**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   **SEPTEMBER 30,
      2007**









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
              (Commission
                  File No.)
              (IRS
                  Employerof
                  incorporation)
              
              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      NO  o




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





Large
                accelerated filer   o
            Accelerated
                filer  x
            Non-accelerated
                filer  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 November 1, 2007 the registrant had 70,457,477 Common Shares
      outstanding.**













**PART
                I - FINANCIAL INFORMATION****Item
                1. Financial Statements****ALTAIR
                NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONDENSED
                CONSOLIDATED BALANCE SHEETS****(Expressed
                in United States Dollars)****(Unaudited)****September
                30,**
            
            
            **December
                31,****2007**
            
            
            **2006****ASSETS****Current
                Assets**Cash
                and cash equivalents
            
            $
            10,847,392
            
            
            $
            12,679,254Investment
                in available for sale securities
            
            
            3,907,733
            
            
            
            14,541,103Accounts
                receivable, net
            
            
            1,244,378
            
            
            
            1,129,825Accounts
                receivable from related party, net
            
            
            361,499
            
            
            
            495,000Notes
                receivable from related party, current portion
            
            
            1,235,479
            
            
            
            -Product
                inventories
            
            
            1,234,319
            
            
            
            169,666Prepaid
                expenses and other current assets
            
            
            542,998
            
            
            
            413,390Total
                current assets
            
            
            19,373,798
            
            
            
            29,428,238**Investment
                in Available for Sale Securities**
            
            
            1,012,800
            
            
            
            1,306,420**Property,
                Plant and Equipment, net**
            
            
            13,108,022
            
            
            
            11,229,406**Patents,
                net**
            
            
            741,637
            
            
            
            805,248**Notes
                Receivable from related party, long-term portion**
            
            
            356,957
            
            
            
            330,000**Other
                Assets**
            
            
            122,718
            
            
            
            21,261**Total
                Assets**
            
            $
            34,715,932
            
            
            $
            43,120,573**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                Liabilities**Trade
                accounts payable
            
            $
            2,065,900
            
            
            $
            1,533,047Accrued
                salaries and benefits
            
            
            1,821,910
            
            
            
            840,219Accrued
                liabilities
            
            
            876,917
            
            
            
            526,596Note
                payable, current portion
            
            
            600,000
            
            
            
            600,000Total
                current liabilities
            
            
            5,364,727
            
            
            
            3,499,862**Note
                Payable, Long-Term Portion**
            
            
            1,200,000
            
            
            
            1,800,000**Minority
                Interest in Subsidiary**
            
            
            1,605,802
            
            
            
            -**Stockholders'
                Equity**Common
                stock, no par value, unlimited shares authorized;70,148,787
                and 69,079,270 shares issued andoutstanding
                at September 30, 2007 and December 31, 2006
            
            
            119,417,717
            
            
            
            115,989,879Additional
                paid in capital
            
            
            4,348,533
            
            
            
            2,002,220Accumulated
                deficit
            
            
            (97,095,447)
            
            
            
            (80,353,188)Accumulated
                other comprehensive (loss)/income
            
            
            (125,400)
            
            
            
            181,800**Total
                Stockholders' Equity**
            
            
            26,545,403
            
            
            
            37,820,711**Total
                Liabilities and Stockholders' Equity**
            
            $
            34,715,932
            
            
            $
            43,120,573See
                notes to the unaudited condensed consolidated financial
                statements.


2





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





**Three
                Months Ended**
            
            
            **Nine
                Months Ended****September
                30,**
            
            
            **September
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Revenues**Product
                sales
            
            $
            1,864,330
            
            
            $
            22,940
            
            
            $
            3,797,333
            
            
            $
            33,598License
                fees
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            364,720Commercial
                collaborations
            
            
            980,478
            
            
            
            339,116
            
            
            
            2,062,550
            
            
            
            1,058,622Contracts
                and grants
            
            
            525,326
            
            
            
            387,842
            
            
            
            1,717,051
            
            
            
            895,082Total
                revenues
            
            
            3,370,134
            
            
            
            749,898
            
            
            
            7,576,934
            
            
            
            2,352,022**Operating
                Expenses**Cost
                of product sales
            
            
            2,083,729
            
            
            
            28,237
            
            
            
            4,486,467
            
            
            
            30,953Research
                and development
            
            
            4,423,159
            
            
            
            2,763,566
            
            
            
            10,659,356
            
            
            
            6,917,218Sales
                and marketing
            
            
            519,464
            
            
            
            423,615
            
            
            
            1,309,230
            
            
            
            1,384,787General
                and administrative
            
            
            2,385,871
            
            
            
            1,288,191
            
            
            
            7,597,903
            
            
            
            5,746,759Depreciation
                and amortization
            
            
            506,970
            
            
            
            405,072
            
            
            
            1,412,019
            
            
            
            1,085,190Total
                operating expenses
            
            
            9,619,193
            
            
            
            4,908,681
            
            
            
            25,464,975
            
            
            
            15,164,907**Loss
                from Operations**
            
            
            (6,549,059)
            
            
            
            (4,158,783)
            
            
            
            (17,888,041)
            
            
            
            (12,812,885)**Other
                Income (Expense)**Interest
                expense
            
            
            (33,402)
            
            
            
            (42,000)
            
            
            
            (99,902)
            
            
            
            (129,500)Interest
                income
            
            
            214,841
            
            
            
            146,235
            
            
            
            850,879
            
            
            
            539,060Gain/(Loss)
                on foreign exchange
            
            
            892
            
            
            
            (138)
            
            
            
            607
            
            
            
            (444)Total
                other income, net
            
            
            182,331
            
            
            
            104,097
            
            
            
            751,584
            
            
            
            409,116**Loss
                from Continuing Operations Before****Minority
                Interest Share**
            
            
            (6,366,728)
            
            
            
            (4,054,686)
            
            
            
            (17,136,457)
            
            
            
            (12,403,769)**Minority
                Interest Share**
            
            
            236,518
            
            
            
            -
            
            
            
            394,198
            
            
            
            -**Net
                Loss**
            
            $
            (6,130,210)
            
            
            $
            (4,054,686)
            
            
            $
            (16,742,259)
            
            
            $
            (12,403,769)**Loss
                per common share - Basic and diluted**
            
            $
            (0.09)
            
            
            $
            (0.07)
            
            
            $
            (0.24)
            
            
            $
            (0.21)**Weighted
                average shares - Basic and diluted**
            
            
            70,023,935
            
            
            
            59,461,244
            
            
            
            69,741,148
            
            
            
            59,325,488See
                notes to the unaudited condensed consolidated financial
                statements.




3





**ALTAIR
                NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONDENSED
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE
                LOSS****(Expressed
                in United States Dollars)****(Unaudited)**





**Accumulated****Other****Additional**
            
            
            
            
            
            **Compre-****Common
                Stock**
            
            
            **Paid
                In**
            
            
            **Accumulated**
            
            
            **hensive****Shares**
            
            
            **Amount**
            
            
            **Capital**
            
            
            **Deficit**
            
            
            **Income**
            
            
            **Total**BALANCE,  JANUARY
                1, 2007
            
            
            69,079,270
            
            
            $
            115,989,879
            
            
            $
            2,002,220
            
            
            $
            (80,353,188)
            
            
            $
            181,800
            
            
            $
            37,820,711Comprehensive
                loss:Net
                loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (16,742,259)
            
            
            
            -
            
            
            
            (16,742,259)Other
                comprehensive loss,net
                of taxes of $0
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (307,200)
            
            
            
            (307,200)Comprehensive
                loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (17,049,459)Share-based
                compensation
            
            
            -
            
            
            
            217,215
            
            
            
            2,346,313
            
            
            
            -
            
            
            
            -
            
            
            
            2,563,528Exercise
                of stock options
            
            
            70,085
            
            
            
            118,824
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            118,824Exercise
                of warrants
            
            
            34,000
            
            
            
            91,800
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            91,800Issuance
                of restricted stock,net
                of cancellations/expired shares
            
            
            69,909Common
                stock issued
            
            
            895,523
            
            
            
            3,000,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,000,000BALANCE,  SEPTEMBER
                30, 2007
            
            
            70,148,787
            
            
            $
            119,417,717
            
            
            $
            4,348,533
            
            
            $
            (97,095,447)
            
            
            $
            (125,400)
            
            
            $
            26,545,403See
                notes to the unaudited condensed consolidated financial
                statements.




