**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





**[X]**
                QUARTERLY
                    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                    ACT OF1934
                    FOR THE QUARTERLY PERIOD ENDED **SEPTEMBER 30,
                    2005**









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








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


(Exact
      name of registrant as specified in its charter)





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






**204
      Edison Way**


**Reno,
      Nevada 89502**


(Address
      of principal executive offices, including zip code)





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






**Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days. YES [** **X[** **NO
        [  ]** .
  **Indicate
        by check mark whether the registrant is an accelerated filer (as defined
        in Rule
        12b-2 of the Act). YES [  ]** **NO
        [** **X]**
  
 **As
        of November 4, 2005 the registrant had 58,990,252 Common Shares
        outstanding.**
 
 **PART
                    I - FINANCIAL INFORMATION****Item
                    1. Financial Statements****ALTAIR
                    NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONSOLIDATED
                    BALANCE SHEETS****(Expressed
                    in United States Dollars)****(Unaudited)**
  **September
                    30,**
                
                **December
                    31,****2005**
                
                **2004****ASSETS****Current
                    Assets**Cash
                    and cash equivalents
                
                $
                11,150,620
                
                $
                7,357,843Investment
                    in available for sale securities
                
                
                15,728,213
                
                
                -Accounts
                    receivable
                
                
                514,291
                
                
                499,599Prepaid
                    expenses and other current assets
                
                
                376,198
                
                
                182,595Total
                    current assets
                
                
                27,769,322
                
                
                8,040,037**Investment
                    in Available for Sale Securities**
                
                
                496,000
                
                
                -**Property,
                    Plant and Equipment, net**
                
                
                6,698,837
                
                
                6,513,907**Patents,
                    net**
                
                
                911,266
                
                
                974,877**Other
                    Assets**
                
                
                75,200
                
                
                18,200**Total
                    Assets**
                
                $
                35,950,625
                
                $
                15,547,021**LIABILITIES
                    AND STOCKHOLDERS' EQUITY****Current
                    Liabilities**Trade
                    accounts payable
                
                $
                672,647
                
                $
                81,030Accrued
                    liabilities
                
                
                537,132
                
                
                295,743Note
                    payable, current portion
                
                
                600,000
                
                
                -Total
                    current liabilities
                
                
                1,809,779
                
                
                376,773**Note
                    Payable, Long-Term Portion**
                
                
                2,400,000
                
                
                2,880,311**Commitments
                    and Contingencies****Stockholders'
                    Equity**Common
                    stock, no par value, unlimited shares authorized;58,990,252
                    and 49,775,694 shares issued andoutstanding
                    at September 30, 2005 and December 31, 2004
                
                
                91,603,870
                
                
                65,505,630Accumulated
                    deficit
                
                
                (59,557,556
                )
                
                (53,215,693
                )Deferred
                    compensation expense
                
                
                (206,468
                )
                
                -Accumulated
                    other comprehensive loss
                
                
                (99,000
                )
                
                -**Total
                    Stockholders' Equity**
                
                
                31,740,846
                
                
                12,289,937**Total
                    Liabilities and Stockholders' Equity**
                
                $
                35,950,625
                
                $
                15,547,021See
                    notes to the consolidated financial
                    statements.
 2
 **ALTAIR
                    NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONSOLIDATED
                    STATEMENTS OF OPERATIONS****(Expressed
                    in United States Dollars)****(Unaudited)**
  **Three
                      Months Ended**
                  
                  **Nine
                      Months Ended****September
                      30,**
                  
                  **September
                      30,****2005**
                  
                  **2004**
                  
                  **2005**
                  
                  **2004****Revenues**License
                      fees
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  695,000
                  
                  $
                  -Product
                      sales
                  
                  
                  8,494
                  
                  
                  3,728
                  
                  
                  74,087
                  
                  
                  6,571Commercial
                      collaborations
                  
                  
                  327,479
                  
                  
                  140,603
                  
                  
                  584,520
                  
                  
                  375,518Contracts
                      and grants
                  
                  
                  249,432
                  
                  
                  202,576
                  
                  
                  762,259
                  
                  
                  258,800Total
                      revenues
                  
                  
                  585,405
                  
                  
                  346,907
                  
                  
                  2,115,866
                  
                  
                  640,889**Operating
                      Expenses**Cost
                      of product sales
                  
                  
                  1,427
                  
                  
                  613
                  
                  
                  17,434
                  
                  
                  1,149Research
                      and development
                  
                  
                  1,290,354
                  
                  
                  520,376
                  
                  
                  2,816,031
                  
                  
                  1,508,231Sales
                      and marketing
                  
                  
                  238,151
                  
                  
                  46,070
                  
                  
                  1,159,259
                  
                  
                  245,786General
                      and administrative
                  
                  
                  1,146,528
                  
                  
                  973,080
                  
                  
                  4,067,661
                  
                  
                  3,449,495Depreciation
                      and amortization
                  
                  
                  263,105
                  
                  
                  226,823
                  
                  
                  759,190
                  
                  
                  668,333Total
                      operating expenses
                  
                  
                  2,939,565
                  
                  
                  1,766,962
                  
                  
                  8,819,575
                  
                  
                  5,872,994**Loss
                      from Operations**
                  
                  
                  (2,354,160
                  )
                  
                  (1,420,055
                  )
                  
                  (6,703,709
                  )
                  
                  (5,232,105
                  )**Other
                      Income (Expense)**Interest
                      expense
                  
                  
                  (52,397
                  )
                  
                  (50,336
                  )
                  
                  (154,689
                  )
                  
                  (145,732
                  )Interest
                      income
                  
                  
                  227,503
                  
                  
                  29,706
                  
                  
                  515,162
                  
                  
                  73,080Gain
                      (Loss) on foreign exchange
                  
                  
                  2,228
                  
                  
                  361
                  
                  
                  1,373
                  
                  
                  (356
                  )Total
                      other income (expense), net
                  
                  
                  177,334
                  
                  
                  (20,269
                  )
                  
                  361,846
                  
                  
                  (73,008
                  )**Net
                      Loss**
                  
                  $
                  (2,176,826
                  )
                  $
                  (1,440,324
                  )
                  $
                  (6,341,863
                  )
                  $
                  (5,305,113
                  )**Loss
                      per common share - Basic and diluted**
                  
                  $
                  (0.04
                  )
                  $
                  (0.03
                  )
                  $
                  (0.11
                  )
                  $
                  (0.11
                  )**Weighted
                      average shares - Basic and diluted**
                  
                  
                  58,940,760
                  
                  
                  49,121,984
                  
                  
                  57,338,796
                  
                  
                  48,401,132See
                      notes to the consolidated financial statements.
 3
 **ALTAIR
                    NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONSOLIDATED
                    STATEMENTS OF STOCKHOLDERS' EQUITY****(Expressed
                    in United States Dollars)****(Unaudited)**
  **Accumulated****Deferred**
                
                **Other****Compen-**
                
                **Compre-****Common
                    Stock**
                
                **Accumulated**
                
                **sation**
                
                **hensive****Shares**
                
                **Amount**
                
                **Deficit**
                
                **Expense**
                
                **Income
                    (Loss)**
                
                **Total**BALANCE,
                    JANUARY 1, 2005
                
                
                49,775,694
                
                $
                65,505,630
                
                $
                (53,215,693
                )
                $
                -
                
                $
                -
                
                $
                12,289,937Comprehensive
                    loss:Net
                    loss
                
                
                -
                
                
                -
                
                
                (6,341,863
                )
                
                -
                
                
                -
                
                
                (6,341,863
                )Other
                    comprehensive loss,net
                    of taxes of $0
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (99,000
                )
                
                (99,000
                )Comprehensive
                    loss:
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (6,440,863
                )Variable
                    accounting on stock options
                
                
                -
                
                
                433,115
                
                
                -
                
                
                -
                
                
                -
                
                
                433,115Exercise
                    of stock options
                
                
                1,166,000
                
                
                1,777,290
                
                
                -
                
                
                -
                
                
                -
                
                
                1,777,290Exercise
                    of warrants
                
                
                2,920,244
                
                
                4,300,635
                
                
                -
                
                
                -
                
                
                -
                
                
                4,300,635Issuance
                    of restricted stock
                
                
                90,000
                
                
                257,400
                
                
                -
                
                
                (257,400
                )
                
                -
                
                
                -Amortization
                    of deferredcompensation
                    expense
                
                
                -
                
                
                -
                
                
                -
                
                
                50,932
                
                
                -
                
                
                50,932Common
                    stock issued, net ofissuance
                    costs of $1,617,044
                
                
                5,038,314
                
                
                19,329,800
                
                
                -
                
                
                -
                
                
                -
                
                
                19,329,800BALANCE,
                    SEPTEMBER 30, 2005
                
                
                58,990,252
                
                $
                91,603,870
                
                $
                (59,557,556
                )
                $
                (206,468
                )
                $
                (99,000
                )
                $
                31,740,846See
                    notes to the consolidated financial statements.
 4
 **ALTAIR
                    NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONSOLIDATED
                    STATEMENTS OF CASH FLOWS****(Expressed
                    in United States Dollars)****(Unaudited)**
  **Three
                      Months Ended**
                  
                  **Nine
                      Months Ended****September
                      30,**
                  
                  **September
                      30,****2005**
                  
                  **2004**
                  
                  **2005**
                  
                  **2004****Cash
                      flows from operating activities:**Net
                      loss
                  
                  $
                  (2,176,826
                  )
                  $
                  (1,440,324
                  )
                  $
                  (6,341,863
                  )
                  $
                  (5,305,113
                  )Adjustments
                      to reconcile net loss to net cashused
                      in operating activities:Depreciation
                      and amortization
                  
                  
                  263,105
                  
                  
                  226,823
                  
                  
                  759,190
                  
                  
                  668,333Stock
                      options issued to non-employees
                  
                  
                  -
                  
                  
                  8,345
                  
                  
                  -
                  
                  
                  262,045Stock
                      options issued to employees
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  39,001Shares
                      issued for services
                  
                  
                  -
                  
                  
                  178,000
                  
                  
                  -
                  
                  
                  178,000Variable
                      accounting on stock options
                  
                  
                  (44,249
                  )
                  
                  (328,770
                  )
                  
                  433,115
                  
                  
                  (406,848
                  )Securities
                      received in payment of license fees
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (595,000
                  )
                  
                  -Amortization
                      of discount on note payable
                  
                  
                  17,397
                  
                  
                  48,962
                  
                  
                  119,689
                  
                  
                  144,358Amortization
                      of deferred compensation expense
                  
                  
                  46,861
                  
                  
                  -
                  
                  
                  50,932
                  
                  
                  -Loss
                      on disposal of fixed assets
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  33,393Changes
                      in assets and liabilities:Accounts
                      receivable, net
                  
                  
                  (133,914
                  )
                  
                  (154,954
                  )
                  
                  (14,692
                  )
                  
                  (200,360
                  )Prepaid
                      expenses and other current assets
                  
                  
                  (281,660
                  )
                  
                  (78,121
                  )
                  
                  (193,603
                  )
                  
                  (39,699
                  )Other
                      assets
                  
                  
                  (52,000
                  )
                  
                  -
                  
                  
                  (57,000
                  )
                  
                  -Trade
                      accounts payable
                  
                  
                  (84,441
                  )
                  
                  (52,195
                  )
                  
                  591,617
                  
                  
                  139,319Accrued
                      liabilities
                  
                  
                  (78,761
                  )
                  
                  33,257
                  
                  
                  241,389
                  
                  
                  384,187**Net
                      cash used in operating activities**
                  
                  
                  (2,524,488
                  )
                  
                  (1,558,977
                  )
                  
                  (5,006,226
                  )
                  
                  (4,103,384
                  )**Cash
                      flows from investing activities:**Purchase
                      of available for sale securities
                  
                  
                  (15,728,213
                  )
                  
                  -
                  
                  
                  (15,728,213
                  )
                  
                  -Purchase
                      of property and equipment
                  
                  
                  (360,871
                  )
                  
