) includes 240,000 shares of Spectrum
Pharmaceuticals, Inc. (“Spectrum”) common stock.  Although the
Spectrum shares are eligible for resale under Rule 144, the Company currently
intends to hold them indefinitely.  The shares were received as
partial payment of licensing fees when Spectrum entered into a license agreement
for RenaZorb in January 2005 and in payment of the first milestone achieved in
June 2006.  On receipt, the shares were recorded at their market value
of $1,138,200 as measured by their closing price on the NASDAQ Capital
Market.  At June 30, 2008, their fair value was approximately
$333,600, representing a cumulative unrealized holding loss of approximately
$804,600.  We evaluated this investment to determine if there is an
other than temporary impairment at June 30, 2008.  Our evaluation took
into consideration published investment analysis, status of drug candidates in
development, analysts’ recommendations, insider trading activity, and other
factors.  Based on our evaluation and our ability and intent to hold
the investment for a reasonable period of time sufficient for an expected
recovery of fair value, we do not consider this investment to be other than
temporarily impaired at June 30, 2008.





The
following table presents our assets measured at fair value on a recurring basis
at June 30, 2008:





Total
      atDescription
            
            6/30/2008
            
            
            Level
      1
            
            
            Level
      2Available-for-sale
      securities
            
            $
            3,459,791
            
            
            $
            333,600
            
            
            $
            3,126,191







10


Note
4.  Patents





Our
patents are associated with the nanomaterials and titanium dioxide pigment
technology.  We are amortizing these assets over their useful
lives.  The amortized patents’ balances as of June 30, 2008 and
December 31, 2007 were:





June
      30, 2008
            
            
            December
      31, 2007Patents
      and patent applications
            
            $
            1,517,736
            
            
            $
            1,517,736Less
      accumulated amortization
            
            
            (839,710
            )
            
            
            (797,303
            )Total
      patents and patent applications
            
            $
            678,026
            
            
            $
            720,433





The
weighted average amortization period for patents is approximately 16.5
years.  Amortization expense, which represents the amortization
relating to the identified amortizable patents, for the six months ended
June 30, 2008 and 2007, was $42,407 and $42,408,
respectively.  For each of the next five years, amortization expense
relating to patents is expected to be approximately $85,000 per
year.  Management believes the net carrying amount of patents will be
recovered by future cash flows generated by commercialization of the titanium
processing technology.





Note
5. Accounts Receivable and Notes Receivable from Related Party





Related Party Accounts Receivable
activity consists of the following:





June
      30, 2008
            
            
            December
      31, 2007Beginning
      Balance - January
            
            $
            -
            
            
            $
            495,000Additions
            
            
            502,073
            
            
            
            1,851,894Less
      cash collected
            
            
            -
            
            
            
            (2,346,894
            )Extinguishment
      of
              accounts
      receivable
            
            
            (2,073
            )Ending
      Balance
            
            $
            500,000
            
            
            $
            -





The ending accounts receivable balance
reflects the final installment of $500,000 that was billed to AES in June 2008
upon substantial completion of the testing of the prototype packs per the July
2007 development agreement.





Related
Party Notes Receivable activity consists of the following:





June
      30, 2008
            
            
            December
      31, 2007Beginning
      Balance - January
            
            $
            1,638,510
            
            
            $
            330,000Additions
            
            
            -
            
            
            
            1,219,075Plus
      interest earned
            
            
            83,409
            
            
            
            89,435Extinguishment
      of notes
            
            
            (1,721,919
            )Ending
      Balance
            
            $
            -
            
            
            
            1,638,510





Pursuant
to a letter agreement effective July 2008 with Phoenix Motorcars, Inc., all
accounts receivable and notes receivable relating to the 2007 Purchase and
Supply Agreement were cancelled.  Refer to discussion in Note 9.
Related Party Transactions.


11


Note
6.  Accrued Warranty





Accrued
warranty consisted of the following:





June
      30, 2008
            
            
            December
      31, 2007Beginning
      Balance – January
            
            $
            2,915,990
            
            
            $
            -Additions
            
            
            -
            
            
            
            2,915,990Release
      from obligation
            
            
            (2,856,902
            )Ending
      Balance
            
            $
            59,088
            
            
            $
            2,915,990





We
provided a limited warranty for battery products sold under the January 2007
purchase and supply agreement with Phoenix and the July 2007 AES development
agreement.  The balance of $2,915,990 reflects a one-time adjustment
of $2,856,902 to record the provision for warranty claims resulting from our
decision to replace 47 of the Phoenix battery packs manufactured in 2007 due to
a potential module configuration problem that could result in
overheating.  The remaining balance of $59,088 reflects the warranty
recorded in connection with the AES prototype battery pack purchase in
2007.     Based on an agreement reached between Phoenix
and Altair in July 2008 (refer to Note 9. Related Party Transactions), the
Phoenix warranty liability was reversed.





Note
7.  Note Payable





The current and long term amounts of
the note payable are as follows:





June
      30, 2008
            
            
            December
      31, 2007Note
      payable to BHP MineralsInternational,
      Inc.
            
            $
            1,200,000
            
            
            $
            1,800,000Less
      current portion
            
            
            (600,000
            )
            
            
            (600,000
            )Long-term
      portion of notes payable
            
            $
            600,000
            
            
            $
            1,200,000





The note
payable to BHP Minerals International, Inc., in the face amount of
$3,000,000, was entered into on August 8, 2002 and is secured by the
property we acquired. Interest on the note payable of 7% is due and payable
on an annual basis with each principal installment.  The first three
payments of $600,000 of principal plus accrued interest were due and paid on
February 8, 2006, 2007 and 2008. The final two payments of $600,000 plus accrued
interest are due annually on February 8, 2009 and 2010.





Note
8.  Stock-Based Compensation





We have a
stock incentive plan, administered by the Board of Directors,
which provides for the granting of options and restricted shares to
employees, officers, directors and other service providers of the Company.





The total
compensation cost charged in connection with these plans was $731,066 and
$1,801,335 for the six-months ended June 30, 2008 and June 30, 2007,
respectively. During the six-months ended June 30, 2008, 562,306
options vested at a weighted average price of $2.94.  During the
six-months ended June 30, 2007, 776,702 options vested at a weighted average
price of $2.86, respectively.





Stock
Options





The total
number of shares authorized to be granted under the 2005 stock plan was
increased from 3,000,000 to an aggregate of 9,000,000 based on the proposal
approved at the annual and special meeting of shareholders on May
30, 2007.  Prior stock option plans, which are now terminated,
authorized a total of 6,600,000 shares, of which options for 5,745,500 were
granted and options for 963,300 are outstanding and unexercised at June 30,
2008. The total number of options relating to the 2005 plan that are
outstanding and unexercised at June 30, 2008 is 3,501,542.





12


Total
options granted for the six-month periods ended June 30, 2008 and June 30,
2007 were 1,814,167 and 1,465,382, respectively.  The weighted average
grant date fair value of options granted during the six months ended June
30, 2008 and June 30, 2007 was $2.07 and $1.90, respectively.





As of
June 30, 2008, there was $1,984,541 of total unrecognized compensation cost
related to non-vested options granted under the plans.  That cost is
expected to be recognized over a weighted average period of 1 year as of
June 30, 2008.  Cash received from stock option and warrant exercises
was $523,513 and $94,491 during the six-months ended June 30, 2008 and June
30, 2007, respectively.





Restricted
Stock





During
the six-months ended June 30, 2008, the Board of Directors granted 143,079
shares of restricted stock under the plan with a weighted average fair value of
$2.11 per share.  During the six-months ended June 30, 2007, the Board
of Directors granted 75,575 shares of restricted stock under the plan with a
weighted average fair value of $3.13 per share.





As of
June 30, 2008 we had $387,666 of total unrecognized compensation
expense related to restricted stock which will be recognized over the weighted
average period of 2.3 years.





