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
              MARCH 31,
      2009o
            TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR
      THE TRANSITION PERIOD FROM  ________________ TO
      ________________






ALTAIR NANOTECHNOLOGIES INC.





(Exact
name of registrant as specified in its charter)







Canada
            
            1-12497
            
            33-1084375(State or other
      jurisdiction
              of
      incorporation)
            
            (Commission File
      No.)
            
            (IRS Employer
              Identification
      No.)







204
Edison Way


Reno,
Nevada 89502





(Address
of principal executive offices, including zip code)





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




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   YES xNO o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).   YES
xNO o




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





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





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act):   YES oNO x




As
of May 5, 2009 the registrant had 93,153,271Common Shares
outstanding.












PART
      I - FINANCIAL INFORMATIONItem
      1. Financial StatementsALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED BALANCE SHEETS(Expressed
      in thousands of United States Dollars, except shares and per share
      amounts)(Unaudited)March
      31,
            
            
            December
      31,2009
            
            
            2008ASSETSCurrent
      assetsCash
      and cash equivalents
            
            $
            21,947
            
            
            $
            28,088Restricted
      cash
            
            
            450
            
            
            
            -Accounts
      receivable, net
            
            
            488
            
            
            
            955Product
      inventories
            
            
            108
            
            
            
            98Prepaid
      expenses and other current assets
            
            
            529
            
            
            
            572Total
      current assets
            
            
            23,522
            
            
            
            29,713Investment
      in available for sale securities
            
            
            3,286
            
            
            
            3,174Property,
      plant and equipment, net held and used
            
            
            11,353
            
            
            
            11,637Property,
      plant and equipment, net held and not used
            
            
            2,193
            
            
            
            2,377Patents,
      net
            
            
            614
            
            
            
            636Other
      assets
            
            
            516
            
            
            
            534Total
      Assets
            
            $
            41,484
            
            
            $
            48,071LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesTrade
      accounts payable
            
            $
            979
            
            
            $
            749Accrued
      salaries and benefits
            
            
            1,529
            
            
            
            1,361Accrued
      warranty
            
            
            34
            
            
            
            36Accrued
      liabilities
            
            
            446
            
            
            
            765Current
      portion of long-term debt
            
            
            696
            
            
            
            736Total
      current liabilities
            
            
            3,684
            
            
            
            3,647Long-term
      debt, less current portion
            
            
            49
            
            
            
            608Stockholders'
      equityCommon
      stock, no par value, unlimited shares authorized;93,153,271
      and 93,143,271 shares issued andoutstanding
      at March 31, 2009 and December 31, 2008
            
            
            180,127
            
            
            
            180,105Additional
      paid in capital
            
            
            5,614
            
            
            
            5,378Accumulated
      deficit
            
            
            (147,277
            )
            
            
            (140,892
            )Accumulated
      other comprehensive loss
            
            
            (1,755
            )
            
            
            (1,873
            )Total
      Altair Nanotechnologies, Inc’s stockholders’ equity
            
            
            36,709
            
            
            
            42,718Noncontrolling
      interest in subsidiary
            
            
            1,042
            
            
            
            1,098Total
      stockholders' equity
            
            
            37,751
            
            
            
            43,816Total
      liabilities and stockholders' equity
            
            $
            41,484
            
            
            $
            48,071See
      notes to the unaudited condensed consolidated financial
      statements.




2




ALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS(Expressed
      in thousands of United States Dollars, except shares and per share
      amounts)(Unaudited)Three
      Months EndedMarch
      31,2009
            
            
            2008RevenuesProduct
      sales
            
            $
            191
            
            
            $
            164Commercial
      collaborations
            
            
            699
            
            
            
            521Contracts
      and grants
            
            
            12
            
            
            
            384Total
      revenues
            
            
            902
            
            
            
            1,069Operating
      expensesCost
      of sales - product
            
            
            185
            
            
            
            58Research
      and development
            
            
            3,028
            
            
            
            5,258Sales
      and marketing
            
            
            611
            
            
            
            666General
      and administrative
            
            
            2,817
            
            
            
            3,263Depreciation
      and amortization
            
            
            733
            
            
            
            573Total
      operating expenses
            
            
            7,374
            
            
            
            9,818Loss
      from operations
            
            
            (6,472
            )
            
            
            (8,749
            )Other
      (expense) incomeInterest
      expense
            
            
            (18
            )
            
            
            (27
            )Interest
      income
            
            
            71
            
            
            
            382Realized
      loss on investment
            
            
            (18
            )
            
            
            -Loss
      on foreign exchange
            
            
            (4
            )
            
            
            (3
            )Total
      other income, net
            
            
            31
            
            
            
            352Net
      loss
            
            
            (6,441
            )
            
            
            (8,397
            )Less:  Noncontrolling
      interests’ share
            
            
            56
            
            
            
            109Net
      Loss attributable to Altair Nanotechnologies, Inc.
            
            $
            (6,385
            )
            
            $
            (8,288
            )Loss
      per common share - basic and diluted
            
            $
            (0.07
            )
            
            $
            (0.10
            )Weighted
      average shares - basic and diluted
            
            
            92,983,131
            
            
            
            84,219,978See
      notes to the unaudited condensed consolidated financial
      statements.




3




ALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE
      LOSS(Expressed
      in thousands of United States Dollars, except shares and per share
      amounts)(Unaudited)AccumulatedNon-controlling
            
            
            OtherAdditional
            
            
            
            
            
            Interest
            
            
            Compre-Common
      Stock
            
            
            Paid
      In
            
            
            Accumulated
            
            
            In
            
            
            hensiveShares
            
            
            Amount
            
            
            Capital
            
            
            Deficit
            
            
            Subsidiary
            
            
            Loss
            
            
            TotalBalance,
      January 1, 2009
            
            
            93,143,271
            
            
            $
            180,105
            
            
            $
            5,378
            
            
            $
            (140,892
            )
            
            $
            1,098
            
            
            $
            (1,873
            )
            
            $
            43,816Comprehensive
      loss:Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (6,385
            )
            
            
            (56
            )
            
            
            -
            
            
            
            (6,441
            )Other
      comprehensiveincome
      net of taxes of $0
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            118
            
            
            
            118Comprehensive
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (6,323
            )Issuance
      of restricted stock
            
            
            10,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Share-based
      compensation
            
            
            
            
            
            
            22
            
            
            
            236
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            258Balance,
      March 31, 2009
            
            
            93,153,271
            
            
            $
            180,127
            
            
            $
            5,614
            
            
            $
            (147,277
            )
            
            $
            1,042
            
            
            $
            (1,755
            )
            
            $
            37,751See
      notes to the unaudited condensed consolidated financial
      statements.







4




ALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed
      in thousands of United States Dollars)(Unaudited)Three
      Months EndedMarch
      31,2009
            
            
            2008Cash
      flows from operating activities:Net
      loss
            
            $
            (6,385
            )
            
            $
            (8,288
            )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
      and amortization
            
            
            733
            
            
            
            573Noncontrolling
      interest in operations
            
            
            (56
            )
            
            
            (109
            )Share-based
      compensation
            
            
            258
            
            
            
            493Loss
      on disposal of fixed assets
            
            
            10
            
            
            
            23Accrued
      interest on notes receivable
            
            
            -
            
            
            
            (43
            )Changes
      in operating assets and liabilities:Restricted
      cash
            
            
            (450
            )
            
            
            -Accounts
      receivable, net
            
            
            467
            
            
            
            153Accounts
      receivable from related party, net
            
            
            -
            
            
            
            94Product
      inventories
            
            
            (10
            )
            
            
            -Prepaid
      expenses and other current assets
            
            
            43
            
            
            
            (2
            )Other
      assets
            
            
            18
            
            
            
            -Trade
      accounts payable
            
            
            304
            
            
            
            (5,631
            )Accrued
      salaries and benefits
            
            
            168
            
            
            
            (604
            )Accrued
      warranty
            
            
            (2
            )
            
            
            -Accrued
      liabilities
            
            
            (393
            )
            
            
            (162
            )Net
      cash used in operating activities
            
            
            (5,295
            )
            
            
            (13,503
            )Cash
      flows from investing activities:Purchase/Sale
      of available for sale securities
            
            
            5
            
            
            
            7Purchase
      of property and equipment
            
            
            (253
            )
            
            
            (904
            )Net
      cash used in investing activities
            
            
            (248
            )
            
            
            (897
            )(continued)




5




ALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed
      in thousands of United States Dollars)(Unaudited)Three
      Months EndedMarch
      31,2009
            
