UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

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


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


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

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

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



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

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 10, 2004 the registrant had 49,188,703 Common Shares outstanding.




<PAGE>
<TABLE>
<CAPTION>
                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS
                      (Expressed in United States Dollars)
                                   (Unaudited)


                                                                 June 30,       December 31,
                                                                   2004            2003
                                                               ------------    ------------
                            ASSETS
<S>                                                            <C>             <C>
Current Assets
    Cash and cash equivalents                                  $ 10,180,470    $  3,869,669
    Accounts receivable, net                                         58,730          13,324
    Other current assets                                             40,765          79,187
                                                               ------------    ------------
       Total current assets                                      10,279,965       3,962,180

Property, Plant and Equipment, net                                6,365,600       6,618,805

Patents, net                                                      1,017,729       1,060,569

Other Assets                                                         18,200          18,200
                                                               ------------    ------------

                         Total Assets                          $ 17,681,494    $ 11,659,754
                                                               ============    ============

             LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
    Trade accounts payable                                     $    276,769    $     85,255
    Accrued liabilities                                             662,816         311,886
                                                               ------------    ------------
       Total current liabilities                                    939,585         397,141
                                                               ------------    ------------
Note Payable, Long-Term Portion                                  2,781,526       2,686,130
                                                               ------------    ------------

Commitments and Contingencies (Note 4)

Shareholders' Equity
    Common stock, no par value, unlimited shares authorized;
       48,866,724 and 43,188,362 shares issued and
      outstanding at June 30, 2004 and December 31, 2003         64,038,584      54,789,896
    Deficit accumulated during the development stage            (50,078,201)    (46,213,413)
                                                               ------------    ------------

                  Total Shareholders' Equity                     13,960,383       8,576,483
                                                               ------------    ------------

          Total Liabilities and Shareholders' Equity           $ 17,681,494    $ 11,659,754
                                                               ============    ============
</TABLE>

              See notes to the consolidated financial statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>
                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (Expressed in United States Dollars)
                                   (Unaudited)

                                                                                                                 Period
                                                                                                             April 9, 1973
                                                                                                               (date of
                                                     Three Months Ended           Six Months Ended           inception) to
                                                          June 30,                    June 30,                  June 30,
                                              ------------------------------------------------------------
                                                  2004            2003            2004            2003            2004
                                              ----------------------------------------------------------------------------
<S>                                           <C>             <C>             <C>             <C>             <C>
Sales                                         $    154,233    $      4,434    $    293,982    $     24,711    $    663,144
Cost of Sales                                      200,440             938         310,832          15,888         484,749
                                              ------------    ------------    ------------    ------------    ------------
Gross Margin                                       (46,207)          3,496         (16,850)          8,823         178,395
                                              ------------    ------------    ------------    ------------    ------------
Operating Expenses
    Mineral exploration and development             55,506          15,167          82,732          43,881       6,756,083
    Research and development                       339,428         202,388         594,827         415,181       5,216,380
    Professional services                          478,742         157,208         731,336         341,566       4,584,105
    General and administrative expenses            988,839         599,050       1,944,795       1,156,888      19,432,244
    Depreciation and amortization                  220,314         218,359         441,510         436,984       6,835,389
    Asset impairment                                  --              --              --              --         2,759,956
                                              ------------    ------------    ------------    ------------    ------------
      Total operating expenses                   2,082,829       1,192,172       3,795,200       2,394,500      45,584,157
                                              ------------    ------------    ------------    ------------    ------------
Loss from Operations                             2,129,036       1,188,676       3,812,050       2,385,677      45,405,762
                                              ------------    ------------    ------------    ------------    ------------
Other (Income) Expense:
    Interest expense                                48,114         146,119          95,396         266,292       5,085,150
    Interest income                                (23,436)           (204)        (43,374)           (384)       (861,198)
    Loss (gain) on foreign exchange                    318            --               717            --          (557,032)
    Loss on extinguishment of debt                    --              --              --              --           914,667
    Gain on forgiveness of debt                       --              --              --              --          (795,972)
    Loss on redemption of convertible
      debentures                                      --              --              --              --           193,256
                                              ------------    ------------    ------------    ------------    ------------
      Total other expense, net                      24,996         145,915          52,739         265,908       3,978,871
                                              ------------    ------------    ------------    ------------    ------------
Net Loss                                         2,154,032       1,334,591       3,864,789       2,651,585      49,384,633
Preferential Warrant Dividend                         --           176,472            --           176,472         693,569
                                              ------------    ------------    ------------    ------------    ------------
Net Loss Applicable to Shareholders           $  2,154,032    $  1,511,063    $  3,864,789    $  2,828,057    $ 50,078,202
                                              ============    ============    ============    ============    ============

Loss per Common Share - Basic and Diluted    $       0.04    $       0.04    $       0.08    $       0.09    $       4.77
                                              ============    ============    ============    ============    ============

Weighted Average Shares - Basic and Diluted     48,740,271      35,287,020      48,036,745      32,920,570      10,501,871
                                              ============    ============    ============    ============    ============
</TABLE>

              See notes to the consolidated financial statements.

                                       3
<PAGE>


<TABLE>
<CAPTION>

                            ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                                    (A Development Stage Company)
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Expressed in United States Dollars)
                                             (Unaudited)

                                                                                              Period
                                                                                           April 9, 1973
                                                                 Six Months Ended            (date of
                                                                     June 30,              inception) to
                                                            ------------    ------------      June 30,
                                                               2004           2003              2004
                                                            ------------    ------------    ------------
Cash flows from development activities:
<S>                                                         <C>             <C>             <C>
    Net loss                                                $ (3,864,789)   $ (2,651,585)   $(49,384,633)
    Adjustments to reconcile net loss to net cash
      used in development activities:
      Depreciation and amortization                              441,510         436,984       6,835,389
      Shares issued for services                                    --            89,298         392,723
      Shares issued for interest                                    --            97,037       1,249,752
      Issuance of common stock options to non-employees          253,700          30,256       3,349,187
      Issuance of common stock options to employees               39,001            --           117,221
      Variable accounting on stock options                       (78,078)           --           825,590
      Issuance of common stock warrants                             --            37,066       1,026,277
      Amortization of discount on note payable                    95,396          88,966       1,076,175
      Amortization of debt issuance costs                           --              --           504,567
      Asset impairment                                              --              --         2,759,956
      Loss on extinguishment of debt                                --              --           914,667
      Loss on redemption of convertible debentures                  --              --           193,256
      Gain on forgiveness of debt                                   --              --          (795,972)
      Loss on disposal of fixed assets                            33,393            --            60,999
      Gain on foreign currency translation                          --              --          (559,581)
      Deferred financing costs written off                          --              --           515,842
    Changes in assets and liabilities (net of effects
      of acquisition):
      Accounts receivable                                        (45,406)        132,323         (58,730)
      Other current assets                                        38,422          (4,144)      1,693,833
      Other assets                                                  --              --          (170,720)
      Trade accounts payable                                     191,514          (6,664)        284,800
      Accrued liabilities                                        350,930          93,109         385,571
                                                            ------------    ------------    ------------

Net cash used in development activities                       (2,544,407)     (1,657,354)    (28,783,831)
                                                            ------------    ------------    ------------