Note
9.  Related Party Transactions





In
January 2007, we entered into a multi-year purchase and supply agreement with
Phoenix Mortorcars, Inc., succeeded by Phoenix MC, Inc. (“Phoenix”) for lithium
Titanate battery pack systems.  Pursuant to two letter agreements with
Phoenix effective in July 2008, the 2007 purchase and supply agreement was
cancelled. Both parties also agreed that all representations, warranties,
covenants and obligations arising under the 2007 agreement were terminated and
further that each party holds the other party harmless from any and all claims,
liabilities, charges, demands, grievances, and causes of action of any kind or
nature. These new agreements resulted in:




1.
            Altair
      agreed to ship 47 Generation 1 prototype batteries back to Phoenix for
      exclusive use in Phoenix demonstration vehicles.The
      batteries are provided to Phoenix “as is” without explicit or implied
      warranties.


2.
            A
      commitment on the part of Phoenix to provide Altair with ten percent of
      the monetized value of any California Air Resources Board ZEV credits for
      each vehicle for which it receives
them.


3.
            The
      forgiveness of the Phoenix notes payable, associated accrued interest, and
      remaining accounts receivable
balance.





Additionally
in January 2007, Phoenix issued 1,000,000 shares of its common stock in
consideration for the three-year exclusivity agreement within the United States
of America included in the contract.  Phoenix did not make the minimum
battery pack purchases required to retain their exclusivity in
2007.  The common stock shares received represented a 16.6% ownership
interest in Phoenix.  The investment was recorded at $106,518 with the
offset to deferred revenue, which was recognized on a straight-line basis until
our agreement was terminated in July 2008.





In March
2008, Phoenix Motorcars, Inc. completed a merger, wherein the surviving
corporation, Phoenix MC, Inc. became a wholly owned subsidiary of All Electric,
LLC (“AELLC”).  On March 19, 2008, Phoenix MC, Inc. announced receipt
of their next round of funding provided by Al Yousuf, LLC and The AES
Corporation.  These changes resulted in conversion of our 1,000,000
common share investment in Phoenix Motorcars, Inc. to ownership of 2,000 units
in AELLC and diluted our ownership percentage in Phoenix to 2.1%.  The
remaining deferred revenue at June 30, 2008 relating to the unamortized
investment was $53,262.  Based on managements’ review of the estimated
valuation of Phoenix presented in the February 21, 2008 Merger Agreement and
consideration of their subsequent round of funding, management believes that the
investment was not impaired at March 31, 2008.  Management is not
aware of any significant changes in circumstances that would impact the value of
the investment as of June 30, 2008.





On July
20, 2007, we entered into a multi-year Joint Development and Equipment Purchase
Agreement with AES Energy Storage, LLC (“AES”), a subsidiary of global power
leader The AES Corporation.  A member of the executive management team
of AES also serves on our board of directors.  Under the terms of the
agreement we will work jointly with AES to develop a suite of energy storage
solutions for purchase by AES and potentially third parties.  On
August 3, 2007, we received an initial $1,000,000 order, of which $500,000 was
prepaid, in connection with the AES Joint Development and Equipment Purchase
Agreement for a 500 kilowatt-hour energy storage product.  This
product was designed and manufactured at our Indiana facilities, and was
completed in December 2007.  The final installment of $500,000 was
billed in June 2008 upon substantial completion of the testing of the prototype
packs.




13




On April
20, 2008, we executed an Amended and Restated Agreement to recover Short-Swing
Profits with Al Yousuf LLC.  Section 16 of the Securities and Exchange
Act of 1934 requires directors, officers and 10% beneficial owners of the
Company to disgorge any short-swing profits realized on a non-exempt purchase
and sale of the Company’s securities within any six-month
period.  Consistent with the terms of the Recovery Agreement, we
received wire transfers (less wire transfer fees) in the amount of
$177,210.





Note
10.  Business Segment Information





Management views the Company as
operating in three business segments:  Power and Energy Group,
Performance Materials and Life Sciences.





The Power
and Energy Group develops, produces, and sells nano-structured LTO, nano lithium
Titanate, battery cells, battery packs, and provides related design and test
services.  The Performance Materials segment produces advanced
materials for coatings, sensors, alternative energy devices and markets and
licenses our titanium dioxide pigment production technology.  The Life
Sciences segment produces pharmaceutical products.





The
accounting policies of these business segments are the same as described in Note
2 to the unaudited condensed consolidated financial
statements.  Reportable segment data reconciled to the consolidated
financial statements as of the six-month periods ended June 30, 2008 and June
30, 2007 is as follows:





DepreciationLoss/(Income)
      From
            
            
            andSix Months
      Ended
            
            Net Sales
            
            
            Operations
            
            
            Amortization
            
            
            AssetsJune
      30, 2008:Power
      and Energy Group
            
            $
            1,681,403
            
            
            $
            3,852,263
            
            
            $
            549,004
            
            
            $
            8,062,980Performance
      Materials
            
            
            598,533
            
            
            
            1,818,271
            
            
            
            561,326
            
            
            
            4,962,671Life
      Sciences
            
            
            692,060
            
            
            
            243,020
            
            
            
            30,470
            
            
            
            2,141,155Corporate
            
            
            -
            
            
            
            8,771,860
            
            
            
            72,551
            
            
            
            33,818,309Consolidated
      Total
            
            $
            2,971,996
            
            
            $
            14,685,414
            
            
            $
            1,213,351
            
            
            $
            48,985,115June
      30, 2007:Power
      and Energy Group
            
            $
            2,302,018
            
            
            $
            4,024,153
            
            
            $
            388,434
            
            
            $
            8,571,483Performance
      Materials
            
            
            1,447,199
            
            
            
            954,148
            
            
            
            437,252
            
            
            
            7,870,986Life
      Sciences
            
            
            457,583
            
            
            
            (4,927
            )
            
            
            14,003
            
            
            
            2,329,768Corporate
            
            
            -
            
            
            
            6,365,608
            
            
            
            65,360
            
            
            
            21,628,732Consolidated
      Total
            
            $
            4,206,800
            
            
            $
            11,338,982
            
            
            $
            905,049
            
            
            $
            40,400,969





In the
table above, corporate expense in the Loss from Operations column includes such
expenses as investor relations, business consulting, general legal expense,
accounting and audit, general insurance expense, shareholder information expense
and general office expense.




14




For the
six months ended June 30, 2008, we had sales to three major customers, each of
which accounted for 10% or more of revenues. Total sales to these customers for
the six months ended June 30, 2008 and the balance of their accounts receivable
at June 30, 2008 were as follows:





Accounts
      Receivable andSales
      - 6 Months Ended
            
            
            Notes
      Receivable atCustomer
            
            June
      30, 2008
            
            
            June
      30, 2008Power and Energy
      Group:Office
      of Naval Research
            
            $
            646,854
            
            
            $
            230,274AES
            
            
            500,000
            
            
            
            500,000Life Sciences
      Division:Elanco
      Animal Health/Eli Lilly
            
            $
            568,804
            
            
            $
            137,110




For the six months ended June 30, 2007,
we had sales to four major customers, each of which accounted for 10% or more of
revenues. Total sales to these customers for the six months ended June 30, 2007
and the balance of their accounts receivable at June 30, 2007 were as
follows:





Accounts
      Receivable andSales
      - 6 Months Ended
            
            
            Notes
      Receivable atCustomer
            
            June
      30, 2007
            
            
            June
      30, 2007Power and Energy
      Group:Phoenix
      Motorcars, Inc.
            
            $
            1,519,632
            
            
            $
            1,474,142Department
      of Energy
            
            
            404,349
            
            
            
            60,378Performance Materials
      Division:Western
      Oil Sands
            
            $
            623,180
            
            
            $
            345,387Department
      of Energy
            
            
            398,796
            
            
            
            87,496Life Sciences
      Division:Elanco
      Animal Health/Eli Lilly
            
            $
            433,029
            
            
            $
            421,706Department
      of Energy
            
            
            23,660
            
            
            
            10,727





Sales for
the six-month periods ended June 30, 2008 and 2007 by geographic area were as
follows:





Sales
      -
            
            
            Sales
      -6
      Months Ended
            
            
            6
      Months EndedGeographic
      information (a):
            
            June
      30, 2008
            
            
            June
      30, 2007United
      States
            
            $
            2,666,924
            
            
            $
            3,400,566Canada
            
            
            245,556
            
            
            
            621,271Other
      foreign countries
            
            
            59,516
            
            
            
            184,963Total
            
            $
            2,971,996
            
            
            $
            4,206,800(a)
      Revenues are attributed to countries based on location of
      customer.