            
            2008Cash
      flows from financing activities:Proceeds
      from exercise of stock options
            
            $
            -
            
            
            $
            397Proceeds
      from exercise of warrants
            
            
            -
            
            
            
            26Payment
      of notes payable
            
            
            (652
            )
            
            
            (600
            )Proceeds
      from long-term debt
            
            
            58
            
            
            
            -Repayment
      of long-term debt
            
            
            (4
            )
            
            
            -Net
      cash used in financing activities
            
            
            (598
            )
            
            
            (175
            )Net
      decrease in cash and cash equivalents
            
            
            (6,141
            )
            
            
            (14,575
            )Cash
      and cash equivalents, beginning of period
            
            
            28,088
            
            
            
            50,146Cash
      and cash equivalents, end of period
            
            $
            21,947
            
            
            $
            35,571Supplemental
      disclosures:Cash
      paid for interest
            
            $
            86
            
            
            $
            126Cash
      paid for income taxes
            
            None
            
            
            None




Supplemental
      schedule of non-cash investing and financing activities:For
      the three months ended March 31, 2009:-
      We had an unrealized gain on available for sale securities of
      $118.-
      We issued 10,000 shares of restricted stock to directors having a fair
      value of approximately $17 for which no cash will be
    received.For
      the three months ended March 31, 2008:-
      We made property and equipment purchases of $338 which are included in
      trade accounts payable at March 31, 2008.-
      We had an unrealized loss on available for sale securities of
      $826.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, 2008, as filed with the Commission on March 16, 2009.




The
results of operations for the three-month period ended March 31, 2009 are
not necessarily indicative of the results to be expected for the full
year.





Note
2.  Summary of Significant Accounting Policies





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




Our cash
balances are maintained in bank accounts that are insured by the Federal Deposit
Insurance Corporation (“FDIC”) up to a maximum of US $250,000 and CN
$100,000.  At March 31, 2009 and December 31, 2008 there were no cash
deposits in excess of FDIC insurance.  Additionally, we had $2.0
million at March 31, 2009 and $852,000 at December 31, 2008 in a U.S. government
money market fund that is not insured.  Funds from this account are
swept out to the operating bank accounts as funds are expended each
period.




Restricted Cash–In February 2009, we
opened a $450,000 certificate of deposit as collateral on our forward currency
contract related to a forecasted transaction that was to be settled in Korean
Won with an approximate value in US dollars of $2.2 million.  The
transaction was not completed and the collateral was subsequently reduced to
$1,000 to maintain an open credit line for anticipated future
transactions.




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




7




Accumulated Other ComprehensiveLoss-Accumulated other
comprehensive loss consists entirely of unrealized loss on
the investment in available for sale securities. The components of
comprehensive loss for the three-month periods ended March 31, 2009 and
2008 are as follows (in thousands):





Three
      months endedMarch
      31,2009
            
            
            2008Net
      loss
            
            $
            6,441
            
            
            $
            8,397Unrealized
      (gain)/loss on investment in available for sale
securities,net
      of taxes of $0
            
            
            (118
            )
            
            
            826Comprehensive
      loss
            
            
            6,323
            
            
            
            9,223Comprehensive
      loss attributable to noncontrolling interest
            
            
            (56
            )
            
            
            (109
            )Comprehensive
      loss attributable to Altair Nanotechnologies, Inc.
            
            $
            6,267
            
            
            $
            9,114




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




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




Revenue Recognition - We
recognize revenue when persuasive evidence of an arrangement exists, delivery
has occurred or service has been performed, the fee is fixed and determinable,
and collectability is probable.  Our revenues were derived from product
sales, commercial collaborations and contracts and grants. Revenue from product
sales is recognized upon delivery of the product, unless specific contractual
terms dictate otherwise.  Based on the specific terms and conditions
of each contract/grant, revenues are recognized on a time and materials basis, a
percentage of completion basis and/or a completed contract
basis.  Revenue under contracts based on time and materials is
recognized at contractually billable rates as labor hours and expenses are
incurred.  Revenue under contracts based on a fixed fee arrangement is
recognized based on various performance measures, such as stipulated
milestones.  As these milestones are achieved, revenue is recognized. 
From time to time, facts develop that may require us to revise our estimated
total costs or revenues expected.  The cumulative effect of revised
estimates is recorded in the period in which the facts requiring revisions
become known.  The full amount of anticipated losses on any type of
contract is recognized in the period in which it becomes
known.  Payments received in advance relating to the future
performance of services or deliveries of products are deferred until the
performance of the service is complete or the product is
shipped.  Upfront payments received in connection with certain rights
granted in contractual arrangements are deferred and amortized over the related
time period over which the benefits are received.  Based on specific
customer bill and hold agreements, revenue is recognized when the inventory is
shipped to a third party storage warehouse, the inventory is segregated and
marked as sold, the customer takes the full rights of ownership and title to the
inventory upon shipment to the warehouse per the bill and hold
agreement.  When contract terms include multiple components that are
considered separate units of accounting, the revenue is attributed to each
component and revenue recognition may occur at different points in time for
product shipment, installation, and service contracts based on substantial
completion of the earnings process.




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




8




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




Derivatives and Hedging–Derivatives are held for
purposes other than trading.  We account for hedges of foreign
currency exposures and certain forecasted transactions as cash flow
hedges.  The fair value of the derivatives is recorded in other
current and noncurrent assets or liabilities in the consolidated balance
sheet.  The effective portions of the changes in the fair values of
these derivatives are recorded in other comprehensive income/(loss) and are
reclassified to sales, cost of goods sold, or other income in the period in
which earnings are impacted by the hedged items or in the period that the
transaction no longer qualifies as a cash flow hedge.




In the
first quarter of 2009, we entered a forward currency contract related to a
forecasted transaction that was to be settled in Korean Won.  The
transaction was not completed as forecasted and we terminated the related
currency contract without incurring a gain or loss.




NoncontrollingInterest – In April
2007, The Sherwin-Williams Company (“Sherwin”) entered into an agreement with us
to form AlSher Titania LLC, a Delaware limited liability company
(“AlSher”).  AlSher is a joint venture combining certain technologies
of ours 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 Sherwin, AlSher, and us, we contributed to AlSher an exclusive
license to use our technology (including our hydrochloride pigment process) for
the production of titanium dioxide pigment and other titanium containing
materials (other than battery or nanoelectrode materials) and certain pilot
plant assets with a net book value of $3.1 million.  We received no
consideration for the license granted to AlSher other than our ownership
interest in AlSher.  Sherwin agreed to contribute to AlSher cash and a
license agreement related to a technology for the manufacture of titanium
dioxide using the digestion of ilmenite in hydrochloric acid.  As a
condition to enter into the second phase of the joint venture, we agreed to
complete the pigment pilot processing plant and related development activities
by January 2008.  The 100 ton pigment pilot processing plant was
commissioned in February 2008 and the costs associated with this effort were
partially reimbursed by AlSher.  We contribute 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 our subsidiaries because we have a controlling interest in
AlSher and any inter-company transactions are eliminated (refer to Note 1 –
Basis of Preparation of Consolidated Financial Statements).  The
noncontrolling shareholder’s interest in the net assets and net income or loss
of AlSher are reported as noncontrolling interest in subsidiary on the condensed
consolidated balance sheet and as noncontrolling 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, as well as
unvested restricted stock.  Potentially dilutive shares are excluded from
the computation if their effect is anti-dilutive.  We had a net loss for
all periods presented herein; therefore, none of the stock options and warrants
outstanding during each of the periods presented or unvested restricted stock
were included in the computation of diluted loss per share as they were
anti-dilutive.




Recent Accounting Pronouncements- In April
2008, the FASB issued Financial Staff Position (“FSP”) No. FAS 142-3,
Determination of the Useful Life of Intangible Assets.  FSP No FAS
142-3 amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset under SFAS No. 142. “Goodwill and Other Intangible
Assets.”  The intent of the position is to improve the consistency
between the useful life of a recognized intangible asset under SFAS No. 142 and
the period of expected cash flows used to measure the fair value of the asset
under SFAS No. 141R, and other U.S. generally accepted accounting
principles.  The provisions of FSP No. FAS 142-3 are effective for
fiscal years beginning after December 15, 2008.  FSP No. FAS 142-3 is
effective for our fiscal year beginning January 1, 2009.  The adoption
of FSP No. FAS 142-3 did not have a material impact on
our consolidated financial statements.