Cash flows from investing activities:
    Asset acquisition                                               --              --        (9,625,154)
    Purchase of property and equipment                          (178,857)        (17,394)     (3,932,682)
    Proceeds received from sale of property and equipment           --              --             4,675
    Purchase of patents                                             --              --        (1,882,187)
                                                            ------------    ------------    ------------

Net cash used in investing activities                           (178,857)        (17,394)    (15,435,348)
                                                            ------------    ------------    ------------
</TABLE>
                                                                  (continued)

                                       4
<PAGE>
<TABLE>
<CAPTION>
                            ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                                    (A Development Stage Company)
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Expressed in United States Dollars)
                                             (Unaudited)

                                                                                      Period
                                                                                  April 9, 1973
                                                           Six Months Ended          (date of
                                                               June 30,           inception) to
                                                    ---------------------------       June 30,
                                                         2004          2003            2004
                                                    --------------------------------------------
<S>                                                 <C>            <C>             <C>
Cash flows from financing activities:
  Issuance of common shares for cash, net of
    issuance costs                                  $       --     $  2,367,103    $ 26,394,979
  Issuance of shares under Employee Stock
    Purchase Plan                                           --          277,212         698,858
  Issuance of convertible debenture                         --             --         5,000,000
  Proceeds from exercise of common stock options         737,709         98,000       3,935,036
  Proceeds from exercise of common stock warrants      8,296,356           --        16,631,270
  Issuance of related party notes                           --             --           174,243
  Issuance of notes payable                                 --             --        19,130,540
  Payment of notes payable                                  --         (280,000)    (14,663,579)
  Payment of related party notes                            --             --          (174,243)
  Payment on capital lease                                  --             --           (27,075)
  Purchase of call options                                  --             --          (449,442)
  Redemption of convertible debentures                      --             --        (2,250,938)
                                                    ------------   ------------    ------------

Net cash provided by financing activities              9,034,065      2,462,315      54,399,649
                                                    ------------   ------------    ------------

Net increase in cash and cash equivalents              6,310,801        787,567      10,180,470

Cash and cash equivalents, beginning of period         3,869,669        244,681            None
                                                    ------------   ------------    ------------

Cash and cash equivalents, end of period            $ 10,180,470   $  1,032,248    $ 10,180,470
                                                    ============   ============    ============

Supplemental disclosures:
Cash paid for interest                              $      --      $    80,289
                                                    ============   ============

Cash paid for income taxes                              None            None
                                                    ============   ============
</TABLE>


Supplemental schedule of non-cash investing and financing activities:
For the six months ended June 30, 2004:
   - None
For the six months ended June 30, 2003:
  - We issued  681,994  common shares to Doral 18, LLC in payment of $266,290 of
principal on our note payable.
  - We repriced warrants, held by a shareholder,  for 796,331 common shares. The
repriced  warrants  have an  incremental  fair value of  $176,472  and have been
accounted for as a preferential warrant dividend.
                                                                 (concluded)
              See notes to the consolidated financial statements.

                                       5
<PAGE>
                  ALTAIR NANOTECHNOLOGIES INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1.  Basis of Preparation of Financial Statements

         These unaudited interim financial statements of Altair Nanotechnologies
Inc. and its subsidiaries  (collectively,  "Altair", "we" or the "Company") have
been prepared in accordance  with the rules and regulations of the United States
Securities  and  Exchange   Commission  (the   "Commission").   Such  rules  and
regulations allow the omission of certain  information and footnote  disclosures
normally included in financial statements prepared in accordance with accounting
principles  generally  accepted in the United States,  so long as the statements
are not  misleading.  In the  opinion of  Company  management,  these  financial
statements and  accompanying  notes contain all adjustments  (consisting of only
normal recurring adjustments) necessary to present fairly the financial position
and  results of  operations  for the  periods  shown.  These  interim  financial
statements should be read in conjunction with the audited  financial  statements
and notes thereto contained in our Annual Report on Form 10-K for the year ended
December 31, 2003, as filed with the Commission on March 26, 2004.

         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  successful  operations.  We  are in  the  process  of
developing and  commercializing  our  nanomaterials and titanium dioxide pigment
technology. We have financed operations primarily through the issuance of equity
securities (common stock,  convertible debentures,  stock options and warrants),
and by the issuance of debt (term notes).  Additional  funds will be required to
complete development  activities.  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 continue as a going concern through 2005.

         The results of operations  for the three- and  six-month  periods ended
June 30, 2004 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  net  loss  per  common  share is
calculated by dividing net loss by the weighted  average number of common shares
outstanding  during the period.  The existence of stock options,  warrants,  and
convertible  securities  affects  the  calculation  of loss per share on a fully
diluted basis. When a net loss is reported,  the number of shares used for basic
and  diluted  net loss per share is the same since the effect of  including  the
additional common stock equivalents would be antidilutive.

         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
<PAGE>
         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.  As allowed by the provisions of SFAS
123, employee and director  stock-based  compensation  expense is measured using
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.

         We account for stock options and warrants  issued to  non-employees  in
accordance  with  SFAS 123.  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:
<TABLE>
<CAPTION>
                                                          Three Months Ended       Six Months Ended
                                                               June 30,                 June 30,
                                                     -----------------------   ------------------------
                                                        2004         2003        2004        2003
                                                     -----------------------   ------------------------
<S>                                                  <C>          <C>          <C>          <C>
Net loss applicable to shareholders:
  As reported                                        $2,154,032   $1,511,063   $3,864,789   $2,828,057
  Add: stock-based employee compensation
    income calculated under APB Opinion
    No. 25 included in reported net loss                139,661         --         39,077         --
  Add: stock-based employee compensation
    expense determined under value based
    method for all awards                               649,218       69,362      964,409       77,997
                                                     ----------   ----------   ----------   ----------

  Pro forma                                          $2,942,911   $1,580,425   $4,868,275   $2,906,054
                                                     ==========   ==========   ==========   ==========
Loss per common share (both basic and diluted):
  As reported                                        $     0.04   $     0.04   $     0.08   $     0.09
                                                     ==========   ==========   ==========   ==========
  Pro forma                                          $     0.06   $     0.04   $     0.10   $     0.09
                                                     ==========   ==========   ==========   ==========
</TABLE>
          We estimated  the fair value of options and rights  granted  under our
employee  stock-based  compensation  arrangements at the date of grant using the
Black-Scholes model with the following weighted-average assumptions:

                                                        Six Months Ended
                                                            June 30,
                                                  ------------------------------
                                                      2004           2003
                                                  ------------------------------
         Dividend yield                                    None            None
         Expected volatility                                61%             66%
         Risk-free interest rate                          3.29%           2.40%
         Expected life (years)                              4.2             5.0
         Weighted average fair value of grants          $   .99        $   0.36

                                       7
<PAGE>

         Revenue  Recognition  - Revenue is  generated  from  product  sales and
services  performed under  contract.  Revenue is recognized for product sales at
the time the  purchaser  has  accepted  delivery of the product and for services
when the service has been performed and is billable in accordance  with contract
terms.  For the three  months  ended June 30, 2004,  we  recognized  $1,221 from
product sales and $153,012 from contract services. For the six months ended June
30, 2004,  we  recognized  $2,843 from product  sales and $291,139 from contract
services.

