**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 OF1934
                    FOR THE QUARTERLY PERIOD ENDED**JUNE
                    30, 2005**









[_]
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF1934
                FOR THE TRANSITION PERIOD FROM _________________ TO
                _________________








**A****LTAIR****N****ANOTECHNOLOGIES****I****NC.**


(Exact
      name of registrant as specified in its charter)





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






**204
      Edison Way**


**Reno,
      Nevada 89502**


(Address
      of principal executive offices, including zip code)





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







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




**Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Act). YES [  ]** **** **NO [** **X]**







**As
      of August 8, 2005 the registrant had 58,919,289 Common Shares
      outstanding.**












**PART
                I - FINANCIAL INFORMATION****Item
                1. Financial Statements****ALTAIR
                NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONSOLIDATED
                BALANCE SHEETS****(Expressed
                in United States Dollars)****(Unaudited)****June
                30,**
            
            **December
                31,****2005**
            
            **2004****ASSETS****Current
                Assets**Cash
                and cash equivalents
            
            $
            29,686,129
            
            $
            7,357,843Accounts
                receivable
            
            
            380,377
            
            
            499,599Prepaid
                expenses and other current assets
            
            
            94,538
            
            
            182,595Total
                current assets
            
            
            30,161,044
            
            
            8,040,037**Investment
                in Available for Sale Securities**
            
            
            420,000
            
            
            -**Property,
                Plant and Equipment, net**
            
            
            6,579,867
            
            
            6,513,907**Patents,
                net**
            
            
            932,470
            
            
            974,877**Other
                Assets**
            
            
            23,200
            
            
            18,200**Total
                Assets**
            
            $
            38,116,581
            
            $
            15,547,021**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                Liabilities**Trade
                accounts payable
            
            $
            757,088
            
            $
            81,030Accrued
                liabilities
            
            
            615,893
            
            
            295,743Note
                payable, current portion
            
            
            600,000
            
            
            -Total
                current liabilities
            
            
            1,972,981
            
            
            376,773**Note
                Payable, Long-Term Portion**
            
            
            2,382,603
            
            
            2,880,311**Commitments
                and Contingencies****Stockholders'
                Equity**Common
                stock, no par value, unlimited shares authorized;58,898,789 and 49,775,694 shares issued andoutstanding at June 30, 2005 and December 31, 2004
            
            
            91,483,656
            
            
            65,505,630Accumulated
                deficit
            
            
            (57,380,730
            )
            
            (53,215,693
            )Deferred
                compensation expense
            
            
            (166,929
            )
            
            -Accumulated
                other comprehensive loss
            
            
            (175,000
            )
            
            -**Total
                Stockholders' Equity**
            
            
            33,760,997
            
            
            12,289,937**Total
                Liabilities and Stockholders' Equity**
            
            $
            38,116,581
            
            $
            15,547,021See
                notes to the consolidated financial
                statements.






2


**ALTAIR
                NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF OPERATIONS****(Expressed
                in United States Dollars)****(Unaudited)****Three
                Months Ended**
            
            **Six
                Months Ended****June
                30,**
            
            **June
                30,****2005**
            
            **2004**
            
            **2005**
            
            **2004****Revenues**License
                fees
            
            $
            -
            
            $
            -
            
            $
            695,000
            
            $
            -Product
                sales
            
            
            42,485
            
            
            1,221
            
            
            65,593
            
            
            2,843Commercial
                collaborations
            
            
            160,775
            
            
            117,244
            
            
            257,041
            
            
            234,915Contracts
                and grants
            
            
            299,621
            
            
            35,768
            
            
            512,827
            
            
            56,224Total
                revenues
            
            
            502,881
            
            
            154,233
            
            
            1,530,461
            
            
            293,982**Operating
                Expenses**Cost
                of product sales
            
            
            12,461
            
            
            189
            
            
            16,007
            
            
            536Research
                and development
            
            
            744,142
            
            
            595,185
            
            
            1,525,677
            
            
            987,855Sales
                and marketing
            
            
            190,670
            
            
            67,579
            
            
            921,108
            
            
            199,716General
                and administrative expenses
            
            
            1,355,698
            
            
            1,400,002
            
            
            2,921,133
            
            
            2,476,415Depreciation
                and amortization
            
            
            251,455
            
            
            220,314
            
            
            496,085
            
            
            441,510Total
                operating expenses
            
            
            2,554,426
            
            
            2,283,269
            
            
            5,880,010
            
            
            4,106,032**Loss
                from Operations**
            
            
            2,051,545
            
            
            2,129,036
            
            
            4,349,549
            
            
            3,812,050**Other
                (Income) Expense**Interest
                expense
            
            
            51,592
            
            
            48,114
            
            
            102,292
            
            
            95,396Interest
                income
            
            
            (184,383
            )
            
            (23,436
            )
            
            (287,659
            )
            
            (43,374
            )Loss
                on foreign exchange
            
            
            324
            
            
            318
            
            
            855
            
            
            717Total
                other (income) expense, net
            
            
            (132,467
            )
            
            24,996
            
            
            (184,512
            )
            
            52,739**Net
                Loss**
            
            $
            1,919,078
            
            $
            2,154,032
            
            $
            4,165,037
            
            $
            3,864,789**Loss
                per common share - Basic and diluted**
            
            $
            0.03
            
            $
            0.04
            
            $
            0.07
            
            $
            0.08**Weighted
                average shares - Basic and diluted**
            
            
            58,814,970
            
            
            48,740,271
            
            
            56,524,538
            
            
            48,036,745See
                notes to the consolidated financial statements.





3


**ALTAIR
                NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF STOCKHOLDERS' EQUITY****(Expressed
                in United States Dollars)****(Unaudited)****Deferred**
            
            **Accumulated****Compen-**
            
            **Other****Common
                Stock**
            
            **Accumulated**
            
            **sation**
            
            **Comprehensive****Shares**
            
            **Amount**
            
            **Deficit**
            
            **Expense**
            
            **Loss**
            
            **Total**BALANCE,
                JANUARY 1, 2005
            
            
            49,775,694
            
            $
            65,505,630
            
            $
            (53,215,693
            )
            $
            -
            
            $
            -
            
            $
            12,289,937Comprehensive
                loss:Net
                loss
            
            
            -
            
            
            -
            
            
            (4,165,037
            )
            
            -
            
            
            -
            
            
            (4,165,037
            )Other
                comprehensive loss,net
                of taxes of $0
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (175,000
            )
            
            (175,000
            )Comprehensive
                loss:
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,340,037
            )Variable
                accounting on stock options
            
            
            -
            
            
            477,364
            
            
            -
            
            
            -
            
            
            -
            
            
            477,364Exercise
                of stock options
            
            
            1,145,500
            
            
            1,740,190
            
            
            -
            
            
            -
            
            
            -
            
            
            1,740,190Exercise
                of warrants
            
            
            2,879,281
            
            
            4,259,672
            
            
            -
            
            
            -
            
            
            -
            
            
            4,259,672Issuance
                of restricted stock
            
            
            60,000
            
            
            171,000
            
            
            -
            
            
            (171,000
            )
            
            -
            
            
            -Amortization
                of deferredcompensation
                expense
            
            
            -
            
            
            -
            
            
            -
            
            
            4,071
            
            
            -
            
            
            4,071Common
                stock issued, net ofissuance
                costs
            
            
            5,038,314
            
            
            19,329,800
            
            
            -
            
            
            -
            
            
            -
            
            
            19,329,800BALANCE,
                JUNE 30, 2005
            
            
            58,898,789
            
            $
            91,483,656
            
            $
            (57,380,730
            )
            $
            (166,929
            )
            $
            (175,000
            )
            $
            33,760,997See
                notes to the consolidated financial statements.