                  (162,576
                  )
                  
                  (880,509
                  )
                  
                  (341,433
                  )**Net
                      cash used in investing activities**
                  
                  
                  (16,089,084
                  )
                  
                  (162,576
                  )
                  
                  (16,608,722
                  )
                  
                  (341,433
                  )**Cash
                      flows from financing activities:**Issuance
                      of common shares for cash, net ofissuance
                      costs
                  
                  
                  -
                  
                  
                  -
                  
                  
                  19,329,800
                  
                  
                  -Proceeds
                      from exercise of stock options
                  
                  
                  37,100
                  
                  
                  -
                  
                  
                  1,777,290
                  
                  
                  737,709Proceeds
                      from exercise of warrants
                  
                  
                  40,963
                  
                  
                  409,505
                  
                  
                  4,300,635
                  
                  
                  8,705,861**Net
                      cash provided by financing activities**
                  
                  
                  78,063
                  
                  
                  409,505
                  
                  
                  25,407,725
                  
                  
                  9,443,570**Net
                      increase (decrease) in cash and cash equivalents**
                  
                  
                  (18,535,509
                  )
                  
                  (1,312,048
                  )
                  
                  3,792,777
                  
                  
                  4,998,753**Cash
                      and cash equivalents, beginning of period**
                  
                  
                  29,686,129
                  
                  
                  10,180,470
                  
                  
                  7,357,843
                  
                  
                  3,869,669**Cash
                      and cash equivalents, end of period**
                  
                  $
                  11,150,620
                  
                  $
                  8,868,422
                  
                  $
                  11,150,620
                  
                  $
                  8,868,422**Supplemental
                      disclosures:**Cash
                      paid for interest
                  
                  
                  None
                  
                  
                  None
                  
                  
                  None
                  
                  
                  NoneCash
                      paid for income taxes
                  
                  
                  None
                  
                  
                  None
                  
                  
                  None
                  
                  
                  NoneSee
                      notes to the consolidated financial
                      statements.
 5
 **ALTAIR
        NANOTECHNOLOGIES INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 
 **Note
        1. Basis of Preparation of Financial Statements**
  These
        unaudited interim financial statements of Altair Nanotechnologies Inc. and
        its
        subsidiaries (collectively, “Altair”, “we” or the “Company”) have been prepared
        in accordance with the rules and regulations of the United States Securities
        and
        Exchange Commission (the “Commission”). Such rules and regulations allow the
        omission of certain information and footnote disclosures normally included
        in
        financial statements prepared in accordance with accounting principles generally
        accepted in the United States of America, so long as the statements are not
        misleading. In the opinion of Company management, these financial statements
        and
        accompanying notes contain all adjustments (consisting of only normal recurring
        items) necessary to present fairly the financial position and results of
        operations for the periods shown. These interim financial statements should
        be
        read in conjunction with the audited financial statements and notes thereto
        contained in our Amendment No. 1 to Annual Report on Form 10-K/A for the
        year
        ended December 31, 2004, as filed with the Commission on March 10, 2005.
  The
        consolidated financial statements do not include any adjustments relating
        to the
        recoverability and classification of recorded asset amounts or the amounts
        and
        classification of liabilities that might be necessary should we be unable
        to
        continue as a going concern. Our continuation as a going concern is dependent
        upon our ability to generate sufficient cash flow to meet our obligations
        on a
        timely basis, to obtain additional financing or refinancing as may be required,
        to develop commercially viable products and processes, and ultimately to
        establish profitable operations. We have financed operations through operating
        revenues and through the issuance of equity securities (common stock,
        convertible debentures, stock options and warrants), and debt (term notes).
        Until we are able to generate positive operating cash flows, additional funds
        will be required to support operations. We believe that current working capital,
        cash receipts from anticipated sales and funding through sales of common
        stock
        will be sufficient to enable us to fund our ongoing operations for approximately
        three to four years at
        current working capital expenditure levels .
 
 The
        results of operations for the three- and nine-month periods ended September
        30,
        2005 are not necessarily indicative of the results to be expected for the
        full
        year.
 
 **Note
        2. Summary of Significant Accounting Policies**
 
 **Net
        Loss Per Common Share** - Basic
        earnings per share is computed using the weighted average number of common
        shares outstanding during the period.  Diluted earnings per share is
        computed using the weighted average number of common and potentially dilutive
        shares outstanding during the period.  Potentially dilutive shares consist
        of the incremental common shares issuable upon the exercise of stock options
        and
        warrants.  Potentially dilutive shares are excluded from the computation if
        their effect is antidilutive.  We had a net loss for all periods presented
        herein; therefore, none of the stock options and warrants outstanding during
        each of the periods presented were included in the computation of diluted
        loss
        per share as they were antidilutive.
 
 **Cash,
        Cash Equivalents and Investment in Available for Sale Securities (short-term)
        -** Cash,
        cash equivalents and **** investment
        in available for sale securities (short-term) consist principally of bank
        deposits, institutional money market funds and corporate notes. Short-term
        investments which are highly liquid, have insignificant interest rate risk
        and
        maturities of 90 days or less are classified as cash and cash equivalents.
        Investments which do not meet the definition of cash equivalents are classified
        as held-to-maturity or available-for-sale in accordance with the provisions
        of
        Statement of Financial Accounting Standards No. 115, *Accounting
        for Certain Investments in Debt and Equity Securities* .
        Investments purchased with the intent to hold for more than one year are
        classified as long-term investments.
 
 **Investment
        in Available for Sale Securities (long-term) -** Available
        for sale securities (long-term) **** includes
        publicly-traded equity investments which are classified as available for
        sale
        and recorded at market using the specific identification method. Unrealized
        gains and losses (except for other than temporary impairments) are recorded
        in
        other comprehensive income (loss), which is reported as a component of
        stockholders’ equity. We evaluate our investments on a quarterly basis to
        determine if a potential other than temporary impairment exists. Our evaluation
        considers the investees’ specific business conditions as well as general
        industry and market conditions.
  6
 **Accumulated
        Other Comprehensive Income (Loss) -** Accumulated
        other comprehensive income (loss) consists entirely of unrealized gain (loss)
        on
        the investment in available for sale securities. The components of comprehensive
        loss for the three- and nine-month periods ended September 30, 2005 and 2004
        are
        as follows:
 
 **Three
                  Months Ended**
              
              **Nine
                  Months Ended****September
                  30,**
              
              **September
                  30,****2005**
              
              **2004**
              
              **2005**
              
              **2004**Net
                  loss
              
              $
              2,176,826
              
              $
              1,440,324
              
              $
              6,341,863
              
              $
              5,305,113Unrealized
                  (gain) loss on investment in availablefor
                  sale securities, net of taxes of $0
              
              
              (76,000
              )
              
              -
              
              
              99,000
              
              
              -Comprehensive
                  loss
              
              $
              2,100,826
              
              $
              1,440,324
              
              $
              6,440,863
              
              $
              5,305,113
  **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.
 
 **Deferred
        Income Taxes -** We
        use
        the asset and liability approach for financial accounting and reporting for
        income taxes. Deferred income taxes are provided for temporary differences
        in
        the bases of assets and liabilities as reported for financial statement purposes
        and income tax purposes. We have recorded a valuation allowance against all
        net
        deferred tax assets. The valuation allowance reduces deferred tax assets
        to an
        amount that represents management’s best estimate of the amount of such deferred
        tax assets that more likely than not will be realized.
 
 **Stock-Based
        Compensation -** ****** Our
        stock
        option plans are subject to the provisions of Statement of Financial Accounting
        Standards (“SFAS”) No. 123, *Accounting
        for Stock-Based Compensation* .
        Under
        the provisions of SFAS 123, employee and director stock-based compensation
        expense can be measured using either the intrinsic-value method as prescribed
        by
        Accounting Principles Board (“APB”) Opinion No. 25, *Accounting
        for Stock Issued to Employees* ,
        or the
        fair value method described in SFAS 123. We have elected to follow the
        accounting provisions of APB 25 for our employee and director stock-based
        awards
        and to furnish the pro forma disclosures required under SFAS 123.
 
 In
        calculating pro forma compensation related to employee stock option grants,
        the
        fair value of each stock option is estimated on the date of grant using the
        Black-Scholes option-pricing model and the following weighted average
        assumptions:
 
 **Nine
                  Months Ended****September
                  30,****2005**
              
              **2004**Dividend
                  yield
              
              None
              
              NoneExpected
                  volatility
              
              
              105
              %
              
              73
              %Risk-free
                  interest rate
              
              
              3.89
              %
              
              4.23
              %Expected
                  life (years)
              
              
              2.83
              
              
              6.40
 
 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:
 7
  **Three
                  Months Ended**
              
              **Nine
                  Months Ended****September
                  30,**
              
              **September
                  30,****2005**
              
              **2004**
              
              **2005**
              
              **2004**Net
                  loss (basic and diluted) as reported
              
              $
              (2,176,826
              )
              $
              (1,440,324
              )
              $
              (6,341,863
              )
              $
              (5,305,113
              )Add
                  (Deduct): change in stock-based employeecompensation
                  included in reported net loss,net
                  of $0 related tax effects
              
              
              44,249
              
              
              328,770
              
              
              (433,115
              )
              
              367,847Add:
                  total stock-based employee compensationexpense
                  determined under fair value basedmethod
                  for all awards, net of $0 related tax effects
              
              
              218,260
              
              
              208,030
              
              
              832,714
              
              
              1,172,439Pro
                  forma net loss applicable to shareholders
              
              $
              (1,914,317
              )
              $
              (903,524
              )
              $
              (5,942,264
              )
              $
              (3,764,827
              )Loss
                  per common share (basic and diluted):As
                  reported
              
              $
              (0.04
              )
              $
              0.03
              
              $
              (0.11
              )
              $
              0.11Pro
                  forma
              
              $
              (0.03
              )
              $
              0.04
              
              $
              (0.10
              )
              $
              0.14
 
 **Revenue
        Recognition** - We
        recognize revenue when persuasive evidence of an arrangement exists, delivery
        has occurred or service has been performed, the fee is fixed and determinable,
        and collectibility is probable.  During the nine months ended September 30,
        2005, our revenues were derived from license fees, product sales, commercial
        collaborations and contracts and grants.  License fees are recognized when
        the agreement is signed, we have performed all material obligations related
        to
        the particular milestone payment or other revenue component and the earnings
        process is complete. Revenue for product sales is recognized at the time
        the
        purchaser has accepted delivery of the product. Based on the specific terms
        and
        conditions of each contract/grant, revenues are recognized on a time and
        materials basis, a percentage of completion basis and/or a completed contract
        basis. Revenue under contracts based on time and materials is recognized
        at
        contractually billable rates as labor hours and expenses are incurred. Revenue
        under contracts based on a fixed fee arrangement is recognized based on various
        performance measures, such as stipulated milestones.  As these milestones
        are achieved, revenue is recognized.  From time to time, facts develop that
        may require us to revise our estimated total costs or revenues expected. 
The cumulative effect of revised estimates is recorded in the period in which
        the facts requiring revisions become known.  The full amount of anticipated
        losses on any type of contract is recognized in the period in which it becomes
        known.
 
 Included
        in sales and marketing expenses for the nine months ended September 30, 2005
        is
        $500,000 that was paid to a sales and marketing firm in connection with the
        RenaZorb TM licensing agreement.
 
 **Recent
        Accounting Pronouncements -** As
        described above in *Stock-Based
        Compensation* ,
        we
        account for stock-based compensation awards issued to employees using the
        intrinsic value measurement provisions of APB 25. Accordingly, no compensation
        expense has been recorded for stock options granted to employees with exercise
        prices greater than or equal to the fair value of the underlying common stock
        at
        the option grant date. On December 16, 2004, the FASB issued Statement of
        Financial Accounting Standards No. 123 (revised 2004) (“SFAS 123R”), *Share-Based
        Payment,* which
        eliminates the alternative of applying the intrinsic value measurement
        provisions of APB 25 to stock compensation awards issued to employees. The
        new
        standard requires enterprises to measure the cost of employee services received
        in exchange for an award of equity instruments based on the grant-date fair
        value of the award. That cost will be recognized over the period during which
        an
        employee is required to provide services in exchange for the award, known
        as the
        requisite service period (usually the vesting period).
 