4





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





**Nine
                Months Ended****September
                30,****2007**
            
            
            **2006****Cash
                flows from operating activities:**Net
                loss
            
            $
            (16,742,259)
            
            
            $
            (12,403,769)Adjustments
                to reconcile net loss to net cashused
                in operating activities:Depreciation
                and amortization
            
            
            1,412,019
            
            
            
            1,085,190Minority
                interest in operations
            
            
            (394,198)
            
            
            
            -Securities
                received in payment of license fees
            
            
            (13,580)
            
            
            
            (521,472)Share-based
                compensation
            
            
            2,563,528
            
            
            
            1,417,504Loss
                on disposal of fixed assets
            
            
            -
            
            
            
            21,098Accrued
                interest on notes receivable
            
            
            (46,733)
            
            
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable, net
            
            
            (114,553)
            
            
            
            384,706Accounts
                receivable from related party, net
            
            
            133,501
            
            
            
            (495,000)Notes
                receivable from related party, net
            
            
            (1,215,703)
            
            
            
            -Product
                inventories
            
            
            (1,018,718)
            
            
            
            (407,104)Prepaid
                expenses and other current assets
            
            
            (129,608)
            
            
            
            (203,708)Other
                assets
            
            
            5,061
            
            
            
            49,939Trade
                accounts payable
            
            
            219,137
            
            
            
            395,162Accrued
                salaries and benefits
            
            
            981,691
            
            
            
            315,925Accrued
                liabilities
            
            
            243,803
            
            
            
            177,202**Net
                cash used in operating activities**
            
            
            (14,116,612)
            
            
            
            (10,184,327)**Cash
                flows from investing activities:**Sale
                of available for sale securities
            
            
            33,675,000
            
            
            
            26,050,000Purchase
                of available for sale securities
            
            
            (23,041,630)
            
            
            
            (12,973,949)Purchase
                of property and equipment
            
            
            (2,959,244)
            
            
            
            (2,956,423)**Net
                cash provided by investing activities**
            
            
            7,674,126
            
            
            
            10,119,628*(continued)*


5





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





**Nine
                Months Ended****September
                30,****2007**
            
            
            **2006****Cash
                flows from financing activities:**Issuance
                of common shares for cash
            
            
            3,000,000
            
            
            
            -Proceeds
                from exercise of stock options
            
            
            118,824
            
            
            
            340,685Proceeds
                from exercise of warrants
            
            
            91,800
            
            
            
            166,670Payment
                of notes payable
            
            
            (600,000)
            
            
            
            (600,000)Minority
                interest
            
            
            2,000,000
            
            
            
            -**Net
                cash provided by (used in) financing activities**
            
            
            4,610,624
            
            
            
            (92,645)**Net
                decrease in cash and cash equivalents**
            
            
            (1,831,862)
            
            
            
            (157,344)**Cash
                and cash equivalents, beginning of period**
            
            
            12,679,254
            
            
            
            2,264,418**Cash
                and cash equivalents, end of period**
            
            $
            10,847,392
            
            
            $
            2,107,074**Supplemental
                disclosures:**Cash
                paid for interest
            
            $
            168,000
            
            
            $
            105,000Cash
                paid for income taxes
            
            None
            
            
            None**Supplemental
                schedule of non-cash investing and financing
                activities:****For
                the nine months ended September 30, 2007:**-
                We received 1,000,000 of common stock valued at $106,518 in connection
                with the Phoenix Motorcars, Inc. January 2007 purchase agreement. The
                investment was recorded with an offset to deferred
                revenue.-
                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 made property and equipment purchases of $313,716, which are included
                in trade accounts payable at September 30, 2007.-
                We had an unrealized loss on available for sale securities of
                $307,200.**For
                the nine months ended September 30, 2006:**- We issued 56,875 shares of restricted stock to employees having
                a fair
                value of approximately$180,000
                for which no cash will be received*.*- We made property and equipment purchases of $94,564, which are
                included
                in trade accounts payable at September 30, 2006.- We had an unrealized gain on available for sale securities of
                $291,400.*(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, 2006, as filed with the Commission
      on
      March 13, 2007.





The
      results of operations for the nine-month period ended September 30,
      2007 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, cash equivalents and****investment in
      available for sale securities (short-term) consist principally of bank deposits,
      institutional money market funds and corporate notes.  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
      September 30, 2007 and December 31, 2006, we had cash deposits of approximately
      $2.0 million and $3.0 million, respectively, in excess of FDIC insurance
      limits.





**Inve****stment
      in****Available for Sale****Securities****(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 income (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.





**Inventory****–******The Company values its
      inventories at the lower of cost (first-in, first-out method) or
      market.  We employ a full absorption procedure using standard cost
      techniques, which approximates actual cost.  The standards are
      customarily reviewed and adjusted annually.




7


**Accumulated
      Other Comprehensive****Loss****-**Accumulated other comprehensive
      loss consists entirely of unrealized
      (gain)/loss on the investment in available for sale securities. The
      components of comprehensive loss for the nine-month periods ended September
      30,
      2007 and 2006 are as follows:





**Nine
                months ended****September
                30,****2007**
            
            
            **2006**Net
                loss
            
            $
            16,742,259
            
            
            $
            12,403,769Unrealized
                (gain)/loss on investment in availablefor
                sale securities, net of taxes of $0
            
            
            307,200
            
            
            
            (291,400)Comprehensive
                loss
            
            $
            17,049,459
            
            
            $
            12,112,369




**Long-Lived
      Assets****-**We evaluate the carrying value of long-term
      assets, including intangibles, when events or circumstance indicate the
      existence of a possible impairment, based on projected undiscounted cash flows,
      and recognize impairment when such cash flows will be less than the carrying
      values.  Measurement of the amounts of impairments, if any, is based
      upon the difference between carrying value and fair value.  Events or
      circumstances that could indicate the existence of a possible impairment include
      obsolescence of the technology, an absence of market demand for the product,
      and/or continuing technology rights protection.





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





**Revenue
      Recognition** - We recognize revenue when persuasive evidence of an
      arrangement exists, delivery has occurred or service has been performed, the
      fee
      is fixed and determinable, and collectibility is probable.  Our revenues
      were derived from product sales, commercial collaborations and contracts and
      grants. 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 delivery 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.


8





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





**Minority
      Inter****est** – 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 plants 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 costs associated with this effort are expected to be
      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.





**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. 
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 were included in the computation of diluted loss per share
      as
      they were anti-dilutive.





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





**Note
      3.  Investment in Available for Sale Securities**





Investments
      in available for sale securities (short-term) consist of auction rate corporate
      notes.  The notes are long-term instruments with expiration dates
      through 2041.  Interest is settled and the rate is reset every 7 to 28
      days.





Investment
      in available for sale securities (long-term) consists of 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 September 30, 2007, their fair value was
      approximately $1,012,800, representing a cumulative unrealized holding loss
      of
      approximately $125,400.  We evaluated this investment to determine if
      there is an other than temporary impairment at September 30,
      2007.  Our evaluation took into consideration published investment
      analysis, levels of institutional ownership of the investee’s common stock 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 September 30, 2007.


9





**Note
      4.  Product Inventories**





Product
      inventories consist of the
      following:




**September
                  30,****2007**
              
              
              **December
                  31,****2006**Raw
                  Materials
              
              $
              1,119,304
              
              
              $
              -Work
                  in Process
              
              
              115,015
              
              
              
              112,500Demo
                  Units
              
              
              -
              
              
              
              57,165Total
                  Product Inventories
              
              $
              1
                  ,234,319
              
              
              $
              169,666


As
      products reach the commercialization
      stage, the related inventory is recorded.  The costs associated with
      products undergoing research and development are expensed as
      incurred.  As of September 30, 2007 and December 31, 2006, inventory
      consisted primarily of battery cells and modules in various stages of the
      manufacturing process.





**Note
      5.  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 September 30, 2007 and
      December 31, 2006 were:





**September
                30,****2007**
            
            
            **December
                31,****2006**Patents
                and patent applications
            
            $
            1,517,736
            
            
            $
            1,517,736Less
                accumulated amortization
            
            
            (776,099)
            
            
            
            (712,488)Total
                patents and patent applications
            
            $
            741,637
            
            
            $
            805,248





The
      weighted average amortization period for patents is approximately 16.5
      years.  Amortization expense, which represents the amortization
      relating to the identified amortizable patents, was $21,204 for the three months
      ended September 30, 2007 and 2006, and $63,611 for the nine months
      ended September 30, 2007 and 2006.  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
      6.  Accounts Receivable and Notes Receivable from Related
      Party**





Related
      Party Accounts Receivable
      activity consists of the following:





**September
                30,****2007**
            
            
            **December
                31,****2006**Beginning
                Balance - January
            
            $
            495,000
            
            
            $
            -Additions
            
            
            1,846,022
            
            
            
            495,000Less
                cash collected
            
            
            (1,979,523)
            
            
            
            -Ending
                Balance
            
            $
            361,499
            
            
            $
            495,000




Based
      on battery pack orders fulfilled
      in the fourth quarter of 2006 for Phoenix Motorcars, Inc. (“Phoenix”), a total
      of $825,000 was recorded as revenue of which 60% - $495,000 was reflected in
      accounts receivable due in 30 days and 40% - $330,000 was recorded as a note
      receivable per terms of the 2006 orders (refer to notes receivable activity
      below).