4


**ALTAIR
                NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****(Expressed
                in United States Dollars)****(Unaudited)****Three
                Months Ended**
            
            **Six
                Months Ended****June
                30,**
            
            **June
                30,****2005**
            
            **2004**
            
            **2005**
            
            **2004****Cash
                flows from operating activities:**Net
                loss
            
            $
            (1,919,078
            )
            $
            (2,154,032
            )
            $
            (4,165,037
            )
            $
            (3,864,789
            )Adjustments
                to reconcile net loss to net cashused
                in operating activities:Depreciation
                and amortization
            
            
            251,455
            
            
            220,314
            
            
            496,085
            
            
            441,510Stock
                options issued to non-employees
            
            
            -
            
            
            135,426
            
            
            -
            
            
            253,700Stock
                options issued to employees
            
            
            -
            
            
            39,001
            
            
            -
            
            
            39,001Variable
                accounting on stock options
            
            
            (170,975
            )
            
            (178,662
            )
            
            477,364
            
            
            (78,078
            )Securities
                received in payment of license fees
            
            
            -
            
            
            -
            
            
            (595,000
            )
            
            -Amortization
                of discount on note payable
            
            
            51,592
            
            
            48,114
            
            
            102,292
            
            
            95,396Amortization
                of deferred compensation expense
            
            
            4,071
            
            
            -
            
            
            4,071
            
            
            -Loss
                on disposal of fixed assets
            
            
            -
            
            
            33,393
            
            
            -
            
            
            33,393Changes
                in assets and liabilities:Accounts
                receivable, net
            
            
            (87,276
            )
            
            32,826
            
            
            119,222
            
            
            (45,406
            )Prepaid
                expenses and other current assets
            
            
            (9,217
            )
            
            69,314
            
            
            88,057
            
            
            38,422Other
                assets
            
            
            (5,000
            )
            
            -
            
            
            (5,000
            )
            
            -Trade
                accounts payable
            
            
            482,960
            
            
            54,090
            
            
            676,058
            
            
            191,514Accrued
                liabilities
            
            
            (413,361
            )
            
            303,473
            
            
            320,150
            
            
            350,930**Net
                cash used in operating activities**
            
            
            (1,814,829
            )
            
            (1,396,743
            )
            
            (2,481,738
            )
            
            (2,544,407
            )**Cash
                flows from investing activities:**Purchase
                of property and equipment
            
            
            (254,928
            )
            
            (142,935
            )
            
            (519,638
            )
            
            (178,857
            )**Cash
                flows from financing activities:**Issuance
                of common shares for cash, net ofissuance
                costs
            
            
            9,400
            
            
            -
            
            
            19,329,800
            
            
            -Proceeds
                from exercise of stock options
            
            
            114,200
            
            
            32,595
            
            
            1,740,190
            
            
            737,709Proceeds
                from exercise of warrants
            
            
            -
            
            
            197,335
            
            
            4,259,672
            
            
            8,296,356**Net
                cash provided by financing activities**
            
            
            123,600
            
            
            229,930
            
            
            25,329,662
            
            
            9,034,065**Net
                increase (decrease) in cash and cash equivalents**
            
            
            (1,946,157
            )
            
            (1,309,748
            )
            
            22,328,286
            
            
            6,310,801**Cash
                and cash equivalents, beginning of period**
            
            
            31,632,286
            
            
            11,490,218
            
            
            7,357,843
            
            
            3,869,669**Cash
                and cash equivalents, end of period**
            
            $
            29,686,129
            
            $
            10,180,470
            
            $
            29,686,129
            
            $
            10,180,470**Supplemental
                disclosures:**Cash
                paid for interest
            
            
            None
            
            
            None
            
            
            None
            
            
            NoneCash
                paid for income taxes
            
            
            None
            
            
            None
            
            
            None
            
            
            None


See
      notes
      to the consolidated financial statements.


5







**ALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**





**Note
      1. Basis of Preparation of Financial Statements**





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




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





The
      results of operations for the three- and six-month periods ended June 30, 2005
      are not necessarily indicative of the results to be expected for the full year.





**Note
      2. Summary of Significant Accounting Policies**





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





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





**Accumulated
      Other Comprehensive Income (Loss) -** Accumulated
      other comprehensive income (loss) consists entirely of unrealized loss on the
      investment in available for sale securities. The components of comprehensive
      loss for the three- and six-month periods ended June 30, 2005 and 2004 are
      as
      follows:


**Three
                  Months Ended**
              
              **Six
                  Months Ended****June
                  30,**
              
              **June
                  30,****2005**
              
              **2004**
              
              **2005**
              
              **2004**Net
                  loss
              
              $
              1,919,078
              
              $
              2,154,032
              
              $
              4,165,037
              
              $
              3,864,789Unrealized
                  loss on investment in available forsale
                  securities, net of taxes of $0
              
              
              177,000
              
              
              -
              
              
              175,000
              
              
              -Comprehensive
                  loss
              
              $
              2,096,078
              
              $
              2,154,032
              
              $
              4,340,037
              
              $
              3,864,789





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





6


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





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





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





**Six
                Months Ended****June
                30,****2005**
            
            **2004**Dividend
                yield
            
            None
            
            NoneExpected
                volatility
            
            
            106
            %
            
            61
            %Risk-free
                interest rate
            
            
            3.84
            %
            
            3.29
            %Expected
                life (years)
            
            
            3.06
            
            
            4.20








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





**Three
                Months Ended**
            
            **Six
                Months Ended****June
                30,**
            
            **June
                30,****2005**
            
            **2004**
            
            **2005**
            
            **2004**Net
                loss (basic and diluted) as reported
            
            $
            1,919,078
            
            $
            2,154,032
            
            $
            4,165,037
            
            $
            3,864,789Add
                (Deduct): change in stock-based employee compensationincluded
                in reported net loss,net
                of $0 related tax effects
            
            
            170,975
            
            
            139,661
            
            
            (477,364
            )
            
            39,077Add:
                total stock-based employee compensationexpense
                determined under fair value basedmethod
                for all awards, net of $0 related tax effects
            
            
            196,029
            
            
            649,218
            
            
            614,454
            
            
            964,409Pro
                forma net loss applicable to shareholders
            
            $
            2,286,082
            
            $
            2,942,911
            
            $
            4,302,127
            
            $
            4,868,275Loss
                per common share (basic and diluted):As
                reported
            
            $
            0.03
            
            $
            0.04
            
            $
            0.07
            
            $
            0.08Pro
                forma
            
            $
            0.04
            
            $
            0.06
            
            $
            0.08
            
            $
            0.10





7


**Revenue
      Recognition** - We
      recognize revenue when persuasive evidence of an arrangement exists, delivery
      has occurred or service has been performed, the fee is fixed and determinable,
      and collectibility is probable.  During the six months ended June 30,
      2005,
      our revenues were derived from license fees, product sales, commercial
      collaborations and contracts and grants.  License fees are recognized
      when
      the agreement is signed and there are no future obligations. Revenue
      for product sales is recognized at the time the purchaser has accepted delivery
      of the product. Based on the specific terms and conditions of each
      contract/grant, revenues are recognized on a time and materials basis, a
      percentage of completion basis and/or a completed contract basis. Revenue under
      contracts based on time and materials is recognized at contractually billable
      rates as labor hours and expenses are incurred. Revenue under contracts based
      on
      a fixed fee arrangement is recognized based on various performance measures,
      such as stipulated milestones.  As these milestones are achieved, revenue
      is recognized.  From time to time, facts develop that may require us
      to
      revise our estimated total costs or revenues expected.  The cumulative
      effect of revised estimates is recorded in the period in which the facts
      requiring revisions become known.  The full amount of anticipated losses
      on
      any type of contract is recognized in the period in which it becomes known.