 We
        have
        not yet quantified the effects of the adoption of SFAS 123R, but it is expected
        that the new standard will result in significant stock-based compensation
        expense. The pro forma effects on net loss and loss per share if we had applied
        the fair value recognition provisions of original SFAS 123 on stock compensation
        awards (rather than applying the intrinsic value measurement provisions of
        APB
        25) are disclosed above in *Stock-Based
        Compensation* .
        Although such pro forma effects of applying original SFAS 123 may be indicative
        of the effects of adopting SFAS 123R, the provisions of these two statements
        differ in some important respects. The actual effects of adopting SFAS 123R
        will
        be dependent on numerous factors including, but not limited to, the valuation
        model chosen by the Company to value stock-based awards, the assumed award
        forfeiture rate, the accounting policies adopted concerning the method of
        recognizing the fair value of awards over the requisite service period, and
        the
        transition method (as described below) chosen for adopting SFAS 123R.
 8
 SFAS
        123R
        will be effective for our fiscal year beginning January 1, 2006, and requires
        the use of either the Modified Prospective Application Method or the Modified
        Retrospective Method.  Under the Modified Prospective Method, SFAS 123R is
        applied to new awards and to awards modified, repurchased, or cancelled after
        the effective date.  Additionally, compensation cost for the portion of
        awards for which the requisite service has not been rendered (such as unvested
        options) that are outstanding as of the date of adoption shall be recognized
        as
        the remaining requisite services are rendered.  The compensation cost
        relating to unvested awards at the date of adoption shall be based on the
        grant-date fair value of those awards as calculated for pro forma disclosures
        under the original SFAS 123.  In addition, companies may use the Modified
        Retrospective Application Method.  This method may be applied to all prior
        years for which the original SFAS 123 was effective or only to prior interim
        periods in the year of initial adoption.  If the Modified Retrospective
        Application Method is applied, financial statements for prior periods shall
        be
        adjusted to give effect to the fair-value-based method of accounting for
        awards
        on a consistent basis with the pro forma disclosures required for those periods
        under the original SFAS 123.
 
 **Overhead
        Allocation** -
        Facilities overhead, which is comprised primarily of occupancy and related
        expenses, is allocated to research and development based on labor
        costs.
 
 **Deferred
        Compensation Expense** - The
        issuance of restricted stock under our stock incentive plan is recorded as
        deferred compensation expense in the shareholders’ equity section of the balance
        sheet and is amortized to expense over the period in which the shares are
        subject to restriction.
 
 **Reclassifications
        -** ****** Certain
        reclassifications have been made to prior period amounts to conform to
        classifications adopted in the current period.
  **Note
        3. Notes Payable**
 
 September
                  30, 2005
              
              December
                  31, 2004Note
                  payable to BHP MineralsInternational,
                  Inc.
              
              $
              3,000,000
              
              $
              2,880,311Less
                  current portion
              
              
              (600,000
              )
              
              -Long-term
                  portion of notes payable
              
              $
              2,400,000
              
              $
              2,880,311
 
 The
        note
        payable to BHP Minerals International, Inc., in the face amount of $3,000,000,
        was entered into on August 8, 2002 and is secured by the property we acquired.
        Interest on the note did not begin to accrue until August 8, 2005. As a result,
        we imputed the interest at a rate of 11% and reduced the face amount of the
        note
        payable by $566,763 at the date of issuance, then amortized that amount to
        interest expense from August 8, 2002 through August 8, 2005. The first payment
        of $600,000 of principal plus accrued interest is due February 8, 2006.
        Additional payments of $600,000 plus accrued interest are due annually on
        February 8, 2007 through 2010.
 
 **Note
        4. Intangible Assets**
 
 Our
        intangible assets consist of patents and related expenditures associated
        with
        the nanomaterials and titanium dioxide pigment technology. We are amortizing
        these assets over their useful lives. The amortized intangible asset balance
        as
        of September 30, 2005 was:
 
 Gross
              
              
              
              NetCarrying
              
              Accumulated
              
              CarryingAmount
              
              Amortization
              
              AmountPatents
                  and related expenditures
              
              $
              1,517,736
              
              $
              (606,470
              )
              $
              911,266
  9
 The
        weighted average amortization period for patents and related expenditures
        is
        approximately 16.5 years. Amortization expense, which represents the
        amortization relating to the identified amortizable intangible assets, was
        $63,611 and $64,270 for the nine months ended September 30, 2005 and 2004,
        respectively, and $21,204 and $21,430 for the three months ended September
        30,
        2005 and 2004, respectively. For each of the next five years, amortization
        expense relating to intangibles is expected to be $84,816 per year. Management
        believes the net carrying amount of intangible assets will be recovered by
        future cash flows generated by commercialization of the titanium processing
        technology.
 
 **Note
        5. Related Party Transactions**
 
 On
        December 31, 2003, we entered into a consulting agreement with Advanced
        Technology Group LLC (“ATG”), whose managing partner is David King, a Director
        of the Company. The agreement stipulates that ATG will furnish consulting
        services in reviewing potential federal grant opportunities and providing
        proposal development assistance on selected programs for a period of one
        year.
        The agreement was subsequently extended for an additional year through December
        31, 2005. Under the terms of the agreement, ATG is paid on a contingency
        basis
        at a rate of 6% of the first $1,000,000 in grant monies secured from
        applications prepared in any calendar year plus 3.5% of any cumulative amounts
        over $1,000,000. ATG also agreed to provide consulting services at a rate
        of
        $200 per hour upon request of the Company. Through September 30, 2005, ATG
        earned $2,833 for certain consulting services and $28,611 in connection with
        our
        National Science Foundation Phase II grant application.
 
 **Note
        6. Business Segment Information**
 
 Management
        views the Company as operating in four business segments: Performance Materials,
        Life Sciences, Tennessee Mineral Property, and the Altair Jig. Reportable
        segment data reconciled to the consolidated financial statements as of and
        for
        the three- and nine-month periods ended September 30, 2005 and 2004 is as
        follows:
 
 **(Income)**
              
              **Depreciation****Loss
                  From**
              
              **and****Net
                  Sales**
              
              **Operations**
              
              **Amortization**
              
              **Assets****Three
                  Months Ended September 30, 2005**Performance
                  Materials
              
              $
              581,515
              
              $
              960,275
              
              $
              237,746
              
              $
              5,645,287Life
                  Sciences
              
              
              3,890
              
              
              316,460
              
              
              446
              
              
              538,396Tennessee
                  Mineral Property
              
              
              -
              
              
              (138,095
              )
              
              -
              
              
              25,143Altair
                  Jig
              
              
              -
              
              
              7,526
              
              
              -
              
              
              -Corporate
                  and other
              
              
              -
              
              
              1,207,994
              
              
              24,913
              
              
              29,741,799Consolidated
                  Total
              
              $
              585,405
              
              $
              2,354,160
              
              $
              263,105
              
              $
              35,950,625**Three
                  Months Ended September 30, 2004**Performance
                  Materials
              
              $
              346,907
              
              $
              1,052,190
              
              $
              212,477
              
              $
              5,263,759Life
                  Sciences
              
              
              -
              
              
              (22,686
              )
              
              -
              
              
              -Tennessee
                  Mineral Property
              
              
              -
              
              
              24,539
              
              
              -
              
              
              -Altair
                  Jig
              
              
              -
              
              
              5,734
              
              
              -
              
              
              -Corporate
                  and other
              
              
              -
              
              
              360,278
              
              
              14,346
              
              
              11,274,515Consolidated
                  Total
              
              $
              346,907
              
              $
              1,420,055
              
              $
              226,823
              
              $
              16,538,274
 10
  **Nine
                  Months Ended September 30, 2005**Performance
                  Materials
              
              $
              1,391,095
              
              $
              2,310,192
              
              $
              690,033
              
              $
              5,645,287Life
                  Sciences
              
              
              724,771
              
              
              (124,123
              )
              
              825
              
              
              538,396Tennessee
                  Mineral Property
              
              
              -
              
              
              (98,563
              )
              
              -
              
              
              25,143Altair
                  Jig
              
              
              -
              
              
              10,708
              
              
              -
              
              
              -Corporate
                  and other
              
              
              -
              
              
              4,605,495
              
              
              68,332
              
              
              29,741,799Consolidated
                  Total
              
              $
              2,115,866
              
              $
              6,703,709
              
              $
              759,190
              
              $
              35,950,625**Nine
                  Months Ended September 30, 2004**Performance
                  Materials
              
              $
              640,889
              
              $
              3,015,834
              
              $
              622,012
              
              $
              5,263,759Life
                  Sciences
              
              
              -
              
              
              171,168
              
              
              -
              
              
              -Tennessee
                  Mineral Property
              
              
              -
              
              
              169,018
              
              
              -
              
              
              -Altair
                  Jig
              
              
              -
              
              
              7,888
              
              
              -
              
              
              -Corporate
                  and other
              
              
              -
              
              
              1,868,197
              
              
              46,321
              
              
              11,274,515Consolidated
                  Total
              
              $
              640,889
              
              $
              5,232,105
              
              $
              668,333
              
              $
              16,538,274
 
 In
        the
        table above, corporate and other expense in the (Income) Loss From Operations
        column includes such expenses as investor relations, business consulting,
        general legal expense, accounting and audit, general insurance expense,
        non-employee and employee variable accounting stock option compensation expense,
        shareholder information expense and general office expense.
 
 For
        the
        three months ended September 30, 2005, we had sales to four major customers,
        each of which accounted for 10% or more of revenues. Total sales to these
        customers for the three months ended September 30, 2005 and the balance of
        their
        accounts receivable at September 30, 2005 were as follows:
 
 **Sales
                  - 3 Months**
              
              **Accounts****Ended**
              
              **Receivable
                  at****Customer**
              
              **September
                  30, 2005**
              
              **September
                  30, 2005****Performance
                  Materials Division:**Western
                  Michigan University
              
              $
              100,595
              
              $
              68,289Western
                  Oil Sands
              
              
              262,846
              
              
              272,162UNLV
                  Research Foundation
              
              
              83,792
              
              
              58,335National
                  Science Foundation
              
              
              65,045
              
              
              -
 
 For
        the
        three months ended September 30, 2004, we had sales to three major customers,
        each of which accounted for 10% or more of revenues. Total sales to these
        customers for the three months ended September 30, 2004 and the balance of
        their
        accounts receivable at September 30, 2004 were as follows:
 
 **Sales
                  - 3 Months**
              
              **Accounts****Ended**
              
              **Receivable
                  at****Customer**
              
              **September
                  30, 2004**
              
              **September
                  30, 2004****Performance
                  Materials Division:**Titanium
                  Metals Corp.
              
              $
              39,310
              
              $
              39,310Western
                  Michigan University
              
              
              153,576
              
              
              117,451Western
                  Oil Sands
              
              
              101,013
              
              
              54,047
 
 For
        the nine months ended September 30, 2005, we had sales to four major customers,
        each of which accounted for 10% or more of revenues. Total sales to these
        customers for the nine months ended September 30, 2005 and the balance of
        their
        accounts receivable at September 30, 2005 were as follows:  11
 **Sales
                  - 9 Months**
              
              **Accounts****Ended**
              
              **Receivable
                  at****Customer**
              
              **September
                  30, 2005**
              
              **September
                  30, 2005****Performance
                  Materials Division:**Western
                  Michigan University
              
              $
              349,034
              
              $
              68,289Western
                  Oil Sands
              
              
              428,080
              
              
              272,162UNLV
                  Research Foundation
              
              
              314,847
              
              
              58,335**Life
                  Sciences Division:**Spectrum
                  Pharmaceuticals, Inc.
              