15


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





Forward-Looking
Statements




This
Quarterly Report on Form 10-Q (this “Report”) contains various forward-looking
statements. Such statements can be identified by the use of the forward-looking
words "anticipate," "estimate," "project," "likely," "believe," "intend,"
"expect," or similar words.   These statements discuss future
expectations, contain projections regarding future developments, operations, or
financial conditions, or state other forward-looking
information.  When considering such forward-looking statements, you
should keep in mind the risk factors noted in Part II – Other Information, “Item
1A. Risk Factors” and other cautionary statements throughout this Report and our
other filings with the Securities and Exchange Commission.  You should
also keep in mind that all forward-looking statements are based on management’s
existing beliefs about present and future events outside of management’s control
and on assumptions that may prove to be incorrect.  If one or more
risks identified in this Report or any other applicable filings materializes, or
any other underlying assumptions prove incorrect, our actual results may vary
materially from those anticipated, estimated, projected, or
intended.




Unless
the context requires otherwise, all references to “Altair,” “we,” “Altair
Nanotechnologies Inc.,” or the “Company” in this Report refer to Altair
Nanotechnologies Inc. and all of its subsidiaries.   Altair
currently has one wholly owned subsidiary, Altair US Holdings, Inc., a Nevada
corporation.  Altair US Holdings, Inc. directly or indirectly wholly
owns Altairnano, Inc., a Nevada corporation, Mineral Recovery Systems, Inc., a
Nevada corporation, Fine Gold Recovery Systems, Inc., a Nevada corporation and a
controlling interest in AlSher Titania LLC (“AlSher Titania”), a joint venture
with The Sherwin-Williams Company (“Sherwin-Williams”).  We have
registered or are in the process of registering the following trademarks: Altair
Nanotechnologies®, Altair Nanomaterials®, AltairnanoTM, TiNano®, Nanocheck© and
RenaZorb®.  Any other trademarks and service marks used in this Report
are the property of their respective holders.





Overview





The
following discussion summarizes the material changes in our financial condition
between December 31, 2007 and June 30, 2008 and the material changes in our
results of operations and financial condition between the three-month
and six-month periods ended June 30, 2008 and June 30,
2007.  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 for the year ended December
31, 2007.





We are a
Canadian corporation, 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
three divisions, a Power and Energy Group, a Performance Materials Division
and a Life Sciences Division.  Our research, development, production
and marketing efforts are currently directed toward three primary market
applications that utilize our proprietary technologies:





●
            Power
      and Energy Systems


o
            The
      design, development, and production of our nano-lithium Titanate battery
      cells, batteries, and battery packs as well as related design and test
      services.


o
            The
      development, production and sale for testing purposes of electrode
      materials for use in a new class of high performance lithium ion batteries
      called nano-lithium Titanate
batteries.





●
            Performance
      Materials Division


o
            Through
      AlSher Titania, the development and production of high quality titanium
      dioxide pigment for use in paint and coatings, and nano titanium dioxide
      materials for use in a variety of applications including those related to
      removing contaminants from air and
water.


o
            The
      testing, development,  marketing and/or licensing of
      nano-structured ceramic powders for use in various applications, such as
      advanced performance coatings, air and water purification systems, and
      nano-sensor applications.




16





●
            Life
      Sciences


o
            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 human patients undergoing kidney
    dialysis.


o
            The
      development of a manufacturing process related to a test-stage active
      pharmaceutical ingredient, which is designed to be useful in the treatment
      of companion animals.





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





Our
revenues have been, and we expect them to continue to be, generated by license
fees, product sales, commercial collaborations and contracts and
grants.  We currently have agreements in place to (1) provide research
to further develop battery electrode materials, nano-sensors, and nano-materials
characterization, (2) to participate in a joint venture combining the
technologies of the partners in order to develop and produce titanium dioxide
pigment for use in paint and coatings and nano-titanium dioxide materials for
use in a variety of advanced materials applications, (3) to develop a suite of
energy storage solutions for the stationary power market, (4) to develop battery
backup power systems for Naval applications and (5) to develop battery power
systems for Army artillery units.  In addition, we have entered into a
licensing agreement for RenaZorb, our pharmaceutical candidate for treatment of
chronic renal failure in humans; we have licensed all potential pharmaceutical
products for animal applications; and we have made product sales consisting
principally of alumina, battery cells and battery modules.  Future
revenues will depend on the success of our contracted projects, the results of
our other research and development work, the success of the RenaZorb and animal
applicationlicensees
in obtaining regulatory approval for the drugs, or other products, the
successful completion of engineering studies relating to the 100 ton per year
plant designed for titanium pigment production, the successful commercialization
of our completed large scale stationary power tests in connection with energy
storage devices, and the success of our marketing efforts with respect to both
product sales and technology licenses.





General
Outlook





We have
generated net losses in each fiscal year since incorporation.  In
fiscal 2007, revenues from product sales, commercial collaborations and
contracts and grants began to increase significantly, but operating expenses
also increased significantly as we added employees and committed additional
funds to our customer contracts, battery initiative, and pigment process
technology.  Our gross profit margins on customer contracts for
research and development work are very low, and in order that we may be
profitable in the long run, our business plan focuses on the development of
products and technologies that we expect will eventually bring a substantial
amount of higher-margin revenues from licensing, manufacturing, product sales
and other sources. We expect our nano-lithium Titanate battery cells, packs and
energy storage devices to be a source of such higher-margin revenues in the long
term.  In 2007, we increased spending for the battery initiative,
manufacturing of the potential drug candidates, and pigment process
development.




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





●
            In
      July 2007, we entered into a multi-year development and equipment purchase
      agreement with AES Energy Storage, LLC, a subsidiary of global power
      leader, The AES Corporation.  Under the terms of the deal, we
      are working jointly with AES to develop a suite of energy storage
      solutions specifically for AES.  The first two one-megawatt
      prototype stationary battery packs were manufactured at our Indiana
      facility and were completed according to the delivery schedule in December
      2007.  These packs have been connected to the electric grid in
      Indiana and full testing has been completed and validated by an external,
      independent agency.  The testing showed the battery system
      successfully met the program’s milestones, which was conducted to
      demonstrate the applicability of Altair’s large platform technology to
      frequency regulation, a key service currently provided by power plants to
      the electric grid.  This demonstration also suggests that the
      technology could be used for a number of other utility
      applications.  We expect our development relationship with AES
      to continue through 2008 and
beyond.




17




●
            Spectrum
      must begin the testing and application processes necessary to receive FDA
      approval of RenaZorb and related products.  Spectrum has begun
      the process of information and data collection and presentation required
      to file an investigational new drug application with the FDA, which is a
      condition precedent to commencing human testing and the first stage of
      seeking regulatory approval.  We do not expect the application
      to be filed until 2009.  In order for RenaZorb to be successful
      in the foreseeable future, it is important that Spectrum, with our
      assistance, submit its investigation new drug application by early 2009
      and continue with testing.




●
            We
      have formed the AlSher Titania joint venture with The Sherwin-Williams
      Company to develop and produce titanium dioxide pigment for use in paint
      and coatings.  We have generated considerable data from our 100
      ton per year pilot plant, commissioned in February 2008 and are currently
      compiling that information for an engineering data package analysis and
      recommendation on next steps.  Based on review of this package,
      its impact on financial projections, and input from our partner, we will
      consider whether to undertake a more detailed engineering cost study aimed
      at a scale up to a 5000 ton per year demonstration plant.  The
      success of this joint venture and initial pilot plant trials is integral
      to continuing development and the ultimate commercialization of AHP
      technology.