Included
      in sales and marketing expenses, for the six months ended June 30, 2005 is
      $500,000 that was paid to a consultant in connection with the RenaZorbTM licensing
      agreement.





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





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





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





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





**Deferred
      Compensation Expense** - The
      issuance of restricted stock under our stock incentive plan is recorded as
      deferred compensation expense in the shareholders’ equity section of the balance
      sheet and is amortized to expense over the period in which the shares are
      subject to restriction.





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





8




**Note
      3. Notes Payable**





June
                30, 2005
            
            December
                31, 2004Note
                payable to BHP MineralsInternational,
                Inc.
            
            $
            2,982,603
            
            $
            2,880,311Less
                current portion
            
            
            600,000
            
            
            -Long-term
                portion of notes payable
            
            $
            2,382,603
            
            $
            2,880,311





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







**Note
      4. Intangible Assets**





Our
      intangible assets consist of patents and related expenditures associated with
      the nanomaterials and titanium dioxide pigment technology. In accordance with
      SFAS No. 142, we are amortizing these assets over their useful lives. The
      amortized intangible asset balance as of June 30, 2005 was:





Gross
            
            
            
            NetCarrying
            
            Accumulated
            
            CarryingAmount
            
            Amortization
            
            AmountPatents
                  and relatedexpenditures
            
            $
            1,517,736
            
            $
            (585,266
            )
            $
            932,470





The
      weighted average amortization period for patents and related expenditures is
      approximately 16.5 years. Amortization expense was $42,407 for the six months
      ended June 30, 2005, which represented the amortization relating to the
      identified amortizable intangible assets. For each of the next five years,
      amortization expense relating to intangibles is expected to be $84,816 per
      year.
      Management believes the net carrying amount of intangible assets will be
      recovered by future cash flows generated by commercialization of the titanium
      processing technology.





**Note
      5. Related Party Transactions**





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





**Note
      6. Business Segment Information**





In
      accordance with SFAS No. 131, *Disclosure
      about Segments of an Enterprise and Related Information* ,
      management views the Company as operating in four business segments: Performance
      Materials, Life Sciences, Tennessee Mineral Property, and the Altair Jig.
      Reportable segment data reconciled to the consolidated financial statements
      as
      of and for the three- and six-month periods ended June 30, 2005 and 2004 is
      as
      follows:





9




**(Income)**
            
            **Depreciation****Loss
                From**
            
            **and****Net
                Sales**
            
            **Operations**
            
            **Amortization**
            
            **Assets****Three
              Months Ended June 30, 2005**Performance
                Materials
            
            $
            476,999
            
            $
            259,186
            
            $
            228,133
            
            $
            5,493,323Life
                Sciences
            
            
            25,882
            
            
            89,008
            
            
            303
            
            
            457,294Tennessee
                Mineral Property
            
            
            -
            
            
            36,318
            
            
            -
            
            
            18,200Altair
                Jig
            
            
            -
            
            
            732
            
            
            -
            
            
            -Corporate
                and other
            
            
            -
            
            
            1,666,301
            
            
            23,019
            
            
            32,147,764Consolidated
                Total
            
            $
            502,881
            
            $
            2,051,545
            
            $
            251,455
            
            $
            38,116,581**Three
              Months Ended June 30, 2004**Performance
                Materials
            
            $
            154,234
            
            $
            1,057,227
            
            $
            205,926
            
            $
            5,126,306Life
                Sciences
            
            
            -
            
            
            170,947
            
            
            -
            
            
            -Tennessee
                Mineral Property
            
            
            -
            
            
            82,079
            
            
            -
            
            
            -Altair
                Jig
            
            
            -
            
            
            18
            
            
            -
            
            
            -Corporate
                and other
            
            
            -
            
            
            818,765
            
            
            14,388
            
            
            12,555,188Consolidated
                Total
            
            $
            154,234
            
            $
            2,129,037
            
            $
            220,314
            
            $
            17,681,494**Six
                Months Ended June 30, 2005**Performance
                Materials
            
            $
            809,579
            
            $
            1,349,915
            
            $
            449,030
            
            $
            5,493,323Life
                Sciences
            
            
            720,882
            
            
            (440,583
            )
            
            2,993
            
            
            457,294Tennessee
                Mineral Property
            
            
            -
            
            
            39,533
            
            
            -
            
            
            18,200Altair
                Jig
            
            
            -
            
            
            3,182
            
            
            -
            
            
            -Corporate
                and other
            
            
            -
            
            
            3,397,503
            
            
            44,062
            
            
            32,147,764Consolidated
                Total
            
            $
            1,530,461
            
            $
            4,349,549
            
            $
            496,085
            
            $
            38,116,581**Six
                Months Ended June 30, 2004**Performance
                Materials
            
            $
            293,982
            
            $
            1,963,644
            
            $
            409,535
            
            $
            5,126,306Life
                Sciences
            
            
            -
            
            
            193,854
            
            
            -
            
            
            -Tennessee
                Mineral Property
            
            
            -
            
            
            144,479
            
            
            -
            
            
            -Altair
                Jig
            
            
            -
            
            
            2,154
            
            
            -
            
            
            -Corporate
                and other
            
            
            -
            
            
            1,507,919
            
            
            31,975
            
            
            12,555,188Consolidated
                Total
            
            $
            293,982
            
            $
            3,812,050
            
            $
            441,510
            
            $
            17,681,494







In
      the
      table above, corporate and other expense in the (Income) Loss From Operations
      column includes such expenses as investor relations, business consulting,
      general legal expense, accounting and audit, general insurance expense,
      non-employee and employee variable accounting stock option compensation expense,
      shareholder information expense and general office expense.





10


For
        the three months ended June 30, 2005, we had sales to three major customers,
        each of which accounted for 10% or more of revenues. Total sales to these
        customers for the three months ended June 30, 2005 and the balance of their
        accounts receivable at June 30, 2005 were as follows:
 
 **Sales
                  - 3 Months**
              
              **Accounts****Ended**
              
              **Receivable
                  at****Customer**
              
              **June
                  30, 2005**
              
              **June
                  30, 2005****Performance
                  Materials Division:**Western
                  Michigan University
              
              $
              138,730
              
              $
              98,930Western
                  Oil Sands
              
              
              69,854
              
              
              56,674UNLV
                  Research Foundation
              
              
              160,890
              
              
              104,702
 
 For
        the three months ended June 30, 2004, we had sales to three major customers,
        each of which accounted for 10% or more of revenues. Total sales to these
        customers for the three months ended June 30, 2004 and the balance of their
        accounts receivable at June 30, 2004 were as follows:
 
 **Sales
                  - 3 Months**
              
              **Accounts****Ended**
              
              **Receivable
                  at****Customer**
              
              **June
                  30, 2004**
              
              **June
                  30, 2004****Performance
                  Materials Division:**Western
                  Oil Sands
              
              $
              71,534
              
              $
              16,651Western
                  Michigan University
              
              
              35,768
              
              
              27,511Kumba
                  Resources
              
              
              20,000
              
              
              -


For
      the
      six months ended June 30, 2005, we had sales to four major customers, each
      of
      which accounted for 10% or more of revenues. Total sales to these customers
      for
      the six months ended June 30, 2005 and the balance of their accounts receivable
      at June
      30,
      2005 were as follows:





**Sales
                - 6 Months**
            
            **Accounts****Ended**
            
            **Receivable
                at****Customer**
            
            **June
                30, 2005**
            
            **June
                30, 2005****Performance
                Materials Division:**Western
                Michigan University
            
            $
            248,439
            
            $
            98,930Western
                Oil Sands, Inc.
            