9


In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities—an amendment of FASB Statement No. 133”. SFAS 161
requires enhanced disclosures about an entity’s derivative and hedging
activities, including (i) how and why an entity uses derivative
instruments, (ii) how derivative instruments and related hedged items are
accounted for under SFAS No. 133, “Accounting for Derivative Instruments
and Hedging Activities,” as amended (SFAS 133), and (iii) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. The provisions of SFAS No. 161 are
effective for fiscal years and interim periods beginning after November 15,
2008. SFAS No. 161 is effective for our fiscal year beginning January 1, 2009.
The adoption of SFAS No. 161 did not materially impact our consolidated
financial statements.




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (SFAS No. 141(R)). Under SFAS No. 141(R), an
entity is required to recognize the assets acquired, liabilities assumed,
contractual contingencies, and contingent consideration at their fair value on
the acquisition date. It further requires that acquisition-related costs be
recognized separately from the acquisition and expensed as incurred,
restructuring costs generally be expensed in periods subsequent to the
acquisition date, and changes in accounting for deferred tax asset valuation
allowances and acquired income tax uncertainties after the measurement period
impact income tax expense. In addition, acquired in-process research and
development (IPR&D) is capitalized as an intangible asset and amortized over
its estimated useful life. The adoption of SFAS No. 141(R) will change
our accounting treatment for business combinations on a prospective basis
beginning in the first quarter of fiscal year 2009.




In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51”.  SFAS
No. 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary.  It clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements.  This
Statement also changes the way the consolidated statement of operations is
presented.  It requires consolidated net income or loss to be reported
at amounts that include the amounts attributable to both the parent and the
noncontrolling interest.  It also requires disclosure, on the face of
the consolidated statement of operations, of the amounts of the consolidated net
income or loss attributable to the parent and to the noncontrolling
interest.  SFAS No. 160 was effective for our Company on
January 1, 2009. The adoption of SFAS No. 160 is reflected in our
consolidated financial
statements.




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





Note
3.  Fair Value Measurements





On
October 10, 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset is Not
Active.  The FSP clarifies the application of FASB Statement
No. 157, Fair Value Measurements, in a market that is not active and provides an
example to illustrate key considerations in determining the fair value of a
financial asset when the market for that financial asset is not
active.  The FSP is effective immediately, and includes prior period
financial statements that have not yet been issued, and therefore the Company
was subject to the provision of the FSP effective September 30,
2008.





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




10




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




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




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




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




The
following table summarizes the valuation of our assets by the SFAS 157 fair
value hierarchy at March 31, 2009 (in thousands):





Assets
      at fair value :
            
            Total
            
            
            Level
      1
            
            
            Level
      2
            
            
            Level
      3Auction
      rate corporate notes
            
            $
            2,866
            
            
            $
            -
            
            
            $
            -
            
            
            $
            2,866Spectrum
      Pharmaceuticals, Inc.
            
            
            420
            
            
            
            420
            
            
            
            -
            
            
            
            -Investment
      in available for sale securities
            
            $
            3,286
            
            
            $
            420
            
            
            $
            -
            
            
            $
            2,866





Financial
instruments that trade in less liquid markets with limited pricing information
generally include both observable and unobservable inputs.  In
instances where observable data is unavailable, we consider the assumptions that
market participants would use in valuing the asset.  Such investments
are categorized in Level 3 as the inputs generally are not
observable.  Our evaluation included consultation with our investment
advisors, assessment of the strength of the financial institution paying the
interest on these investments, ratings of the underlying collateral, and a
probability-weighted discounted cash flow analysis.





Note
4. Investment in Available for Sale Securities





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





The
auction rate corporate notes are long-term instruments with expiration dates
through 2017.  Through the third quarter of 2007, the interest was
settled and the rate reset every 7 to 28 days and historically these investments
were classified as short-term investments.  However, in the fourth
quarter of 2007 due to a change in the liquidity of the auction rate market,
sell orders have exceeded bid orders in that market, and the interest rate
relating to these investments was reset to a contractual rate of London
Interbank Offering Rate plus 50 basis points.  The auction rate
markets have not yet recovered.  As such, we evaluated these
investments at March 31, 2009 to determine if they were impaired.  Our
evaluation included consultation with our investment advisors, assessment of the
strength of the financial institution paying the interest on these investments,
ratings of the bonds that are the underlying collateral, prices of similar
instruments, our ability to hold the notes to maturity, and a
probability-weighted discounted cash flow analysis.  Based on this
analysis, we estimate that at March 31, 2009 their fair value was $2.9 million,
representing a cumulative unrealized holding loss of approximately $1.0
million.  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 March 31, 2009.





Investment
in available for sale securities (long-term) includes 240,000 shares of Spectrum
Pharmaceuticals, Inc. (“Spectrum”) common stock.  Although the
Spectrum shares are eligible for resale under Rule 144, we currently intend 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
$1.1 million as measured by their closing price on the NASDAQ Capital
Market.  At March 31, 2009, their fair value was approximately
$420,000, representing a cumulative unrealized holding loss of
$718,000.  We evaluated this investment to determine if there is an
other than temporary impairment at March 31, 2009.  Our evaluation
took into consideration published investment analysis, status of drug candidates
in development, analysts’ recommendations, insider trading activity, and other
factors.  Based on our evaluation and our ability and intent to hold
the investment for a reasonable period of time sufficient for an expected
recovery of fair value, we do not consider the remaining investment to be other
than temporarily impaired at March 31, 2009.




11




Note
5.  Patents





Our
patents are associated with the nanomaterials and titanium dioxide pigment
technology.  We are amortizing these assets on a straight-line basis
over their useful lives.  The amortized patents’ balances as of March
31, 2009 and December 31, 2008 were:





In
thousands of dollars




March
      31,
              2009
            
            
            December
      31,
              2008Patents
      and patent applications
            
            $
            1,518
            
            
            $
            1,518Less
      accumulated amortization
            
            
            (904
            )
            
            
            (882
            )Total
      patents and patent applications
            
            $
            614
            
            
            $
            636





The
weighted average amortization period for patents is approximately 16.5
years.  Amortization expense, which represents the amortization
relating to the identified amortizable patents, for the three months ended
March 31, 2009 and March 31, 2008, was $21,000 in each
period.  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.  Note Payable and Capital Leases





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





In
thousands of dollars




March
      31,
              2009
            
            
            December
      31,
              2008Note
      payable to BHP Minerals International, Inc.
            
            $
            600
            
            
            $
            1,200Note
      payable to AICCO, Inc.
            
            
            79
            
            
            
            132Capital
      leases
            
            
            66
            
            
            
            12Less
      current portion
            
            
            (696
            )
            
            
            (736
            )Long-term
      portion of notes payable and capital leases
            
            $
            49
            
            
            $
            608





On August
8, 2002, we entered into a purchase and sale agreement with BHP Minerals
International, Inc. (“BHP”), wherein we purchased the land, building and
fixtures in Reno, Nevada where our titanium processing assets are located. In
connection with this transaction, BHP also agreed to terminate our obligation to
pay royalties associated with the sale or use of the titanium processing
technology. In return, we issued to BHP a note in the amount of $3 million, at
an interest rate of 7%, secured by the property we acquired. Interest did not
begin to accrue until August 8, 2005. As a result, we imputed interest and
reduced the face amount of the note payable by $567,000, which was then
amortized to interest expense from inception of the note through August 8, 2005.
Payments are due in February of each year beginning in 2006.  All
payments have been made through February 8, 2009.  A final payment of
$600,000 plus accrued interest is due on February 8, 2010.





Note
7.  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 ours.





The total
compensation cost charged in connection with the stock incentive plan was
$418,000 and $487,000 for the three-months ended March 31, 2009
and 2008, respectively. During the three-months ended March 31,
2009, 523,773 options vested at a weighted average price of
$3.18.  During the three-months ended March 31, 2008, 518,973 options
vested at a weighted average price of $2.92. There was no cash received
from stock option and warrant exercises during the three-months ended March 31,
2009 and $423,000 during the three-months ended March 31, 2008.