●
            In
      January 2008, we entered into a development agreement with the Office of
      Naval Research for $2,490,000.  This is is a cost reimbursement
      agreement whereby we will develop a proof of concept battery system
      consisting of two 50-80 killowatt hour batteries.  Successful
      completion of this development work is required to qualify for further
      military grants with the Office of Naval
  Research.




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 overcome.





Recent Business
Developments





Power
and Energy Group





Pursuant
to letter agreements effective July 2008 with Phoenix, the January 2007 purchase
and supply agreement was cancelled, and both parties agreed to resolve
outstanding issues with respect to the warranty associated with the 47 battery
packs and the amounts owed by both parties.  That agreement resulted
in our shipping of 47 Generation 1 prototype batteries back to Phoenix for
exclusive use in Phoenix demonstration vehicles.The batteries
are provided to Phoenix “as is” without explicit or implied warranties. In
turn Phoenix committed to provide Altair with ten percent of the monetized value
of any California Air Resources Board ZEV credits for each vehicle for which it
receives them.





In June
2008, we received an order from BAE Systems for $349,000 to develop 32 batteries
in support of the US Army’s artillery upgrade program.  We plan to
deliver the batteries in October 2008.  Revenue will be recognized
upon acceptance by BAE Systems.





In August
2007, we received an initial $1,000,000 order in connection with the AES Joint
Development and Equipment Purchase Agreement for a 500 kilowatt-hour energy
storage product.  In accordance with this purchase order, two
one-megawatt stationary battery packs (energy equivalent for each pack based on
anticipated operational time is 250 kilowatt-hours of energy) were completed
according to the delivery schedule in December 2007.  A testing
program was developed and validated by KEMA, Inc., an independent agency and
executed by AES personnel and subcontractors.  KEMA’s testing
completed during the second quarter of 2008 showed the battery system
successfully met the program’s specifications.  The demonstration also
suggests that the technology could be used for several other utility
applications.  There were no inherent design limitations identified in
its application within the designed one-megawatt power handling
range. Fast-responding, high-efficiency energy storage systems such as
these are anticipated to create a more resilient grid and allow for increased
use of variable generating sources such as wind and solar by power
providers.  We expect our development relationship with AES to
continue through 2008 and beyond.  We also expect to commercialize
this prototype as a standard product offering by the end of 2008.





18


Life
Sciences





In
September 2007, we entered into a development services agreement with Elanco
Animal Health, a division of Eli Lilly and Company
(“Elanco”).  Pursuant to the agreement, over a multi-year period, we
will develop a manufacturing process related to a test-stage active
pharmaceutical ingredient.  This development work will include making
certain regulatory filings, installing related equipment, and providing related
services.  Based on a previous agreement, Elanco has the exclusive
right to develop and market this pharmaceutical ingredient.  Elanco
has agreed to fund substantially all of the development process, at a cost of
approximately $2,500,000.  Through the end of the second quarter of
2008, $1,206,940 has been billed under this agreement on a cumulative contract
to date basis and approximately $1,293,060 remains to be completed.





Performance
Materials





In April 2007, a new company, called
AlSher Titania LLC was formed.  AlSher Titania represents a joint venture
with Sherwin-Williams, one of the world's leading manufacturers of paint and
durable coatings.  Construction of the 100 ton pigment processing
pilot plant in connection with the joint venture agreement was completed and the
plant was commissioned in February 2008.  Testing under the piloting
program has commenced and results to date have been
positive.  Considerable data has been generated and is being compiled
for an engineering data package analysis and recommendation on next
steps.  Based on review of this package, its impact on financial
projections, and input from our partner, we will consider whether to undertake a
more detailed engineering cost study by early 2009 relating to the potential
scale up to a 5000 ton per year demonstration plant.





Liquidity
and Capital Resources





Current
and Expected Liquidity





Historically,
we have financed operations primarily through the issuance of equity securities
(common shares, convertible notes, stock options and warrants) and by the
issuance of debt.  In order to finance our existing operations and
development plans, as well as to respond to any new business or acquisition
opportunity, we will be required to raise capital in the future.  We
do not have any commitments with respect to future financing and may, or may
not, be able to obtain such financing on reasonable terms, or at
all.  We have a single note payable in the original principal amount
of $3,000,000 that does not contain any restrictive covenants with respect to
the issuance of additional debt or equity securities by Altair.  The
first three payments of $600,000 of principal plus accrued interest were due and
paid on February 8, 2006, 2007, and 2008.  The total outstanding note
payable balance is $1,200,000.  Future payments of principal and
interest are due annually on February 8, 2009 and 2010.





Our cash
and short-term investments decreased by $22,373,380, from $50,146,117 at
December 31, 2007 to $27,772,737 at June 30, 2008, due primarily to net
cash used in operations (approximately $20,900,000) purchases of property and
equipment (approximately $1,591,000) and payment of notes payable
($600,000).  This decrease was partially offset by the receipt of
proceeds resulting from the exercise of stock options and warrants and recovery
of short swing profits (totaling approximately $700,000).





Our
objective is to manage cash expenditures in a manner consistent with rapid
product development that leads to the generation of revenues in the shortest
possible time.  We believe we have adequate cash resources, and
availability of additional capital if needed, to continue product development
until higher-margin revenues and positive cash flow can be
generated.





At August
1, 2008, we had 84,744,322 common shares issued and outstanding.  As
of that same date, there were outstanding warrants to purchase up to 1,115,431
common shares and options to purchase up to 4,448,371 common
shares.




19




Capital Commitments





The
following table discloses aggregate information about our contractual
obligations and the periods in which payments are due as of June 30,
2008:




Less
      Than
            
            
            
            
            
            
            
            
            AfterContractual
      Obligations
            
            Total
            
            
            1
      Year
            
            
            1-3
      Years
            
            
            4-5
      Years
            
            
            5
      YearsNotes
      Payable
            
            $
            1,200,000
            
            
            $
            600,000
            
            
            $
            600,000
            
            
            $
            -
            
            
            $
            -Interest
      on notes payable
            
            
            126,000
            
            
            
            84,000
            
            
            
            42,000
            
            
            
            -
            
            
            
            -Contractual
      Service Agreements
            
            
            3,209,099
            
            
            
            3,209,099
            
            
            
            -
            
            
            
            -
            
            
            
            -Facilities
      and Property Leases
            
            
            1,211,036
            
            
            
            336,032
            
            
            
            577,500
            
            
            
            297,504
            
            
            
            -Unfulfilled
      Purchase Orders
            
            
            2,107,400
            
            
            
            2,107,400
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
      Contractual Obligations
            
            $
            7,853,535
            
            
            $
            6,336,531
            
            
            $
            1,219,500
            
            
            $
            297,504
            
            
            $
            -





In 2007,
we anticipated that a total of approximately $4.8 million would be spent on
labor, equipment and building improvements and other implementation expenses
related to preparations to manufacture our pharmaceutical
products.  Based on updated forecasts in 2008, total anticipated
expenditures have been revised to $2.4 million.  Of this amount,
approximately $328,000 was spent in the second quarter of 2008 for a cumulative
total of $2,002,000 incurred project to date through June 30, 2008.




Beginning
in the second quarter of 2008, we have revised our capital acquisition policy to
lease capital purchases that meet our business case criteria.  As a
result no significant capital expenditures are anticipated through the end of
2008.





Off-Balance Sheet
Arrangements





There
were no off-balance sheet arrangements at June 30, 2008.





Critical Accounting Policies
and Estimates




Management
based the following discussion and analysis of our financial condition and
results of operations on our unaudited condensed 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 inventory,
long-lived assets, share-based compensation, revenue recognition, accrued
warranty, overhead allocation, minority interest, allowance for doubtful
accounts and deferred income taxes.   We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.