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

         Recent  Accounting  Pronouncements  - In March 2004, the FASB reached a
consensus on Emerging  Issues Task Force (EITF) Issue  No.03-1,  "The Meaning of
Other-Than-Temporary  Impairment and Its  Application  to Certain  Investments."
This   pronouncement   provides   guidance   to   determine   the   meaning   of
other-than-temporary impairment and its application to investments classified as
either  available-for-sale or held-to-maturity  (including individual securities
and investments in mutual funds),  and investments  accounted for under the cost
method or the equity method.  The guidance for evaluating  whether an investment
is  other-than-temporarily  impaired  is to be applied  in  other-than-temporary
impairment  evaluations made in reporting periods beginning after June 15, 2004.
Management  believes  the  adoption  of Issue No.  03-1 will not have a material
impact on the financial statements.


Note 3.  Common Stock

         Common  stock  transactions  during the six months  ended June 30, 2004
were as follows:

                                                      Common Stock
                                               ---------------------------
                                                                 Stated
                                                  Shares         Amount
                                               ------------   ------------
Balance, December 31, 2003                       43,188,362   $ 54,789,896
Exercise of common stock warrants                 5,254,462      8,296,356
Exercise of common stock options                    423,900        737,709
Variable accounting on common stock options            --          (78,078)
Common stock options issued to employees               --           39,001
Common stock options issued to non-employees           --          253,700
                                               ------------   ------------
Balance, June 30, 2004                           48,866,724   $ 64,038,584
                                               ============   ============



Note 4.  Notes Payable

         Notes payable  consisted of the following at June 30, 2004 and December
31, 2003:

                                       8
<PAGE>

<TABLE>
<CAPTION>

                                              June 30, 2004          December 31, 2003
                                              -------------        ---------------------
<S>                                            <C>                      <C>
         Note payable to BHP Minerals
            International, Inc.                $2,781,526               $2,686,130
         Less current portion                       --                       --
                                               ----------               ----------
         Long-term portion of notes payable    $2,781,526               $2,686,130
                                               ==========               ==========
</TABLE>

         The note  payable to BHP  Minerals  International,  Inc. is in the face
amount of $3,000,000. Interest on the note does not begin to accrue until August
8, 2005. As a result, we imputed the interest and reduced the face amount of the
note payable by $566,763,  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 5.  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, 2004 was:

                                      Gross                            Net
                                    Carrying        Accumulated      Carrying
                                     Amount         Amortization      Amount
                                 ---------------- --------------- --------------
         Patents and related
           expenditures           $   1,517,736   $  (500,007)    $   1,017,729


         The  weighted  average  amortization  period for  intangible  assets is
approximately  16.5 years.  Amortization  expense was $42,840 for the six months
ended  June  30,  2004,  which  represented  the  amortization  relating  to the
identified  intangible assets still required to be amortized under SFAS No. 142.
For each of the next five years,  amortization  expense  relating to intangibles
will be  $85,680  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.


                                       9
<PAGE>

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, 2003 and June 30, 2004 and the material
changes  in our  results of  operations  and  financial  condition  between  the
three-and  six-month  periods  ended  June 30,  2003 and  June  30,  2004.  This
discussion  should  be read in  conjunction  with  Management's  Discussion  and
Analysis  of  Financial  Condition  and  Results of  Operations  included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003.

Overview

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

The Performance Materials Division
         o    Advanced Materials for Paints and Coatings
              o    The production of titanium dioxide pigments;
              o    The production of  nano-structured  powders for thermal spray
                   applications.
         o    Advanced Materials for Improving Process Technologies
              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;
              o    The  development  and  production  of  NanoCheck TM phosphate
                   binding  materials for prevention of algae growth.
         o    Advanced Materials for Alternative Energy
              o    The development of materials for high performance  batteries,
                   fuel cells and photovoltaics.
The Life Sciences  Division
         o    Pharmaceutical Products
              o    RenaZorb(TM),  a new active pharmaceutical ingredient,  which
                   is designed to be useful in the  treatment of elevated  serum
                   phosphate levels in patients undergoing kidney dialysis.
         o    Drug Delivery Products
              o    TiNano  SpheresTM and No-DefeatTM are rigid,  hollow,  porous
                   high surface area ceramic micro  structures  that are derived
                   from Altair's proprietary process technology.
         o    Dental  Materials
              o    The development of nanomaterials  for use in various products
                   for dental fillings.

         We acquired the technology  that serves as the original  source for our
nanomaterial  and  titanium  dioxide  pigment  technologies  from  BHP  Minerals
International, Inc. in 1999.

         We  expected  to  be  able  to  produce   titanium   dioxide   ("TiO2")
nanoparticles for sale in established markets within a short period of time. Our
expectation  was  that  revenues  from  these  sales,   combined  with  external
financing,  would provide adequate cash flow to fund our development  activities
for the nanomaterial and titanium dioxide pigment technologies and our Tennessee
mineral  property and the Altair  Centrifugal  Jig (the  "Centrifugal  Jig"). We
underestimated  the  difficulty  of entering the markets for TiO2  nanoparticles
with the  result  that  sales  revenues  have been  below  expectations  and our
external financing needs have been greater than anticipated.

                                       10
<PAGE>

         During  much of the period from 2001  through  2003,  we suffered  cash
shortages as our share price declined and financing  became more  difficult.  In
response to this,  we reduced cash  expenditures  to the extent  possible  while
still  continuing  to develop the  nanomaterials  and titanium  dioxide  pigment
technology.  At the same time, we reduced expenditures for the Tennessee mineral
property and Centrifugal  Jig and finally  suspended work on these assets during
2003.

         During the  remainder of 2004,  we expect  sales  revenues to come from
contracts in place to (1) provide  research  involving a technology  used in the
detection of chemical,  biological and radiological  agents,  (2) provide custom
oxide  feedstocks for a titanium metal research program funded by the Department
of Defense and (3) license and evaluate our pigment  production  process for the
production of TiO2 pigment and  pigment-related  products from  titanium-bearing
oil sands. In addition,  we expect to realize revenues from agreements involving
the development of our drug delivery system and water treatment  products.  Such
agreements are not currently in place and will likely require additional testing
and  development  work by Altair  before  customers  will commit funds for joint
development.

Recent Business Developments

Life Science Division

RenaZorb(TM) Products
---------------------

         In  2005,  we  hope to  generate  revenues  through  the  licensing  of
RenaZorb(TM),  a potential  drug we  developed  that may be useful in  phosphate
control  in kidney  dialysis  patients.  A drug of  similar  compounds  has been
submitted for FDA approval by Shire  Pharmaceuticals  Group plc, which indicated
in a recent press release that it has received a letter from the FDA  indicating
a 90-day  extension  to the review  period to  complete  evaluation  of new data
relating to the formulation and dosage strengths.  If this similarly  compounded
drug is approved,  we hope to be able to quickly  negotiate a license  agreement
for RenaZorb(TM) with one or more pharmaceutical  companies. We do not expect to
be able to negotiate a license  agreement for RenaZorb(TM)  unless and until the
similar  drug is approved by the FDA. We can provide no  assurance  that we will
enter  into  such a  license  agreement  or that such  license  agreement  would
generate significant revenue in the short term.