              
              724,271
              
              
              28,881
 
 
 For
        the
        nine months ended September 30, 2004, we had sales to three major customers,
        each of which accounted for 10% or more of revenues. Total sales to these
        customers for the nine months ended September 30, 2004 and the balance of their
        accounts receivable at September 30, 2004 were as follows:
 
 **Sales
                  - 9 Months**
              
              **Accounts****Ended**
              
              **Receivable
                  at****Customer**
              
              **September
                  30, 2004**
              
              **September
                  30, 2004****Performance
                  Materials Division:**Titanium
                  Metals Corp.
              
              $
              114,310
              
              $
              39,310Western
                  Michigan University
              
              
              209,800
              
              
              117,451Western
                  Oil Sands
              
              
              215,218
              
              
              54,047
 
 Revenues
        for the three-month periods ended September 30, 2005 and 2004 by geographic
        area
        were as follows:
 
 **Revenues
                  -**
              
              **Revenues
                  -****3
                  Months Ended**
              
              **3
                  Months Ended****Geographic
                  information (a):**
              
              **September
                  30, 2005**
              
              **September
                  30, 2004**United
                  States
              
              $
              310,352
              
              $
              245,894Canada
              
              
              274,164
              
              
              101,013Other
                  foreign countries
              
              
              889
              
              
              -Total
              
              $
              585,405
              
              $
              346,907(a)
                  Revenues are attributed to countries based on location of
                  customer.
 
 Revenues
        for the nine-month periods ended September 30, 2005 and 2004 by geographic
        area
        were as follows:
 
 **Revenues
                  -**
              
              **Revenues
                  -****9
                  Months Ended**
              
              **9
                  Months Ended****Geographic
                  information (a):**
              
              **September
                  30, 2005**
              
              **September
                  30, 2004**United
                  States
              
              $
              1,673,756
              
              $
              425,671Canada
              
              
              440,580
              
              
              215,218Other
                  foreign countries
              
              
              1,530
              
              
              -Total
              
              $
              2,115,866
              
              $
              640,889(a)
                  Revenues are attributed to countries based on location of
                  customer.
 12
 **Note
        7. Investment in Available for Sale Securities**
 
 Investments
        in available for sale securities (short-term) consist of auction rate corporate
        notes. The notes are long-term instruments with expiration dates through
        2043.  Interest is settled and the rate is reset every 7 to 28
        days.
 
 Investment
        in available for sale securities (long-term) consists of 100,000 restricted
        shares of Spectrum Pharmaceuticals, Inc. (“Spectrum”) common stock received in
        January 2005. The shares are "restricted securities," as defined in Rule
        144 and are not registered for resale.   They will be eligible for
        resale under Rule 144 beginning in January 2006. The shares were received
        as
        partial payment of licensing fees when Spectrum entered into a license agreement
        for RenaZorb TM .
        On
        receipt, the shares were recorded at their market value of $595,000 as measured
        by their closing price on the Nasdaq SmallCap Stock Market. At September
        30,
        2005, their fair value was $496,000, representing an unrealized holding loss
        of
        $99,000. We do not believe that there is an other than temporary impairment
        at
        September 30, 2005.
 
 **Note
        8. Other Transactions**
 
 On
        February 15, 2005, we sold 5,000,000 common shares to institutional investors.
        The sales were made at $4.05 per share with net proceeds to the Company,
        after
        expenses, of approximately $19.2 million. The placement agent also received
        a
        warrant to purchase 250,000 shares of our common stock at $5.27 per share.
        The
        warrant has a four-year term. Using a Black-Scholes pricing model, we estimate
        these warrants have a value of approximately $581,000 at their date of
        issuance.
 
 In
        May
        2005, shareholders approved the 2005 Stock Incentive Plan (the “Plan”) under
        which 3,000,000 common shares are available for issuance to employees, officers
        and directors of Altair as well as selected service providers. Through September
        30, 2005, the Board of Directors has granted 90,000 shares of restricted
        stock
        under the Plan. The shares were recorded as deferred compensation expense
        in the
        shareholders’ equity section of the balance sheet at their fair value on the
        date of issue and are being amortized to expense over the vesting
        period.
  13
 **Item** **2.** **MANAGEMENT’S
        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION** **AND RESULTS OF OPERATIONS**
 
 The
        following discussion summarizes the material changes in our financial condition
        between December 31, 2004 and September 30, 2005 and the material changes
        in our
        results of operations and financial condition between the three- and nine-month
        periods ended September 30, 2004 and September 30, 2005. This discussion
        should
        be read in conjunction with Management’s Discussion and Analysis of Financial
        Condition and Results of Operations included in the Company’s Annual Report on
        Form 10-K for the year ended December 31, 2004, as amended.
 
 **Overview**
 
 We
        are a
        Canadian company, with principal assets and operations in the United States,
        whose primary business is developing and commercializing advanced ceramic
        nanomaterials and titanium dioxide pigment technologies. We are organized
        into
        two divisions, a Performance Materials Division and a Life Sciences Division.
        Our research, development, production and marketing efforts are currently
        directed toward six market applications that utilize our proprietary
        technologies:
 
 The
        Performance Materials Division .
 ·
              Advanced
                  Materials
 o
              The
                  marketing of titanium dioxide pigment production
                  technology.
 o
              The
                  marketing and production of nano-structured ceramic powders for
                  thermal
                  spray applications.
 o
              The
                  development of nano-structured ceramic powders for nano-sensor
                  applications.
 o
              The
                  development of titanium dioxide electrode structures in connection
                  with
                  research programs aimed at developing a lower-cost process for
                  producing
                  titanium metals and related alloys.
 ·
              Air
                  and Water Treatment
 o
              The
                  development of photocatalytic materials for air
                  cleansing.
 o
              The
                  marketing, licensing and production of NanocheckTMproducts for phosphate binding to prevent or reduce algae growth
                  in
                  recreational and industrial water.
 ·
              Alternative
                  Energy
 o
              The
                  development of materials for high performance batteries, photovoltaics
                  and
                  transparent electrodes for hydrogen generation and fuel
                  cells.
 
 The
        Life Sciences Division .
 ·
              Pharmaceutical
                  Products
 o
              The
                  co-development of RenaZorbTM, a test-stage active pharmaceutical
                  ingredient, which is designed to be useful in the treatment of
                  elevated
                  serum phosphate levels in patients undergoing kidney
                  dialysis.
 o
              The
                  co-development of Renalan, a test stage active pharmaceutical ingredient,
                  which is designed to be useful in the treatment of elevated serum
                  phosphate levels in companion animals suffering from chronic renal
                  failure.
 ·
              Chemical
                  Delivery Products
 o
              The
                  development of TiNano SpheresTM,
                  which are rigid, hollow, porous, high surface area ceramic micro
                  structures that are derived from Altair’s proprietary process technology
                  for the delivery of chemicals, drugs and biocides.
 ·
              Biocompatible
                  Materials
 o
              The
                  development of nanomaterials for use in various products for dental
                  fillings and dental products.
 
 We
        also
        provide contract research services on select projects where we can utilize
        our
        resources to develop intellectual property for our core technology and/or
        new
        products.
 
 We
        have
        generated, and expect to continue to generate, revenues from license fees,
        product sales, commercial collaborations, contracts and grants.
 
 We
        have
        discontinued work on both the Tennessee mineral property and Altair jig segments
        and are in the process of disposing of the mineral leases and other property
        in
        Tennessee.
 
 14
  **General
        Outlook**
 
 During
        the nine-month period ended September 30, 2005, we licensed RenaZorbTM to
        Spectrum Pharmaceuticals, Inc. (“Spectrum”) and recognized $695,000 of licensing
        revenue in connection with the licensing agreement. Prior to this transaction,
        s ubstantially
        all of our revenues came from commercial collaborations, grants and other
        research or development work which we have undertaken primarily in order
        to
        benefit from the resulting technology. Our gross profit margin on such research
        and development work is very low, and in order that we may be profitable
        in the
        long run, our business plan focuses on the development of products and
        technologies that we expect will eventually bring a substantial amount of
        higher-margin revenues from licensing, product sales and other sources.
 
 As
        we
        attempt to significantly expand our revenues from licensing, sales and other
        sources, some of the key near-term events that will affect our long term
        success
        prospects include the following:
 
 ·
              Spectrum
                  must complete animal testing of our RenaZorbTM product demonstrating
                  specified result levels for RenaZorbTM. The tests were completed in
                  September 2005 and, although we have been informed orally that
                  the results
                  were positive, we have not yet received a copy of the test results
                  and
                  Altair has not received the milestone payment of 100,000 shares
                  of
                  Spectrum Pharmaceuticals, Inc. stock. Altair and Spectrum entered the
                  early stages of a dispute resolution process as required by our
                  license
                  agreement. This process may delay the product development process and
                  our receipt of our next milestone
                  payment.
 
 ·
              We
                  are in discussions with American and European animal health companies
                  with
                  respect to development and licensing of Renalan, a potential drug
                  for
                  treatment of phosphate in dogs and cats with chronic renal disease.
                  In order to commence production and sale of Renalan, we must license
                  the
                  product to an animal health company and it must successfully complete
                  the
                  testing and possibly the approval process of the FDA and/or other
                  regulatory agencies.
 
 ·
              We
                  must begin receiving commercial orders for NanoCheckTMfrom
                  pool chemical companies. We are continuing to prepare for the market
                  introduction of NanoCheckTM later this year or next year.
                  Testingof
                  NanoCheckTMproducts
                  in pools owned or serviced by pool chemical companies that are
                  major
                  suppliers to the recreational water market is continuing, but we
                  do not
                  anticipate that we will generate significant commercial sales of the
                  product in 2005.
 
 ·
              The
                  initial phase of work for the Western Oil Sands license agreement
                  is
                  expected to be complete by December 31, 2005. In order for this
                  project to
                  move toward commercialization, we must successfully complete the
                  initial
                  phase, it must be determined that the oil sands tailings have sufficient
                  economic value to allow the process to be viable, and Western Oil
                  Sands
                  must decide to proceed with phase two.
 
 ·
              We
                  must successfully develop a profitable battery materials business.
                  The
                  ultimate commercialization of our battery materials will be dependent
                  upon
                  our ability to secure a technology license, product sales agreements
                  or
                  similar agreements with one or more battery manufacturers. We have
                  entered
                  into a development agreement or material evaluation agreement with
                  a
                  number of battery manufacturers and are currently in discussions
                  with
                  other battery manufacturers but cannot project when, or if, we
                  will enter
                  into a commercialization agreement with respect to our battery
                  materials
                  technology and what the terms of such agreement may be.
 
 Although
        it is not essential that all of these projects be successful in order to
        permit
        substantial long-term revenue growth, we believe that full commercialization
        of
        several of our technologies will be necessary in order to expand our revenues
        enough to create a likelihood of our becoming profitable in the long term.
        We
        are optimistic with respect to our current key projects, as well as others
        we
        are pursuing, but recognize that, with respect to each, there are development,
        marketing, partnering and other risks to be overcome.
 
 15
 **Recent
        Business Developments**
 
 **Performance
        Materials Division**
 
 *Altair
        Hydrochloride Pigment Process*
 
 Altair
        has entered into an additional agreement with Western Oil Sands, Inc.
        (“Western”) to provide pilot plant and office space within our facilities for
        Western’s five employees and consultants to facilitate on-site collaboration
        between the two companies in furthering the engineering study of manufacturing
        titanium dioxide pigment from Western’s tar sand tailings using the Altair
        Hydrochloride Pigment Process. We subsequently entered into an agreement
        with
        Western for the design and construction of the pilot separation plant in
        our
        Reno Nevada facility. Revenues from leasing the office and pilot plant space
        are
        expected to be minor.
  *Catalyst
        Support and Electrode Structures for Titanium Metals*
 
 In
        January 2004, we entered into a contract with Titanium Metals Corporation
        (“TIMET”) to provide custom oxide feedstocks for a titanium metal research
        program funded by the Department of Defense, Defense Advanced Research Projects
        Agency (“DARPA”). We became a subcontractor for the DARPA program with
        responsibility to design and develop a titanium oxide electrode structure
        and
        supply TIMET optimized titanium oxide feedstock to produce 50 pounds of titanium
        metal per day in batch production demonstrations. During the course of the
        contract, we provided TIMET with specified quantities of feedstock materials
        as
        their preferred supplier. We currently have reservations about the rate of
        progress of the project and, accordingly, are seeking alternative sponsors
        and
        partners.
 