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




●
            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 collectability is
      probable, in accordance with the Securities and Exchange Commission “Staff Accounting Bulletin No.
      104 – Revenue Recognition in Financial Statements”. 
      Historically, our revenues have been derived from four sources: license
      fees, commercial collaborations, contract research and development and
      product sales.  License fees are recognized when the agreement is
      signed, we have performed all material obligations related to the
      particular milestone payment or other revenue component and the earnings
      process is complete.  Revenue for product sales is recognized
      upon delivery of the product, unless specific contractual terms dictate
      otherwise.  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 is recognized in the period in
      which it becomes known.  Payments received in advance relating
      to the future performance of services or deliveries of products are
      deferred until the performance of the service is complete or the product
      is shipped.  Based on specific customer bill and hold
      agreements, revenue is recognized when the inventory is shipped to a third
      party storage warehouse, the inventory is segregated and marked as
      sold, the customer takes the full rights of ownership and title to
      the inventory upon shipment to the warehouse per the bill and hold
      agreement.  When contract terms include multiple components that
      are considered separate units of accounting, the revenue is attributed to
      each component and revenue recognition may occur at different points in
      time for product shipment, installation, and service contracts based on
      substantial completion of the earnings
process.




20




●
            Accrued
      Warranty.  We provide a limited warranty for battery packs and
      energy storage systems.  A liability is recorded for estimated
      warranty obligations at the date products are sold.  Since these
      are new products, the estimated cost of warranty coverage is based on cell
      and module life cycle testing and compared for reasonableness to warranty
      rates on competing battery products.  As sufficient actual
      historical data is collected on the new product, the estimated cost of
      warranty coverage will be adjusted accordingly.  The liability
      for estimated warranty obligations may also be adjusted based on specific
      warranty issues identified.





●
            Share-Based
      Compensation.  We have a stock incentive plan that provides for
      the issuance of common stock options to employees and service
      providers.  We calculate compensation expense under SFAS 123R
      using a Black-Scholes option pricing model.  In so doing, we
      estimate certain key assumptions used in the model.  We believe
      the estimates we use are appropriate and
  reasonable.





●
            Allowance
      for Doubtful Accounts.  The allowance for doubtful accounts is
      based on our assessment of the collectability 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.





●
            Long-Lived
      Assets.  Our long-lived assets consist principally of the
      nano-materials and titanium dioxide pigment assets, the intellectual
      property (patents and patent applications) associated with them, and a
      building.  Included in these long-lived assets are those that
      relate to our research and development process.  These assets are
      initially evaluated for capitalization based on Statement of Financial
      Accounting Standards No. 2, Accounting for Research and
      Development Costs.  If the assets have alternative future uses
      (in research and development projects or otherwise), they are capitalized
      when acquired or constructed; if they do not have alternative future uses,
      they are expensed as incurred. At June 30, 2008, the carrying value
      of these assets was $14,123,615, or 29% of total assets.  We
      evaluate the carrying value of long-lived assets when events or
      circumstances indicate that 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.





●
            Minority
      Interest – In April 2007, the Company and Sherwin-Williams
      entered into an agreement to form AlSher Titania LLC, a Delaware limited
      liability company.  AlSher Titania is a joint venture combining
      certain technologies of the Company and Sherwin-Williams in order to
      develop and produce titanium dioxide pigment for use in paint and coatings
      and nano-titanium dioxide materials for use in a variety of applications,
      including those related to removing contaminants from air and
      water.  Pursuant to a Contribution Agreement dated April 24,
      2007 among Altairnano, Inc, Sherwin-Williams and AlSher Titania,
      Altairnano contributed to AlSher Titania an exclusive license to use
      Altairnano’s technology (including its hydrochloride pigment process) for
      the production of titanium dioxide pigment and other titanium containing
      materials (other than battery or nano-electrode materials) and certain
      pilot plant assets with a net book value of
      $3,110,000.  Altairnano received no consideration for the
      license granted to AlSher




21




Titania
      other than its ownership interest in AlSher
      Titania.  Sherwin-Williams agreed to contribute to AlSher
      Titania cash and a license agreement related to a technology for the
      manufacture of titanium dioxide using the digestion of ilmenite in
      hydrochloric acid.  As a condition to enter into the second
      phase of the joint venture, we agreed to complete the pigment pilot
      processing plant and related development activities by January
      2008.  The 100 ton pigment pilot processing plant was
      commissioned in February 2008 and the costs associated with this effort
      were partially reimbursed by AlSher Titania.  Altairnano
      contributes any work in process and fixed assets associated with
      completion of the pigment pilot processing plant to the AlSher Titania
      joint venture.  For each reporting period, AlSher Titania is
      consolidated with the Company’s subsidiaries because the Company has a
      controlling interest in AlSher Titania and any inter-company transactions
      are eliminated (refer to Note 1 – Basis of Preparation of Consolidated
      Financial Statements).  The minority shareholder’s interest in
      the net assets and net income or loss of AlSher Titania are reported as
      minority interest in subsidiary on the condensed consolidated balance
      sheet and as minority interest share in the condensed consolidated
      statement of operations, respectively.●
            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 and product inventories based on labor
      costs.  Facilities overhead allocated to research and
      development projects may be chargeable when invoicing customers under
      certain research and development
contracts.





●
            Deferred
      Income Taxes.  Income taxes are accounted for using the asset
      and liability method.  Deferred income tax assets and liabilities are
      recognized for the future tax consequences attributable to differences
      between the financial statement carrying amounts of existing assets and
      liabilities and their respective tax bases and operating loss and tax
      credit carry-forwards.  Deferred income tax assets and liabilities
      are measured using enacted tax rates expected to apply to taxable income
      in the years in which those temporary differences are expected to be
      recovered or settled.  The effect on deferred income tax assets and
      liabilities of a change in tax rates is recognized in income in the period
      that includes the enactment date.  Future tax benefits are subject to
      a valuation allowance when management is unable to conclude that its
      deferred income tax assets will more likely than not be realized from the
      results of operations.  The Company has recorded a valuation
      allowance to reflect the estimated amount of deferred income tax assets
      that may not be realized. The ultimate realization of deferred income tax
      assets is dependent upon generation of future taxable income during the
      periods in which those temporary differences become deductible. Management
      considers projected future taxable income and tax planning strategies in
      making this assessment. Based on the historical taxable income and
      projections for future taxable income over the periods in which the
      deferred income tax assets become deductible, management believes there is
      insufficient basis for projecting that the Company will realize the
      benefits of these deductible differences as of June 30, 2008. 
      Management has, therefore, established a full valuation allowance against
      its net deferred income tax assets as of June 30,
  2008.





Results of
Operations





Three
Months Ended June 30, 2008 Compared to Three Months Ended June 30,
2007





The net
loss for the quarter ended June 30, 2008, which was the second quarter of our
2008 fiscal year, totaled $5,660,322 ($.07 per share) compared to a net loss of
$5,430,583 ($.08 per share) in the second quarter of 2007.





Total
revenues for the quarter ended June 30, 2008 were $1,902,659 compared to
$3,065,868 for the same period of 2007.  The decrease in revenue is
due to the a reduction of $1,531,006 in product revenues primarily due to the
absence of battery pack sales to the transportation segment in
2008.





Commercial
Collaborations revenue increased $257,934, primarily attributable to the
$500,000 billed to AES offset by decrease of $207,171 by Western Oil Sands due
to their relocation to another facility in May 2008.





Contract
and Grant revenues increased $109,863 relating to $533,620 recognized in
connection with a new grant received in January 2008 from the Office of Naval
Research offset by a decrease in the Department of Energy revenues of $437,703
as the budget dollars available to expend were fully utilized as the grant ended
June 30, 2008.




22





Cost of
sales - product decreased by $2,171,651, from $2,192,476 in the second
quarter of 2007  to $20,825 in the same quarter of
2008.  This change is driven by an overall decrease in product sales
of $1,531,006 as discussed above.





Cost of
sales – warranty and inventory reserves decreased by $2,864,837 primarily
due to a letter agreement effective July 2008 with Phoenix, whereby the 2007
purchase and supply agreement was terminated and all outstanding issues with
respect to the warranty associated with the 47 battery packs sold in 2007 were
resolved.