Drug Delivery System
--------------------

         We are  continuing the test and  development  work on our drug delivery
system and have filed additional patent  applications  related to it. The system
uses rigid, hollow ceramic structures into which drugs can be loaded for release
at therapeutic  concentrations.  The structures resist crushing,  thereby making
them an ideal  delivery  system  for drugs  that are  subject  to abuse  such as
amphetamines,  narcotics or pain management drugs. We are continuing discussions
with potential market partners interested in this system but have not yet signed
any development contracts.


Performance Materials Division

Nanocheck(TM) Products
----------------------

         Nanocheck(TM) is a  lanthanum-based  compound that can be used to treat
water for the  removal  of a wide  range of  deleterious  impurities.  It has no


                                       11
<PAGE>
reported human health hazards and works effectively in existing filtration units
without the need for purchasing additional equipment. We have conducted in-house
tests of Nanocheck(TM) for phosphate removal in swimming pool simulations, and a
pool and spa  chemical  company  has  performed  materials  testing  that  shows
effective phosphate removal and high kinetics.  Larger scale swimming pool tests
being performed by a pool chemical company began in mid-August 2004. Significant
sales of products incorporating  Nanocheck(TM),  if any, will not occur until at
least mid-2005.

         During  the  second  quarter  of  2004,  we  performed  a  study  using
Nanocheck(TM)  to remove arsenic from drinking  water.  The results of the study
are currently being analyzed.

Battery Applications
--------------------

         In June 2004, we were awarded a National  Science  Foundation  grant of
$100,000 to fund joint  development  work on next  generation  lithium ion power
sources  with  Hosokawa  Micron's  Nanoparticle  Technology  Center and  Rutgers
University's Energy Storage Research Group. The grant was effective July 1, 2004
with the work to be done over a six-month period. We expect to supply nano-sized
anode and cathode  materials for design and development of high capacity lithium
ion battery and super  capacitor  applications.  Nanomaterials  are  expected to
improve the  performance  of these systems and enable their use in  applications
where immediate high power delivery is necessary.

Other
         With  respect to TIMET and the Altair  Hydrochloride  Pigment  Process,
there are no  significant  changes or recent  developments  to report that would
change the discussion contained in our Form 10-Q for the quarter ended March 31,
2004.

         Contract  documents between the Vietnam project sponsor,  AVIRECO,  and
the  Company  have been  updated  to  reflect a current  project  start date and
contract milestone dates. Contract finalization is scheduled for September 2004.

Restructuring Plans and Progress
--------------------------------

         In June 2004, we completed a reorganization  of the Company in order to
concentrate   resources  on  the  nanomaterials  and  titanium  dioxide  pigment
business.  The reorganization  will maximize  management focus on nanomaterials,
nanotechnology  and material science in targeted markets for TiO2 pigment,  TiO2
electrodes   for   titanium   metal,    pharmaceutical    delivery   structures,
pharmaceuticals,  dental materials and nanostructured  materials for lithium ion
batteries and fuel cells.

Life Sciences Division. As part of the restructuring, we have created a new life
sciences division that will focus on the continued development of pharmaceutical
delivery  structures (TiNano  Spheres(TM)),  dental materials and new nano-based
pharmaceuticals including Altair's drug candidate, RenaZorb(TM).

Performance Materials Division. We also created a performance materials division
that will focus on developing and licensing  technologies for the manufacture of
nano- to micron-sized ceramic materials.  This includes the Altair Hydrochloride
Pigment Process,  production of nano-structured  materials and contract research
and development work in the materials sciences.

Disposition of Mineral Business.  In March 2004, our Board received and reviewed
various   summary   presentations   about  our  mineral   business  and  various
alternatives  for its  disposition.  The Board's  initial  review of disposition
alternatives (including spin-off, sale, abandonment and joint venture) indicated
that a spin-off would best effect the Board's  desires to dispose of the mineral
assets  quickly  and  in a  manner  that  enhances  shareholder  value  (without

                                       12
<PAGE>

excessive costs). However, after further consideration,  the Board has abandoned
the proposed spin-off and has concluded that the most  cost-effective  course of
action  with  respect to the  Tennessee  mineral  property is to  terminate  the
mineral leases on the Tennessee mineral property,  dispose of the related assets
and  remediate  the  subject  property  to the  extent  required  by  regulatory
authorities.  We expect to  dispose of our  interest  in the  Tennessee  mineral
property  by the end of fiscal 2004 and expect  that costs  associated  with the
abandonment of the Tennessee  mineral property will equal or exceed any proceeds
from the disposition of related assets.  Remediation work, which involves, among
other  things,  the  removal  of the pilot  plant  and  related  facilities  and
restoration of the property,  will begin after the remediation  plan is approved
by the applicable  regulatory  authorities.  Costs of remediation  are uncertain
until such plan approval is obtained and the scope of the work is determined. We
expect that the mineral leases,  except those involved in  remediation,  will be
terminated by the end of 2004. We expect that the  remediation  work will not be
complete until early 2005.

A major minerals  processing  firm is currently  testing the Centrifugal Jig The
carrying costs  associated with it are minimal,  and the Board believes that, by
retaining the  Centrifugal  Jig at least until the minerals  processing firm has
completed its testing and development  work, we may be able to generate  limited
revenue (through licensing fees or in sale transaction) from the Centrifugal Jig
in the  foreseeable  future.  Accordingly,  the Board has determined to maintain
ongoing  efforts to sell or  license  the  Centrifugal  Jig  technology  without
additional investment.


Liquidity and Capital Resources
-------------------------------

         We generated $293,982 of sales revenues in the first six months of 2004
but incurred a net loss of $3,864,789,  resulting in an  accumulated  deficit of
$50,078,201 at June 30, 2004.

         Our  cash and  short-term  investments  increased  from  $3,869,669  at
December 31, 2003 to  $10,180,470  at June 30, 2004 due primarily to the receipt
of $737,709  from the exercise of common stock options and receipt of $8,296,356
from  the  exercise  of  warrants.   These  increases  in  cash  and  short-term
investments were partially offset by normal cash operating expenditures.

         Current and Expected Liquidity.  At June 30, 2004, we had cash and cash
equivalents of $10,180,470, an amount that would be sufficient to fund our basic
operations  through  December 31, 2005 at current  working  capital  expenditure
levels. We will,  however,  increase  expenditure  levels in 2004 and 2005 as we
execute on existing and  expected  contracts.  Accordingly,  if we are unable to
increase our revenues  proportionately,  we will require additional financing to
provide working capital to fund our day-to-day  operations.  As described above,
we  expect  that  revenues  from our  contract  work  will  continue  to  expand
incrementally in 2004.

         We do not, however,  expect to receive significant licensing or produce
sales revenue unless, and until, we are able to enter into licensing  agreements
related to Renazorb(TM),  Nanocheck(TM), or our drug delivery systems. We do not
expect to sign any such  licensing  agreements  before late 2004, if at all, and
expect that, other than a possible up-front licensing fee, a significant revenue
stream would not develop from any such licenses until mid-2005 or later.