12




Compensation
expense of $418,000 was recognized for the first quarter of 2009, which is
included in general and administrative expenses in the accompanying Consolidated
Statements of Operations.  This expense consisted of $160,000 related
to the stock grant awards accrual of the “2009 Annual Incentive Bonus Plan”,
amortized expense of stock options and restricted stock of $236,000 and $22,000,
respectively, the offset of which is additional paid in capital of stockholders’
equity.  For the first quarter of 2008, compensation expense of
$487,000 consisted of amortized stock options and restricted stock expense of
$441,000 and $46,000, respectively





Stock
Options





The total
number of shares authorized for issuance under our 2005 stock incentive plan is
9 million shares.  Prior stock option plans, which are now terminated,
authorized a total of 6.6 million shares, of which options for 5,745,500
were granted and options for 445,900 are outstanding and unexercised
at March 31, 2009. The total number of options relating to the 2005
stock incentive plan that are outstanding and unexercised at March 31, 2009 is
4,605,985.





Total
options granted for the three-month periods ended March 31, 2009 and
2008 were 1,331,000 and 1,420,000, respectively.  The weighted
average grant date fair value of options granted during the three months
ended March 31, 2009 and March 31, 2008 was $1.18 and $2.92,
respectively.





As of
March 31, 2009, there was $1.7 million of total unrecognized compensation
cost related to non-vested options granted under the plans.  That cost
is expected to be recognized over a weighted average period of 1 year as of
March 31, 2009.





Restricted
Stock





During
the three-months ended March 31, 2009, the Board of Directors granted 10,000
shares of restricted stock under the plan with a weighted average fair value of
$1.71 per share.  During the three-months ended March 31, 2008, the
Board of Directors did not grant any shares of restricted stock under the
plan.





As of
March 31, 2009 we had $382,000 of total unrecognized compensation
expense related to restricted stock which will be recognized over the weighted
average period of 1.5 years.





Note
8.  Related Party Transactions





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





On
October 6, 2008, we entered into a Stock Purchase and Settlement Agreement dated
as of September 30, 2008 with Al Yousuf, LLC. Pursuant to the agreement, we
agreed to issue an aggregate of 8.0 million common shares to Al Yousuf. Of such
shares, 5,882,353 shares were acquired on October 14, 2008 by Al Yousuf at a
purchase price of $1.70 per share, for an aggregate purchase price of $10
million. The remaining 2,117,647 shares were issued upon execution of the
agreement in exchange for a release by Al Yousuf of all potential claims arising
from design concerns related to battery packs delivered to Phoenix Motorcars,
Inc. in 2007, our related offer of a warranty replacement and inventory
write-off, and any other known claims existing as of the date of the Agreement.
Under the Purchase Agreement dated November 29, 2007 between us and Al Yousuf,
pursuant to which Al Yousuf purchased $40 million in common shares, we made
certain representations and warranties related to our inventory, warranty
reserve and similar matters that were affected by the write-off of battery
inventories and warranty offer announced in March 2008.





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




13




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


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


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


4.
              The
      reversal of the warranty accrual associated with the 47 recalled
      batteries.





Additionally
in January 2007, Phoenix issued 1.0 million shares of its common stock in
consideration for the three-year exclusivity agreement within the United States
of America included in the contract.  Phoenix did not make the minimum
battery pack purchases required to retain their exclusivity in
2007.  The common stock shares received represented a 16.6% ownership
interest in Phoenix.  The investment was recorded at $107,000 with the
offset to deferred revenue, which was recognized on a straight-line basis until
our agreement was terminated in July 2008.





In March
2008, Phoenix Motorcars, Inc. completed a merger, wherein the surviving
corporation, Phoenix MC, Inc. became a wholly owned subsidiary of All Electric,
LLC (“AELLC”).  On March 19, 2008, Phoenix MC, Inc. announced receipt
of their next round of funding provided by Al Yousuf, LLC and The AES
Corporation.  These changes resulted in conversion of our 1.0 million
common share investment in Phoenix Motorcars, Inc. to ownership of 2,000 units
in AELLC and diluted our ownership percentage in Phoenix to 1.56%.  At
December 31, 2008, there was no deferred revenue relating to the unamortized
investment.  We concluded that the investment is
other-than-temporarily-impaired.  Consequently, a realized loss on the
investment of $89,000 was recognized in December 2008.  The remaining
investment was valued at $18,000.  During the first quarter of 2009
Phoenix suffered a significant adverse arbitration judgment that prompted
management to recognize further impairment of $18,000 which is deemed to be
other-than-temporarily impaired.





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





Note
9.  Business Segment Information





Management
views the Company as operating in two major business segments:  Power
and Energy Group, and All Others.




The Power
and Energy Group develops, produces, and sells nano-structured LTO, nano lithium
Titanate, battery cells, battery packs, and provides related design and test
services. The All Others group consists of the remaining portions of the
previous Life Sciences and Performance Materials groups plus corporate general
expenses. Management completed a thorough review of operations and
strategies and determined that it was in the best interests of the shareholders
for the Company to focus solely on the Power and Energy Group. As a result of
this assessment resources devoted to the Performance Materials Group and Life
Sciences Group were considerably reduced and no new significant development is
being pursued in those areas by the Company.




14




The
accounting policies of these business segments are the same as described in Note
2 to the unaudited condensed consolidated financial
statements.  Reportable segment data reconciled to the consolidated
financial statements as of the three-month periods ended March 31, 2009 and
March 31, 2008 is as follows:





In
thousands of dollars


DepreciationLoss
            
            
            andThree Months
      Ended
            
            Net Sales
            
            
            From Operations
            
            
            Amortization
            
            
            AssetsMarch
      31, 2009:Power
      and Energy Group
            
            $
            848
            
            
            $
            2,337
            
            
            $
            356
            
            
            $
            6,800All
      Other
            
            
            54
            
            
            
            4,135
            
            
            
            377
            
            
            
            34,684Consolidated
      Total
            
            $
            902
            
            
            $
            6,472
            
            
            $
            733
            
            
            $
            41,484March
      31, 2008:Power
      and Energy Group
            
            $
            330
            
            
            $
            3,581
            
            
            $
            265
            
            
            $
            9,036All
      Other
            
            
            739
            
            
            
            5,168
            
            
            
            308
            
            
            
            49,858Consolidated
      Total
            
            $
            1,069
            
            
            $
            8,749
            
            
            $
            573
            
            
            $
            58,894





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.





For the
three months ended March 31, 2009, we had sales to two major customers, each of
which accounted for 10% or more of revenues. Total sales to these customers for
the three months ended March 31, 2009 and the balance of their accounts
receivable at March 31, 2009 were as follows:





In
thousands of dollars


Sales
            
            
            Accounts
      Receivable andThree
      Months Ended
            
            
            Notes
      Receivable atCustomer
            
            March
      31, 2009
            
            
            March
      31, 2009Power and Energy
      Group:BAE
      Systems Science & Technology Inc
            
            $
            482
            
            
            $
            202BAE
      Systems Marine Limited
            
            
            215
            
            
            
            59Amperex
      Technology Limited
            
            
            103
            
            
            
            103





For the
three months ended March 31, 2008, we had sales to five major customers, each of
which accounted for 10% or more of revenues. Total sales to these customers for
the three months ended March 31, 2008 and the balance of their accounts
receivable at March 31, 2008 were as follows:





In
thousands of dollars


Sales
            
            
            Accounts
      Receivable andThree
      Months Ended
            
            
            Notes
      Receivable atCustomer
            
            March
      31, 2008
            
            
            March
      31, 2008Power and Energy
      Group:Office
      of Naval Research
            
            $
            113
            
            
            $
            75Department
      of Energy
            
            
            45
            
            
            
            10All
      Other:Boeing
            
            
            148
            
            
            
            117Western
      Oil Sands
            
            
            146
            
            
            
            91Department
      of Energy
            
            
            113
            
            
            
            41Elanco
      Animal Health/Eli Lilly
            
            
            246
            
            
            
            175




15




Sales for
the three-month periods ended March 31, 2009 and 2008 by geographic area were as
follows:





In
thousands of dollars


Sales
            
            
            SalesThree
      Months Ended
            
            
            Three
      Months EndedGeographic
      information (a):
            
            March
      31, 2009
            
            
            March
      31, 2008United
      States
            
            $
            572
            
            
            $
            874Canada
            
            
            -
            
            
            
            146Other
      foreign countries
            
            
            330
            
            
            
            49Total
            
            $
            902
            
            
            $
            1,069(a)
      Revenues are attributed to countries based on location of
      customer.




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 consolidated
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 (“MRS”), and Fine Gold
Recovery Systems, Inc., a Nevada corporation (“Fine Gold”) which was dissolved
on December 30, 2008.  AlSher Titania LLC, a Delaware limited
liability company, is 70% owned by Altairnano, Inc.  We have
registered or are in the process of registering the following trademarks: Altair
Nanotechnologies Inc.®, Altair Nanomaterials, Inc.®, Altairnano®, TiNano®,
Nanocheck® and RenaZorb®.  Any other trademarks and service marks used
in this Report are the property of their respective holders.