            
            165,235
            
            
            56,674UNLV
                Research Foundation
            
            
            231,054
            
            
            104,702**Life
                Sciences Division:**Spectrum
                Pharmaceuticals, Inc.
            
            
            720,881
            
            
            25,881








For
      the
      six months ended June 30, 2004, we had sales to three major customers, each
      of
      which accounted for 10% or more of revenues. Total sales to these customers
      for
      the six months ended June 30, 2004 and the balance of their
      accounts receivable at June 30, 2004 were as follows:








11




**Sales
                - 6 Months**
            
            **Accounts****Ended**
            
            **Receivable
                at****Customer**
            
            **June
                30, 2004**
            
            **June
                30, 2004****Performance
                Materials Division:**Titanium
                Metals Corp.
            
            $
            75,000
            
            $
            -Western
                Michigan University
            
            
            56,224
            
            
            27,511Western
                Oil Sands, Inc.
            
            
            114,205
            
            
            16,651








Revenues
      for the three-month periods ended June 30, 2005 and 2004 by geographic area
      were
      as follows:


**Revenues
                  -**
              
              **Revenues
                  -****3
                  Months Ended**
              
              **3
                  Months Ended****Geographic
                  information (a):**
              
              **June
                  30, 2005**
              
              **June
                  30, 2004**United
                  States
              
              $
              416,527
              
              $
              62,699Canada
              
              
              82,354
              
              
              71,534Other
                  foreign countries
              
              
              4,000
              
              
              20,000Total
              
              $
              502,881
              
              $
              154,233(a)
                  Revenues are attributed to countries based on location of
                  customer.




Revenues
      for the six-month periods ended June 30, 2005 and 2004 by geographic area were
      as follows:





**Revenues
                -**
            
            **Revenues
                -****6
                Months Ended**
            
            **6
                Months Ended****Geographic
                information (a):**
            
            **June
                30, 2005**
            
            **June
                30, 2004**United
                States
            
            $
            1,363,404
            
            $
            179,777Canada
            
            
            166,416
            
            
            114,205Other
                foreign countries
            
            
            641
            
            
            -Total
            
            $
            1,530,461
            
            $
            293,982(a)
                Revenues are attributed to countries based on location of
                customer.








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





Investment
      in available for sale securities consists of 100,000 restricted shares of
      Spectrum Pharmaceuticals, Inc. (“Spectrum”) common stock received in January
      2005. The shares were received as partial payment of licensing fees when
      Spectrum entered into a license agreement for RenaZorb TM .
      On
      receipt, the shares were recorded at their market value of $595,000 as measured
      by their closing price on the Nasdaq SmallCap Stock Market. At June 30, 2005,
      their fair value was $420,000, representing an unrealized holding loss of
      $175,000. We do not believe that there is an other than temporary impairment
      at
      June 30, 2005. As of August 12, 2005, $90,000 of the unrealized holding loss
      has
      been recovered.





**Note
      8. Other Transactions**





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





In
      May
      2005, shareholders approved the 2005 Stock Incentive Plan (the “Plan”) under
      which 3,000,000 common shares are available for issuance to employees, officers
      and directors of Altair as well as selected service providers. In June 2005,
      the
      Board of Directors granted 60,000 shares of restricted stock under the Plan.
      A
      total of 30,000 shares vest on the later of March 21, 2006 or the date of the
      2006 annual shareholders meeting of the Company, and the remaining 30,000 shares
      vest on the later of March 21, 2007 or the date of the 2007 annual shareholders
      meeting of the Company. The shares were recorded as deferred compensation
      expense in the shareholders’ equity section of the balance sheet at their fair
      value on the date of issue and are being amortized to expense over the vesting
      period.





12


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





The
      following discussion summarizes the material changes in our financial condition
      between December 31, 2004 and June 30, 2005 and the material changes in our
      results of operations and financial condition between the three- and six-month
      periods ended June 30, 2004 and June 30, 2005. This discussion should be read
      in
      conjunction with Management’s Discussion and Analysis of Financial Condition and
      Results of Operations included in the Company’s Annual Report on Form 10-K/A for
      the year ended December 31, 2004.





**Overview**





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





The
      Performance Materials Division .


·
            Advanced
                Materials


o
            The
                marketing of titanium dioxide pigment production
                technology.


o
            The
                marketing and production of nano-structured ceramic powders for thermal
                spray applications.


o
            The
                development of nano-structured ceramic powders for nano-sensor
                applications.


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


·
            Air
                and Water Treatment


o
            The
                development of photocatalytic materials for air
                cleansing.


o
            The
                marketing, licensing and production of NanocheckTMproducts for phosphate binding to prevent or reduce algae
                growth.


·
            Alternative
                Energy


o
            The
                development of materials for high performance batteries, photovoltaics
                and
                transparent electrodes for hydrogen generation and fuel
                cells.





The
      Life Sciences Division .


·
            Pharmaceutical
                Products


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


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


·
            Chemical
                Delivery Products


o
            The
                development of TiNano SpheresTM,
                which are rigid, hollow, porous, high surface area ceramic micro
                structures that are derived from Altair’s proprietary process technology
                for the delivery of chemicals, drugs and biocides.


·
            Biocompatible
                Materials


o
            The
                development of nanomaterials for use in various products for dental
                fillings and dental products.





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





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




We
      have discontinued work on both the Tennessee
      mineral property and Altair jig segments and are in the process of disposing
      of
      the mineral leases and other property in Tennessee.








13





**General
      Outlook**





During
      the six-month period ended June 30, 2005, we licensed RenaZorbTM to Spectrum
      Pharmaceuticals, Inc. (“Spectrum”) and recognized $695,000 of licensing revenue
      in connection with the licensing agreement. Prior to this transaction,
      s ubstantially
      all of our revenues came from commercial collaborations, grants and other
      research or development work which we have undertaken primarily in order to
      benefit from the resulting technology. Our gross profit margins on such research
      and development work is very low, and in order that we may be profitable in
      the
      long run, our business plan focuses on the development of products and
      technologies that we expect will eventually bring a substantial amount of
      higher-margin revenues from licensing, product sales and other sources.





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





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





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





·
            The
                initial phase of work for the Western Oil Sands license agreement
                is
                expected to be complete by December 31, 2005. In order for this project
                to
                move toward commercialization, we must successfully complete the
                initial
                phase, it must be determined that the oil sands tailings have sufficient
                economic value to allow the process to be viable, and Western Oil
                Sands
                must decide to proceed with phase two.





·
            We
                have completed phase one work under a National Science Foundation
                grant to
                produce materials enabling a next generation of rechargeable batteries
                and
                have been awarded a phase two grant of $476,850. The ultimate
                commercialization of our battery materials will be dependant upon
                our
                ability to secure a technology license or similar agreement with
                one or
                more battery manufacturers. We have entered into a development agreement
                or material evaluation agreement with a number of battery manufacturers
                and are currently in discussions with other battery manufacturers
                but
                cannot project when, or if, we will enter into a commercialization
                agreement with respect to our battery materials technology and what
                the
                terms of such agreement may be.