 *Lithium
        Ion Battery Electrode Materials*
 
 In
        December 2004, we completed work under Phase I of a National Science Foundation
        (“NSF”) grant for development of electrode nanomaterials for next generation
        lithium ion power sources. The results of the research indicated that lithium
        ion batteries prepared with nano-structured lithium titanate spinel anode
        materials exhibit rapid charge and discharge rates, improved cycle life
        performance and a decrease in specific energy density when compared to
        conventional lithium ion, nickel cadmium and nickel metal hydride battery
        materials. In June 2005, we were awarded a grant of $476,850 from the NSF
        for
        Phase II. Phase I work was designed to optimize the anode electrode materials
        and Phase II is designed to develop cathode electrode materials, thus resulting
        in matched anode-cathode electrode materials for optimum electrochemical
        performance.
 
 We
        are
        focusing our marketing and development efforts on markets presently dominated
        by
        nickel cadmium or nickel metal hydride batteries, such as power tools and
        automobiles, in which rapid charging, long cycle life and the additional
        power
        from the rapid discharge should prove advantageous. Secondarily, we intend
        to
        pursue markets, such as cell phone batteries, presently dominated by lithium
        ion
        batteries, which are characterized by slow charge and discharge rates and
        high
        specific energy density. A battery with high specific energy density requires
        less volume per Watt hour and, if the discharge rate is limited, discharges
        slower than a battery with low specific energy density. We believe that,
        as our
        battery materials improve and the market realizes the benefits of our rapid
        charge/discharge “contrarian strategy”, as well as the benefits of using
        environmentally friendly nano titanate spinal, our battery materials could
        become competitive in markets presently dominated by lithium ion batteries;
        however, because of the importance presently placed on specific energy density
        in such markets, we expect that our best short-term opportunities do not
        lie in
        this area.
 
 Further,
        another aspect of our development focus is on product life, initially cycle
        life, then charge retention and calendar life. In cycle life, each
        charge/discharge cycle tends to cause a loss of capacity. Controlling this
        rate
        of capacity loss is essential to producing batteries that have 3,000 to 5,000
        cycle life, important for electric vehicles and hybrid-electric vehicles.
        Charge
        retention life describes how fast a charged lithium ion battery loses its
        charge
        in storage. Calendar life describes how quickly lithium ion batteries lose
        their
        charge over time, whether in use or in storage.
 
 ** In
        April
        2005, we signed a partnering agreement with Advanced Battery Technologies,
        Inc.
        (“ABAT”), a U.S. and Chinese-owned company, for the development of lithium
        polymer batteries in China. The agreement covers the incorporation of our
        battery electrode nanomaterials into ABAT's existing polymer battery product
        lines on a testing and development basis. It specifically focuses on development
        of high power, lithium polymer batteries for use in electric vehicles where
        long
        life cycles and fast charge times are desirable. We have provided ABAT with
        sample nanomaterials for their use in design and development of the batteries.
        ABAT’s phase I testing of batteries using our battery electrodes showed that the
        nano-structured electrode materials are performing as anticipated and have
        significantly improved recharging capability. We received an order for and
        have
        shipped 2,200 pounds of lithium titanate spinel electrode nanomaterials to
        ABAT
        for use in their development program for polymer lithium ion batteries for
        electric vehicles. These
        materials are intended for use in the construction of developmental polymer
        lithium ion batteries designated to power one electric bus and one electric
        sedan. We expect road testing of the batteries in these vehicles late in
        the
        fourth quarter of 2005.
 
 16
 We
        have
        significantly expanded our battery initiative projects by adding thirteen
        highly
        qualified, advanced battery scientists, engineers, manufacturing and marketing
        specialists, several of whom will be located at a new facility in central
        Indiana. At both this and our Reno facility, we plan to install manufacturing
        equipment for the production of prototype lithium ion cells, batteries and
        battery packs in sufficient quantities to demonstrate end-user products in
        power
        tools, automobiles, trucks and buses.
 
 *Hydrogen
        Generation*
 
 In
        November 2004, we entered into an agreement with the University of Nevada,
        Las
        Vegas Research Foundation to act as a subcontractor under a $3,000,000 grant
        awarded to them by the U.S. Department of Energy (“DOE”) for joint research
        activities related to solar hydrogen production at a refilling station under
        development in Las Vegas. The agreement, which is effective through December
        31,
        2005, provides for payments to Altair of $400,000 for research and development
        work utilizing nanotechnology processes for the production and commercialization
        of solar-based hydrogen technologies. On November 1, 2005, we announced that
        we
        will receive $750,000 under a Phase III grant award from the DOE for
        collaborative research and development work beginning October 1, 2005 and
        continuing through December 2006.
 
 **Life
        Sciences Division**
 
 *RenaZorbTM
        Products*
 
 In
        January 2005, we signed a licensing agreement with Spectrum which grants
        them
        exclusive worldwide rights to develop, market and sell RenaZorbTM. We have
        supplied Spectrum with test quantities of RenaZorbTM in order to conduct in-life
        animal testing. The
        tests
        were completed in September 2005 and, although we have been informed orally
        that
        the results were positive, we have not yet received a copy of the test results
        and Altair has not received the milestone payment of 100,000 shares of Spectrum
        Pharmaceuticals, Inc. stock. Altair and Spectrum entered the early stages
        of a
        dispute resolution process as required by our license agreement. This process
        may delay the product development process and our receipt of our next milestone
        payment.
 
 *Renalan
        Products*
 
 We
        are
        conducting third-party discussions toward the potential licensing of Renalan
        (similar chemistry to RenaZorbTM) for use in companion animal applications,
        primarily dogs and cats with chronic renal disease. Renalan, as a phosphate
        binder, has the potential to alleviate hyperphosphatemia, a condition associated
        with chronic renal disease in companion animals.
 
 **Other
        Developments**
 
 The
        remediation work on the Tennessee mineral properties has been substantially
        completed. Certain re-vegetation measures, the planting of small trees, cannot
        be completed until late winter 2006. Once completed, the applicable regulatory
        authorities will review and, if acceptable, approve completion of remediation
        work and a multi-year monitoring plan.
 
 **Liquidity
        and Capital Resources**
  **Current
        and Expected Liquidity**
 
 Our
        cash
        and short-term investments increased from $7,357,843 at December 31, 2004
        to
        $26,878,833 at September 30, 2005 due primarily to the sale of 5,000,000
        common
        shares on February 14, 2005, which provided net proceeds of $19.2 million,
        and
        the exercise of stock options and warrants which provided $6.1 million. We
        intend to use these funds for working capital, capital expenditures, research
        and development activities and the possible acquisition of other technologies.
 
 17
 Our
        average net cash outflow increased from $530,000 per month during the calendar
        year 2004 to $650,000 per month for the nine months ended September 30, 2005
        due
        primarily to an increase in employees, increased expenses for patent work,
        an
        increase in internal R&D projects, capital asset expenditures, and
        compliance with the Sarbanes-Oxley Act. Our monthly cash outflow is expected
        to
        increase during the fourth quarter of 2005, primarily as the result of hiring
        additional employees and increasing capital expenditures.
 
 During
        the remainder of 2005, we expect to generate revenues from licensing, product
        sales, commercial collaborations, contracts and grants by utilizing our
        nanomaterials and titanium dioxide pigment technology. We currently have
        four
        contracts in place that are expected to generate revenues during the fourth
        quarter of 2005. These are:
 
 ·
              a
                  contract with Western Oil Sands, Inc. for a testing program related
                  to the
                  production of titanium dioxide pigment and pigment-related products
                  from
                  oil sands.
 ·
              a
                  contract with Western Michigan University to develop nanosensors
                  for the
                  detection of chemical, biological and radiological agents.
 ·
              an
                  agreement with the University of Nevada, Las Vegas Research Foundation
                  to
                  act as a subcontractor under a grant awarded to them by the U.S.
                  Department of Energy for joint research activities related to solar
                  hydrogen production.
 ·
              a
                  contract with NSF for Phase II work on the development of advanced
                  battery
                  materials which began October 1, 2005.
 
 We
        had
        anticipated receiving a milestone payment from Spectrum Pharmaceuticals,
        Inc. in
        the form of 100,000 shares of common stock during the fourth quarter of 2005.
        As
        explained above, receipt of this payment during 2005 now appears
        questionable.
 
 At
        November 4, 2005, we had 58,990,252 common shares issued and outstanding.
        As of
        that same date, there were outstanding warrants to purchase up to 1,826,490
        shares of common stock and options to purchase up to 2,556,200 shares of
        common
        stock.
 
 **Capital
        Commitments**
  We
          intend
          to purchase equipment for both our Reno, Nevada and Anderson, Indiana facilities
          for use in the development of advanced battery materials and production
          of
          prototype batteries and battery packs. We expect to spend approximately
          $2
          million for this equipment and related facility upgrades through June 30,
          2006.
  The
          following table discloses aggregate information about our contractual
          obligations and the periods in which payments are due as of September 30,
          2005:
 **Less
                    Than**
                
                
                
                
                
                **After****Contractual
                    Obligations**
                
                **Total**
                
                **1
                    Year**
                
                **1-3
                    Years**
                
                **4-5
                    Years**
                
                **5
                    Years**Notes
                    Payable
                
                $
                3,000,000
                
                $
                600,000
                
                $
                1,200,000
                
                $
                1,200,000
                
                $
                -Interest
                    on notes payable
                
                
                525,000
                
                
                105,000
                
                
                294,000
                
                
                126,000
                
                
                -Mineral
                    Leases*
                
                
                126,251
                
                
                96,851
                
                
                21,550
                
                
                7,850
                
                
                -Contractual
                    Service Agreements
                
                
                169,991
                
                
                144,991
                
                
                25,000
                
                
                -
                
                
                -Facilities
                    Leases
                
                
                210,872
                
                
                12,000
                
                
                198,872
                
                
                -
                
                
                -Unfulfilled
                    Purchase Orders
                
                
                282,642
                
                
                282,642
                
                
                -
                
                
                -
                
                
                -Total
                    Contractual Obligations
                
                $
                4,314,756
                
                $
                1,241,484
                
                $
                1,739,422
                
                $
                1,333,850
                
                $
                -
  *
                    Although we expect to terminate all mineral leases as soon as
                    is
                    practicable, the obligations are included here because they are
                    not yet
                    terminated.
 
 **Critical
        Accounting Policies and Estimates**
 
 The
        following discussion and analysis of our financial condition and results
        of
        operations is based on our consolidated financial statements. The preparation
        of
        these financial statements requires us to make estimates and judgments that
        affect the reported amounts of assets, liabilities, revenue and expenses,
        and
        related disclosure of contingent assets and liabilities. On an on-going basis,
        we evaluate our critical accounting policies and estimates, including those
        related to long-lived assets and stock-based compensation. We base our estimates
        on historical experience and on various other assumptions that we believe
        to be
        reasonable under the circumstances, the results of which form the basis for
        making judgments about the carrying values of assets and liabilities that
        are
        not readily apparent from other sources. Actual results may differ from these
        estimates under different assumptions or conditions.
 18
 We
        believe that the following critical accounting policies affect the more
        significant judgments and estimates used in the preparation of our consolidated
        financial statements. These judgments and estimates affect the reported amounts
        of assets and liabilities and the reported amounts of revenues and expenses
        during the reporting periods. Changes to these judgments and estimates could
        adversely affect the Company’s future results of operations and cash flows.
 