Overview





The
following discussion summarizes the material changes in our financial condition
between December 31, 2008 and March 31, 2009 and the material changes in our
results of operations and financial condition between the three-month periods
ended March 31, 2009 and March 31, 2008.  This discussion should be
read in conjunction with Management’s Discussion and Analysis of Financial
Condition and Results of Operations included in our Annual Report on Form 10-K
for the year ended December 31, 2008.




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 two divisions, a
Power and Energy Group, and all other operations, which consists of the
remaining portions of the previous Life Sciences and Performance Materials
groups.  Management completed a thorough review of operations and
strategies and determined that it was in the best interests of the shareholders
for the Company to focus solely on the Power and Energy Group.  As a
result of this assessment resources devoted to the Performance Materials Group
and Life Sciences Group were significantly reduced and no new development is
being pursued in those areas.




16




Our
research, development, production and marketing efforts are currently directed
toward one primary market, the Power and Energy Storage market, with efforts in
other areas being directed at supporting existing initiatives rather than
developing any new products.  We are still, however, engaged in the
following ongoing development and production efforts:





Power and
Energy Group


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


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





All Other
Operations


·
              Continuing
      support for AlSher Titania, in the development and production of high
      quality titanium dioxide pigment for use in paint and coatings, and nano
      titanium dioxide materials for use in a variety of applications including
      those related to removing contaminants from air and water.  We
      are currently working with Sherwin-Williams and AlSher to identify and
      qualify an interested third party to purchase our interest in the AlSher
      joint venture.


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


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





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





Our
revenues have been, and we expect them to continue to be, generated by license
fees, product sales, commercial collaborations and contracts and
grants.  We currently have agreements in place to (1) provide research
to further develop battery electrode materials, nanosensors, and nanomaterials
characterization, (2) participate in a joint venture combining the technologies
of the partners in order to develop and produce titanium dioxide pigment for use
in a variety of applications, (3) develop a suite of energy storage solutions
for the stationary power market, (4) develop battery backup power systems for
Naval applications and (5) develop power and energy systems for other military
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 made product sales consisting principally
of battery packs and nano 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 applicationlicensee
in obtaining regulatory approval for the drugs, or other products, and the
success of our marketing efforts with respect to both product sales and
technology licenses.





The
current financial markets and general economic environment are substantially
weaker at present than they were during the first quarter of
2008.  New credit availability is severely constrained and those
companies producing products for individual consumer use have seen their sales
negatively impacted.  Although Altair’s products are targeted
primarily at the military and large power producers, our anticipated sales
volume has also been negatively impacted.  To further exacerbate the
situation, companies that were financially able to make purchases from us have
delayed many of their purchase decisions to see if they can first qualify for
portions of the money being dispensed in accordance with the American Recovery
and Reinvestment Act of 2009.





General
Outlook





We have
generated net losses in each fiscal year since incorporation and the first
quarter of 2009 was no different.  Revenues from product sales,
commercial collaborations and contracts and grants decreased significantly in
2008 compared to 2007.  Operating expenses also declined
significantly. These trends have continued through the first three months of
2009 as well.  The revenue decrease was due almost entirely to the
reduced level of product sales in the automotive sector as a result of the
difficulties encountered by Phoenix MC in launching their electric
vehicle.  We also experienced delays in customer commitments in the
stationary power frequency regulation market.  The operating expense
decline was primarily the result of decreases in Research and Development
expenses due to the completion of a number of grants as well as the shift in
Company focus away from Life Sciences and Performance
Materials.  General and Administration in the first quarter of 2008
included accrual of the former CEO’s severance payment, which did not appear in
the first quarter of 2009.  Our gross profit margins on customer
contracts for research and development work are very low, leading us to shift
our focus away from these opportunities. Our current focus is on the
development of products and technologies in energy storage that we anticipate
will eventually bring a substantial amount of higher-margin revenues from
licensing, manufacturing, product sales and other sources. We expect our nano
lithium titanate batteries and battery materials to be a source of such
higher-margin revenues.  Consequently, during the first three months
of 2009, we continued to expand the scope of our Power and Energy Group by (1)
hiring additional staff and increasing temporary personnel to handle the
conversion from a prototype to a commercial product, (2) adding additional
marketing personnel to focus on this market, and (3) acquiring test and
production equipment.





17





Recent Business
Developmentsand Status Updates





Power
and Energy Group





In
September 2008, we accepted a purchase order from DesignLine International USA
(DLI) for the delivery of four complete battery module sets.  These
hybrid electric vehicle (HEV) battery packs will be used in demonstration buses
for three city transit customers, and one for a modular testing
program.   The DLI HEV bus operates in an electric-only mode for
as much as 30 percent of its range and provides a 100 percent improvement in
fuel economy over a diesel bus, with fuel savings of up to 6,000 gallons per
year.   Due to a number of problems related to components outside
of the battery cells and a disagreement on payment terms, this program is
currently on hold and not expected to continue until all outstanding issues have
been resolved.




In August
2007, we received an initial $1.0 million order in connection with the AES Joint
Development and Equipment Purchase Agreement for a 500 kilowatt-hour energy
storage product.  In accordance with this purchase order, two
one-megawatt stationary battery packs (energy equivalent for each pack based on
anticipated operational time is 250 kilowatt-hours of energy) were completed
according to the delivery schedule in December 2007.  A testing
program was developed and validated by KEMA, Inc., an independent agency and
executed by AES personnel and subcontractors.  KEMA’s testing
completed during the second quarter of 2008 showed the battery system
successfully met the program’s specifications.  The demonstration also
suggests that the technology could be used for several other utility
applications.  Of these two one-megawatt battery packs, one has been
relocated to Pennsylvania and hooked into the commercial electric grid providing
ongoing ancillary services.  The second unit is in the process of
being relocated to the New York area and similarly connected to the electric
grid in that area.   We expect our development relationship with
AES to continue through 2009 and beyond.  Also as a result of the
impartial successful test results reported by KEMA, we have made inroads into
other potential customer opportunities that we expect to develop over the next
12 months.




As a
result of the American Recovery and Reinvestment Act of 2009, the Federal
Government has earmarked $2 billion for near-term alternate energy projects to
construct the manufacturing capability in the U.S. for producing advanced
batteries for the automotive market.  Another $4.5 billion has been
earmarked for electric grid modernization projects.  We are currently
exploring the viability of submitting proposals under each of these programs
with a number of different companies.




In June
2008, we received an order from BAE Systems for $349,000 to develop 32 batteries
in support of the US Army’s artillery upgrade program.  These
batteries were delivered and accepted by the customer on March 31,
2009.  We are in advanced negotiations with BAE Systems Marine Limited
and the UK Ministry of Defense (MoD) to develop a battery system for use in a
British naval application.  We have successfully completed phase 1a of
the project and are awaiting finalization of the contract for phase 1b which we
anticipate starting during the second quarter of 2009.  It is
anticipated that the successful completion of this initial work will lead to
subsequent production orders from the MoD.





All
Other Areas





In August
2008, we and Elanco Animal Health, a division of Eli Lilly and Company
("Elanco"), terminated the Development Services Agreement entered into by them
in September 2007 and related license agreements.  Because all rights
granted to Elanco under the original agreements reverted to us with the
termination of those agreements, we have since explored licensing this
technology and product to other interested parties and are in advanced
discussions with an interested new party.  We are also continuing to
work with Spectrum under the terms of our agreement with them.




18




·
            In
      April 2007, a new company, called AlSher Titania LLC was formed. 
      AlSher Titania represents a joint venture with Sherwin-Williams, one of
      the world's leading manufacturers of paint and durable
      coatings.  Construction of the 100 ton pigment processing pilot
      plant in connection with the joint venture agreement was completed, and
      the plant was commissioned in February 2008.  Testing under the
      piloting program commenced, and although results to date have been
      positive, we have curtailed full operations at this time.  We
      are currently working with Sherwin-Williams and AlSher to identify and
      qualify an interested third party to purchase our interest in the AlSher
      joint venture. Considerable data has been generated and compiled into
      an engineering data package analysis and recommendation on the next
      steps.  AlSher is actively seeking a partner or partners to
      participate in the next phase which will include the construction of a
      5,000 ton annual capacity processing plant.  Several companies
      with raw materials resources have indicated interest in the technology,
      but none has been willing to make any commitment up to
      now.  Without additional capital, it is unlikely that AlSher
      will be able to independently fund this
effort.