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





**Recent
      Business Developments**





**Performance
      Materials Division**





*Altair
      Hydrochloride Pigment Process*





Altair
      has entered into an additional agreement with Western Oil Sands, Inc.
      (“Western”) to provide pilot plant and office space within our facilities for
      Western’s five employees and consultants to facilitate on-site collaboration
      between the two companies in furthering the engineering study of manufacturing
      titanium dioxide pigment from Western’s tar sand tailings using the Altair
      Hydrochloride Pigment Process. Revenues from leasing the office and pilot plant
      space are expected to be minor.




14


*Thermal
      Spray Grade Powders*





During
      the quarter ended June 30, 2005, we made additional shipments of titanium
      dioxide coating materials for thermal spray applications, and we began marketing
      of our yttria stabilized zirconia coating powders for the industrial engine
      market where potential applications could include coatings for turbine blades
      used in power production turbines.





*Catalyst
      Support and Electrode Structures for Titanium Metals*





In
      January 2004, we entered into a contract with Titanium Metals Corporation
      (“TIMET”) to provide custom oxide feedstocks for a titanium metal research
      program funded by the Department of Defense, Defense Advanced Research Projects
      Agency (“DARPA”). We became a subcontractor for the DARPA program with
      responsibility to design and develop a titanium oxide electrode structure and
      supply TIMET optimized titanium oxide feedstock to produce 50 pounds of titanium
      metal per day in batch production demonstrations. During 2005, we have provided
      TIMET with over 100 pounds of titania electrode materials in accordance with
      the
      agreement. This agreement has been extended by TIMET, and we will continue
      to
      ship titanium dioxide feedstock materials to TIMET as requested for this
      research and development project.





*Air
      Cleansing*





In
      February 2005, we entered into a partnership agreement with Genesis Air to
      develop specialized, surface activated, nano-sized titanium dioxide compounds
      for use in an innovative HVAC air cleaning system. Under the terms of the
      partnership agreement, Altair is providing Genesis with product design services,
      proprietary nano-sized titanium dioxide materials and ongoing chemical
      engineering support services. Genesis filtration systems incorporating Altair
      nanomaterials are being tested in 12 sites worldwide.





*Lithium
      Ion Battery Electrode Materials*





In
      December 2004, we completed work under Phase I of a National Science Foundation
      (“NSF”) grant for development of electrode nanomaterials for next generation
      lithium ion power sources. The results of the research indicated that lithium
      ion batteries prepared with nano-structured lithium titanate spinel anode
      materials exhibit rapid charge and discharge rates, improved cycle life
      performance and a decrease in specific energy density when compared to
      conventional lithium ion, nickel cadmium and nickel metal hydride battery
      materials.





On
      June
      30, 2005, we announced that we received a grant of $476,850 from the NSF for
      Phase II. Phase I work was designed to optimize the anode electrode materials
      and Phase II is designed to develop cathode electrode materials, thus resulting
      in matched anode-cathode electrode materials for optimum electrochemical
      performance.





We
      are
      focusing our marketing and development efforts on markets presently dominated
      by
      nickel cadmium or nickel metal hydride batteries, such as power tools and
      automobiles, in which rapid charging, long cycle life and the additional power
      from the rapid discharge should prove advantageous. Secondarily, we intend
      to
      pursue markets, such as cell phone batteries, presently dominated by lithium
      ion
      batteries, which are characterized by slow charge and discharge rates and high
      specific energy density. A battery with high specific energy density requires
      less volume per Watt hour and, if the discharge rate is limited, discharges
      slower than a battery with low specific energy density. We believe that, as
      our
      battery materials improve and the market realizes the benefits of our rapid
      charge/discharge “contrarian strategy,” our battery materials will become
      competitive in markets presently dominated by lithium ion batteries; however,
      because of the importance presently placed on specific energy density in such
      markets, we expect that our best short-term opportunities do not lie in this
      area.





Further,
      another aspect of our development focus is on product life, initially cycle
      life, then charge retention and calendar life. In cycle life, each
      charge/discharge cycle tends to cause a loss of capacity. Controlling this
      rate
      of capacity loss is essential to producing batteries that have 3,000 to 5,000
      cycle life, important for electric vehicles. Charge retention life describes
      how
      fast a charged lithium ion battery loses it charge in storage. Calendar life
      describes how quickly lithium ion batteries lose their charge over time, whether
      in use or in storage.







15


** In
      April
      2005, we signed a partnering agreement with Advanced Battery Technologies,
      Inc.
      (“ABAT”), a U.S. and Chinese-owned company, for the development of lithium
      polymer batteries in China. The agreement covers the incorporation of our
      battery electrode nanomaterials into ABAT's existing polymer battery product
      lines on a testing and development basis. It specifically focuses on development
      of high power, lithium polymer batteries for use in electric vehicles where
      long
      life cycles and fast charge times are desirable. We have provided ABAT with
      sample nanomaterials for their use in design and development of the batteries.
      ABAT’s phase I testing of batteries using our battery electrodes showed
      significantly improved recharging capability. We are currently producing
      additional anode materials at ABAT’s request. We anticipate that ABAT will be
      able to produce batteries for testing in standard battery test protocols and
      in
      real world tests using electric vehicles (i.e. cars and buses) in late 2005.





*Hydrogen
      Generation*





In
      November 2004, we entered into an agreement with the University of Nevada,
      Las
      Vegas Research Foundation to act as a subcontractor under a $3,000,000 grant
      awarded to them by the U.S. Department of Energy for joint research activities
      related to solar hydrogen production at a refilling station under development
      in
      Las Vegas. The agreement, which is effective through December 31, 2005, provides
      for payments to Altair of $400,000 for research and development work utilizing
      nanotechnology processes for the production and commercialization of solar-based
      hydrogen technologies. In connection with this, we are providing thin films
      of
      transparent iron oxide for use in solar generation cells. The project is on
      track for completion by December 31, 2005.





*Manufacturing
      Operations*





We
      have
      created a manufacturing group within Altair to provide production control,
      quality assurance, current good manufacturing practices (cGMP) capabilities
      and
      to address issues related to the possible production of large, multiple-product
      orders for lithium ion anode and cathode electrode materials and for
      NanoCheck TM ,
      RenaZorb TM and
      Renalan products.





**Life
      Sciences Division**





*RenaZorbTM
      Products*





In
      January 2005, we signed a licensing agreement with Spectrum which grants them
      exclusive worldwide rights to develop, market and sell RenaZorbTM. We have
      supplied Spectrum with test quantities of RenaZorbTM in order to conduct in-life
      animal testing. They expect to complete this testing by the end of summer 2005
      in preparation for pre-Investigational New Drug consultations with the
      FDA.





*Renalan
      Products*





We
      are
      also conducting third-party discussions toward the potential licensing of
      Renalan (similar chemistry to RenaZorbTM) for use in companion animal
      applications, primarily dogs and cats with chronic renal failure. Renalan,
      as a
      phosphate binder, has the potential to alleviate hyperphosphatemia, a condition
      associated with chronic renal failure in companion animals.




*TiNanoSpheres* *TM* **





We
      have
      identified initial target applications where TiNanoSpheres TM may be
      used as a chemical delivery device. These include cancer therapy, where
      TiNanoSpheres TM may be
      used as a drug delivery mechanism targeting very localized areas of the human
      body, and cell-based immune response applications such as viral vaccine
      delivery. We are currently negotiating agreements for investigation and possible
      testing of these and other applications.





**Other
      Developments**





With
      respect to the Tennessee mineral property, we are continuing our efforts to
      terminate leases. Our remediation plan, which is expected to cost between
      $100,000 and $200,000, has been approved by the applicable regulatory
      authorities. We expect to perform the remediation work during the third quarter
      of 2005 and will then be responsible for site monitoring for a period of two
      years. In May 2005, we completed the sale of the pilot plant processing
      equipment and reserved the proceeds for payment of remediation costs.