 ·
              Long-Lived
                  assets. Our long-lived assets consist principally of the nanomaterials
                  and
                  titanium dioxide pigment assets, the intellectual property (patents
                  and
                  patent applications) associated with those assets, and a building.
                  At
                  September 30, 2005, the carrying value of these assets was approximately
                  $7,337,000, or 20% of total assets. We evaluate the carrying value
                  of
                  long-lived assets when events or circumstances indicate that an
                  impairment
                  may exist. In our evaluation, we estimate the net undiscounted
                  cash flows
                  expected to be generated by the assets, and recognize impairment
                  when such
                  cash flows will be less than the carrying values. Events or circumstances
                  that could indicate the existence of a possible impairment include
                  obsolescence of the technology, an absence of market demand for
                  the
                  product, and/or the partial or complete lapse of technology rights
                  protection.
 
 ·
              Stock-Based
                  Compensation. We have stock option plans which provide for the
                  issuance of
                  common stock options to employees and service providers. Although
                  SFAS No.
                  123,*Accounting
                  for Stock Based Compensation*,
                  encourages entities to adopt a fair-value-based method of accounting
                  for
                  stock options and similar equity instruments, it also allows an
                  entity to
                  continue measuring compensation cost for stock-based compensation
                  for
                  employees and directors using the intrinsic-value method of accounting
                  prescribed by APB 25,*Accounting
                  for Stock Issued to Employees*.
                  We have elected to follow the accounting provisions of APB 25 and
                  to
                  furnish the pro forma disclosures required under SFAS 123 for employees
                  and directors, but we also issue warrants and options to non-employees
                  that are recognized as expense when issued in accordance with the
                  provisions of SFAS 123. We calculate compensation expense under
                  SFAS 123
                  using a modified Black-Scholes option pricing model. In so doing,
                  we
                  estimate certain key assumptions used in the model. We believe
                  the
                  estimates we use, which are presented in Note 2 of the Notes to
                  Consolidated Financial Statements included above in this Form 10-Q,
                  are
                  appropriate and reasonable. As explained in Note 2 to the Consolidated
                  Financial Statements, the Financial Accounting Standards Board
                  has issued
                  a revision to SFAS 123 that eliminates the alternative of applying
                  the
                  intrinsic value measurement provisions of APB 25. We are required
                  to adopt
                  the revised SFAS 123 no later than January 1, 2006. Although we
                  have not
                  yet quantified the effects of adoption, it is expected that the
                  new
                  standard will result in significant additional expense, depending
                  upon the
                  nature and amount of stock-based compensation awards which may
                  be
                  granted.
 
 ·
              Revenue
                  Recognition. We recognize revenue when persuasive evidence of an
                  arrangement exists, delivery has occurred or the service has been
                  performed, the fee is fixed and determinable, and collectibility
                  is
                  probable.  During the nine months ended September 30, 2005, our
                  revenues were derived from license fees, product sales, commercial
                  collaborations and contracts and grants.  License fees are recognized
                  when the agreement is signed, we have performed all material obligations
                  related to the particular milestone payment or other revenue component
                  and
                  the earnings process is complete. Revenue for product sales is
                  recognized
                  at the time the purchaser has accepted delivery of the product.
                  Based on
                  the specific terms and conditions of each contract or grant, revenues
                  are
                  recognized on a time and materials basis, a percentage of completion
                  basis
                  and/or a completed contract basis. Revenue under contracts based
                  on time
                  and materials is recognized at contractually billable rates as
                  labor hours
                  and expenses are incurred. Revenue under contracts based on a fixed
                  fee
                  arrangement is recognized based on various performance measures,
                  such as
                  stipulated milestones.  As these milestones are achieved, revenue is
                  recognized.  From time to time, facts develop that may require us to
                  revise our estimated total costs or revenues expected.  The
                  cumulative effect of revised estimates is recorded in the period
                  in which
                  the facts requiring revisions become known.  The full amount of
                  anticipated losses on any type of contract is recognized in the
                  period in
                  which it becomes known.
 
 ·
              Overhead
                  Allocation. Facilities overhead, which is comprised primarily of
                  occupancy
                  and related expenses, is initially recorded in general and administrative
                  expenses and then allocated monthly to research and development
                  expense
                  based on labor costs. Facilities overhead allocated to research
                  and
                  development projects may be chargeable when invoicing customers
                  under
                  certain research and development
                  contracts.
 
 19
 ·
              Allowance
                  for Doubtful Accounts. The allowance for doubtful accounts is based
                  on our
                  assessment of the collectibility of specific customer accounts
                  and the
                  aging of accounts receivable.  We analyze historical bad debts, the
                  aging of customer accounts, customer concentrations, customer
                  credit-worthiness, current economic trends and changes in our customer
                  payment patterns when evaluating the adequacy of the allowance
                  for
                  doubtful accounts.  From period to period, differences in judgments
                  or estimates utilized may result in material differences in the
                  amount and
                  timing of our bad debt expenses.
  **Results
        of Operations**
 
 *Three
        Months Ended September 30, 2005 Compared to Three Months Ended September
        30,
        2004*
 
 The
        net
        loss for the quarter ended September 30, 2005, which was the third quarter
        of
        our 2005 fiscal year, totaled $2,176,826 ($.04 per share) compared to a net
        loss
        of $1,440,324 ($.03 per share) in the third quarter of 2004.
 
 Total
        revenues for the three months ended September 30, 2005 were $585,405 compared
        to
        $346,907 for the same period of 2004. Revenues
        from contracts and grants increased by $46,856, from $202,576 in the quarter
        ended September 30, 2004 to $249,432 in the same quarter of 2005. Revenues
        were
        generated under three contracts to (1) provide research, under a contract
        with
        Western Michigan University, involving a technology used in the detection
        of
        chemical, biological and radiological agents, (2) provide research for the
        University of Nevada, Las Vegas Research Foundation utilizing nanotechnology
        processes for the production and commercialization of solar-based hydrogen
        technologies, and (3) supply nano-sized anode and cathode materials for design
        and development of high capacity lithium ion battery and super capacitor
        applications under a contract with the National Science Foundation. At September
        30, 2005, our backlog of work under existing contracts was approximately
        $635,000.
 
 Revenues
        from commercial collaborations increased by $186,876, from $140,603 in the
        third
        quarter of 2004 to $327,479 in the third quarter of 2005. The increase is
        due to
        additional revenues from the Western Oil Sands project resulting from billings
        for the design and construction of a pilot separation plant.
 
 Research
        and development (“R&D”) expenses increased by $769,978, from $520,376 in the
        third quarter of 2004 to $1,290,354 in the same quarter of 2005. Labor costs
        increased from approximately $334,000 in the third quarter of 2004 to
        approximately $419,000 in the same quarter of 2005 due to new employee additions
        and salary increases. Costs also increased primarily as a result of expenditures
        on new contract R&D projects, including battery materials and materials for
        use in solar hydrogen production, increased expenditures for internal R&D
        and temporary employees hired for R&D projects.
 
 Sales
        and
        marketing expenses increased by $192,081, from $46,070 in the third quarter
        of
        2004 to $238,151 in the third quarter of 2005. The increase is due to staff
        increases and increased business development activities.
 
 General
        and administrative ("G&A") expenses increased by $173,448, from $973,080 in
        third quarter of 2004 to $1,146,528 in the third quarter of 2005. Stock option
        compensation expense, a non-cash item, increased by approximately $285,000,
        from
        approximately $(329,000) in the third quarter of 2004 to $(44,000) in the
        third
        quarter of 2005, due to an increase in value of stock options repriced in
        prior
        years, and consulting fees increased by approximately $317,000 due primarily
        to
        costs related to compliance with the Sarbanes-Oxley Act These increases were
        partially offset by a decrease in investor relations expense of approximately
        $208,000 as a result of a cutback in our investor relations programs and
        a
        decrease in other general and office expenses of approximately $225,000.
 
 Interest
        income increased by $197,797, from $29,706 in the third quarter of 2004 to
        $227,503 in the third quarter of 2005 due to the significant increase in
        cash
        available for investment that was generated through the sale of common shares
        and the exercise of warrants and options in early 2005.
 
 20
 *Nine
        months Ended September 30, 2005 Compared to Nine months Ended September 30,
        2004*
 
 For
        the
        nine months ended September 30, 2005, the net loss was $6,341,863 ($.11 per
        share) compared to a net loss of $5,305,113 ($.11 per share) for the same
        period
        of 2004.
 
 Total
        revenues for the nine months ended September 30, 2005 were $2,115,866 compared
        to $640,889 for the same period in 2004. Included in revenues was $695,000
        representing the initial license fee paid by Spectrum Pharmaceuticals in
        connection with the license of Renazorb TM .
        Contract and grant revenues increased by $503,459, from $258,800 in the nine
        months ended September 30, 2004 to $762,259 in the same period of 2005. The
        increase is due to increased revenues under the Western Michigan University
        contract (nanosensor technology) and new agreements with the University of
        Nevada, Las Vegas Research Foundation (solar hydrogen generation) and the
        NSF
        (advanced battery materials). Commercial collaborations revenues increased
        by
        $209,002, from $375,518 in the nine months ended September 30, 2004 to $584,520
        in the same period of 2005. The increase is due to additional revenues from
        the
        Western Oil Sands project resulting from billings for the design and
        construction of a pilot separation plant. Product sales increased by $67,516,
        from $6,571 in the nine months ended September 30, 2004 to $74,087 in the
        same
        period of 2005, primarily due to increased sales of thermal spray grade powders
        and sales of Nanocheck TM .
 
 R&D
        expenses increased by $1,307,800, from $1,508,231 in the nine months ended
        September 30, 2004 to $2,816,031 in the same period of 2005. Labor costs
        increased from approximately $784,000 in the nine months ended September
        30,
        2004 to approximately $1,066,000 in the same period of 2005 due to new employee
        additions and salary increases. Costs also increased primarily as a result
        of
        expenditures on new contract R&D projects, including battery materials and
        materials for use in solar hydrogen production, increased expenditures for
        internal R&D and temporary employees hired for R&D
        projects.
 
 Sales
        and
        marketing expenses increased by $913,473, from $245,786 in the nine months
        ended
        September 30, 2004 to $1,159,259 in the same period of 2005. The increase
        is due
        to payment of a $500,000 fee to RBC Capital Markets in connection with the
        RenaZorb TM licensing agreement, increased payroll expense resulting from additional
        staff
        and increased business development activities.
 
 G&A
        expenses increased by $618,166, from $3,449,495 in the nine months ended
        September 30, 2004 to $4,067,661 in the same period of 2005. Stock option
        compensation expense, a non-cash item, increased by approximately $840,000,
        from
        approximately $(407,000) in the nine months ended September 30, 2004 to
        approximately $433,000 in the same period of 2005 due to an increase in value
        of
        stock options repriced in prior years. Legal expense increased by approximately
        $372,000, from approximately $404,000 in the nine months ended September
        30,
        2004 to approximately $776,000 in the same period of 2005 due to increased
        patent attorney fees paid in connection with patent work and increased attorney
        fees in connection with regulatory work. In addition, consulting fees increased
        by approximately $570,000 due primarily to costs related to compliance with
        the
        Sarbanes-Oxley Act. These increases were partially offset by decreases in
        certain expenses. Investor relations expense decreased by approximately $671,000
        as a result of a cutback in our investor relations programs and general
        consulting decreased by approximately $209,000. In addition, facilities overhead
        costs transferred from G&A to R&D increased by approximately $100,000
        and audit fees decreased by approximately $53,000.
 
 Interest
        income increased by $442,082, from $73,080 in the nine months ended September
        30, 2004 to $515,162 in the same period of 2005 due to the significant increase
        in cash available for investment that was generated through the sale of common
        shares and the exercise of warrants and options in early 2005.
  **Forward-Looking
        Statements**
 
 This
        Quarterly Report on Form 10-Q (this “Report”) contains forward-looking
        statements within the meaning of Section 27A of the Securities Act of 1933,
        as
        amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
        Such statements can be identified by the use of the forward-looking words
        "anticipate," "estimate," "project," "likely," "believe," "intend," "expect,"
        or
        similar words. These statements discuss future expectations, contain projections
        regarding future developments, operations, or financial conditions, or state
        other forward-looking information. Statements in this report regarding the
        ability of the Company to raise working capital necessary to fund our
        operations, development of the nanomaterials and titanium dioxide pigment
        processing technology and assets (including for pharmaceutical and battery
        uses), and other future activities are forward-looking statements. You should
        keep in mind that all forward-looking statements are based on management’s
        existing beliefs about present and future events outside of management’s control
        and on assumptions that may prove to be incorrect.
 