Payment
      terms based on the January 2007
      Purchase and Supply Agreement with Phoenix are as follows:  33% of the
      release order value is due upon placement of the order, 27% is due within 30
      days of the receipt of the invoice by Phoenix, and 40% is due in the form of
      a
      note payable as described below.  For the nine months ended September
      30, 2007, $2,049,068 of cash was received from Phoenix, of which $1,072,500
      was
      prepaid against release orders.  Of the prepaid balance, $1,002,955
      was applied to accounts receivable and $69,545 is recorded in deferred
      revenue.


10




Related
      Party Notes Receivable activity consists of the following:





**September
                30, 2007**
            
            
            **December
                31, 2006**Beginning
                Balance - January
            
            $
            330,000
            
            
            $
            -Additions
            
            
            1,215,703
            
            
            
            330,000Plus
                interest earned
            
            
            46,733
            
            
            
            -Ending
                Balance
            
            
            1,592,436
            
            
            
            330,000Less
                current portion
            
            
            1,235,479
            
            
            
            -Long
                term portion
            
            $
            356,957
            
            
            $
            330,000





On
      December 31, 2006, we received a $330,000 unsecured note receivable from Phoenix
      Motorcars, Inc. (refer to Note 11 – Related Party Transactions) in connection
      with the sale of battery packs, which bears interest at 10.5%.  The
      principal and interest are due by December 30, 2008 with no pre-payment
      penalty.  Notes receivable issued in 2007 carry interest at prime plus
      1% as set forth in the Wall Street Journal and are due within 360 days of the
      delivery date based on the terms of the January 2007 Phoenix Motorcars, Inc.
      supply agreement.  The due date of these notes is accelerated if
      Phoenix sells the Zero Emission credits associated with the sales of motorcars
      containing the Altair Nanosafe battery packs.





**Note
      7.  Note Payable**





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





**September
                31, 2007**
            
            
            **December
                31, 2006**Note
                payable to BHP MineralsInternational,
                Inc.
            
            $
            1,800,000
            
            
            $
            2,400,000Less
                current portion
            
            
            (600,000)
            
            
            
            (600,000)Long-term
                portion of notes payable
            
            $
            1,200,000
            
            
            $
            1,800,000





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  The first two payments of $600,000 of principal
      plus accrued interest were due and paid on February 8, 2006 and February 8,
      2007. Additional payments of $600,000 plus accrued interest are due annually
      on
      February 8, 2008 through 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 $762,192 and
      $410,157 for the three-months ended and $2,563,528 and $1,417,504 for the
      nine-months ended September 30, 2007 and September 30, 2006,
      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 1,630,600 are outstanding and unexercised at
      September 30, 2007. The total number of options relating to the 2005 plan
      that are outstanding and unexercised at September 30, 2007 is
      2,776,960.


11





Total
      options granted for the nine-month periods ended September 30, 2007
      and September 30, 2006 were 1,687,382 and 1,279,631,
      respectively.  The weighted average grant date fair value of options
      granted during the nine months ended September 30, 2007 and September 30,
      2006 was $1.93 and $2.29, respectively.





As
      of
      September 30, 2007, there was $1,328,300 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 0.7 years as
      of September 30, 2007.  Cash received from stock option and
      warrant exercises was $210,624 and $507,355 during the nine-months
      ended September 30, 2007 and September 30, 2006, respectively.





**Restricted
      Stock**





During
      the nine-months ended September 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.  During the nine-months ended September 30, 2006, the
      Board of Directors granted 56,875 shares of restricted stock under the plan
      with
      a weighted average fair value of $3.17 per share.





As
      of
      September 30, 2007 we had $272,585 of total unrecognized compensation
      expense related to restricted stock which will be recognized over the weighted
      average period of 1.8 years.





**Note
      9.  Other Transactions**





In
      March
      2007, The AES Corporation (“AES”) privately purchased 895,523 unregistered
      common shares of the Company at a price of $3.35 per share.  Total
      proceeds received relating to the purchase were $3,000,000.  No
      underwriting commission was paid in connection with this
      transaction.  The Company agreed to prepare and file a registration
      statement to register the shares within 30 days of the closing date of the
      transaction, which was effective on March 5, 2007.  Due to additional
      time required by AES to review the registration statement and prepare related
      documents, the registration statement was not filed until April 10, 2007 and
      became effective on May 30, 2007.





**Note
      10.  Income Taxes**




In
      June
      2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      (FIN) No. 48 “Accounting for Uncertainty in Income Taxes– an interpretation of
      FASB Statement 109”. FIN 48 establishes a single model to address accounting for
      uncertain tax positions. FIN 48 clarifies the accounting for income taxes by
      prescribing a minimum recognition threshold a tax position is required to meet
      before being recognized in the financial statements. FIN 48 also provides
      guidance on de-recognition, measurement classification, interest and penalties,
      accounting in interim periods, disclosure and transition.  Upon adoption as
      of January 1, 2007, we had no uncertain tax positions.  However, in
      reviewing the U.S. and Canadian income tax treatment of certain expenses we
      concluded that errors had been made in the allocation of those expenses between
      the U.S. and Canadian entities.




Based
      on
      our review, we determined that the Canadian net operating loss will be reduced
      by approximately $5.9 million as a result of filing amended returns.  We
      also determined that the gross amount of the Canadian deferred tax asset is
      overstated for 2002 through 2005.  This deferred tax asset has been
      fully reserved and, therefore, there will be no net income tax effect on the
      financial statements relating to this correction.




For
      U.S.
      tax purposes, the gross deferred tax asset has been understated for expense
      items that should be recorded on the U.S. books for 2002 through
      2006.   The additional expenses to be recorded on the U.S. books
      during 2007 will increase the U.S. net operating loss by approximately
      $3.0 million. Although the gross amount of the deferred tax asset will
      be increased as a result of the expenses to be recorded on the U.S. books,
      the
      additional amount of the deferred tax asset will also be fully
      reserved.




12





**Note
      11.  Related Party Transactions**





In
      January 2007, we entered into a multi-year purchase and supply agreement with
      Phoenix Motorcars, Inc. (“Phoenix”) for up to 500 battery pack
      systems.  Two release orders were placed pursuant to this agreement in
      January 2007 and in May 2007 with a value of $1,040,000 and $2,210,000,
      respectively.  For the three and nine month periods ended September
      30, 2007, revenue of $1,519,625 and $3,039,257, respectively, has been recorded
      in connection with these orders.  Title has passed and Phoenix assumes
      all risk of loss for purchases under these release orders.   In
      the third quarter, Phoenix notified us of their plan to redesign the packs
      for
      their Generation II vehicle.  Based on their request, we continue to
      segregate and hold the packs in a storage facility pending receipt of the new
      design specifications.  We anticipate performing the redesign work on
      a time and materials basis.  The only unfulfilled items relating to
      the first two release orders are the battery management systems valued at
      $210,743, which will be billed as a separate component upon
      delivery.  We may also receive additional payments from Phoenix in
      2007 and 2008 related to the technology fee, which is based on their sale of
      Zero Emission Credits (“ZEV credits”) associated with each electric
      vehicle.  ZEV credits are issued in connection with zero emission
      vehicles as defined by the California Air Resources Board.  Through
      September 30, 2007, no ZEV credits have been sold by Phoenix.  Total
      accounts receivable and notes receivable including accrued interest (see Note
      6)
      due from Phoenix at September 30, 2007 totaled $361,499 and $1,592,436,
      respectively.  Total deferred revenue of $149,435 at September 30,
      2007, reflects pre-payment for battery purchase orders and the unamortized
      balance of the investment described below.





Additionally,
      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 must meet minimum battery pack purchases,
      annually, to maintain the limited exclusivity agreement through its expiration
      in December 2009.  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 is recognized on a
      straight-line basis over the three year term of the exclusivity
      period.





On
      July
      20, 2007, we entered into a multi-year Joint Development and Equipment Purchase
      Agreement with AES.  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 will be designed, manufactured, and tested at our Indiana and Reno
      facilities, and is expected to ship by the end of the fourth quarter of
      2007.  Through September 30, 2007, $352,795 of revenue has been
      recorded in connection with this purchase order on a time and materials basis
      and $147,205 of the prepaid balance is reflected in deferred
      revenue.