16


**Liquidity
      and Capital Resources**




**Current
      and Expected Liquidity**





Our
      cash
      and short-term investments increased from $7,357,843 at December 31, 2004 to
      $29,686,129 at June 30, 2005 due primarily to the sale of 5,000,000 common
      shares on February 14, 2005, which provided net proceeds of $19.2 million,
      and
      the exercise of stock options and warrants which provided $6.1 million. We
      intend to use these funds for working capital, capital expenditures, research
      and development activities and the possible acquisition of other technologies.





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





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





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


·
            a
                contract with Western Oil Sands, Inc. for the production of titanium
                dioxide pigment and pigment-related products from oil sands. We have
                approximately $30,000 of work remaining to be done on an existing
                contract
                and expect to enter into a second phase contract for additional work
                in
                late 2005 or early 2006.


·
            a
                contract with Western Michigan University to develop nanosensors
                for the
                detection of chemical, biological and radiological agents. We have
                approximately $10,000 of work to be done under existing contracts
                during
                the remainder of 2005.


·
            an
                agreement with the University of Nevada, Las Vegas Research Foundation
                to
                act as a subcontractor under a $3,000,000 grant awarded to them by
                the
                U.S. Department of Energy for joint research activities related to
                solar
                hydrogen production. We have approximately $150,000 of work remaining
                to
                be done in 2005 under the
                agreement.


·
            a contract
                with NSF for Phase II work on the development of advanced battery
                materials which begins October 1, 2005. We expect to generate
                approximately $80,000 of revenues during the remainder of 2005 in
                connection with this contract.





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





At
      August
      8, 2005, we had 58,919,289 common shares issued and outstanding. As of that
      same
      date, there were outstanding warrants to purchase up to 1,867,453 shares of
      common stock and options to purchase up to 2,514,200 shares of common
      stock.





**Capital
      Commitments**




The
        following table discloses aggregate information about our contractual
        obligations and the periods in which payments are due as of June 30,
        2005:
 17


**Contractual
                  Obligations**
                
                **Total**
                
                **Less
                    Than******1
                    Year****
                
                **1-3
                    Years**
                
                **4-5
                    Years**
                
                **After**
                  **5
                    Years**Notes
                    Payable
                
                $
                3,000,000
                *
                $
                600,000
                
                $
                1,200,000
                
                $
                1,200,000
                
                $
                -Interest
                    on notes payable
                
                
                525,000
                
                
                105,000
                
                
                294,000
                
                
                126,000
                
                
                -Mineral
                    Leases**
                
                
                124,509
                
                
                40,362
                
                
                56,548
                
                
                27,599
                
                
                -Contractual
                    Service Agreements
                
                
                326,803
                
                
                289,303
                
                
                37,500
                
                
                -
                
                
                -Unfulfilled
                    Purchase Orders
                
                
                94,985
                
                
                94,985
                
                
                -
                
                
                -
                
                
                -Total
                    Contractual Obligations
                
                $
                4,071,297
                
                $
                1,129,650
                
                $
                1,588,048
                
                $
                1,353,599
                
                $
                -
  *
                  Before discount of $17,397.**
                  Although we expect to terminate substantially all mineral leases
                  by the
                  end of 2005, the obligations are included here because they are
                  not yet
                  terminated.





**Critical
      Accounting Policies and Estimates**





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





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





·
            Long-Lived
                assets. Our long-lived assets consist principally of the nanomaterials
                and
                titanium dioxide pigment assets, the intellectual property (patents
                and
                patent applications) associated with those assets, and a building.
                At June
                30, 2005, the carrying value of these assets was $7,512,339, or 20%
                of
                total assets. We evaluate the carrying value of long-lived assets
                when
                events or circumstances indicate that an impairment may exist. In
                our
                evaluation, we estimate the net undiscounted cash flows expected
                to be
                generated by the assets, and recognize impairment when such cash
                flows
                will be less than the carrying values. Events or circumstances that
                could
                indicate the existence of a possible impairment include obsolescence
                of
                the technology, an absence of market demand for the product, and/or
                the
                partial or complete lapse of technology rights protection.





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





18


·
            Revenue
                Recognition. We recognize revenue when persuasive evidence of an
                arrangement exists, delivery has occurred or the service has been
                performed, the fee is fixed and determinable, and collectibility
                is
                probable.  During the six months ended June 30, 2005, our
                revenues
                were derived from license fees, product sales, commercial collaborations
                and contracts and grants.  License fees are recognized when
                the
                earnings process is complete. Revenue for product sales is recognized
                at
                the time the purchaser has accepted delivery of the product. Based
                on the
                specific terms and conditions of each contract or grant, revenues
                are
                recognized on a time and materials basis, a percentage of completion
                basis
                and/or a completed contract basis. Revenue under contracts based
                on time
                and materials is recognized at contractually billable rates as labor
                hours
                and expenses are incurred. Revenue under contracts based on a fixed
                fee
                arrangement is recognized based on various performance measures,
                such as
                stipulated milestones.  As these milestones are achieved,
                revenue is
                recognized.  From time to time, facts develop that may require
                us to
                revise our estimated total costs or revenues expected.  The
                cumulative effect of revised estimates is recorded in the period
                in which
                the facts requiring revisions become known.  The full amount
                of
                anticipated losses on any type of contract is recognized in the period
                in
                which it becomes known.





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





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








**Results
      of Operations**





*Three
      Months Ended June 30, 2005 Compared to Three Months Ended June 30,
      2004*





The
      net
      loss for the quarter ended June 30, 2005, which was the second quarter of our
      2005 fiscal year, totaled $1,919,078 ($.03 per share) compared to a net loss
      of
      $2,154,032 ($.04 per share) in the second quarter of 2004.





Total
      revenues for the three months ended June 30, 2005 were $502,881. Revenues
      from contracts and grants increased by $263,853, from $35,768 in the quarter
      ended June 30, 2004 to $299,621 in the same quarter of 2005. Revenues were
      generated under two contracts to (1) provide research involving a technology
      used in the detection of chemical, biological and radiological agents, and
      (2)
      provide research utilizing nanotechnology processes for the production and
      commercialization of solar-based hydrogen technologies. At June 30, 2005, our
      backlog of work under existing contracts was approximately $884,000. We
      anticipate that $250,000 to $300,000 of this work may be completed during the
      remainder of 2005.





Revenues
      from commercial collaborations increased from $117,244 in the second quarter
      of
      2004 to $160,775 in the second quarter of 2005 as a result of work on a project
      to provide custom oxide feedstocks for a titanium metal research program funded
      by the Department of Defense, billings for work on the joint development of
      Nanocheck TM and
      billings to Spectrum Pharmaceuticals in connection with Renazorb TM .





Product
      sales increased by $41,264, from $1,221 in the second quarter of 2004 to $42,485
      in the second quarter of 2005, primarily due to increased sales of thermal
      spray
      grade powders and sales of Nanocheck TM .





19


Research
      and development (“R&D”) expenses increased by $148,957, from $595,185 in the
      quarter ended June 30, 2004 to $744,142 in the same quarter of 2005. Labor
      costs
      increased significantly, from $216,000 in the second quarter of 2004 to $364,000
      in the same quarter of 2005 due to new employee additions, salary increases
      and
      benefit cost increases. Costs also increased primarily as a result of
      expenditures on new contract R&D projects, including battery materials and
      materials for use in solar hydrogen production, increased expenditures for
      internal R&D and temporary employees hired for R&D
      projects.