We were
recently awarded a $1.8 million grant by the Department of Defense to pursue
development of a nano-sensor project with Western Michigan
University.  This project and similar activities will continue into
the foreseeable future as long as they are able to make a positive contribution
to our financial position, however they are not the focus area of the
Company.





We
continue our support of Spectrum related to their efforts to receive FDA
approval of RenaZorb and related products.  Spectrum is currently doing an
in vitro competitive study to determine the efficacy of the alternate high
surface area product they requested from us compared to
Fosrenol.  This will take approximately two months to
complete.  Then, if RenaZorb performs well against Fosrenol, Spectrum
has indicated that it will begin the pre-clinical work which originally was
expected to take about one year to complete.  Consequently, we now do
not expect the application to be filed until mid 2010.





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 near
future.  We evaluate our capital needs and the availability of capital
on an ongoing basis and, consistent with past practice, expect to seek to raise
capital when and on such terms as we deem appropriate based upon our assessment
of our current liquidity, capital needs and the availability of
capital.  We do not have any commitments from any party to provide
required capital and may, or may not, be able to obtain such capital on
reasonable terms, or at all.  We have a single note payable in the
original principal amount of $3 million that does not contain any restrictive
covenants with respect to the issuance of additional debt or equity securities
by Altair.  The first four payments of $600,000 of principal plus
accrued interest were due and paid on February 8, 2006, 2007, 2008 and
2009.  The total outstanding note payable balance is
$600,000.  The final payment of principal and interest is due on
February 8, 2010.





Our cash
and short-term investments decreased by $6.1 million, from $28.1 million at
December 31, 2008 to $21.9 million at March 31, 2009, due primarily to net
cash used in operations (approximately $5.3 million), purchases of
property and equipment ($253,000) and payment of notes payable
($652,000).





Our
objective is to manage cash expenditures in a manner consistent with rapid
product development that leads to the generation of revenues in the shortest
possible time.  At this time our sales volume is low and we are
averaging a monthly cash outlay of $2.2 million.  We anticipate
beginning to close significant contracts and ramping up production by late
2009.  These events are expected to move us closer to cash flow
breakeven, expanding our options for external financing to sustain our
growth.





At May 5,
2009, we had 93,153,271 common shares issued and outstanding.  As of
that same date, there were outstanding warrants to purchase up to 431,482 common
shares and options to purchase up to 4,968,185 common shares.





19





Capital
Commitments





The
following table discloses aggregate information about our contractual
obligations and the periods in which payments are due as of March 31,
2009:





In
thousands of dollars


Less
      Than
            
            
            
            
            
            
            
            
            AfterContractual
      Obligations
            
            Total
            
            
            1
      Year
            
            
            1-3
      Years
            
            
            4-5
      Years
            
            
            5
      YearsNotes
      Payable
            
            $
            680
            
            
            $
            680
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Interest
      on notes payable
            
            
            42
            
            
            
            42
            
            
            
            -
            
            
            
            -
            
            
            
            -Contractual
      Service Agreements
            
            
            407
            
            
            
            407
            
            
            
            -
            
            
            
            -
            
            
            
            -Facilities
      and Property Leases
            
            
            1,074
            
            
            
            360
            
            
            
            714
            
            
            
            -
            
            
            
            -Unfulfilled
      Purchase Orders
            
            
            1,420
            
            
            
            1,420
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
      Contractual Obligations
            
            $
            3,623
            
            
            $
            2,909
            
            
            $
            714
            
            
            $
            -
            
            
            $
            -





Beginning
in the second quarter of 2008, we revised our capital acquisition policy to
lease capital purchases that meet our business case criteria.  Since
the Company is not yet in a cash flow positive state, we have had limited
opportunity to implement this change in policy.





Off-Balance Sheet
Arrangements





There
were no off-balance sheet arrangements at March 31, 2009.





Critical Accounting Policies
and Estimates





Management
based the discussion and analysis of our financial condition and results of
operations on our consolidated financial statements. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenue and expenses, and related
disclosure of contingent assets and liabilities.  On an on-going
basis, we evaluate our critical accounting policies and estimates, including
those related to long-lived assets, share-based compensation, revenue
recognition, overhead allocation, allowance for doubtful accounts, inventory,
and deferred income tax.  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.





·
              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 (“SFAS”) No. 2, Accounting for Research and
      Development Costs.  If the assets have alternative future uses
      (in research and development projects or otherwise), they are capitalized
      when acquired or constructed; if they do not have alternative future uses,
      they are expensed as incurred. At March 31, 2009, the carrying value
      of these assets was $14.2 million, or 34% 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 stock options, restricted stock and other awards to
      employees and service providers.  We calculate compensation
      expense under SFAS 123R using a Black-Scholes Merton 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.




20




·
              Revenue
      Recognition.  We recognize revenue when persuasive evidence of
      an arrangement exists, delivery has occurred or service has been
      performed, the fee is fixed and determinable, and collectability is
      probable.  Historically, our revenues were derived from three
      sources: product sales, commercial collaborations, and contract research
      and development.  License fees are recognized when the agreement is
      signed; we have performed all material obligations related to the
      particular milestone payment or other revenue component and the earnings
      process is complete.  Revenue for product sales is recognized
      upon delivery of the product, unless specific contractual terms dictate
      otherwise.  Based on the specific terms and conditions of each
      contract/grant, revenues are recognized on a time and materials basis, a
      percentage of completion basis and/or a completed contract
      basis.  Revenue under contracts based on time and materials is
      recognized at contractually billable rates as labor hours and expenses are
      incurred.  Revenue under contracts based on a fixed fee
      arrangement is recognized based on various performance measures, such as
      stipulated milestones.  As these milestones are achieved, revenue is
      recognized.  From time to time, facts develop that may require us to
      revise our estimated total costs or revenues expected.  The
      cumulative effect of revised estimates is recorded in the period in which
      the facts requiring revisions become known.  The full amount of
      anticipated losses on any type of contract is recognized in the period in
      which it becomes known.  Payments received in advance relating
      to 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, and the
      customer takes the full rights of ownership and title to the inventory
      upon shipment to the warehouse per the bill and hold
      agreement.  When contract terms include multiple components that
      are considered separate units of accounting, the revenue is attributed to
      each component and revenue recognition may occur at different points in
      time for product shipment, installation, and service contracts based on
      substantial completion of the earnings
process.





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





·
              Overhead
      Allocation.  Facilities overheads, which are comprised primarily
      of occupancy and related expenses, and fringe benefit expenses, are
      initially recorded in general and administrative expenses and then
      allocated monthly to research and development expense based on labor
      costs.  Facilities overheads and fringe benefits allocated to
      research and development projects may be chargeable when invoicing
      customers under certain research and development
  contracts.





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





·
              Inventory.  The
      Company values its inventories generally at the lower of cost (first-in,
      first-out method) or market.  We employ a full absorption
      procedure using standard cost techniques.  The standards are
      customarily reviewed and adjusted annually.  Overhead rates are
      recorded to inventory based on normal capacity.  Any idle
      facility costs or excessive spoilage are recorded as current period
      charges.





·
              Deferred
      Income Tax.  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.  We have 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 it more likely than not that
      the Company will not realize benefits of these deductible differences as
      of March 31, 2009.  Management has, therefore, established a full
      valuation allowance against its net deferred income tax assets as of March
      31, 2009.  Due to the significant increase in common shares
      issued and outstanding from 2005 through 2008, Section 382 of the Internal
      Revenue Code may provide significant limitations on the utilization of our
      net operating loss carry forwards.  As a result of these
      limitations, a portion of these loss and credit carryovers may expire
      without being utilized.




21




Results of
Operations





Three
Months Ended March 31, 2009 Compared to Three Months Ended March 31,
2008





The net
loss for the quarter ended March 31, 2009, which was the first quarter of our
2009 fiscal year, totaled $6.4 million ($0.07 per share) compared to a net loss
of $8.3 million ($0.10 per share) in the first quarter of 2008.





Total
revenues for the quarter ended March 31, 2009 were $902,000 compared to
$1.1 million for the same period of 2008.  The decrease in revenue is
primarily due to a reduction of $372,000 in contracts and grants as Office of
Naval Research grant concluded during the fourth quarter of 2008.





Cost of
sales – product increased by $127,000, from $58,000 compared to $185,000 in the
same quarter of 2009.  This change is driven by a shift from sales of
the more profitable prototype cells and modules in the first quarter of 2008 to
less profitable lithium Titanate powder in the same quarter of
2009.