**Note
      12.  Business Segment Information**





Management
      views the Company as
      operating in three business segments:  Performance Materials, Life
      Sciences, and Power and Energy Group, previously known as Advanced
      Materials and Power Systems (“AMPS”).  In the third quarter of 2007,
      the Altair Hydrochloride Pigment Process Division (“AHP”), which includes the
      AlSher Titania joint venture, was combined with Performance Materials in order
      to leverage and manage their inter-related operations.  For all
      quarters presented, the activity relating to the former AHP Division has been
      reclassified to Performance Materials.





The
      Performance Materials segment produces advanced materials for coatings, sensors,
      alternative energy devices and markets and licenses our titanium dioxide pigment
      production technology.  Beginning in the third quarter of 2007, sales
      of nano-structured lithium titanate spinel (“LTO”) were moved from Performance
      Materials to the Power and Energy segment.  All previous activity has
      been re-classified accordingly.  The Life Sciences segment produces
      pharmaceutical products, drug delivery products and dental
      materials.  The Power and Energy Group develops, produces, and
      sells nano-structured LTO, NanoSafe nano lithium Titanate battery
      cells, and battery packs and provides related design and test
      services.


13


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 and for the three- and nine-month periods ended
      September 30, 2007 and September 30, 2006 was as follows:





**Loss/(Income)
                From**
            
            
            **Depreciation****and****Three
                Months Ended**
            
            **Net
                Sales**
            
            
            **Operations**
            
            
            **Amortization**
            
            
            **Assets****September
                30, 2007:**Performance
                Materials
            
            $
            514,878
            
            
            $
            973,379
            
            
            $
            247,570
            
            
            $
            5,806,332Power
                and Energy Group
            
            
            2,452,753
            
            
            
            2,451,157
            
            
            
            217,410
            
            
            
            9,567,691Life
                Sciences
            
            
            402,504
            
            
            
            (142,201)
            
            
            
            8,199
            
            
            
            1,501,868Corporate
            
            
            -
            
            
            
            3,266,723
            
            
            
            33,791
            
            
            
            17,840,041Consolidated
                Total
            
            $
            3,370,134
            
            
            $
            6,549,059
            
            
            $
            506,970
            
            
            $
            34,715,932**September
                30, 2006:**Performance
                Materials
            
            $
            506,856
            
            
            $
            1,284,568
            
            
            $
            281,764
            
            
            $
            5,458,925Power
                and Energy Group
            
            
            238,810
            
            
            
            1,300,836
            
            
            
            90,038
            
            
            
            4,046,264Life
                Sciences
            
            
            4,232
            
            
            
            163,674
            
            
            
            2,669
            
            
            
            1,375,828Corporate
            
            
            -
            
            
            
            1,409,705
            
            
            
            30,601
            
            
            
            12,778,342Consolidated
                Total
            
            $
            749,898
            
            
            $
            4,158,783
            
            
            $
            405,072
            
            
            $
            23,659,359




**Loss/(Income)
                From**
            
            
            **Depreciation**
                **and****Nine
                months ended**
            
            **Net
                Sales**
            
            
            **Operations**
            
            
            **Amortization**
            
            
            **Assets****September
                30, 2007:**Performance
                Materials
            
            $
            1,962,078
            
            
            $
            1,927,529
            
            
            $
            684,824
            
            
            $
            5,806,332Power
                and Energy Group
            
            
            4,754,769
            
            
            
            6,475,302
            
            
            
            605,841
            
            
            
            9,567,691Life
                Sciences
            
            
            860,088
            
            
            
            (147,129)
            
            
            
            22,202
            
            
            
            1,501,868Corporate
            
            
            -
            
            
            
            9,632,338
            
            
            
            99,152
            
            
            
            17,840,041Consolidated
                Total
            
            $
            7,576,934
            
            
            $
            17,888,041
            
            
            $
            1,412,019
            
            
            $
            34,715,932**September
                30, 2006:**Performance
                Materials
            
            $
            1,408,647
            
            
            $
            3,159,215
            
            
            $
            795,723
            
            
            $
            5,458,925Power
                and Energy Group
            
            
            428,535
            
            
            
            3,582,422
            
            
            
            194,434
            
            
            
            4,046,264Life
                Sciences
            
            
            514,840
            
            
            
            (147,356)
            
            
            
            7,374
            
            
            
            1,375,828Corporate
            
            
            -
            
            
            
            6,218,604
            
            
            
            87,660
            
            
            
            12,778,342Consolidated
                Total
            
            $
            2,352,022
            
            
            $
            12,812,885
            
            
            $
            1,085,190
            
            
            $
            23,659,359





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





**Accounts
                Receivable and****Sales
                - 3 Months Ended**
            
            
            **Notes
                Receivable at****Customer**
            
            **September
                30, 2007**
            
            
            **September
                30, 2007****Performance
                Materials Division:**Department
                of Energy
            
            $
            73,472
            
            
            $
            15,958**Power
                and Energy Group:**Phoenix
                Motorcars, Inc.
            
            $
            1,528,503
            
            
            $
            1,953,935Department
                of Energy
            
            $
            190,915
            
            
            $
            167,400AES
                Energy Storage, LLC.
            
            $
            352,795
            
            
            $
            -**Life
                Sciences Division:**Department
                of Energy
            
            $
            103,904
            
            
            $
            23,025





For
      the three months ended September
      30, 2006, we had sales to four major customers, each of which accounted for
      10%
      or more of revenues. Total sales to these customers for the three months ended
      September 30, 2006 and the balance of their accounts receivable at September
      30,
      2006 were as follows:





**Revenues
                - 3 Months Ended**
            
            
            **Accounts
                Receivable at****Customer**
            
            **September
                30, 2006**
            
            
            **September
                30, 2006****Performance
                Materials Division:**Western
                Oil Sands
            
            $
            298,730
            
            
            $
            190,305UNLV
                Research Foundation
            
            $
            74,152
            
            
            $
            52,266Department
                of Energy
            
            $
            97,819
            
            
            $
            84,025**Power
                and Energy Group:**National
                Science Foundation
            
            $
            51,184
            
            
            $
            111,146Department
                of Energy
            
            $
            152,438
            
            
            $
            136,575





For
      the
      nine months ended September 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 nine months ended September 30, 2007 and the balance of their accounts
      receivable at September 30, 2007 were as follows:





**Accounts
                Receivable and****Sales
                - 9 Months Ended**
            
            
            **Notes
                Receivable at****Customer**
            
            **September
                30, 2007**
            
            
            **September
                30, 2007****Performance
                Materials Division:**Western
                Oil Sands
            
            $
            897,829
            
            
            $
            100,858Department
                of Energy
            
            $
            472,268
            
            
            $
            15,958**Power
                and Energy Group:**Phoenix
                Motorcars, Inc.
            
            $
            3,067,121
            
            
            $
            1,953,935Department
                of Energy
            
            $
            595,264
            
            
            $
            167,400**Life
                Sciences Division:**Elanco
                Animal Health/Eli Lilly
            
            $
            727,629
            
            
            $
            294,600Department
                of Energy
            
            $
            127,565
            
            
            $
            23,025




15





For
      the
      nine months ended September 30, 2006, we had sales to five major customers,
      each
      of which accounted for 10% or more of revenues. Total sales to these customers
      for the nine months ended September 30, 2006 and the balance of their accounts
      receivable at September 30, 2006 were as follows:





**Revenues
                - 9 Months Ended**
            
            
            **Accounts
                Receivable at****Customer**
            
            **September
                30, 2006**
            
            
            **September
                30, 2006****Performance
                Materials Division:**Western
                Oil Sands
            
            $
            819,117
            
            
            $
            190,305UNLV
                Research Foundation
            
            $
            377,406
            
            
            $
            52,266Department
                of Energy
            
            $
            97,819
            
            
            $
            84,025**Power
                and Energy Group:**National
                Science Foundation
            
            $
            198,125
            
            
            $
            111,146Department
                of Energy
            
            $
            152,438
            
            
            $
            136,575**Life
                Sciences Division:**Spectrum
                Pharmaceuticals, Inc.
            
            $
            514,840
            
            
            $
            1,232




Revenues
      for the three-month periods ended September 30, 2007 and 2006 by geographic
      area
      were as follows:





**Revenues
                -**
            
            
            **Revenues
                -****3
                Months Ended**
            
            
            **3
                Months Ended****Geographic
                information (a):**
            
            **September
                30, 2007**
            
            
            **September
                30, 2006**United
                States
            
            $
            2,864,455
            
            
            $
            428,228Canada
            
            
            274,649
            
            
            
            298,730Other
                foreign countries
            
            
            231,031
            
            
            
            22,940Total
            
            $
            3,370,134
            
            
            $
            749,898(a)
                Revenues are attributed to countries based on location of
                customer.