Sales
      and
      marketing expenses increased by $123,091, from $67,579 in the second quarter
      of
      2004 to $190,670 in the second quarter of 2005. The increase is due to increased
      payroll expense resulting from the addition of a senior vice president of sales
      and marketing in January 2005 and increased business development activities.





General
      and administrative expenses decreased by $44,304, from $1,400,002 in second
      quarter of 2004 to $1,355,698 in the second quarter of 2005. Investor relations
      expense decreased by $320,000 as a result of a cutback in our investor relations
      programs; general consulting decreased by $160,000 and stock option compensation
      expense decreased by $31,000. These decreases were partially offset by an
      increase in legal expenses of $125,000, primarily due to increased patent
      attorney fees paid in connection with patent work and increased attorney fees
      in
      connection with regulatory work. Consulting fees associated with Sarbanes-Oxley
      Act compliance increased by $170,000; shareholder information expenses increased
      by $35,000 and payroll expense increased by $123,000 as a result of additional
      staff, salary increases and benefit cost increases.





Interest
      income increased by $160,947, from $23,436 in the second quarter of 2004 to
      $184,383 in the second quarter of 2005 due to the significant increase in cash
      available for investment that was generated through the sale of common shares
      and the exercise of warrants and options in early 2005.





*Six
      Months Ended June 30, 2005 Compared to Six Months Ended June 30,
      2004*





For
      the
      six months ended June 30, 2005, the net loss was $4,165,037 ($.07 per share)
      compared to a net loss of $3,864,789 ($.08 per share) for the same period of
      2004.





Total
      revenues for the six months ended June 30, 2005 were $1,530,461. Included in
      revenues was $695,000 representing the initial license fee paid by Spectrum
      Pharmaceuticals in connection with the license of Renazorb TM .
      Contract and grant revenues increased by $456,603, from $56,224 in the six
      months ended June 30, 2004 to $512,827 in the same period of 2005. The increase
      is due to increased revenues under the Western Michigan University contract
      (nanosensor technology) and new agreements with the University of Nevada, Las
      Vegas Research Foundation (solar hydrogen generation) and the NSF (advanced
      battery materials). Product sales increased by $62,750, from $2,843 in the
      six
      months ended June 30, 2004 to $65,593 in the same period of 2005, primarily
      due
      to increased sales of thermal spray grade powders and sales of
      Nanocheck TM .





R&D
      expenses increased by $537,822, from $987,855 in the six months ended June
      30,
      2004 to $1,525,677 in the same period of 2005. Labor costs increased from
      $444,000 in the six months ended June 30, 2004 to $686,000 in the same period
      of
      2005 due to new employee additions, salary increases and benefit cost increases.
      Costs also increased primarily as a result of expenditures on new contract
      R&D projects, including battery materials and materials for use in solar
      hydrogen production, increased expenditures for internal R&D and temporary
      employees hired for R&D projects.





Sales
      and
      marketing expenses increased by $721,392, from $199,716 in the six months ended
      June 30, 2004 to $921,108 in the same period of 2005. The increase is due to
      payment of a $500,000 fee to a consultant in connection with the
      RenaZorb TM licensing agreement and increased payroll expense resulting from the addition
      of
      a senior vice president of sales and marketing in January 2005 and increased
      business development activities.





G&A
      expenses increased by $444,718, from $2,476,415 in the six months ended June
      30,
      2004 to $2,921,133 in the same period of 2005. Stock option compensation
      expense, a non-cash item, increased by $500,678, from $(23,313) in the six
      months ended June 30, 2004 to $477,365 in the same period of 2005 due to an
      increase in value of stock options repriced in prior years. Legal expense
      increased by $239,947, from $271,911 in the six months ended June 30, 2004
      to
      $511,858 in the same period of 2005 due to increased patent attorney fees paid
      in connection with patent work and increased attorney fees in connection with
      regulatory work. Payroll increased from $838,000 in the six months ended June
      30, 2004 to $1,160,000 in the same period of 2005 due to staff increases, salary
      increases and increased costs for employee benefits. In addition, consulting
      fees associated with Sarbanes-Oxley Act compliance increased by $173,000. These
      increases were partially offset by decreases in certain expenses. Investor
      relations expense decreased by $463,000 as a result of a cutback in our investor
      relations programs and general consulting decreased by $231,000. In addition,
      facilities overhead costs transferred from G&A to R&D increased by
      $63,000.





20


Interest
      income increased by $244,285, from $43,374 in the six months ended June 30,
      2004
      to $287,659 in the same period of 2005 due to the significant increase in cash
      available for investment that was generated through the sale of common shares
      and the exercise of warrants and options in early 2005.




**Forward-Looking
      Statements**





This
      Quarterly Report on Form 10-Q (this “Report”) contains forward-looking
      statements within the meaning of Section 27A of the Securities Act of 1933,
      as
      amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
      Such statements can be identified by the use of the forward-looking words
      "anticipate," "estimate," "project," "likely," "believe," "intend," "expect,"
      or
      similar words. These statements discuss future expectations, contain projections
      regarding future developments, operations, or financial conditions, or state
      other forward-looking information. Statements in this report regarding the
      ability of the Company to raise working capital necessary to fund our
      operations, development of the nanomaterials and titanium dioxide pigment
      processing technology and assets (including for pharmaceutical and battery
      uses), and other future activities are forward-looking statements. You should
      keep in mind that all forward-looking statements are based on management’s
      existing beliefs about present and future events outside of management’s control
      and on assumptions that may prove to be incorrect.





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




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





We
      have
      experienced a loss from operations in every fiscal year since our inception.
      Our
      losses from operations were $6,904,955 in 2004 and $4,349,549 in the six months
      ended June 30, 2005. We
      will
      continue to experience a net operating loss at least until the applications
      of
      our nanomaterials and titanium dioxide pigment technology begin generating
      revenues in excess of our operating expenses. Even if any or all applications
      of
      the nanomaterials and titanium dioxide pigment technology begin generating
      such
      revenues, the revenues may not exceed our costs of production and operating
      expenses. We may not ever realize a profit from operations.




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





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





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


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


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


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


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


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





21


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





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




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





As
      of
      August 8, 2005, there were outstanding warrants to purchase up to 1,867,453
      shares of common stock and options to purchase up to 2,514,200 shares of common
      stock. **** The
      existence of such warrants and options, and any additional warrants and options
      we issue in the future, may hinder future equity offerings, and the exercise
      of
      such warrants and options may further dilute the interests of all shareholders.
      The shares of common stock issuable upon the exercise of many of our outstanding
      warrants are subject to resale registration statements, and all of our options
      are subject to a registration statement on Form S-8. Accordingly, future resale
      of the shares of common stock issuable on the exercise of such warrants and
      options in most cases occurs immediately after exercise and may have an adverse
      effect on the prevailing market price of the shares of common
      stock.