Research
and development, expense decreased by $2.2 million, from $5.3 million in the
first quarter of 2008 to $3.0 million in the same quarter of
2008.  Costs decreased $1.1 million associated with grant activity in
the first quarter of 2009.  Additional cost decreases of $992,000
are attributable to a shift in focus and realignment of resources from Life
Sciences and Performance Materials to the battery production arena.





General
and administrative expenses decreased by $446,000, from $3.3 million in the
first quarter of 2008 to $2.8 million in the same quarter of
2009.  This decrease is primarily related to the separation expenses
related to our former President and Chief Executive Officer that were
incurred in February 2008.





Depreciation
and amortization increased by $160,000, from $573,000 in the first quarter of
2008 to $733,000 in the same quarter of 2009.  The increase in
depreciation reflects the addition of approximately $1.4 million of production
equipment and facility improvements from April 1, 2008 through March 31,
2009.





Interest
income decreased by $311,000, from $382,000 in the first quarter 2007 to $71,000
in the same quarter of 2008.  On average, a higher average level of
cash during 2008 than in 2009 and lower interest rates in 2009 drove this
reduction.





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.  Although we do not speculate on the currency markets, we will on
occasion enter into currency hedging contracts to minimize our risk associated
with currency rate fluctuations when purchasing from a foreign supplier in a
foreign currency.  During the first quarter of 2009, we entered into
one such contract which has since been unwound at no cost or gain to
us.





Item
4.Controls and
Procedures





(a)Based on the evaluation
of our "disclosure controls and procedures" (as defined in the Securities
Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) required by paragraph (b) of
Rules 13a-15 or 15d-15, our chief executive officer and our chief financial
officer have concluded that, as of March 31, 2009, our disclosure controls and
procedures were effective in ensuring that information required to be disclosed
by us in reports that we file under the Exchange Act is recorded, processed,
summarized and reported within the time periods required by governing rules and
forms.




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




22





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, 2008, except as follows:




·
              We
      have added the following risk factor to more clearly articulate risks to
      our company arising from the economic slowdown and government
      initiatives:




Adverse
economic conditions and government initiatives could reduce, delay or
harm  demand for our products.




The
current financial markets and general economic environment are substantially
weaker at present than they were during the first quarter of
2008.  Our products are targeted primarily at large power producers,
the U.S. and British military, military contractors and, to a lesser extent,
automobile manufacturers.  Due to declining revenues and concerns
about liquidity, companies and branches of the military in our target market
have reduced, delayed or eliminated many research and development initiatives,
including those related to energy storage.  This reduction or delay in
development spending is harming our development and productions efforts and will
continue to harm such efforts until development spending increases to prior
levels.




In
addition, certain of our customers or potential customers who have the liquidity
to fund development projects have deferred orders in anticipation of qualifying
for funds dispensed in accordance with the American Recovery and Reinvestment
Act of 2009.   We are likely to experience reduced product demand
until companies seeking funding under these energy initiatives within the
American Recovery and Reinvestment Act of 2009 receive funding and/or learn that
they will not receive funding.




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





Risk
Factors





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




We
may continue to experience significant losses from operations.




We have
experienced a net loss in every fiscal year since our inception. Our losses from
operations were $30.1 million in 2008, and $6.4 million for the three months
ended March 31, 2009. Even if we do generate operating income in one or more
quarters in the future, subsequent developments in the economy, 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.




23





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;


·
            additions
      of new customers or losses of existing
  customers;


·
            positive
      or negative business or financial developments announced by our key
      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;


·
            technology
      and intellectual property issues associated with our products;
      and


·
            general
      political, social, geopolitical and economic trends and
      events.




A
majority of our revenue has historically been generated from low-margin contract
research and development services; if we cannot expand revenues from other
products and services, our business will fail.




Historically,
a majority of our revenue has come from contract research and development
services for businesses and government agencies. During the years ended December
31, 2008, 2007 and 2006, contract service revenues comprised 87%, 55% and 67%
respectively, of our operating revenues. Contract services revenue is low
margin, or has negative margins, and is unlikely to grow at a rapid pace. Our
business plan anticipates revenues from product sales and licensing, both of
which have potential for higher margins than contract services and have
potential for rapid growth, increasing in coming years. If we are not successful
in significantly expanding our revenues, or if we are forced to accept low or
negative margins in order to achieve revenue growth, we may fail to reach
profitability in the future.




Adverse
economic conditions and government initiatives could reduce or delay the demand
for our products.




The
current financial markets and general economic environment are substantially
weaker at present than they were during the first quarter of
2008.  Our products are targeted primarily at large power producers,
the U.S. and British military, military contractors and, to a lesser extent,
automobile manufacturers.  Due to declining revenues and concerns
about liquidity, companies and branches of the military in our target market
have reduced, delayed or eliminated many research and development initiatives,
including those related to energy storage.  This reduction or delay in
development spending is harming our development and productions efforts and will
continue to harm such efforts until development spending increases to prior
levels.




In
addition, certain of our customers or potential customers who have the liquidity
to fund development projects have deferred orders in anticipation of qualifying
for funds dispensed in accordance with the American Recovery and Reinvestment
Act of 2009.   We are likely to experienced reduced product
demand until companies seeking funding under these energy initiatives within the
American Recovery and Reinvestment Act of 2009 receive funding and/or learn that
they will not receive funding.




We
depend upon several sole-source third-party suppliers.




We rely
on certain suppliers as the sole-source of certain services, raw materials and
other components of our products.  We do not have long-term supply or
service agreements with any such suppliers.  As a result, the
providers of such services and components could terminate or alter the terms of
service or supply with little or no advance notice.  If our
arrangements with any sole-source supplier were terminated or such a supplier
failed to provide essential services or deliver essential components on a timely
basis or introduced unacceptable price increases, our production schedule would
be delayed, possibly by as long as six months.  Any such delay in our
production schedule would result in delayed product delivery and may also result
in additional production costs, customer losses and litigation.




24




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 technology, as critical to our success. We have received various
patents, and filed other patent applications, for various applications and
aspects of our nanomaterials 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.




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, 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 to,
      and/or may abandon, a development project for reasons, including reasons,
      such as a shift in corporate focus, unrelated to its
    merits;




25




·
            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.




Interest
in our nano-structured LTO battery materials and batteries is affected by energy
supply and pricing, political events, popular consciousness and other factors
over which we have no control.




Currently,
our marketing and development efforts for our batteries and battery materials
are focused primarily on transportation, military and stationary power
applications.  In the transportation and military markets, batteries
containing our nano-structured LTO materials are designed to replace or
supplement gasoline and diesel engines.  In the stationary power
applications, our batteries are designed to conserve and regulate the stable
supply of electricity, including from renewable sources.  The interest
of our potential customers and business partners in our products and services is
affected by a number of factors beyond our control, including:




·
            economic
      conditions and capital financing and liquidity
  constraints;


·
            short-term
      and long-term trends in the supply and price of gasoline, diesel, coal and
      other fuels;


·
            the
      anticipated or actual granting or elimination by governments of tax and
      other financial incentives favoring electric or hybrid electric vehicles
      and renewable energy production;


·
            the
      anticipated or actual funding, or elimination of funding, for programs
      that support renewable energy programs, electric grid improvements,
      certain military electric vehicle initiatives and related
      programs;


·
            changes
      in public and investor interest, for financial and/or environmental
      reasons, in supporting or adopting alternatives to gasoline and diesel for
      transportation and other purposes;


·
            the
      overall economic environment and the availability of credit to assist
      customers in purchasing our large battery
  systems;


·
            the
      expansion or contraction of private and public research and development
      budgets as a result of global and U.S. economic trends;
  and


·
            the
      speed of incorporation of renewable energy generating sources into the
      electric grid.




Our
nano-structured LTO battery materials and battery business is currently
dependent upon a few customers and potential customers, which presents various
risks.




Our
nano-structure LTO battery materials and battery business has historically been
dependent upon a few customers, including the U.S. government, affiliates of AES
Corporation and smaller companies developing electric or hybrid electric cars
and buses.  In addition, most of these customers are development
partners, who are subsidizing the research and development of products for which
they may be the sole, or one of a few, potential purchasers.  As a
result of the small number of potential customers and partners, our existing
customers and partners may have significant leverage on pricing terms,
exclusivity terms and other economic and noneconomic terms.  This may
harm our attempts to sell products at prices that reflect desired gross
margins.  In addition, the decision by a single customer to abandon
use or development of a product, or budget cutbacks and other events harming the
ability of a single customer to continue to purchase products or continue
development, may significantly harm both our financial results and the
development track of one or more products.