Research
and development, or R&D, expense increased by
$1,872,655, from $3,238,869 in the second quarter of 2007 to $5,111,524 in
the same quarter of 2008.  Labor costs increased $335,666 due to merit
increases in Q1 2008 and an increase in benefit costs.  Expenditures
for materials, supplies and other operating costs (exclusive of labor) increased
for the following divisions:  Power and Energy Group expenses
increased by approximately $1,510,107 ($583,000 of expenses incurred to
complete the testing of the AES product in conjunction with the July 2007
development agreement, $454,000 relates to cell purchases for developmental
activities, $396,000 in materials relating to 2008 customer purchase orders and
development agreements, and approximately $77,000 for repairs and
maintenance expense) and $26,882 is an increase in other research and
development activities.





Sales and
marketing expense increased by $360,112, from $409,230 in the second
quarter of 2007 to $769,342 in the same quarter of 2008.  This
increase reflects the retention of consultants relating to business development
and defining and developing our branding in the United States, as well as in
Europe.





Depreciation
and amortization increased by $165,751, from $473,991 in second quarter of 2007
to $639,742 in the same quarter of 2008.  The increase in depreciation
is a result of the commission of the pigment pilot plant associated with Alsher
joint venture in February 2008 and expansion of production capabilities at the
Indiana facility.





Minority
interest decreased by $105,510, from $157,680 in second quarter 2007 to $52,170
in the same quarter of 2008.  This decrease reflects Sherwin-Williams
minority interest share of the AlSher Titania joint venture’s loss for the
quarter ending June 30, 2008.  Their share of the loss has been
reduced due to the completion of a research and development services contract in
January 2008.





Six
Months Ended June 30, 2008 Compared to Six Months Ended June 30,
2007





The net
loss for the six months ended June 30, 2008 totaled $13,948,758 ($.17 per share)
compared to a net loss of $10,612,049 ($.15 per share) in the same period of
2007.





Total
revenues for the six months ended June 30, 2008 were $2,971,996 compared to
$4,206,800 for the same period of 2007.  Product revenues decreased
$1,544,466 primarily due to the absence of battery pack sales to the
transportation segment in 2008.





Revenues
from Commercial Collaborations increased $431,458 due to an increase due to
final billing to AES of $500,000 for substantial completion of stationary
battery pack testing, an increase of $138,000 associated with a new development
agreement with Boeing dated January 25, 2008 , an increase of $135,775 for a
development services agreement with Elanco that began in June 2007, an increase
of $38,790 in other commercial revenues, offset by a decrease of $381,107 by
Western Oil Sands due to their relocation to another facility in May
2008.




Revenues
from contracts and grants decreased by $121,797 relating to a decrease in the
Department of Energy grant and University of Nevada, Las Vegas Research
Foundation subcontract of $712,150 and $274,110, respectively that reached their
budget limits, offset by increases of $646,854 for a new grant received in
January 2008 from the Office of Naval Research and $217,609 in revenues for
other grants effective in late 2007 and early 2008.





Cost of
sales - product decreased by $2,323,704, from $2,402,738 in the second
quarter of  2007 to $79,034 in the same quarter of
2008.  This change is driven by an overall decrease in product sales
of  $1,544,466 as discussed above.




23




Cost of
sales – warranty and inventory reserves decreased by $2,864,837 primarily due to
a letter agreement effective July 2008 with Phoenix, whereby the purchase and
supply agreement was terminated and the parties resolved all outstanding issues
with respect to the warranty associated with the 47 battery packs sold in
2007.





Research
and development expenses increased by $4,133,361, from $6,236,197 for the
six months ended June 30, 2007 to $10,369,558 in the same period of
2008.  Labor costs increased $1,121,168 due to merit increases in Q1
2008 and an increase in benefit costs.  Research and development
expenses increased in the following business units:  $2,964,125
increase Power and Energy Group of (approximately $1,550,000 for purchases of
raw material and cells for developmental activities, $705,000 expenses for
completion of the testing of the AES product in conjunction with the July 2007
development agreement, $300,714 in materials relating to 2008 customer purchase
orders and development agreements, $179,000 in repairs and maintenance expenses,
and $229,411 of engineering and other research and development
activities); and a $276,540 net increase in Life Sciences primarily due to
RenaZorb and animal pharmaceutical candidate research expenses.  These
increases were offset by a decrease of $228,472 relating to internal research
and development activities.





Sales and
marketing expenses increased by $645,504, from $789,766 for the six months ended
June 30, 2007 to $1,435,270 in the same period of 2008.  The increase
relates to an increase in consulting relating to business development and
defining and developing our branding in the United States, as well as in
Europe.





Depreciation
and amortization increased by $308,302, from $905,049 for the six months ended
June 30, 2007 to $1,213,351 in the same time period of 2008.  The
increase in depreciation is primarily attributed to the commission of the
pigment pilot plant associated with the Alsher joint venture in February
2008.





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.





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 president and our chief financial
officer have concluded that, as of June 30, 2008, our disclosure controls and
procedures were effective in ensuring that information required to be
disclosed by the Company in reports that it files under the Exchange Act is
recorded, processed, summarized and reported within the time periods required by
governing rules and forms.




(b)           There
have been no changes in our internal controls over financial reporting
identified in connection with the evaluation required by paragraph (d) of
Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.




24




PART
II – OTHER INFORMATION




Item
1A.  Risk Factors





Material Changes in Risk
Factors




The
Risk Factors set forth below do not reflect any material changes from the “Risk
Factors” identified in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2007.





We have made immaterial edits and
updated the financial and other data referenced in the risk factors as of a
recent practicable date.





Risk
Factors





An
investment in our common shares involves significant risks. You should carefully consider the
risks described in this Report before making an investment decision. Any of
these risks could materially and adversely affect our business, financial
condition or results of operations. In such case, you may lose all or part of
your investment. Some factors in this section are forward-looking
statements.





We may continue
to experience significant losses from operations.





We have
experienced a loss in every fiscal year since our inception.  Our
losses from operations were $11,338,982 in 2007 and $14,685,414 for the six
months ended June 30, 2008.  Even if we do generate operating income
in one or more quarters in the future, subsequent developments in our industry,
customer base, business or cost structure, or an event such as significant
litigation or a significant transaction, may cause us to again experience
operating losses.  We may never become profitable for the long-term,
or even for any quarter.




Our
quarterly operating results have fluctuated significantly in the past and will
continue to fluctuate in the future, which could cause our stock price to
decline.




Our
quarterly operating results have fluctuated significantly in the past, and we
believe that they will continue to fluctuate in the future, due to a number of
factors, many of which are beyond our control. If in future periods our
operating results do not meet the expectations of investors or analysts who
choose to follow our company, our stock price may fall.  Factors that
may affect our quarterly operating results include the following:




•
            fluctuations
      in the size and timing of customer orders from one quarter to the
      next;


•
            timing
      of delivery of our services and
products;


•
            addition
      of new customers or loss of existing
customers;


•
            our
      ability to commercialize and obtain orders for products we are
      developing;


•
            costs
      associated with developing our manufacturing
  capabilities;


•
            new
      product announcements or introductions by our competitors or potential
      competitors;


•
            the
      effect of variations in the market price of our common shares on our
      equity-based compensation expenses;


•
            warranty
      claims or product recalls that exceed expectations;•
            acquisitions
      of businesses or customers;


•
            technology
      and intellectual property issues associated with our
    products;


•
            general
      economic trends, including changes in energy prices, or geopolitical
      events such as war or incidents of terrorism; and•
            loss
      of key employees, or our inability to attract appropriate new employees to
      meet expected growth.




25


Our
revenues have historically been generated from low-margin contract research
services; if we cannot expand revenues from other products and services, our
business will fail.