Revenues
      for the nine-month periods ended September 30, 2007 and 2006 by geographic
      area
      were as follows:





**Revenues
                -**
            
            
            **Revenues
                -****9
                Months Ended**
            
            
            **9
                Months Ended****Geographic
                information (a):**
            
            **September
                30, 2007**
            
            
            **September
                30, 2006**United
                States
            
            $
            6,253,966
            
            
            $
            1,457,421Canada
            
            
            904,774
            
            
            
            821,781Other
                foreign countries
            
            
            418,194
            
            
            
            72,820Total
            
            $
            7,576,934
            
            
            $
            2,352,022(a)
                Revenues are attributed to countries based on location of
                customer.





**Note
      13.  Commitments**





On
      July
      18, 2007, we signed a new lease agreement effective as of July 1, 2007 for
      30,000 square feet of space in the Flagship Business Accelerator Building
      located at 3019 Enterprise Drive, Anderson, Indiana.  The lease is for
      an initial term of 5 years with a single one-year renewal term.  Total
      rent to be paid over the 5 year term including real estate taxes is
      $570,625.  The landlord will provide the first $110,000 in additional
      leasehold improvements at no cost.  We expect to spend $220,000 on
      build-out and leasehold improvements, net of the $110,000 credit to be received
      from the landlord through the first quarter of 2008.  We plan to move
      from the current office and laboratory space leased in the Flagship Enterprise
      Center Building, an aggregate of 8,199 square feet, to the Accelerator Building
      over a period of several months, with expected completion of the move in January
      2008.


On
        July
        20, 2007 we entered into a  multi-year Joint Development and Equipment
        Purchase Agreement with AES. We agreed to pay a royalty (based on
        gross sales) on energy storage products exceeding specified power capacities
        made to customers other than AES or its affiliates.  Royalties will be
        recorded to sales and marketing expense as incurred. Further, we agreed to
        issue
        AES warrants to purchase common shares of the  Company based on a
        formula derived from revenue received from sales of' energy storage systems
        to
        AES and its affiliates. As qualifying sales are incurred, the warrant sales
        incentive expense will be recorded to cost of  goods sold and accrued
        as a liability until the warrants are issued, at which time the liability
        will be reclassified to additional paid in capital in equity.


16





**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®, NanoSafeTM,
      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, 2006 and September 30, 2007 and the material changes in
      our
      results of operations and financial condition between the three-and nine-month
      periods ended September 30, 2007 and September 30, 2006.  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,
      2006.





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 Systems Division (formally known as the
      Advanced Materials and Power Systems Division), a Life Sciences Division, and
      a
      Performance Materials Division.  In the third quarter of 2007, the
      Altair Hydrochloride Pigment Process Division (“AHP”), which includes the AlSher
      Titania joint venture, was combined with Performance Materials in order to
      leverage and manage their inter-related operations.  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 NanoSafe brand nanoTitanate
                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 lithium nanoTitanate
                batteries.





·
            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 patients undergoing kidney
                dialysis.


o
            The
                co-development of a test-stage active pharmaceutical ingredient,
                which is designed to be useful in the treatment of elevated serum
                phosphate levels in animals suffering from chronic renal
                disease.


17





·
            Performance
                Materials


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.   As part of the AlSher Titania joint
                venture, an exclusive license was granted to AlSher Titania to produce
                nano titanium dioxide materials that will be purchased by the Company
                for
                internal development and commercial
                sales.


o
            In
                April 2007, the AlSher Titania joint venture was formed to develop
                and
                produce 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.  The Performance Materials Division works with current
                customers utilizing the Altair Hydrochloride Pigment Process technology
                and also conducts internal research and development
                activities.





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
      involving a technology used in the detection of chemical, biological and
      radiological agents, (2) provide laboratory space and services in connection
      with testing and development related to the use of our AHP to produce titanium
      dioxidepigment and
      pigment-related products from titanium-bearing oil sands, (3) supply nano-sized
      anode and cathode materials for design and development of high capacity lithium
      ion battery and super capacitor applications, (4) provide research utilizing
      nanotechnology processes for the production and commercialization of solar-based
      hydrogen technologies, (5) produce battery packs, (6) provide research to
      further develop battery electrode materials, nanosensors, and nanomaterials
      characterization, (7) jointly develop a suite of energy storage solutions,
      and
      (8) to develop a nanometal oxide material to be used as a primer in aerospace
      applications.  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; have entered into a joint venture 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; and we have
      made product sales consisting principally of battery packs and lithium
      titanate.  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 pilot plant operations in connection with AlSher Titania, the
      successful completion of pilot plant operations 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 2006, 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, pigment process technology
      and sales and marketing efforts.   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 NanoSafe nano lithium Titanate
      battery cells and packs to be a source of such higher-margin
      revenues.  In 2007, we have 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:





·
            We
                must continue the development work on our nano-structured lithium
                titanate
                spinel (“LTO”) electrode materials, produce sufficient quantities of
                batteries and battery cells for test purposes, obtain satisfactory
                test
                results and successfully market the materials.  Toward that end,
                we have hired additional employees, have constructed test and production
                facilities and are purchasing equipment.  Our intent is to
                initially market our LTO electrode materials to the automotive industry
                and stationary power markets where we must be able to demonstrate
                to
                prospective customers that our nano-structured LTO electrode materials
                offer significant advantages over existing
                technologies.


18





·
            On
                July 20, 2007, we entered into a multi-year joint development and
                equipment purchase agreement related to our battery technology and
                energy
                storage products with AES Energy Storage, LLC (“AES”), a subsidiary of The
                AES Corporation.  Under this agreement, a pilot project to
                jointly develop an energy storage system with AES is expected to
                be
                completed by the second quarter of 2008.  Successful completion
                of this project is key to begin commercially marketing and selling
                these
                energy storage systems.





·
            On
                January 9, 2007, we entered into a multi-year purchase and supply
                agreement with Phoenix Motorcars, Inc. (“Phoenix”) for NanoSafe
                nanoTitanate battery packs to be used in electric vehicles produced
                by
                Phoenix.  Phoenix has placed firm purchase orders for $3,250,000
                in NanoSafe nano lithium Titanate battery packs through September
                30,
                2007.  Management believes that the projected orders for 2007 of
                between $16 and $42 million for the remainder of 2007 may not be
                achieved,
                and that orders may fall below $16 million.  We are currently
                working with Phoenix to firm up orders through the remainder of
                2007.  In the third quarter, Phoenix notified us of their plan
                to redesign the battery packs for their Generation II
                vehicle.  Based on their request, we continue to segregate and
                hold the packs in a storage facility pending receipt of the new design
                specifications.  We anticipate performing the redesign work on a
                time and materials basis.  The agreement provides Phoenix with
                limited exclusivity in the all-electric vehicle market during a three-year
                period.  In order to maintain exclusivity, Phoenix must purchase
                at least $16 million in battery packs during 2007.  Phoenix must
                be successful in their business strategy and we must build and deliver
                battery packs on a scale we have never before achieved, in order
                to fully
                benefit from this purchase
                agreement.





·
            Spectrum and
                Elanco must begin the testing and application processes necessary to
                receive Federal Drug Administration approval of
                our pharmaceutical candidates.  Toward that end, we must
                manufacture these products under pharmaceutical industry
                guidelines to support such testing.





·
            We
                have formed the AlSher Titania joint venture with Sherwin-Williams
                to
                develop and produce titanium dioxide pigment for use in paint and
                coatings.  The success of this joint venture and initial pilot
                plant trials is integral to continuing development and the ultimate
                commercialization of AHP.





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.





**RecentBusiness Developments**





**Power
      and Energy Group**





In
      January 2007, we entered into a multi-year purchase and supply agreement with
      Phoenix for nano lithium Titanate battery packs to be used in electric
      vehicles produced by Phoenix.  Contemporaneously, Phoenix placed firm
      purchase orders for 35 kilowatt hour (“KWh”) battery pack systems valued at
      $1,040,000 and placed a blanket purchase order for up to 500 battery pack
      systems to be delivered during 2007 (projected value between $16 and $42
      million).  The second release order valued at $2,210,000 was placed in
      May 2007.  Management believes that the projected orders for 2007 of
      between $16 and $42 million for the remainder of 2007 may not be achieved and
      that orders may fall below $16 million.  We are currently working with
      Phoenix to firm up orders through the remainder of 2007. For the three and nine
      month periods ended September 30, 2007, revenue of $1,519,625 and $3,039,257,
      respectively, has been recorded in connection with these
      orders.   In the third quarter, Phoenix notified us of their plan
      to redesign the packs for their Generation II vehicle.  Based on their
      request we continue to segregate and hold the packs in a storage facility
      pending receipt of the new design specifications.  We anticipate
      performing the redesign work on a time and materials basis.