26




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 conducting diligence on, evaluating,
purchasing or 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;


·
            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. To the extent 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 several years, we have increased our research and development
expenditures in an attempt to accelerate the commercialization of certain
products, particularly our nano-structured LTO electrode materials and battery
systems. Our business plan anticipates continued expenditure on development,
manufacturing and other growth initiatives. We may fail to 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 timely or accurate 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, and may be supported by more
prominent partners, 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. In
addition, certain of our early stage competitors may be partnered with,
associated with or supported by larger business or financial
partners.  This may increase their ability to raise capital, attract
media attention, develop products and attract customers despite their short
operating history and small size.  Because of their size, resources,
reputation and history (or that of their business and financial partners)
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.




27





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 may enter into
similar agreements with respect the other products.  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 it obtains such
      approval, may not obtain such approval on a timely basis; in this regard,
      we note that Spectrum Pharmaceuticals, Inc., the licensee of RenaZorb, has
      been significantly delayed in testing on RenaZorb;
  and


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




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




We
and Sherwin-Williams may be unable to find a new investor to participate in
AlSher, and consequently terminate the joint venture disposing of its remaining
assets.




We are
currently working with Sherwin-Williams to identify an interested third party to
invest in AlSher and undertake the next phase in the proposed development of our
titanium dioxide pigment manufacturing process, which is the construction of an
approximately 5,000 ton per year demonstration plant.  Neither Sherwin
nor Altair has indicated a willingness to fund this next phase of
development.  Should the parties be unable to find an acceptable third
party investor, the AlSher joint venture will in all likelihood be terminated
and its remaining assets written off or sold.  If this joint venture
is terminated, it is unlikely that we will realize any material revenue from its
titanium dioxide pigment production process.




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




We have
not produced any products using our nanomaterials and titanium dioxide pigment
technology and equipment on a sustained commercial basis. In-house or outsourced
manufacturing is expected to become an increasingly significant part of our
business over the next few years. As a result, we expect to 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
      be required to repair or replace defective products and may become liable
      for 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;




28




·
            As
      our manufacturing operations expand, we expect that a significant portion
      of our manufacturing will be done overseas, either by third-party
      contractors or in a plant owned by the company.  Any
      manufacturing done overseas presents risks associated with quality
      control, currency exchange rates, foreign laws and customs, timing and
      loss risks associated with overseas transportation and potential adverse
      changes in the political, legal and social environment in the host county;
      and


·
            We
      may have made, 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 harm our
business, operations and financial condition.




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




As of
March 31, 2009, we had approximately $21.9 million in cash and cash
equivalents.  As we take additional steps to enhance our
commercialization and marketing efforts, or respond to acquisition and joint
venture opportunities or potential adverse events, our use of working capital
may increase. In any such event, absent a comparatively significant increase in
revenue, we will need to raise additional capital in order to sustain our
ongoing operations, continue unfinished testing and additional development work
and, if certain of our products are commercialized, construct and operate
facilities for the production of those products.




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




·
            market
      factors affecting the availability and cost of capital generally,
      including recent increases or decreases in major stock market indexes, the
      stability of the banking and investment banking systems and general
      economic stability or instability;


·
            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 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.  If we are unable to obtain
sufficient capital in the long run, we may be forced to curtail or discontinue
operations.




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 or Dubai and may be able to avoid
civil liability.




We are a
Canadian corporation, and three of our directors and our Canadian legal counsel
are residents of Canada. A fourth director is a resident of Dubai.  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 or Dubai 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.




29




We
are dependent on key personnel.




Our
continued success will depend, to a significant extent, on the services of our
executive management team and certain key scientists and engineers. We do not
have key man insurance on any of these individuals. Nor do we have agreements
requiring any of our key personnel to remain with our company.  The
loss or unavailability of any or all of these individuals could harm our ability
to execute our business plan, maintain important business relationships and
complete certain product development initiatives, which would harm our
business.




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




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




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




The
market price of our common shares is 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 our 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.




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 conditions, investor distrust or a financial
      crisis.




We
may be delisted from the NASDAQ Capital Market if the price of our common shares
does not remain above $1.00 per share.




Under
NASDAQ rules, a stock listed on NASDAQ Capital Market must maintain a minimum
bid price of at least $1.00 per share.  During late 2008 and early
2009, the minimum bid price for our common shares has fallen below $1.00 on
several occasions.  As a matter of practice, NASDAQ generally gives a
company a notice of delisting if its common shares trades below $1.00 for 30
consecutive trading days. After receiving the notice, the company will generally
be delisted if the trading price for its common stock has not exceeded $1.00 for
10 consecutive days within 90 days of the date of the notice.  NASDAQ
has temporarily suspended its minimum bid price requirements until July 2009 in
light of recent declines in the value of equity securities
overall.  NASDAQ is not, however, required to extend this rule
suspension or give a company any grace period and may delist a company's stock
immediately after violation of an applicable rule.  Accordingly, if
the price of our common shares trades below $1.00 for a sustained period of
time, or if NASDAQ decides to delist our common shares based upon a one-time
violation of the bid-price rule or any other rule, we may be delisted from the
NASDAQ Capital Market.




30




Following
any such delisting, our common shares would likely be eligible for quotation on
the OTC Bulletin Board or other quotation service. Nonetheless, even if our
common shares are quoted on an alternative quotation service, the fact of being
delisted from the NASDAQ Capital Market will likely harm the price and trading
volume for our common shares. Once delisted, our common shares would not be
eligible for relisting until, among other things, our common shares traded at or
above $4.00 per share.




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.




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




Item
5.Other
Information




In
February 2009, the Company’s Compensation, Nominating and Governance Committee
adopted the 2009 Annual Incentive Bonus Plan (the “Bonus
Plan”).   Pursuant to the Bonus Plan, each of the persons
identified in the table that follows (the “named executive officers”) is
eligible for target annual incentive bonuses ranging from 60% to 80% of his base
salary, depending on his position.  Of these amounts, 100% is tied to
the achievement of corporate goals as follows: a total revenue goal (25%
weighting), a cash balance target at December 31, 2009 (40% weighting), an order
backlog (30% weighting) and a safety OSHA incidence rate (5% weighting), all in
line with the Company’s board-approved budget.  The incentive bonus is
triggered when 100% of the corporate goals are achieved and increases linearly
from 100% to 150% for 100% to 125% performance.  Bonuses are paid 60%
in cash and 40% in stock for each named executive officer.  Set forth
in the table that follows are the minimum/target and the maximum incentive bonus
opportunity for each of the named executive officers, phrased as a percentage of
base salary:





Name
            Minimum/Target
      Incentive
              Bonus
      Opportunity (payout
              as
      a % of base salary)
            Maximum
      Incentive Bonus
              Opportunity
      (payout as a %
              of
      base salary)Terry
      M. Copeland, President, Chief Executive Officer
            80
            120John
      C. Fallini, Chief Financial Officer
            60
            90Bruce
      J. Sabacky, Vice President & Chief Technology Officer
            60
            90Stephen
      Balogh, Vice President Human Resources
            60
            90C.
      Robert Pedraza, Vice President Corporate Strategy
            60
            90




31




The
Compensation, Nominating and Governance Committee reserves the discretion to
award, or to deny, annual incentive bonuses whether or not performance targets
are achieved, as it deems appropriate.  Decisions with respect to
incentive bonuses for 2009 will be made by the Compensation, Nominating and
Governance Committee based upon year-end information and pursuant to the formula
included in the 2009 incentive plan.





Item
6.Exhibits





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




32




SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.







Altair
      Nanotechnologies Inc.May
      8, 2009
            
            By:  /s/  Terry
      M. CopelandDate
            
            Terry
      M. Copeland,President
      and Chief Executive OfficerMay
      8, 2009
            
            By:  /s/  John
      FalliniDate
            
            John
      Fallini,Chief
      Financial Officer and Secretary




33




EXHIBIT
      INDEXExhibit
      No.
            
            Exhibit
            
            Incorporated
      by Reference/ FiledHerewith3.1
            
            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
            
            2009
      Annual Incentive Bonus Plan
            
            Filed
      herewith*31.1
            
            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





*Portions of this
Exhibit have been omitted pursuant to Rule 24b-2, are filed separately with
the SEC and are subject to a confidential treatment request.






34