Historically,
a significant portion of our revenues has come from contract research services
for businesses and government agencies. During the years ended December 31,
2007, 2006 and 2005, contract services revenues comprised 55%, 67%, and 70%,
respectively, of our operating revenues. Contract services revenue is low margin
and unlikely to grow at a rapid pace. Our business plan anticipates revenues
from product sales and licensing, both of which have potential for higher
margins and more rapid growth, increasing in coming years. If we are not
successful in significantly expanding our revenues from higher margin products
and services, our revenue growth will be slow, and it is unlikely that we will
achieve profitability.




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 conflicting patents or defects in our
      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 intellectual
      proprietary information and techniques, do not breach our patented or
      unpatented proprietary rights.






Because
the value of our company and common shares is rooted primarily in our
proprietary intellectual property rights, our inability to protect our
proprietary intellectual property rights or gain a competitive advantage from
such rights could harm our ability to generate revenues and, as a result, our
business and operations.




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.




Because
our products are generally components of end products, the viability of many or
our products is tied to the success of third parties' existing and potential end
products.




Few of
the existing or potential products being developed with our nanomaterials and
titanium dioxide pigment technology are designed for direct use by the ultimate
end user. Phrased differently, most of our products are components of other
products. For example, our nano-structured lithium Titanate battery materials
and batteries are designed for use in end-user products such as electric
vehicles, hybrid electric vehicles and other potential products. Other potential
products and processes we and our partners are developing using our technology,
such as titanium dioxide pigments, life science materials, air and water
treatment products, and coatings, are similarly expected to be components of
third-party products. As a result, the market for our products is dependent upon
third parties creating or expanding markets for their end-user products that
utilize our products. If such end-user products are not developed, or the market
for such end-user products contracts or fails to develop, the market for our
component products would be expected to similarly contract or collapse. This
would limit our ability to generate revenues and would harm our business and
operations.




26




The
commercialization of many of our technologies is dependent upon the efforts of
commercial partners and other third parties over which we have no or little
control.




We do not
have the expertise or resources to commercialize all potential applications of
our nanomaterials and titanium dioxide pigment technology. For example, we do
not have the resources necessary to complete the testing of, and obtain FDA
approval for, RenaZorb and other potential life sciences products or to
construct a commercial facility to use our titanium dioxide pigment production
technology. Other potential applications of our technology, such as those
related to our nano-structure LTO electrode materials, coating materials and
dental materials, are likely to be developed in collaboration with third
parties, if at all. With respect to these and substantially all other
applications of our technology, the commercialization of a potential application
of our technology is dependent, in part, upon the expertise, resources and
efforts of our commercial partners. This presents certain risks, including the
following:




•
            we
      may not be able to enter into development, licensing, supply and other
      agreements with commercial partners with appropriate resources, technology
      and expertise on reasonable terms or at all;•
            our
      commercial partners may not place the same priority on a project as we do,
      may fail to honor contractual commitments, may not have the level of
      resources, expertise, market strength or other characteristics necessary
      for the success of the project, may dedicate only limited resources and/or
      may abandon a development project for reasons, including reasons, such as
      a shift in corporate focus, unrelated to its
  merits;




•
            our
      commercial partners may be in the early stages of development and may not
      have sufficient liquidity to invest in joint development projects, expand
      their businesses and purchase our products as expected or honor
      contractual commitments;




•
            our
      commercial partners may terminate joint testing, development or marketing
      projects on the merits of the projects for various reasons, including
      determinations that a project is not feasible, cost-effective or likely to
      lead to a marketable end product;




•
            at
      various stages in the testing, development, marketing or production
      process, we may have disputes with our commercial partners, which may
      inhibit development, lead to an abandonment of the project or have other
      negative consequences; and




•
            even
      if the commercialization and marketing of jointly developed products is
      successful, our revenue share may be limited and may not exceed our
      associated development and operating
costs.




As a
result of the actions or omissions of our commercial partners, or our inability
to identify and enter into suitable arrangements with qualified commercial
partners, we may be unable to commercialize apparently viable products on a
timely and cost-effective basis, or at all.




If
we acquire or invest in other companies, assets or technologies and we are not
able to integrate them with our business, or we do not realize the anticipated
financial and strategic goals for any of these transactions, our financial
performance may be impaired.




As part
of our growth strategy, we routinely consider acquiring or making investments in
companies, assets or technologies that we believe are strategic to our business.
We do not have extensive experience in integrating new businesses or
technologies, and if we do succeed in acquiring or investing in a company or
technology, we will be exposed to a number of risks, including:




27




•
            we
      may find that the acquired company or technology does not further our
      business strategy, that we overpaid for the company or technology or that
      the economic conditions underlying our acquisition decision have
      changed;




•
            we
      may have difficulty integrating the assets, technologies, operations or
      personnel of an acquired company, or retaining the key personnel of the
      acquired company;




•
            our
      ongoing business and management's attention may be disrupted or diverted
      by transition or integration issues and the complexity of managing
      geographically or culturally diverse
  enterprises;




•
            we
      may encounter difficulty entering and competing in new product or
      geographic markets or increased competition, including price competition
      or intellectual property litigation;
and




•
            we
      may experience significant problems or liabilities associated with product
      quality, technology and legal contingencies relating to the acquired
      business or technology, such as intellectual property or employment
      matters.




In
addition, from time to time we may enter into negotiations for acquisitions or
investments that are not ultimately consummated. These negotiations could result
in significant diversion of management time, as well as substantial
out-of-pocket costs. If we were to proceed with one or more significant
acquisitions or investments in which the consideration included cash, we could
be required to use a substantial portion of our available cash. If we issue
shares of capital stock or other rights to purchase capital stock, including
options and warrants, existing stockholders would be diluted. In addition,
acquisitions and investments may result in the incurrence of debt, large
one-time write-offs, such as acquired in-process research and development costs,
and restructuring charges.




As
our commercial orders increase, we intend to expand our operations and increase
our expenditures in an effort to grow our business. If we are unable to achieve
or manage significant growth and expansion, or if our business does not grow as
we expect, our operating results may suffer.




During
the past year, we have significantly increased our research and development
expenditures in an attempt to accelerate the commercialization of certain
products, particularly our nano-structured LTO electrode materials and battery
systems. Our business plan anticipates continued additional expenditure on
development, manufacturing and other growth initiatives. We may not achieve
significant growth despite such expenditures. If achieved, significant growth
would place increased demands on our management, accounting systems, network
infrastructure and systems of financial and internal controls. We may be unable
to expand associated resources and refine associated systems fast enough to keep
pace with expansion, especially as we expand into multiple facilities at distant
locations. If we fail to ensure that our management, control and other systems
keep pace with growth, we may experience a decline in the effectiveness and
focus of our management team, problems with the timeliness and accuracy of our
reporting, issues with costs and quality controls and other problems associated
with a failure to manage rapid growth, all of which would harm our results of
operations.




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




We have
limited financial personnel 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.




28


We
will not generate substantial revenues from our life science products unless
proposed products receive FDA approval and achieve substantial market
penetration.




We have
entered into development and license agreements with respect to RenaZorb, a
potential drug candidate for humans with kidney disease, and other life science
products, and expect to enter into additional licensing and/or supply agreements
in the future.  Most of the potential life sciences applications of
our technologies are subject to regulation by the FDA and similar regulatory
bodies.  In general, license agreements in the life sciences area call
for milestone payments as certain milestones related to the development of the
products and the obtaining of regulatory approval are met; however, the receipt
by the licensor of substantial recurring revenues is generally tied to the
receipt of marketing approval from the FDA and the amount of revenue generated
from the sale of end products.   There are substantial risks
associated with licensing arrangements, including the following:





•
            Further
      testing of potential life science products using our technology may
      indicate that such products are less effective than existing products,
      unsafe, have significant side effects or are otherwise not
      viable;




•
            The
      licensees may be unable to obtain FDA or other regulatory approval for
      technical, political or other reasons or, even if a licensee obtains such
      approval, it may obtain such approval much later than expected or
      projected; and




•
            End
      products for which FDA approval is obtained, if any, may fail to obtain
      significant market share for various reasons, including questions about
      efficacy, need, safety and side effects or because of poor marketing by
      the licensee.