19






**Life
      Sciences**





In
      September 2007, we entered into 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.  The September development services
      agreement supersedes and continues the work requested under purchase orders
      received in the second quarter of 2007.  Year to date through the end
      of the third quarter, $598,320 has been billed under this
      agreement.





**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 pigment processing pilot plant
      in connection with the joint venture agreement is underway and completed
      processing stages were tested in the third quarter.  It is expected
      that the plant will be fully commissioned in late 2007.





**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 two payments of $600,000 of principal plus accrued interest were due
      and
      paid on February 8, 2006 and 2007.  The current outstanding note
      payable balance is $1,800,000.  Future payments of principal and
      interest are due annually on February 8, 2008 through 2010.





Our
      cash
      and short-term investments decreased by $12,465,232, from $27,220,357 at
      December 31, 2006 to $14,755,125 at September 30, 2007, due primarily to net
      cash used in operations (approximately $14,117,000) purchases of property and
      equipment (approximately $2,959,000) and payment of notes payable
      ($600,000).  This decrease was partially offset by the receipt of
      proceeds in connection with the private placement of common shares purchased
      by
      AES in March 2007, receipt of cash in connection with the AlSher Titania joint
      venture, and proceeds resulting from the exercise of stock options and
      warrants.





During
      the nine months ended September 30, 2007, our cash used in operations was
      $14,116,612.  The amount of cash we use in operations is partially
      dependent on the amount and mix of revenues we generate.  In the nine
      months ended 2007, revenues were $7,576,934, which included $3,797,333 of
      product sales.  Although we expect quarterly revenues to increase
      during the remainder of the year, and we expect product sales to become a larger
      percentage of the sales mix, we cannot be certain that this will
      occur.  As revenues associated with product sales increase, a higher
      level of inventory and long term notes receivable impact cashflows as
      well.


20





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
      November 1, 2007, we had 70,457,477 common shares issued and
      outstanding.  As of that same date, there were outstanding warrants to
      purchase up to 3,171,895 common shares and options to purchase up to 4,123,930
      common shares.




**Capital
      Commitments**





The
      following table discloses aggregate information about our contractual
      obligations and the periods in which payments are due as of September 30,
      2007:




**Less
                Than**
            
            
            
            
            
            
            
            
            **After****Contractual
                Obligations**
            
            **Total**
            
            
            **1
                Year**
            
            
            **1-3
                Years**
            
            
            **4-5
                Years**
            
            
            **5
                Years**Notes
                Payable
            
            $
            1,800,000
            
            
            $
            600,000
            
            
            $
            1,200,000
            
            
            $
            -
            
            
            $
            -Interest
                on notes payable
            
            
            252,000
            
            
            
            126,000
            
            
            
            126,000
            
            
            
            -
            
            
            
            -Contractual
                Service Agreements
            
            
            1,688,634
            
            
            
            1,527,534
            
            
            
            161,100
            
            
            
            -
            
            
            
            -Facilities
                and Property Leases
            
            
            817,500
            
            
            
            314,390
            
            
            
            311,860
            
            
            
            191,250
            
            
            
            -Unfulfilled
                Purchase Orders
            
            
            3,225,588
            
            
            
            3,225,588
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
                Contractual Obligations
            
            $
            7,783,722
            
            
            $
            5,793,512
            
            
            $
            1,798,960
            
            
            $
            191,250
            
            
            $
            -





In
      connection with the formation of the AlSher Titania joint venture, the Company
      committed to complete its pigment processing pilot plant and expects to
      commission the plant by late 2007.  Total capital expenditures, labor
      and development costs associated with this effort are expected to total
      approximately $3.9 million. Through September 30, 2007, approximately $2.7
      million of costs associated with the pigment processing pilot plant
      have been incurred.





A
      total
      of approximately $4.8 million is anticipated to be spent on labor, equipment
      and
      building improvements and other implementation expenses related to preparations
      to manufacture our pharmaceutical products.  Of this amount,
      approximately $800,000 is expected to be incurred during the quarter ending
      December 31, 2007.





In
      July
      2007, we signed a new lease agreement for 30,000 square feet of space in the
      Flagship Business Accelerator Building located at 3019 Enterprise Drive,
      Anderson, Indiana.  We plan to move from the current office and
      laboratory space leased in the Flagship Enterprise Center Building, an aggregate
      of 8,199 square feet, to the Accelerator Building by January
      2008.  Completion of the move is dependent upon the build-out of
      office space in the new building, which may not be completed until January
      2008.  We expect to spend $220,000 on build-out and leasehold
      improvements, net of the $110,000 credit to be received from the landlord
      through the first quarter of 2008.





We
      also
      intend to purchase equipment for our Reno, Nevada facility for use in the
      development and expansion of our current advanced battery materials production
      capabilities.  Through September 30, 2007, approximately $748,000 was
      expended on production equipment, and we expect to spend approximately $500,000
      during the quarter ending December 31, 2007.





**Off-Balance
      Sheet Arrangements**





There
      were no off-balance sheet arrangements at September 30, 2007.


21





**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, 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.




·
            Product
                Inventories.    The Company values its inventories at
                the lower of cost (first-in, first-out method) or market.  We
                employ a full absorption procedure using standard cost techniques,
                which
                approximates actual cost.  The standards are customarily
                reviewed and adjusted annually.





·
            Long-Lived
                Assets.  Our long-lived assets consist principally of the
                nanomaterials and titanium dioxide pigment assets, the intellectual
                property (patents and patent applications) associated with them,
                and a
                building.  Included in these long-lived assets are 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, *Acco**unting 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 September 30, 2007, the carrying
                value of these assets was $13,523,485, or 39% 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.





·
            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.





·
            Revenue
                Recognition.  We recognize revenue when persuasive evidence of
                an arrangement exists, delivery has occurred or service has been
                performed, the fee is fixed and determinable, and collectibility
                is
                probable, 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.  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.


22





·
            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.





·
            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.





·
            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 nanoelectrode materials) and certain
                pilot plants assets with a net book value of
                $3,110,000.  Altairnano received no consideration for the
                license granted to AlSher 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 costs associated with this effort are expected to be
                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.





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





·
            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 September 30, 2007. 
                Management has, therefore, established a full valuation allowance
                against
                its net deferred income tax assets as of September 30,
                2007.


23





**Results
      of Operations**





*Three
      Months Ended September 30, 2007 Compared to Three Months Ended September
      30, 2006*





The
      net
      loss for the third quarter ended September 30, 2007 totaled $6,130,210 ($.09
      per
      share) compared to a net loss of $4,054,686 ($.07 per share) in the third
      quarter of 2006.





Total
      revenues for the third quarter ended September 30, 2007 were
      $3,370,134 compared to $749,898 for the third quarter of
      2006.





Product
      revenues increased by $1,841,390 from $22,940 in the third quarter of 2006
      to
      $1,864,330 in the third quarter of 2007.  During the third quarter of
      2007, we recorded approximately $1,714,700 of product revenues associated with
      NanoSafe nano lithium Titanate batteries and prototype cells.  There
      were no comparable product revenues in the third quarter of
      2006.  Additionally, sales of our electrograde materials increased by
      approximately $126,700 for the third quarter ending September 30, 2007 over
      the
      prior year quarter.





Revenues
      from commercial collaborations increased by $641,362, from $339,116 in the
      third quarter of 2006 to $980,478 in the third quarter of
      2007.  Revenues of approximately $353,000 were recorded in connection
      with the AES development agreement signed in July 2007.  Revenues of
      approximately $295,000 were also recorded in connection with research and
      development services performed under the new 2007 contract with Elanco Animal
      Health.





Revenues
      from contracts and grants increased by $137,484, from $387,842 in the
      third quarter of 2006 to $525,326 in the third quarter of 2007.
 Revenues of $118,033 were recorded in connection with the $2.5 million
      Department of Energy grant in the third quarter of 2007.  In the prior
      year, revenues associated with this grant did not commence until September
      2006.  This increase and other increases due to the timing of new 2007
      grants with PPG Aerospace and University of Reno, Nevada of $89,535 was
      offset by $42,486 due to the completion of the $750,000 University of Nevada,
      Las Vegas Research Foundation subcontract and by $27,598 due to the completion
      of a subcontract with Rutgers University to provide testing services associated
      with the National Science Foundation grant.