 21
 Among
        the
        key factors that may have a direct bearing on the Company's future results
        and
        value are various risks and uncertainties including, but not limited to,
        the
        following:
  ***We
        may continue to experience significant losses from operations.***
 
 We
        have
        experienced a loss from operations in every fiscal year since our inception.
        Our
        losses from operations were $6,904,955 in 2004 and $6,703,709 in the nine
        months
        ended September 30, 2005. We
        will
        continue to experience a net operating loss at least until the applications
        of
        our nanomaterials and titanium dioxide pigment technology begin generating
        revenues in excess of our operating expenses. Even if any or all applications
        of
        the nanomaterials and titanium dioxide pigment technology begin generating
        such
        revenues, the revenues may not exceed our costs of production and operating
        expenses. We may not ever realize a profit from operations.
  ***Our
        patents and other protective measures may not adequately protect our proprietary
        intellectual property, and we may be infringing on the rights of others.***
 
 We
        regard
        our intellectual property, particularly our proprietary rights in our
        nanomaterials and titanium dioxide pigment technology, as critical to our
        success. We have received various patents, and filed other patent applications,
        for various applications and aspects of our nanomaterials and titanium dioxide
        pigment technology and other intellectual property. In addition, we generally
        enter into confidentiality and invention agreements with our employees and
        consultants. Such patents and agreements and various other measures we take
        to
        protect our intellectual property from use by others may not be effective
        for
        various reasons, including the following:
 
 ·
              Our
                  pending patent applications may not be granted for various reasons,
                  including the existence of similar patents or defects in the
                  applications;
 ·
              The
                  patents we have been granted may be challenged, invalidated or
                  circumvented because of the pre-existence of similar patented or
                  unpatented intellectual property rights or for other
                  reasons;
 ·
              Parties
                  to the confidentiality and invention agreements may have such agreements
                  declared unenforceable or, even if the agreements are enforceable,
                  may
                  breach such agreements;
 ·
              The
                  costs associated with enforcing patents, confidentiality and invention
                  agreements or other intellectual property rights may make aggressive
                  enforcement cost prohibitive;
 ·
              Even
                  if we enforce our rights aggressively, injunctions, fines and other
                  penalties may be insufficient to deter violations of our intellectual
                  property rights; and
 ·
              Other
                  persons may independently develop proprietary information and techniques
                  that, although functionally equivalent or superior to our proprietary
                  intellectual information and techniques, do not breach our patented
                  or
                  unpatented proprietary rights.
 
 Because
        the value of our company and common stock is rooted primarily in our proprietary
        intellectual property rights, our inability to protect these rights, or gain
        a
        competitive advantage from such rights, could have a material adverse effect
        on
        our business.
 
 In
        addition, we may inadvertently be infringing on the proprietary rights of
        other
        persons and may be required to obtain licenses to certain intellectual property
        or other proprietary rights from third parties. Such licenses or proprietary
        rights may not be made available under acceptable terms, if at all. If we
        do not
        obtain required licenses or proprietary rights, we could encounter delays
        in
        product development or find that the development or sale of products requiring
        such licenses is foreclosed.
  ***We
        have a substantial number of warrants and options outstanding and may issue
        a
        significant number of additional shares upon exercise
        thereof.***
 
 As
        of
        November 4, 2005, there were outstanding warrants to purchase up to 1,826,490
        shares of common stock and options to purchase up to 2,556,200 shares of
        common
        stock. **** The
        existence of such warrants and options, and any additional warrants and options
        we issue in the future, may hinder future equity offerings, and the exercise
        of
        such warrants and options may further dilute the interests of all shareholders.
        The shares of common stock issuable upon the exercise of many of our outstanding
        warrants are subject to resale registration statements, and all of our options
        are subject to a registration statement on Form S-8. Accordingly, future
        resale
        of the shares of common stock issuable on the exercise of such warrants and
        options in most cases occurs immediately after exercise and may have an adverse
        effect on the prevailing market price of the shares of common
        stock.
  22
 ***Our
        competitors have more resources than we do, which may give them a competitive
        advantage.***
 
 We
        have
        limited financial and other resources and, because of our early stage of
        development, have limited access to capital. We compete or may compete against
        entities that are much larger than we are, have more extensive resources
        than we
        do and have an established reputation and operating history. Because of their
        size, resources, reputation, history and other factors, certain of our
        competitors may be able to exploit acquisition, development and joint venture
        opportunities more rapidly, easily or thoroughly than we can. In addition,
        potential customers may choose to do business with our more established
        competitors, without regard to the comparative quality of our products, because
        of their perception that our competitors are more stable, are more likely
        to
        complete various projects, are more likely to continue as a going concern
        and
        lend greater credibility to any joint venture.
  ***We
        may not be able to generate substantial revenues from the licensing of
        RenaZorb*** ***TM*** ***.***
 
 On
        January 28, 2005, we entered into a license agreement with Spectrum
        Pharmaceuticals, Inc. under which we granted Spectrum the exclusive worldwide
        rights to develop, market and sell RenaZorb TM ,
        a
        potential drug candidate for patients with kidney disease, for human therapeutic
        and diagnostic applications. Under the terms of the license, we will not
        generate substantial recurring revenues unless and until Spectrum completes
        clinical testing of RenaZorb TM and
        applies for and receives marketing approval from the FDA and similar regulatory
        agencies worldwide, begins marketing products containing RenaZorb TM and
        experiences substantial, sustained market penetration with such products.
        There
        are substantial risks associated with that process, including the following:
 
 ·
              further
                  testing conducted by Spectrum may indicate that RenaZorbTMis
                  less effective than existing products, is unsafe, has significant
                  side
                  effects or is otherwise not viable;
 ·
              Spectrum
                  may be unable to obtain FDA or other regulatory approval of
                  RenaZorbTMfor technical, political or other reasons or, even if it obtains
                  such
                  approval, may not obtain such approval on a timely
                  basis;
 ·
              products
                  containing RenaZorbTMmay not be accepted in the market for various reasons, including
                  questions
                  about its efficacy, safety and side effects or because of poor
                  marketing
                  by Spectrum;
 ·
              Spectrum
                  may terminate the license agreement, experience financial or other
                  problems or otherwise fail to effectively test, seek approval for
                  and
                  market RenaZorbTM;
                  and
 ·
              prior
                  to or following regulatory approval, superior products may be developed
                  and introduced into the market.
 
 If
        any or
        the foregoing risks, or other risks associated with developing pharmaceutical
        products were to occur, we would not receive substantial, recurring revenue
        from
        our license with Spectrum.
  ***Our
        nanomaterial technology with potential applications in rechargeable batteries
        has not been incorporated into any commercial
        products.***
  We
        are
        still testing and developing our Altairnano TM Lithium
        Titanate Spinel nanomaterial technology, which has potential applications
        in
        rechargeable batteries. Although we have entered a partnering agreement with
        Advanced Battery Technologies, Inc. (“ABAT”) for the development of lithium
        polymer batteries in China and have supplied them with nanomaterials
        for  their
        use
        in design and development of the batteries, the project is in the early stages
        and substantial design, development and testing work remains to be done.
        Even if
        ABAT or other potential partners are successful in producing battery products
        with our nanomaterial technology:
  ·
              batteries
                  utilizing the technology may not exhibit expected charge rates,
                  discharge
                  rates or durability run time or other features when used in real
                  world
                  applications;
 ·
              batteries
                  incorporating the technology may not meet the distinct needs of
                  potential
                  customers, applications or industries or otherwise prove competitive
                  with
                  existing technologies or technologies under development on account
                  of
                  technical limitations such as a short run time between charges
                  or
                  excessive heat generation; and
 ·
              marketing
                  and branding efforts by us, a potential strategic partner or others
                  may be
                  insufficient to attract a sufficient number of
                  customers.
 
 23
 ***We
        may not benefit from licenses to use our technology for titanium dioxide
        pigment
        production.***
 
 Because
        of our relatively small size and limited resources, we do not plan to use
        our
        titanium processing technology for large-scale production of titanium dioxide
        pigments. We have entered into discussions with various minerals and materials
        companies about licensing our technology to such entities for large-scale
        production of titanium dioxide pigments. To date, we have entered into a
        license
        agreement with only one such entity, Western Oil Sands, Inc. Under our license
        agreement with Western Oil Sands, we expect to receive a limited amount of
        revenue during the early testing and development phase of the agreement but
        will
        receive significant royalties only if Western Oil Sands and licensees of
        Western
        Oil Sands determine in their discretion, after testing at a demonstration
        plant,
        to construct or license the construction of a full-scale titanium pigment
        production facility. If we enter into other license agreements, we expect
        that,
        as with the Western Oil Sands agreement, we would not receive significant
        revenues from such licenses unless and until feasibility testing yielded
        positive results and the licensee determined, in its discretion, to construct
        and operate a titanium pigment production facility.
 
 ***We
        may not be able to sell nanoparticles produced using the nanomaterials and
        titanium dioxide pigment technology.***
 
 We
        plan
        to use the nanomaterials and titanium dioxide pigment technology to produce
        titanium dioxide nanoparticles for various applications. Titanium dioxide
        nanoparticles and other products we intend to initially produce with the
        nanomaterials and titanium dioxide pigment technology generally must be
        customized for a specific application working in cooperation with the end-user.
        We are still testing and customizing our titanium dioxide nanoparticle products
        for various applications and have no long-term agreements with end-users
        to
        purchase any of our titanium dioxide nanoparticle products. We may be unable
        to
        recoup our investment in the nanomaterials and titanium dioxide pigment
        technology and nanomaterials and titanium dioxide pigment equipment for various
        reasons, including the following:
 
 ·
              products
                  utilizing our titanium dioxide nanoparticle products, most of which
                  are in
                  the research or development stage, may not be completed or, if
                  completed,
                  may not be readily accepted by expected
                  end-users;
 ·
              we
                  may be unable to customize our titanium dioxide nanoparticle products
                  to
                  meet the distinct needs of potential customers;
 ·
              potential
                  customers may purchase from competitors because of perceived or
                  actual
                  quality or compatibility
                  differences;
 ·
              our
                  marketing and branding efforts may be insufficient to attract a
                  sufficient
                  number of customers; and
 ·
              because
                  of our limited funding, we may be unable to continue our development
                  efforts until a strong market for nanoparticles develops.
  ***Our
        costs of production may be too high to permit
        profitability*** ***.***
 
 We
        have
        not produced any pigments, nanoparticles or other products using our
        nanomaterials and titanium dioxide pigment technology and equipment on a
        sustained commercial basis. Our actual costs of production, or those of our
        licensees, may exceed those of competitors. Even if our costs of production
        are
        lower, competitors may be able to sell titanium dioxide and other products
        at a
        lower price than is economical for us or our licensees.
  ***We
        have issued a $3,000,000 note to secure the purchase of the land and the
        building where our nanomaterials and titanium dioxide pigment assets are
        located.***
 
 In
        August
        2002, we entered into a purchase and sale agreement with BHP Minerals
        International Inc. to purchase the land, building and fixtures in Reno, Nevada
        where our nanomaterials and titanium dioxide pigment assets are located.
        In
        connection with this transaction, we issued to BHP a note in the amount of
        $3,000,000, at an interest rate of 7%, secured by the property we acquired.
        The
        first payment of $600,000 of principal plus accrued interest is due February
        8,
        2006. Additional payments of $600,000 plus accrued interest are due annually
        on
        February 8, 2007 through 2010. If we fail to make the required payments on
        the
        note, BHP has the right to foreclose and take the property. If this should
        occur, we would be required to relocate our primary operating assets and
        offices, causing a significant disruption in our business.
  24
 ***We
        may not be able to raise sufficient capital to meet future
        obligations*** ***.***
 
 As
        of
        November 4, 2005, we had $25.2 million in cash and short-term investments,
        an
        amount which we believe will be sufficient to fund our ongoing operations
        for
        approximately three to four years at
        current expenditure levels .
        However, we may use our existing capital sooner than projected in connection
        with an acquisition or joint venture transaction, litigation or other unplanned
        event. We may also use more capital than projected as we expand our research,
        development and marketing efforts. Unless we experience a significant increase
        in revenue, we will need to raise additional capital in the future in order
        to
        sustain our ongoing operations, continue unfinished testing and additional
        development work and, if certain of our products have been commercialized,
        produce and market such products.
 