If any of
the foregoing risks, or other risks associated with our life science products
were to occur, we would not receive substantial, recurring revenue from our life
science division, which would adversely affect our overall business, operations
and financial condition


.


As
manufacturing becomes a larger part of our operations, we will become exposed to
accompanying risks and liabilities.





We have
not produced any pigments, nanoparticles or other products using our
nanomaterials and titanium dioxide pigment technology and equipment on a
sustained commercial basis.  In-house or outsourced manufacturing is
becoming an increasingly significant part of our business.  If and as
manufacturing becomes a larger part of our business, we will become increasingly
subject to various risks associated with the manufacturing and supply of
products, including the following:





•
            If
      we fail to supply products in accordance with contractual terms, including
      terms related to time of delivery and performance specifications, we may
      become liable for replacement, direct, special, consequential and other
      damages, even if manufacturing or delivery was
  outsourced;




•
            Raw
      materials used in the manufacturing process, labor and other key inputs
      may become scarce and expensive, causing our costs to exceed cost
      projections and associated
revenues;




•
            Manufacturing
      processes typically involve large machinery, fuels and chemicals, any or
      all of which may lead to accidents involving bodily harm, destruction of
      facilities and environmental contamination and associated liabilities;
      and




•
            As
      our manufacturing operations expand, we expect that a significant portion
      of our manufacturing will be done overseas, either by third-party
      contractors or in a plant owned by the company.  Any
      manufacturing done overseas presents risks associated with quality
      control, currency exchange rates, foreign laws and customs, timing and
      loss risks associated with overseas transportation and potential adverse
      changes in the political, legal and social environment in the host county;
      and•
            We
      may have, and may be required to, make representations as to our right to
      supply and/or license intellectual property and to our compliance with
      laws. Such representations are usually supported by indemnification
      provisions requiring us to defend our customers and otherwise make them
      whole if we license or supply products that infringe on third-party
      technologies or violate government
regulations.




29




Any
failure to adequately manage risks associated with the manufacture and supply of
materials and products could lead to losses (or small gross profits) from that
segment of our business and/or significant liabilities, which would adversely
affect our business, operations and financial condition.





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




As of
June 30, 2008, we had approximately $27.8 million in cash, cash equivalents and
short-term investments.  As we take additional steps to enhance our
commercialization and marketing efforts, or respond to acquisition opportunities
or potential adverse events, our use of working capital may increase
significantly. In any such event, absent a comparatively significant increase in
revenue in the immediate future, we will need to raise additional capital in
order to sustain our ongoing operations, continue unfinished testing and
additional development work and, if certain of our products are commercialized,
construct and operate facilities for the production of those
products.




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





•
            market
      factors affecting the availability and cost of capital
      generally;




•
            the
      price, volatility and trading volume of our common
  shares;




•
            our
      financial results, particularly the amount of revenue we are generating
      from operations;•
            the
      amount of our capital needs;




•
            the
      market's perception of companies in one or more of our lines of
      business;




•
            the
      economics of projects being pursued;
and




•
            the
      market's perception of our ability to execute our business plan and any
      specific projects identified as uses of
  proceeds.




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.





Our
past and future operations may lead to substantial environmental
liability.




Virtually
any prior or future use of our nanomaterials and titanium dioxide pigment
technology is subject to federal, state and local environmental laws. In
addition, we are in the process of reclaiming mineral property that we leased in
Tennessee.  Under applicable environmental laws, we may be jointly and
severally liable with prior property owners for the treatment, cleanup,
remediation and/or removal of any hazardous substances discovered at any
property we use. In addition, courts or government agencies may impose liability
for, among other things, the improper release, discharge, storage, use, disposal
or transportation of hazardous substances.  If we incur any
significant environmental liabilities, our ability to execute our business plan
and our financial condition would be harmed.




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




We are a
Canadian corporation, and several 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 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 impose liability in original actions
against us or our directors, officers or experts predicated upon U.S. securities
laws.




30




We
are dependent on key personnel.




Our
continued success will depend to a significant extent on the services of our
senior management and key scientists.  We have key man insurance on
the life of Dr. Sabacky.  We do not have agreements requiring any of
our key personnel to remain with our company.  The loss or
unavailability of any or all of these individuals would harm our ability to
execute our business plan, maintain important business relationships and
complete certain product development initiatives, which would harm our
business.




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




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




The
market price of our common shares is highly volatile and may increase or
decrease dramatically at any time.




The
market price of our common shares may be highly volatile. Our stock price may
change dramatically as the result of announcements of product developments, new
products or innovations by us or our competitors, uncertainty regarding the
viability of the nanomaterials and titanium dioxide pigment technology or any of
our product initiatives, 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 shares 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, including by short sellers
      covering their position;•
            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; and•
            Economic
      and other external market factors, such as a general decline in market
      prices due to poor economic indicators or investor
    distrust.





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




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




We
are subject to various regulatory regimes, and may be adversely affected by
inquiries, investigations and 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 Capital 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 the execution of our business plan.




31




Through
such audits, inquiries and investigations, we or a regulator may determine that
we are out of compliance with one or more governing rules or laws. 
Remedying such non-compliance diverts 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.  We may also be subject to lawsuits as a result of
alleged violation of the securities laws or governing corporate laws.  Any
charge or allegation, and particularly any determination, that we had materially
violated a governing law would harm our ability to enter into business
relationships, recruit qualified officers and employees and raise
capital.




Item 4.Submission of Mattersto a Vote of Security
Holders.





We held
an Annual Meeting of Shareholders on May 29, 2008 at which the shareholders
considered and voted as follows on the items described below:





1.
              The
      shareholders considered whether to elect the following persons as
      directors, each to serve until the next annual meeting of shareholders and
      until his respective successor shall have been duly elected and shall
      qualify:




Name
      of Nominee
            Votes
      For
            Votes
              Withheld/Abstentions
            Broker
      Non-VotesMichel
      Bazinet
            36,347,870
            494,847
            -0-Jon
      Bengtson
            36,580,296
            262,421
            -0-George
      Hartman
            36,540,831
            301,886
            -0-Robert
      F. Hemphill, Jr
            36,607,321
            235,396
            -0-Pierre
      Lortie
            36,347,595
            495,122
            -0-Robert
      G. van Schoonenberg
            36,322,845
            519,872
            -0-




2.
              The
      shareholders considered whether to appoint Perry-Smith, LLP as independent
      auditors and authorized the Audit Committee of the Board of Directors to
      fix their remuneration.  There were 35,961,667 votes cast in
      favor, 61,333 votes withheld, 819,717 votes not valid as the votes were
      not clearly indicated on the ballot, and no broker non-votes, which vote
      was sufficient for approval.





Item
5.Other
Information





Item
6.Exhibits





a) See
Exhibit Index attached hereto following the signature page.




32




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.August
      7, 2008
            
            By:  /s/  Terry
      M. CopelandDate
            
            Terry
      M. Copeland, President and CEOAugust
      7, 2008
            
            By:  /s/  John
      FalliniDate
            
            John
      Fallini, Chief Financial Officer













33




EXHIBIT
      INDEXExhibit
      No.
            
            Exhibit
            
            Incorporated
      by Reference/ Filed Herewith3.1
            
            Articles
      of Continuance
            
            Incorporated
      by reference to the Current Report on Form 8-K filed with the SEC on July
      18, 2002, File No. 001-124973.2
            
            Bylaws
            
            Incorporated
      by reference to the Annual Report on Form 10-K for the year ended December
      31, 2004  filed with the SEC on March 9, 2005, File No.
      001-1249731.1
            
            Section
      302 Certification of Chief Executive Officer
            
            Filed
      herewith31.2
            
            Section
      302 Certification of Chief Financial Officer
            
            Filed
      herewith32.1
            
            Section
      906 Certification of Chief Executive Officer
            
            Filed
      herewith32.2
            
            Section
      906 Certification of Chief Financial Officer
            
            Filed
      herewith








34