         Although we currently have capital sufficient to fund our operations at
current levels, we expect our capital needs to increase during 2004 and 2005. We
have hired, and expect to continue to hire,  additional personnel to satisfy our
contractual obligations under existing and anticipated services agreements,  and
to provide  administrative  support.  In addition,  our management is focused on


                                       13
<PAGE>

facilitating  the  commercialization  of one or  more  of  its  products  in the
foreseeable  future.  Substantially  all of our products are at a conceptual  or
development stage and, if we are to commercialize one or more products ourselves
(as opposed to  licensing it for  commercialization  by the  licensee),  we will
likely be required to hire additional employees,  purchase additional equipment,
and engage the research, marketing and other services of third parties. This may
require significant additional capital. We believe our ability to find strategic
partners would be enhanced if we had a stronger balance sheet.

         Accordingly,  we may raise  additional  capital during 2004 or 2005. We
would most  likely  generate  such  financing  through  the  issuance  of equity
securities in one or more private  placements of common  shares  (probably  with
accompanying re-sale registration rights and warrants to purchase common shares)
or public  offerings  of our  common  shares.  We do not expect to, but may also
issue debt securities or enter into loan or capital leasing  arrangements,  with
one or more financial  institutional  investors.  Any  financing,  especially an
issuance of equity  securities in a public offering or large private  placement,
may dilute existing  shareholders and have an adverse effect on the market price
of our common shares.  We can provide no assurance that, if we determine to seek
additional  financing,  we  will be able to  obtain  additional  financing  at a
reasonable cost, or at all.

         Capital   Commitments.   The  following   table   discloses   aggregate
information about our contractual  obligations including notes payable,  mineral
lease  payments and  contractual  service  agreements,  and the periods in which
payments are due as of June 30, 2004:
<TABLE>
<CAPTION>

                                               Less Than                                 After
Contractual Obligations             Total        1 Year     1 - 3 Years  4 - 5 Years   5 Years
-----------------------          ----------    ----------   ----------   ----------   ----------
<S>                              <C>           <C>          <C>          <C>          <C>
Notes Payable                    $3,000,000*   $     --     $1,200,000   $1,200,000   $  600,000
Mineral Leases**                  1,018,652       371,958      326,974      239,691       80,029
Contractual Service Agreements      574,339       486,839       87,500         --           --
                                 ----------    ----------   ----------   ----------   ----------
                                 $4,592,991    $  858,797   $1,614,474   $1,439,691   $  680,029
                                 ==========    ==========   ==========   ==========   ==========
</TABLE>

* Before discount of $218,474.
* Although we expect to terminate substantially all mineral leases by the end of
2004, the obligations are included here because they are not yet terminated.


Critical Accounting Policies and Estimates
------------------------------------------

         Management based the following discussion and analysis of our financial
condition and results of operations on our  consolidated  financial  statements.
The preparation of these financial  statements requires us to make estimates and
judgments that affect the reported amounts of assets,  liabilities,  revenue and
expenses,  and related  disclosure of contingent  assets and liabilities.  On an
on-going  basis,  we evaluate our critical  accounting  policies and  estimates,
including those related to long-lived  assets 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.

                                       14
<PAGE>

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

         o    Long-lived  assets.  Our long-lived assets consist  principally of
              the  nanomaterials  and  titanium  dioxide  pigment  assets,   the
              intellectual property (patents and patent applications) associated
              with them, and a building. At June 30, 2004, the carrying value of
              these assets was $7,359,729,  or 42% 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.

         o    Stock-Based  Compensation.  We have two stock  option  plans which
              provide for the issuance of common stock  options to employees and
              service  providers.  Although  Statement of  Financial  Accounting
              Standards   ("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 Accounting  Principles Board ("APB") Opinion No. 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 No. 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 No. 123.  We  calculate  compensation  expense
              under SFAS No. 123 using a modified  Black-Scholes  option pricing
              model. In so doing, we estimate  certain key variables used in the
              model.  We  believe  the  estimates  we use  are  appropriate  and
              reasonable.

         o    Revenue  Recognition.  Revenue is generated from product sales and
              services  performed  under  contract.  Revenue is  recognized  for
              product sales at the time the  purchaser has accepted  delivery of
              the product and for services  when the service has been  performed
              and is billable in accordance with contract terms.

         o    Overhead  Allocation.  Facilities  overhead,  which  is  comprised
              primarily of occupancy and related expenses, is initially recorded
              in general  and  administrative  expenses  and then  allocated  to
              research and development and cost of sales based on labor costs.

                                       15
<PAGE>
Results of Operations
---------------------

Three Months Ended June 30, 2004 Compared to Three Months Ended June 30, 2003
-----------------------------------------------------------------------------

         The net loss applicable to shareholders  for the quarter ended June 30,
2004, which was the second quarter of our 2004 fiscal year,  totaled  $2,154,032
($.04 per share)  compared to a net loss of  $1,511,063  ($.04 per share) in the
second quarter of 2003. The principal factors  contributing to the losses during
these periods were the lack of substantial  revenue combined with the incurrence
of operating expenses.

         Sales revenues in the second quarter of 2004 were as follows:

                                                          Sales Revenues
                                                        Three Months Ended
                                                           June 30, 2004
                                                      ------------------------
                  Contract research:
                  ------------------
                    Western Oil Sands                       $ 71,534
                    Western Michigan University               35,768
                    Other                                     45,710
                                                            --------
                                Subtotal                     153,012
                  Nanoparticle products                        1,221
                                                            --------

                                Total                       $154,233
                                                            ========


         The revenues from contract  research work include  $35,768 earned under
an agreement  with Western  Michigan  University  ("WMU") for research  services
involving  a  technology  used in the  detection  of  chemical,  biological  and
radiological agents. We expect to generate approximately $120,000 of revenues in
connection with this contract  during 2004.  Contracted  services  revenues also
includes  $71,534  received from Western Oil Sands,  Inc. in connection  with an
agreement to license our Altair  Hydrochloride  Pigment Process (the "AHPP") for
its possible use of the AHPP for the production of titanium  dioxide pigment and
pigment-related  products at the Athabasca Oil Sands Project in Alberta, Canada,
and elsewhere.  Upon execution of the agreement, we granted Western Oil Sands an
exclusive,  conditional  license to use the AHPP on heavy minerals  derived from
oil sands in Alberta,  Canada.  The agreement  also  contemplates a three-phase,
five-year  program  pursuant to which the parties will work  together to further
evaluate,   develop  and   commercialize   the  AHPP.   We  expect  to  generate
approximately $490,000 of revenues in 2004 in connection with the first phase of
this contract. During the quarter ended June 30, 2004, we also generated $45,710
of revenues from two other development contracts. We expect to supply additional
materials and services through follow-on  contracts with these customers in 2004
with a contract  value of $45,000.  In the second  quarter of 2003, we generated
sales  revenues  of $4,434,  all of which,  was from sales of  titanium  dioxide
nanoparticles.