Cost
      of
      product sales increased by $2,055,492, from $28,237 in the third quarter of
      2006
      to $2,083,729 in the same quarter of 2007.  This increase is primarily
      driven by the changes in product sales discussed in the paragraph
      above.   Positive margins have not yet been achieved associated
      with the sale of battery packs due to scaling issues, and a portion of the
      revenues relating to the battery packs is dependent upon the receipt of Zero
      Emission Credits (refer to Note 11 – Related Party
      Transactions).  Through September 30, 2007, no ZEV credits have been
      sold by Phoenix Motorcars, Inc.  As higher production volumes and cost
      reduction efforts are achieved and ZEV credits are paid, the margin on battery
      pack sales is expected to become positive.




Research
      and development expenses increased by $1,659,593, from $2,763,566 in
      the third quarter of 2006 to $4,423,159 in the same quarter of
      2007.  Labor and fringe costs increased by approximately
      $584,000 due to the addition of 27 new employees.  Excluding
      labor, research and development costs increased in the following business
      units:  $697,000 net increase in Power and Energy Systems
      primarily due to research performed in connection with developing current
      battery products as well as development relating to potential new battery
      markets (approximately $476,000), work performed in connection with the July
      2007 AES agreement (approximately $265,000) and an increased level of
      electrograde materials production, these increases were offset by approximately
      $111,000 of decreases in research and development associated with non-billable
      internal projects; $231,000 net increase in Performance Materials primarily
      due
      the start up and testing of the pigment pilot plant in the third quarter of
      2007; $118,000 net increase in Life Sciences primarily due to work
      performed under the 2007 Department of Energy subcontract with the University
      of
      California Santa Barbara (approximately $104,000) and research
      costs associated with our pharmaceutical candidate (approximately $92,000),
      offset by a decrease of $78,000 relating to other Life Sciences projects; and
      a
      $30,000 net increase in other research and development
      expenses .





Sales
      and
      marketing expenses increased by $95,849, from $423,615 in the third quarter
      of
      2006 to $519,464 in the third quarter of 2007.  This increase reflects
      the cost of new battery market studies undertaken in the third quarter of 2007
      as well as increased travel and other costs associated with attendance at trade
      shows.


24





General
      and administrative expenses increased by $1,097,680, from $1,288,191 in the
      third quarter of 2006 to $2,385,871 in the same quarter of
      2007.  Labor and benefit costs increased by approximately $245,000 due
      to 5 additional personnel required to support Company
      growth.  Employee benefits costs increased by approximately $488,000
      primarily due to a higher level of employees in the third quarter of 2007
      coupled with an increase in bonus accrual relating to achieving the targeted
      objectives of the plan.  Share based compensation, a non-cash expense,
      increased by $352,000 due to a higher level of new employees eligible for and
      receiving option grants and an overall higher level of employees who received
      retention grants in January 2007. Other general and administrative expenses
      also increased by approximately $13,000 in the third quarter of
      2007.





Depreciation
      and amortization increased by $101,899, from $405,072 in the third quarter
      of 2006 to $506,970 in the same quarter of 2007. The increase in
      depreciation reflects the addition of lab and production equipment since October
      2006 of approximately $2,895,000 primarily relating to expansion of production
      capabilities at the Indiana and Reno facilities and approximately $413,000
      relating to execution of grant contracts.





Interest
      income increased by $68,606, from $146,235 in the third quarter of 2006 to
      $214,841 in the same quarter of 2007 due to an increase in cash available
      for investment of approximately $5.5 million that was generated through the
      sale
      of common shares in December 2006, the private sale of stock to The AES
      Corporation in March 2007, and the receipt of the initial contribution to the
      AlSher Titania joint venture in May 2007 less operating
      expenditures.





Minority
      interest increased by $236,518
      in the third quarter of 2007.  This increase reflects Sherwin-Williams
      minority interest share of the AlSher Titania joint venture’s loss for the
      quarter ending September 30, 2007.   AlSher Titania was not
      formed until April 2007.




*Nine
      months ended September 30, 2007 Compared to Nine months
      ended September 30, 2006*





The
      net
      loss for the nine months ended September 30, 2007 totaled
      $16,742,259 ($.24 per share) compared to a net loss of $12,403,769 ($.21
      per share) in the same period of 2006.





Total
      revenues for the nine months ended September 30, 2007 were
      $7,576,934 compared to $2,352,022 for the same period of
      2006. License fee revenue decreased by $364,720 in the nine months
      ended September 30, 2007 as compared to the same period in 2006 due to a
      milestone payment received in the third quarter of 2006 in connection with
      the
      Spectrum agreement.  No additional milestones were achieved for the
      same period in 2007.





Product
      revenues increased by $3,763,735 from $33,598 for the nine months
      ended September 30, 2006 to $3,797,333 in the same period of
      2007.  During the nine months ended September 30, 2007, we
      recorded approximately $3,435,000 of product revenues associated with NanoSafe
      nano lithium Titanate battery packs, prototype cells and
      alumina.  There were no comparable product revenues for the same
      period of 2006.  Additionally, sales of electrograde materials and
      other TiO2 related products increased by approximately $329,000 for the
      nine months ended September 30, 2007 over the same period in
      2006.





Revenues
      from commercial collaborations increased by $1,003,928, from $1,058,622 for
      the
      nine months ended September 30, 2006 to $2,062,550 for the same period of
      2007.  Revenues of approximately $728,000 were recorded in connection
      with research and development services performed under the new 2007 contract
      with Elanco Animal Health and revenues of approximately $353,000 were recorded
      in connection with the AES development agreement signed in July
      2007. Additional revenue of approximately $79,000 was recognized in
      connection with Western Oil Sands primarily related to materials purchases
      for the nine months ended September 30, 2007.  These increases
      were offset by a decrease in revenue of approximately $155,000 primarily
      relating to the RenaZorb development revenues under the Spectrum contract
      recorded in the third quarter of 2006.  No development revenues
      associated with the Spectrum contract have been recorded in 2007.





Revenues
      from contracts and grants increased by $821,969, from $895,082 for the nine
      months ended September 30, 2006 to $1,717,051 in the same period of
      2007.  Revenues recorded in connection with the $2.5 million
      Department of Energy grant for the nine months ended September 30, 2007
      increased over the same period in the prior year by approximately
      $930,000.  In the prior year, revenues associated with this grant were
      not recorded until September 2006.  This increase and other increases
      due to the timing of new 2007 grants with PPG Aerospace and University of Reno,
      Nevada of $123,000 was offset by a decrease of $159,000 primarily due to
      the completion of a subcontract with Rutgers University to provide testing
      services associated with the National Science Foundation grant and a decrease
      of
      $72,000 due to the completion of the $750,000 University of Nevada, Las Vegas
      Research Foundation subcontract.


25




Cost
      of
      product sales increased by $4,455,514, from $30,953 for the nine months
      ended September 30, 2006 to $4,486,467 in the same period of
      2007.  This increase is primarily driven by the changes in product
      sales discussed above.  Positive margins have not yet been achieved
      associated with the sale of battery packs due to scaling issues, and a portion
      of the revenues relating to the battery packs is dependent upon the receipt
      of
      Zero Emission Credits (refer to Note 11 – Related Party
      Transactions).  Through September 30, 2007, no ZEV credits have been
      sold or paid to us by Phoenix Motorcars, Inc.  As higher production
      volumes and cost reduction efforts are achieved and ZEV credits are paid, the
      margin on battery pack sales is expected to become positive.





Research
      and development expenses increased by $3,742,138, from $6,917,218 for the
      nine months ended September 30, 2006 to $10,659,356 in the same period of
      2007.  Labor and fringe costs increased by approximately $1,663,000
      due to the addition of 27 new employees.  Excluding labor, research
      and development costs increased in the following business
      units:  $1,066,000 net increase in Power and Energy Systems primarily
      due to research performed in connection with developing current battery products
      as well as development relating to potential new battery markets (approximately
      $1,035,000), work performed in connection with the July 2007 AES agreement
      (approximately $265,000) and increased costs associated with the Department
      of
      Energy grant (approximately 270,000), these increases were offset by
      approximately $504,000 of decreases in research and development associated
      with
      non-billable internal projects; $596,000 net increase in Performance Materials
      primarily due the start up and testing of the pigment pilot plant in the third
      quarter of 2007 (approximately $353,000) and increased costs associated with
      the
      Department of Energy Grant (approximately $338,000), offset by a net decrease
      of
      $95,000 associated with non-billable internal projects; and $419,000 net
      increase in Life Sciences primarily due to development of our pharmaceutical
      candidate (approximately $292,000) and costs incurred relating to the 2007
      Department of Energy subcontract with the University of California Santa Barbara
      (approximately $128,000).