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





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




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





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





·
            further
                testing conducted by Spectrum may indicate that RenaZorbTMis
                less effective than existing products, is unsafe, has significant
                side
                effects or is otherwise not viable;


·
            Spectrum
                may be unable to obtain FDA or other regulatory approval of
                RenaZorbTMfor technical, political or other reasons or, even if it obtains
                such
                approval, may not obtain such approval on a timely
                basis;


·
            products
                containing RenaZorbTMmay not be accepted in the market for various reasons, including
                questions
                about its efficacy, safety and side effects or because of poor marketing
                by Spectrum;


·
            Spectrum
                may terminate the license agreement, experience financial or other
                problems or otherwise fail to effectively test, seek approval for
                and
                market RenaZorbTM;
                and


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





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





22




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




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




·
            batteries
                utilizing the technology may not exhibit expected charge rates, discharge
                rates or durability run time or other feature when used in real world
                applications; batteries incorporating the technology may not meet
                the
                distinct needs of potential customers, applications or industries
                or
                otherwise prove competitive with existing technologies or technologies
                under development on account of technical limitations such as a short
                run
                time between charges or excessive heat generation;
                and


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





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





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





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





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





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


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


·
            potential
                customers may purchase from competitors because of perceived or actual
                quality or compatibility
                differences;


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


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




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





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




23


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





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




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





As
      of
      August 8, 2005, we had $28.3 million in cash, an amount which we believe will
      be
      sufficient to fund our ongoing operations for approximately four to five
      years at
      current expenditure levels .
      However, we may use our existing capital sooner than projected in connection
      with an acquisition or joint venture transaction, litigation or other unplanned
      event. We may also use more capital than projected as we expand our research,
      development and marketing efforts. Unless we experience a significant increase
      in revenue, we will need to raise additional capital in the future in order
      to
      sustain our ongoing operations, continue unfinished testing and additional
      development work and, if certain of our products have been commercialized,
      produce and market such products.





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





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


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


·
            our
                financial results, particularly the amount of revenue we are generating
                from operations;


·
            the
                amount of our capital needs;


·
            the
                market’s perception of nanotechnology and/or chemical
                stocks;


·
            the
                economics of projects being pursued;
                and


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





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




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





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




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





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




24


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





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




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





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




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





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





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


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


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


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




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





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





25


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





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




**Item
      3.**  **Quantitative
      and Qualitative Disclosures about Market Risk**





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





**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 June 30, 2005, our disclosure
      controls and procedures were effective.




(b)  We
      are
      not presently required to conduct quarterly evaluations of our internal control
      over financial reporting pursuant to paragraph (d) of Rules 13a-15 or 15d-15
      promulgated under the Exchange Act. We are, however, in the process of
      designing, evaluating and implementing internal controls in anticipation of
      the
      date when we will become subject to such evaluation requirements. In connection
      with this, effective January 1, 2005, we implemented a new financial software
      system and, through June 2005, have implemented attendant operating controls
      that substantially enhance the controls over the processing, recording and
      reporting of financial transactions.




**PART
      II - OTHER INFORMATION**





**Item
      1. Legal Proceedings**





In
      June
      2005, the Company filed a Complaint against Rudi E. Moerck, former President
      and
      a director of the Company, alleging breach of his Employee Confidential
      Information and Inventions Agreement (the “Information Agreement”) and seeking
      declaratory relief, injunctive relief and damages. Specifically, the Company
      requested that Mr. Moerck be ordered to assign his rights in certain patent
      applications to the Company, return all Company proprietary information in
      his
      possession to the Company and to delete/destroy Mr. Moerck’s copies of all such
      information. Mr. Moerck filed a timely Answer to the Complaint. Subsequently,
      in
      late July 2005, Mr. Moerck offered to have judgment entered against him in
      the
      case. The Company is evaluating Mr. Moerck’s offer and is confident that the
      case can be resolved in the near future in a manner that will fully preserve
      and
      protect the Company’s interests in its proprietary information.





On
      July
      29, 2005, the Company was served by mail with a complaint in the matter of
      Louis
      Schnur v. Al Moore, Altair Nanotechnologies, Inc. and Does 1 through 10, filed
      in the U.S. District court, Central District of California. The complaint
      alleges that Mr. Moore visited the offices of the Company together with William
      P. Long, our former CEO, on February 7-8, 2005, that they received nonpublic
      information related to the Company’s battery electrode materials program during
      the course of such visit, that Mr. Moore proceeded to contact Mr. Schnur and
      offer to purchase 100,000 shares at $2.25 per share, that such offer was
      accepted by Mr. Schnur without knowledge of the nonpublic information and that,
      following the Company’s release of such information in its February 10, 2005
      press release regarding its battery materials program, the price of the
      Company’s common stock increased dramatically. Mr. Schnur alleges that such
      facts constitute a violation of Rule 10b-5 by Mr. Moore and the Company,
      constitute a violation of Section 20A of the Securities Exchange Act of 1934,
      as
      amended, by Mr. Moore and the Company, constitute common law fraud by Mr. Moore
      and constitute a breach of a fiduciary duty by the Company. Mr. Schnur seeks
      $375,000 in damages, punitive damages, costs and other relief as the court
      deems
      proper, all for himself.





26


The
      Company believes that Mr. Moore is a long-term acquaintance of Mr. Schnur and
      has acted at the request of Mr. Schnur at various times, including in connection
      with the February 2005 visit to the Company. Mr. Moore and Mr. Long did, in
      fact, visit the Company on or about February 7 and/or 8, 2005 and, in the course
      of such visit, received a standard investor presentation from management. The
      Company does not believe that Mr. Moore received any material, nonpublic
      information in the course of his visit and believes that the material factual
      and legal claims of the complaint are baseless. The Company is disappointed
      that
      Mr. Schnur continues to force the Company to expend time and resources in
      responding to his personal agenda and expects to aggressively defend the
      lawsuit.




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





We
      held
      an Annual Meeting of Shareholders on May 26, 2005 at which the shareholders
      considered and voted as follows on the items described below:





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


**Name
                  of Nominee**
              **Votes
                  For**
              **Votes
                  Withheld/Abstentions**
              **Broker
                  Non-Votes**Michel
                  Bazinet
              48,132,790
              114,408
              -0-Jon
                  Bengtson
              47,971,274
              275,924
              -0-James
                  Golla
              48,124,190
              123,008
              -0-Alan
                  J. Gotcher
              48,133,990
              113,208
              -0-George
                  Hartman
              47,972,374
              274,824
              -0-Christopher
                  Jones
              47,969,474
              277,724
              -0-David
                  King
              47,970,174
              277,024
              -0-





2.
            The
                shareholders considered whether to appoint Deloitte & Touche, LLP as
                auditors and authorize the Board of Directors to fix their remuneration.
                There were 47,856,782 votes cast in favor, no votes cast against,
                138,101
                votes withheld, and no broker non-votes, which vote was sufficient
                for
                approval.





3.
            The
                shareholders considered a proposal to approve the Altair Nanotechnologies
                Inc. 2005 Stock Incentive Plan. There were 2,797,232 votes cast in
                favor,
                1,477,248 votes cast against, 86,226 votes withheld, and 43,886,492
                broker
                non-votes, which vote was sufficient for
                approval.





4.
            The
                shareholders considered a proposal to approve a bylaw amendment increasing
                the quorum requirement for shareholders meeting from two shareholders
                to
                331⁄3 % of the shares entitled to vote at the meeting. There were 4,168,195
                votes cast in favor, 133,593 votes cast against, 58,918 votes withheld,
                and 43,886,492 broker non-votes, which vote was sufficient for
                approval.





**Item
      6. Exhibits**





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








27


**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.Date: August
              15, 2005
            By:
            /s/ Alan
              J. GotcherAlan
              J. Gotcher, Chief Executive Officer




Date: August
              15, 2005
            By:
            /s/ Edward
              H. DickinsonEdward
              H. Dickinson, Chief Financial Officer











28






**EXHIBIT
                INDEX****Exhibit
                No.**
            
            **Exhibit**
            
            **Incorporated
                by Reference/ Filed Herewith**10.1
            
            Subcontract
                between the UNLV Research Foundation and Altair Nanomaterials,
                Inc.
            
            Filed
                herewith31.1
            
            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







29