         Gross  margin in the second  quarter  of 2004 was a  negative  $46,207,
primarily due to a change in the method of recording  facilities overhead costs.
In prior years,  overheads were recorded as general and  administrative  ("G&A")
expenses and remained in G&A. In 2004,  these  overheads,  which totaled $82,000
for the  second  quarter  of 2004,  are  allocated  between  G&A,  research  and
development  ("R&D") and cost of sales. This allocation  methodology was adopted


                                       16
<PAGE>
in response to a material increase in contract services revenues in 2004 and the
need to obtain cost  reimbursement for these overheads in future contracts.  Our
existing  customer  contracts,  which are  principally  contract R&D work,  were
negotiated  with the goal of  providing  cost  reimbursement  and  little  or no
margin, but significant  potential for the development of valuable  intellectual
property.  As a result of this and the change in accounting for overhead  costs,
we expect that margins will be slightly positive or negative until we enter into
substantial  product sales and/or agreements to license our technologies  and/or
additional contract R&D work which provides better margins.

         Our R&D efforts in the second quarter of 2004 were directed principally
to contract research,  pharmaceuticals and titanium pigment process development.
R&D expenses  increased by $137,040 from $202,388 in the second  quarter of 2003
to  $339,428 in the same period of 2004,  principally  as a result of  increased
labor hours, overheads and animal testing costs for RenaZorb(TM).  This increase
was partially offset by an increase in contract research R&D expense transferred
to cost of sales.  Costs for contract  research are  accumulated in R&D accounts
and  transferred  to cost of sales when the  customer is billed for the work and
revenue is recorded. We expect our R&D expenses for the remainder of fiscal 2004
to remain at levels higher than those of fiscal 2003.

         Professional services,  which consist principally of legal,  consulting
and audit  expenses,  increased by  $321,534,  from  $157,208  during the second
quarter of 2003,  to $478,742  in the second  quarter of 2004.  Accounting  fees
increased  by  $19,000  as a result  of  compliance  costs  associated  with the
Sarbanes-Oxley  Act. Legal expenses  increased by $48,000 due primarily to legal
costs  associated  with a  shareholder  proposal  and other  issues  involving a
shareholder.  Legal  expenses  also  increased  as  a  result  of  patent  costs
associated with  performance  materials.  Consulting fees increased by $254,000,
from $27,000 in the second  quarter of 2003 to $281,000 in the second quarter of
2004,  as a result of  consultants  hired to assist with  marketing  and product
development in both the performance  materials and life sciences  divisions.  Of
this amount,  $135,000 represents non-cash expense associated with stock options
granted to service providers.

         General and administrative expenses increased by $389,789 from $599,050
in second  quarter of 2003 to $988,839 in the second  quarter of 2004.  Salaries
and related overheads increased by $110,000, from $325,000 in the second quarter
of 2003 to  $435,000  in the second  quarter of 2004,  due to salary  increases,
bonuses and the addition of three new  employees.  Investor  relations  expenses
increased by $69,000  from $54,000 in the second  quarter of 2003 to $123,000 in
the  second  quarter  of 2004 as a  result  of  programs  designed  to  increase
institutional  investor  ownership  of Altair  shares.  Shareholder  information
expenses  increased by $47,000,  from  $41,000 in the second  quarter of 2003 to
$88,000 in the second quarter of 2004, due to annual report printing and mailing
costs;  the number of shareholders  owning our stock increased  substantially in
2004.  General office  expenses  increased by $75,000 from $96,000 in the second
quarter of 2003 to $171,000 in the second  quarter of 2004 primarily as a result
of  additional  purchases of office  supplies,  increased  travel and  increased
directors' fees.  Technical operating expenses increased by $45,000 from $47,000
in 2003 to $92,000 in 2004 due  primarily to  increased  product  sample  costs,
laboratory costs and small equipment  purchases.  We also recorded an expense of
$235,000  representing  the value of common shares to be issued to a shareholder
in connection with a settlement agreement involving certain issues raised by the
shareholder. In addition,  insurance expense increased by $17,000 as a result of
higher  premiums for liability and property  coverages and we incurred a loss of
$33,000 on  disposal of  property.  These  increases  were  partially  offset by
$82,000 of facilities  overheads allocated to cost of sales and R&D as explained
in the gross margin  discussion  above. In addition,  stock option  compensation
expense  decreased by $163,000 from the second quarter of 2003 to second quarter
of 2004 as a result of a reduction in value of repriced stock options.

         Interest  expense  decreased  by $98,005,  from  $146,119 in the second
quarter of 2003 to $48,114 in the second quarter of 2004. The decrease is due to
the payoff of our note payable to Doral 18, LLC in September 2003.
                                       17
<PAGE>

Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003
-------------------------------------------------------------------------

        For the six  months  ended June 30,  2004,  the net loss  applicable  to
shareholders  was $3,864,789  ($.08 per share) compared to $2,828,057  ($.09 per
share) for the same period of 2003.

        During the six months  ended June 30,  2004,  we  generated  $291,139 of
revenues  from  contract  research  work and $2,843  from sales of  nanoparticle
products as follows:

                                                         Sales Revenues
                                                        Six Months Ended
                                                         June 30, 2004
                                                      ---------------------
                  Contract research:
                  ------------------
                       Western Oil Sands                   $114,205
                       Western Michigan University           56,224
                       TIMET                                 75,000
                       Other                                 45,710
                                                           --------
                                   Subtotal                 291,139
                  Nanoparticle products                       2,843
                                                           --------

                                   Total                   $293,982
                                                           ========


        The contract research revenues received from Titanium Metals Corporation
("TIMET")  were  generated  under a contract to provide  them with custom  oxide
feedstocks  for a  four-year,  titanium  metal  research  program  funded by the
Department of Defense,  Defense Advanced  Research Projects Agency. We expect to
generate  approximately  $150,000 of revenues in  connection  with this contract
during 2004.  The other listed  contracts are  described  above in "Three Months
Ended June 30, 2004 Compared to Three Months Ended June 30, 2003".

        Gross  margin  for the six  months  ended  June 30,  2004 was a negative
$16,850, compared to positive $8,823 for the six months ended June 30, 2003. The
decline  in margin is  attributable  to the  factors  described  above in "Three
Months Ended June 30, 2004 Compared to Three Months Ended June 30, 2003".

        R&D expenses increased by $179,646 from $415,181 in the six months ended
June 30, 2003 to $594,827 in the same period of 2004, principally as a result of
increased labor hours,  overheads,  temporary  employees working on R&D projects
and animal testing costs for RenaZorb(TM). This increase was partially offset by
an increase in contract research R&D expense transferred to cost of sales.