General
      and administrative expenses increased by $1,851,144, from $5,746,759 for the
      nine months ended September 30, 2006 to $7,597,903 in the same period of
      2007.  Share based compensation, a non-cash expense, increased by
      $1,146,000 due to a higher level of new employees eligible for and receiving
      option grants and an overall higher level of employees who received retention
      grants in January 2007.  Labor, fringe benefit and recruiting costs
      increased by approximately $795,000 due to 5 additional personnel required
      to
      support Company growth and the search for additional talent.  Employee
      benefits costs were $276,000 higher due to an increase in the bonus accrual
      based on expectations of meeting the bonus targets.  Travel costs have
      also increased by approximately $183,000 due to increased headcount and trips
      to
      identify new supplier sources for raw battery material
      components.  Accounting fees increased by $159,000 primarily due to an
      international tax project undertaken in 2007.  These increases plus an
      increase of $33,000 in other general and administrative expenses are offset
      by a net decrease in expense of approximately $741,000 primarily due
      to:  the flood that occurred in the first quarter of 2006 ($401,000);
      a decrease in legal costs that were incurred in 2006 relating to the lawsuits
      that were settled in 2006 ($190,000); and a decrease in the level of patent
      costs incurred in 2007 ($150,000).





Depreciation
      and amortization increased by $326,829, from $1,085,190 for the nine months
      ended September 30, 2006 to $1,412,019 in the same period of
      2007.  The increase in depreciation reflects the addition of lab and
      production equipment since October 2006 of approximately $2,895,000 primarily
      relating to expansion of production capabilities at the Indiana and Reno
      facilities and approximately $413,000 relating to execution of grant
      contracts.





Interest
      income increased by $311,819, from $539,060 for the nine months
      ended September 30, 2006 to $850,879 in the same period of 2007 due to an
      increase in cash available for investment of approximately $5.5 million that
      was
      generated through the sale of common shares in December 2006, the private sale
      of stock to The AES Corporation in March 2007, and the receipt of the initial
      contribution to the AlSher joint venture in May 2007 less operating
      expenditures.





Minority
      interest increased by $394,198 for the nine months ended September 30,
      2007.  This increase reflects Sherwin-Williams minority interest share
      of the AlSher Titania joint venture’s loss for the nine months ended September
      30, 2007.   AlSher Titania was not formed until April
      2007.





**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 chief executive officer and our
      chief financial officer have concluded that, as of September 30, 2007, 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 control 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.




26


**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, 2006 (the “Form 10-K”), except (i) that we have made immaterial
        edits and updated references to financial data, and (ii) a Risk Factor
        addressing our dependence upon commercial partners has been altered to read
        as
        follows:
 
 ***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.  Our business is not
        dependent upon a single application of our technology; however, we will not
        become profitable and be able to sustain operations in the long run if we
        fail
        to commercialize several of our potential products.
  **Risk
        Factors**





An
      investment in our common shares and warrants 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 $17,681,415 in 2006 and $17,888,041 for the nine
      months ended September 30, 2007.  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.




II-1




***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;•
              acquisitions
                  of businesses or customers;•
              technology
                  and intellectual property issues associated with our products;
                  and•
              general
                  economic trends, including changes in energy prices, or geopolitical
                  events such as war or incidents of
                  terrorism.




***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,
      2006, 2005 and 2004, contract services revenues comprised 67%, 70%, and 99%,
      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 are higher margin than contract
      services and have potential for 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.




II-2




***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 LTO battery materials and NanoSafe
      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.




***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.  Our business is not
      dependent upon a single application of our technology; however, we will not
      become profitable and be able to sustain operations in the long run if we fail
      to commercialize several of our potential products.




***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:


•
              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;
  II-3
   •
              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.




***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 NanoSafe
      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.





***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.
  II-4




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




•
            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.





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




In
      August
      2002, we entered into a purchase and sale agreement with BHP Minerals
      International Inc. to purchase the land, building and fixtures in Reno, Nevada
      where our nanomaterials and titanium dioxide pigment assets are
      located.  In connection with this transaction, we issued to BHP a note
      in the amount of $3,000,000, at an interest rate of 7%, secured by the property
      we acquired.  The first two payments of $600,000 of principal plus
      accrued interest were due and paid on February 8, 2006 and February 8, 2007.
      Additional payments of $600,000 plus accrued interest are due annually on
      February 8, 2008 through 2010.  If we fail to make the required
      payments on the note, BHP has the right to foreclose and take the
      property.  If this should occur, we would be required to relocate our
      primary operating assets and offices, causing a significant disruption in our
      business.





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




As
      of
      September 30, 2007, we had approximately $14.8 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.




II-5





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.





***We
      are dependent on key personnel.***




Our
      continued success will depend to a significant extent on the services of Dr.
      Alan J. Gotcher, our Chief Executive Officer and President, Edward Dickinson,
      our Chief Financial Officer, and Dr. Bruce Sabacky, our Chief Technology
      Officer. We have key man insurance on the lives of Dr. Gotcher and 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.


II-6




***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.   In addition,
      through such audits, inquiries and investigations, we or a regulator have from
      time to time determined, and may in the future determine, that we are out of
      compliance with one or more governing rules or laws.  Remedying such
      non-compliance may divert additional financial and human resources.  In
      addition, in the future, we may be subject to a formal charge or determination
      that we have materially violated a governing law, rule or regulation.  Any
      charge, and particularly any determination, that we had materially violated
      a
      governing law would likely have a material adverse effect on the market price
      of
      our stock, our ability to raise capital and recruit employees, and our ability
      to execute our business plan.





For
      example, on March 30, 2005, we received a letter of inquiry from the SEC
      requesting information relating to a press release we issued on February 10,
      2005, in which we announced developments in a rechargeable battery technology
      that incorporates our lithium titanate battery materials. After providing the
      requested information, we received a follow up letter of inquiry dated August
      2,
      2005 requesting additional information related to our battery programs, emails
      of certain affiliates, certain transactions and recent earnings
      calls.  We provided the information to the SEC in a series of letters
      sent during September and October 2005. We have not been contacted by the SEC
      since providing all requested information in October 2005 or been notified
      of
      any ongoing activity or pending proceeding.  The absence of any
      additional letters of inquiry related to the matter for an approximately
      21-month period suggests to us that the inquiry may be completed; however,
      we
      have received no notice from the SEC with respect to the status of the inquiry
      and are uncertain as to its status. Based upon advice of counsel that the SEC
      frequently does not apprise a company whether an inquiry has been terminated
      or
      is ongoing, we expect to remain uncertain in the foreseeable future. Our
      response to the SEC inquiry diverted considerable financial and human resources,
      which harmed our ability to execute our business plan for a time, and leaves
      a
      level of uncertainty going forward, which may harm our ability to enter into
      business relationships, recruit qualified officers and employees and raise
      capital.




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.  Any charge, 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
      6.  Exhibits**





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


II-7




**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.November
                8, 2007
            
            By:  /s/  Alan
                J. GotcherDate
            
            Alan
                J. Gotcher, Chief Executive OfficerNovember
                8, 2007
            
            By:  /s/  Edward
                H. DickinsonDate
            
            Edward
                H. Dickinson, Chief Financial
                Officer




II-8




**EXHIBIT
                INDEX**





**Exhibit
                No.**
            
            **Exhibit**
            
            **Incorporated
                by Reference/ Filed Herewith**3.1
            
            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.
                001-1249710.1
            
            Amendment
                dated August 17, 2007 to Altair Executive Employment Agreement between
                the
                Company and Alan Gotcher
            
            Incorporated
                by reference to the Current Report on Form 8-K filed with the SEC
                on
                August 17, 2007, File No. 001-1249710.2
            
            Amendment
                dated August 17, 2007 to Altair Executive Employment Agreement between
                the
                Company and Edward Dickinson
            
            Incorporated
                by reference to the Current Report on Form 8-K filed with the SEC
                on
                August 17, 2007, File No. 001-1249710.3
            
            Amendment
                dated August 17, 2007 to Altair Executive Employment Agreement between
                the
                Company and Bruce Sabacky
            
            Incorporated
                by reference to the Current Report on Form 8-K filed with the SEC
                on
                August 17, 2007, File No. 001-1249710.4
            
            Development
                Services Agreement executed on September 25, 2007 between the Company
                and
                Elanco Animal Health*
            
            Incorporated
                by reference to the Current Report on Form 8-K filed with the SEC
                on
                September 27, 2007, 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





*
      Certain
      portions of this exhibit have been omitted pursuant to Rule 24b-2 and are
      subject to a confidential treatment request.