        Professional services increased by $389,770 from $341,566 during the six
months  ended June 30, 2003 to  $731,336 in the same period of 2004.  Accounting
fees increased by $35,000 as a result of compliance  costs  associated  with the
Sarbanes-Oxley  Act. Legal expenses increased by $115,000 due primarily to legal
expenses for work associated with contract research agreements, preparation of a
shelf registration  statement for our common shares, legal costs associated with
a shareholder proposal and other issues involving a shareholder.  Legal expenses
also  increased  as  a  result  of  patent  costs  associated  with  performance
materials.  Consulting  fees  increased  by $240,000 as a result of  consultants
hired to assist with marketing and product  development in both the  performance
materials  and life sciences  divisions.  Included in this amount is $160,000 of
non-cash  expense  representing  the value of  options  granted  to the  service
providers.
                                       18
<PAGE>

        General  and   administrative   expenses   increased  by  $787,907  from
$1,156,888  in the six months  ended  June 30,  2003 to  $1,944,795  in the same
period of 2004.  Salaries  and related  overheads  increased  by  $306,000  from
$607,000 in 2003 to $913,000  in 2004 due to salary  increases,  bonuses and the
addition  of three new  employees.  Investor  relations  expenses  increased  by
$181,000  from $124,000 in the six months ended June 30, 2003 to $305,000 in the
six months  ended June 30,  2004 as a result of  programs  designed  to increase
institutional  investor  ownership  of Altair  shares.  Shareholder  information
expenses increased by $47,000 from $41,000 in the six months ended June 30, 2003
to $88,000 in the six months ended June 30, 2004 due to annual  report  printing
and  mailing  costs;  the  number of  shareholders  owning  our stock  increased
substantially  in 2004.  General  office  expenses  increased  by  $99,000  from
$209,000  in the six months  ended June 30,  2003 to  $308,000 in the six months
ended June 30, 2004  primarily  as a result of  additional  purchases  of office
supplies and equipment,  increased travel and increased directors' fees. We also
recorded an expense of $235,000  representing  the value of common  shares to be
issued to a shareholder  in  connection  with a settlement  agreement  involving
certain  issues  raised by the  shareholder.  In  addition,  insurance  expense,
corporate   services  and  other  operating   expenses  increased  by  $139,000,
principally as a result of increased activity levels and rising insurance rates.
These increases were partially offset by $170,000 of general and  administrative
overheads allocated to R&D as explained in the gross margin discussion above and
a  decrease  in stock  option  compensation  expense of $46,000 as a result of a
reduction in value of repriced stock options.

        Interest expense decreased by $170,896,  from $266,292 in the six months
ended  June 30,  2003 to $95,396 in the six  months  ended  June 30,  2004.  The
decrease is due to the payoff of our note  payable to Doral 18, LLC in September
2003.



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  use),
licensing of that technology for  pharmaceutical or other uses, and other future
activities  are  forward-looking  statements.  You should  keep in mind that all
forward-looking  statements  are based on  management's  existing  beliefs about
present and future events  outside of  management's  control and on  assumptions
that may prove to be incorrect.

                                       19
<PAGE>

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

         o    To  date,  we  have  not  generated   substantial   revenues  from
              operations.  As of June 30, 2004,  we have  generated  $265,712 of
              revenues  from our  nanomaterials  and  titanium  dioxide  pigment
              technology  and  $28,270  from the use of our  Centrifugal  Jig in
              consulting  contracts.  Although we currently  have  approximately
              $903,000 in unfulfilled contractual commitments,  such commitments
              primarily  relate to our  provision  of research  and  development
              services or to sales of products  for  experimental  purposes.  We
              have no  sales or  other  commitments  with  respect  to  on-going
              revenues  from our  nanomaterials  and  titanium  dioxide  pigment
              technology and can provide no assurance that we will ever generate
              significant revenues.

         o    As of August  6,  2004,  we had $9.7  million  in cash,  an amount
              sufficient to fund our ongoing  operations until December 31, 2005
              at current working capital expenditure levels. However, we may use
              our existing  capital sooner than projected in connection  with an
              unanticipated transaction,  litigation or another 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
              significant  amounts of 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.

         o    The market price of our common stock,  like that of the securities
              of other early stage companies,  may be highly volatile. Our stock
              price may change  dramatically as the result of  announcements  of
              our quarterly  results,  new products or  innovations by us or our
              competitors,   uncertainty   regarding   the   viability   of  the
              nanomaterials and titanium dioxide pigment technology, significant
              customer  contracts,  significant  litigation  or other factors or
              events  that  could  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:

              (1)  Intentional  manipulation  of our stock  price by existing or
                   future shareholders;

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

              (3)  The  interest of the market in our business  sector,  without
                   regard to our financial  condition,  results of operations or
                   business prospects;

              (4)  Positive  or negative  statements  or  projections  about our
                   company, or our industry, by analysts,  stock gurus and other
                   persons;

              (5)  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;

                                       20
<PAGE>

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

              (7)  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.


         o    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, however, entered
              into  discussions  with various  minerals and materials  companies
              about  licensing our  technology to such entities for  large-scale
              production of titanium dioxide pigments.  We have not entered into
              any long-term licensing  agreements with respect to the use of our
              titanium  processing  technology  for  large-scale  production  of
              titanium  dioxide  pigments and can provide no  assurance  that we
              will be able to enter  into any such  agreement.  Even if we enter
              into such an agreement,  we would not receive significant revenues
              from such license  until  feasibility  testing is complete and, if
              the  results  of  feasibility  testing  were  negative,  would not
              receive significant revenues at any time.

         o    In the  short  run,  we also plan to use the  titanium  processing
              technology  to produce  TiO2  nanoparticles  and/or to license the
              technology to others.  TiO2  nanoparticles  and other  products we
              intend  to  initially   produce   with  the  titanium   processing
              technology,  such  as  nano-sized  lithium  titanate  for  use  in
              batteries  or  other  nanoparticles  for use in  titanium  metals,
              dental applications or detection of radiological agents, generally
              must  be  customized  for  a  specific   application   working  in
              cooperation   with   manufacturers   of  products   utilizing  the
              nanoparticles  and end users. We are still testing and customizing
              our TiO2 nanoparticle  products for various  applications and have
              no agreements with research partners, manufacturers,  customers or
              others under which any such person has agreed to purchase, license
              or  otherwise  pay  significant  fees to Altair with  respect to a
              nanoparticle application of our technology.  We may never generate
              significant  revenues  producing,  or licensing our technology for
              the production of, TiO2 or other nanoparticles.

         o    We do not presently  have the technical or financial  resources to
              conduct clinical tests on, and take to market,  any pharmaceutical
              application   of  our   titanium   and   nanoparticle   processing
              technology.  In  order  for us to get any  significant,  long-term
              benefit  from  any  potential  pharmaceutical  application  of our
              technology, the following must occur:

              (1)  we must enter into an evaluation license or similar agreement
                   with a pharmaceutical  company under which such company would
                   pay a fixed or  contingent  fee for the right to  evaluate  a
                   pharmaceutical use of our technology for a specific period of
                   time and for an option to  purchase  or receive a license for
                   such use of our technology;

              (2)  clinical tests conducted by such pharmaceutical company would
                   have  to  indicate  that  the   pharmaceutical   use  of  our
                   technology  is  safe,   technically  viable  and  financially
                   viable;

                                       21
<PAGE>

              (3)  such  pharmaceutical  company  would  have to  apply  for and
                   obtain  FDA  approval  of  the   pharmaceutical  use  of  our
                   technology,  or any related  products,  which  would  involve
                   extensive additional testing; and

              (4)  such pharmaceutical company would have to successfully market
                   the product incorporating our technology.

         o    The  products we intend to  initially  produce or license with the
              titanium and nanoparticle  processing technology generally must be
              customized for a specific  application working in cooperation with
              the end user. We are still testing and customizing our prospective
              products,  including  Nanocheck(TM) and our drug delivery systems,
              for various applications and have no long-term agreements with end
              users to  purchase  any of our  nanoparticle  products.  We may be
              unable to recoup our  investment in the titanium and  nanoparticle
              processing  technology  and titanium and  nanoparticle  processing
              equipment for various reasons, including the following:

              (1)  products  being  developed by our  potential  customers  that
                   could use our 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;

              (2)  even if our potential  customers complete  development of and
                   find a market for their  products,  such potential  customers
                   may determine to use nanoparticle products of our competitors
                   for various reasons, including:

              (3)  we may be unable to customize  our  nanoparticle  products to
                   meet the distinct needs of potential customers;

              (4)  potential  customers may purchase from competitors because of
                   perceived or actual quality or compatibility differences; and

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

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

         o    We regard our intellectual property,  particularly our proprietary
              rights in our titanium and nanoparticle processing technology,  as
              critical to our success.  We have received  various  patents,  and
              filed other  patent  applications,  for various  applications  and
              aspects of our titanium and nanoparticle processing 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:

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

              (2)  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;

                                       22
<PAGE>

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

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

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

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

              Because  the  value of our  company  and  common  shares is rooted
              primarily in our proprietary  intellectual  property  rights,  our
              inability to protect our proprietary  intellectual property rights
              or gain a  competitive  advantage  from such  rights  could 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.

         o    As described in "Restructuring  plans and Progress" above, we have
              determined to dispose of the Tennessee mineral property and expect
              such  disposition  to take place by the end of fiscal 2004.  We do
              not expect to receive  significant value for the project's assets,
              even if they are sold, and believe that costs to Altair associated
              with the disposition  transaction will equal or exceed proceeds to
              Altair from the disposition transaction.


         The foregoing factors represent only a sampling of the most significant
of the risks associated with an investment in the Company.

         In addition to the foregoing,  we have included additional risk factors
and  other  cautionary  statements  contained  in our  other  filings  with  the
Securities and Exchange Commission, including our Annual Report on Form 10-K for
the year ended  December 31, 2003. We recommend  that you review such  documents
prior to investing in our common shares.

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.

                                       23
<PAGE>
Item 4.       Controls and Procedures

         (a) Based on the evaluation of our "disclosure controls and procedures"
(as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e))
required by paragraph (b) of Rules 13a-15 or 15d-15, our president and our chief
financial  officer have  concluded  that,  as of June 30, 2004,  our  disclosure
controls and procedures were effective.

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

                           PART II - OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

During the quarter  ended June 30, 2004,  we made a commitment  to issue 100,000
common shares to a shareholder in a private placement as part of a settlement of
various  issues and claims made on Altair by Toyota on Western and Louis Schnur,
the sole owner of Toyota on Western. Such common shares will be offered and sold
in reliance upon the  exemption  for sales of securities  not involving a public
offering,  as set  forth  in  Section  4(2) of the  Securities  Act and Rule 506
promulgated under the Securities Act based upon the following:  (a) the investor
represents and warrants to the Company that it is an  "accredited  investor," as
defined in Rule 501 of Regulation D promulgated under the Securities Act and has
such background,  education, and experience in financial and business matters as
to be able to evaluate the merits and risks of an investment in the  securities;
(b) there is no public  offering  or general  solicitation  with  respect to the
offering;  the  investor  is any  existing  shareholder  of the  Company and the
investor represents and warrants that it is acquiring the securities for its own
account and not with an intent to distribute such  securities;  (c) the investor
is provided with an offering  summary,  a copy of the most recent Annual Reports
on Form 10-K,  Quarterly Reports on Form 10-Q and Current Reports on Form 8-K of
the Company and all other information  requested by the investor with respect to
the Company,  (d) the investor  acknowledges that all securities being purchased
are  "restricted  securities"  for purposes of the Securities Act, and agrees to
transfer such securities only in a transaction registered with the SEC under the
Securities Act or exempt from  registration  under the Securities Act; and (e) a
legend is placed on the certificates and other documents  representing each such
security  stating  that  it is  restricted  and  could  only be  transferred  if
subsequently registered under the Securities Act or transferred in a transaction
exempt from registration under the Securities Act.

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

        We held an Annual Meeting of  Shareholders on June 24, 2004 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:

                                       24
<PAGE>

<TABLE>
<CAPTION>
        Name of Nominee             Votes For       Votes Withheld/Abstentions       Broker Non-Votes
        ---------------             ---------       --------------------------       ----------------
<S>                                 <C>                      <C>                             <C>
        Jon Bengtson                39,844,606               150,618                        -0-
        James Golla                 39,801,901               193,323                        -0-
        George Hartman              39,829,856               165,368                        -0-
        David King                  39,875,286               119,938                        -0-
        Christopher Jones           39,869,356               125,868                        -0-
        Rudi Moerck                 39,798,416               196,808                        -0-
</TABLE>


        2. The shareholders considered whether to appoint Deloitte & Touche, LLP
as auditors and  authorize  the Board of  Directors  to fix their  remuneration.
There were 39,849,250  votes cast in favor, no votes cast against,  36,042 votes
withheld, and no broker non-votes, which vote was sufficient for approval.

        The proxy  statement  with  respect to the Annual  Meeting  described  a
shareholder  proposal  regarding the director  nomination  process  submitted by
Louis  Schnur and  indicated  that,  if neither  Mr.  Schnur nor his  authorized
representative  attended the Annual Meeting in order to present his  shareholder
proposal,  the Company  reserved the right to withdraw it.  Because  neither Mr.
Schnur  nor his  authorized  representative  attended  the Annual  Meeting,  the
shareholder  proposal was not formally  presented  or  considered  at the Annual
Meeting.


Item 6.  Exhibits and Reports on Form 8-K

a) See Exhibit Index attached hereto.

b) On May 18, 2004,  we filed a Form 8-K to clarify  development  progress  with
respect to the Avireco project.





                                       25

<PAGE>

                                   SIGNATURES

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


                             Altair Nanotechnologies Inc.


    August 13, 2004          By:  /s/ Rudi E. Moerck
    ---------------               ----------------------------------------------
             Date                 Rudi E. Moerck, President


    August 13, 2004          By:  /s/ Edward H. Dickinson
    ---------------               -----------------------
             Date                 Edward H. Dickinson, Chief Financial Officer



                                       26
<PAGE>

                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

  Exhibit No.                          Exhibit                            Incorporated by Reference/ Filed Herewith
----------------  ---------------------------------------------------    ---------------------------------------------
<S>               <C>                                                    <C>
      3.1         Articles of Continuance                                Incorporated by reference to the Company's
                                                                         Current Report on Form 8-K filed with the
                                                                         SEC on July 18, 2002, File No. 001-12497.

      4.1         Bylaws                                                 Incorporated by reference to the Company's
                                                                         Quarterly Reporton Form 10-Q filed with
                                                                         the SEC on August 13, 2003, File No.001-12497.

     10.1         Settlement Agreement with Louis Schnur et al           Incorporated by reference to the Company's
                                                                         Amendment No. 2 to Registration Statement
                                                                         on Form S-3, File No. 333-117125, filed
                                                                         with the SEC on July 30, 2004.

     31.1         Section 302 Certification of Chief Executive           Filed herewith
                  Officer

     31.2         Section 302 Certification of Chief Financial           Filed herewith
                  Officer

     32.1         Section 906 Certification of Chief Executive           Filed herewith
                  Officer

     32.2         Section 906 Certification of Chief Financial           Filed herewith
                  Officer
</TABLE>

                                       27