 We
        may
        not be able to obtain the amount of additional capital needed or may be forced
        to pay an extremely high price for capital. Factors affecting the availability
        and price of capital may include the following:
 
 ·
              market
                  factors affecting the availability and cost of capital
                  generally;
 ·
              the
                  price, volatility and trading volume of our shares of common stock;
 ·
              our
                  financial results, particularly the amount of revenue we are generating
                  from operations;
 ·
              the
                  amount of our capital needs;
 ·
              the
                  market’s perception of nanotechnology and/or chemical
                  stocks;
 ·
              the
                  economics of projects being pursued;
                  and
 ·
              the
                  market’s perception of our ability to generate revenue through the
                  licensing or use of our nanoparticle technology for pharmaceutical,
                  pigment production, nanoparticle production and other
                  uses.
 
 If
        we are
        unable to obtain sufficient capital or are forced to pay a high price for
        capital, we may be unable to meet future obligations or adequately exploit
        existing or future opportunities, and may be forced to discontinue
        operations.
  ***Operations
        using the nanomaterials and titanium dioxide pigment technology or our Tennessee
        mineral property may lead to substantial environmental
        liability.***
 
 Virtually
        any prior or future use of the nanomaterials and titanium dioxide pigment
        technology is subject to federal, state and local environmental laws. In
        addition, we have constructed a pilot plant on, and are in the process of
        reclaiming, our Tennessee mineral property. Under such laws, we may be jointly
        and severally liable for the treatment, cleanup, remediation and/or removal
        of
        any hazardous substances discovered at any property we use. In addition,
        courts
        or government agencies may impose liability for, among other things, the
        improper release, discharge, storage, use, disposal or transportation of
        hazardous substances.
  ***Certain
        of our experts and directors reside in Canada and may be able to avoid civil
        liability.***
 
 We
        are a
        Canadian corporation, and three of our directors and our Canadian legal counsel
        are residents of Canada. As a result, investors may be unable to effect service
        of process upon such persons within the United States and may be unable to
        enforce court judgments against such persons predicated upon civil liability
        provisions of the U.S. securities laws. It is uncertain whether Canadian
        courts
        would (i) enforce judgments of U.S. courts obtained against us or such
        directors, officers or experts predicated upon the civil liability provisions
        of
        U.S. securities laws or (ii) impose liability in original actions against
        us or
        our directors, officers or experts predicated upon U.S. securities
        laws.
  ***We
        are dependent on key personnel.***
 
 Our
        continued success will depend to a significant extent on the services of
        Dr.
        Alan J. Gotcher, our Chief Executive Officer and President, Douglas Ellsworth,
        our Senior Vice President Edward Dickinson, our Chief Financial Officer,
        and
        Bruce Sabacky, our Vice President of Research and Engineering. The loss or
        unavailability of any or all of these individuals could have a material adverse
        effect on our business and the market price of our shares of common stock.
        We do
        not carry key man insurance on the lives of any of our personnel.
  ***We
        may issue substantial amounts of additional shares without stockholder
        approval.*** ******
 
 Our
        articles of incorporation authorize the issuance of an unlimited number of
        shares of common stock that may be issued without any action or approval
        by our
        stockholders. In addition, we have various stock option plans and stock purchase
        plans that have potential for diluting the ownership interests of our
        stockholders. The issuance of any additional shares of common stock would
        further dilute the percentage ownership of our company held by existing
        stockholders.
  25
 ***The
        market price of our common stock may increase or decrease dramatically at
        any
        time for any or no rational reason.***
 
 The
        market price of our common stock, like that of the securities of other early
        stage companies, may be highly volatile. Our stock price may change dramatically
        as the result of announcements of our quarterly results, new products or
        innovations by us or our competitors, u ncertainty
        regarding the viability of the nanomaterials and titanium dioxide pigment
        technology, significant customer contracts, significant litigation or other factors or
        events that would be expected to affect our business, financial condition,
        results of operations and future prospects. In addition, the market price
        for
        our common stock may be affected by various factors not directly related
        to our
        business or future prospects, including the following:
 
 ·
              Intentional
                  manipulation of our stock price by existing or future shareholders
                  or a
                  reaction by investors to trends in our stock rather than the fundamentals
                  of our business;
 ·
              A
                  single acquisition or disposition, or several related acquisitions
                  or
                  dispositions, of a large number of our shares, including by short
                  sellers
                  covering their position;
 ·
              The
                  interest of the market in our business sector, without regard to
                  our
                  financial condition, results of operations or business prospects;
 ·
              Positive
                  or negative statements or projections about our company or our
                  industry,
                  by analysts, stock gurus and other
                  persons;
 ·
              The
                  adoption of governmental regulations or government grant programs
                  and
                  similar developments in the United States or abroad that may enhance
                  or
                  detract from our ability to offer our products and services or
                  affect our
                  cost structure;
 ·
              Economic
                  and other external market factors, such as a general decline in
                  market
                  prices due to poor economic indicators or investor distrust;
                  and
 ·
              Speculation
                  by short sellers of our common stock or other persons who stand
                  to profit
                  from a rapid increase or decrease in the price of our common
                  stock.
  ***We
        have never declared a cash dividend and do not intend to declare a cash dividend
        in the foreseeable future.***
 
 We
        have
        never declared or paid cash dividends on our common stock. We currently intend
        to retain any future earnings, if any, for use in our business and, therefore,
        do not anticipate paying dividends on our common stock in the foreseeable
        future.
 
 ***We
        are subject to various regulatory regimes, and may be adversely affected
        by
        allegations that we have not complied with governing rules and
        laws.***
 
 In
        light
        of our status as a public company and our lines of business, we are subject
        to a
        variety of laws and regulatory regimes in addition to those applicable to
        all
        businesses generally.  For example, we are subject to the reporting
        requirements applicable to Canadian and United States reporting issuers,
        such as
        the Sarbanes-Oxley Act of 2002, the rules of the Nasdaq Capital Market and
        certain state and provincial securities laws. We are also subject to state
        and
        federal environmental, health and safety laws, and rules governing department
        of
        defense contracts   Such laws and rules change frequently and are
        often complex.  In connection with such laws, we are subject to periodic
        audits, inquiries and investigations.  Any such audits, inquiries and
        investigations may divert considerable financial and human resources and
        adversely affect our execution of our business plan.   In addition,
        through such audits, inquiries and investigations, we or a regulator have
        from
        time to time determined, and may in the future determine, that we are out
        of
        compliance with one or more governing rules or laws.  Remedying such
        non-compliance may divert additional financial and human resources.  In
        addition, in the future, we may be subject to a formal charge or determination
        that we have materially violated a governing law, rule or regulation.  Any
        charge, and particularly any determination, that we had materially violated
        a
        governing law would likely have a material adverse effect on the market price
        of
        our stock, our ability to execute our business plan and our ability to retain
        and attract qualified management.
  **Item
        3.**  **Quantitative
        and Qualitative Disclosures about Market Risk**
 
 We
        do not
        have any derivative instruments, commodity instruments, or other financial
        instruments for trading or speculative purposes, nor are we presently at
        material risk for changes in interest rates on foreign currency exchange
        rates.
 
 26
 **Item
        4.**  **Controls
        and Procedures**
 
 (a)  Based
        on
        the evaluation of our "disclosure controls and procedures" (as defined in
        the
        Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) required by
        paragraph (b) of Rules 13a-15 or 15d-15, our chief executive officer and
        our
        chief financial officer have concluded that, as of September 30, 2005, our
        disclosure controls and procedures were effective in ensuring that information
        required to be disclosed by the Company in reports that it files under the
        Exchange Act is recorded, processed, summarized and reported within the time
        periods required by governing rules and forms.
  (b)  We
        are
        not presently required to conduct quarterly evaluations of our internal control
        over financial reporting pursuant to paragraph (d) of Rules 13a-15 or 15d-15
        promulgated under the Exchange Act. We are, however, in the process of
        designing, evaluating and implementing internal controls in anticipation
        of the
        date when we will become subject to such evaluation requirements. In connection
        with this, effective January 1, 2005, we implemented a new financial software
        system and, through September 2005, have implemented attendant operating
        controls that substantially enhance the controls over the processing, recording
        and reporting of financial transactions. Testing of our key internal controls
        has commenced and will be updated as required in the fourth quarter of
        2005.
  **PART
        II - OTHER INFORMATION**
 
 **Item
        1. Legal Proceedings**
 
 In
        June 2005, the Company filed a Complaint against Rudi E. Moerck, former
        President and a director of the Company, alleging breach of his Employee
        Confidential Information and Inventions Agreement (the “Information Agreement”)
        and seeking declaratory relief, injunctive relief and damages. Specifically,
        the
        Company requested that Mr. Moerck be ordered to assign his rights in certain
        patent applications to the Company, return all Company proprietary information
        in his possession to the Company and to delete/destroy Mr. Moerck’s copies of
        all such information. Mr. Moerck filed a timely Answer to the Complaint.
        Subsequently, Mr. Moerck executed and delivered the requested patent
        application assignments. As of October 4, 2005, the Company executed a
        settlement agreement with Mr. Moerck, which the Company believes will fully
        preserve and protect the Company’s interests in its proprietary information.
        Prior to the execution of the Settlement Agreement, Mr. Moerck provided
        the Company with several Offers of Judgment against him in this case.
        Effectiveness of the settlement agreement is conditioned upon the occurrence
        of
        certain events and, accordingly, there is a possibility that the matter will
        be
        re-opened in the future.
 
 Please
        refer to the discussion in PART II, Item 1. of the Company's Form 10-Q for
        the
        quarter ended June 30, 2005 regarding Louis Schnur v. Al Moore, Altair
        Nanotechnologies, Inc. and Does 1 through 10.  On October 13, 2005 the
        Company filed a counterclaim (the "Company's Counterclaim) against Mr. Schnur
        for declaratory relief, asking the Court to issue a declaration that:
        (1)  Altair did not improperly disclose material, non-public information in
        violation of any statute; (2)  Altair did not breach its fiduciary duties
        to its shareholders; and (3)  Altair had no duty or ability to prevent an
        individual from purchasing Altair common stock from an individual
        shareholder.  Mr. Schnur timely filed an Answer to the Company's
        Counterclaim on November 2, 2005 and the Company's Counterclaim is now
        pending.
 
 
 **Item
        6. Exhibits**
 
 a)
              See
                  Exhibit Index attached hereto following the signature
                  page.
 
 
 27
 **SIGNATURES**
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned thereunto
        duly authorized.
  Altair
                  Nanotechnologies Inc.Date: November
                  14, 2005
                By:
                /s/ Alan
                  J. GotcherAlan
                  J. Gotcher, Chief Executive Officer
  Date: November
                  14, 2005
                By:
                /s/ Edward
                  H. DickinsonEdward
                  H. Dickinson, Chief Financial Officer
   28
 **EXHIBIT
                  INDEX****Exhibit
                  No.**
              
              **Exhibit**
              
              **Incorporated
                  by Reference/ Filed Herewith**3.1
              
              Articles
                  of Continuance
              
              Incorporated
                  by reference to the Current Report on Form 8-K filed with the SEC
                  on July
                  18, 2002.3.2
              
              Bylaws
              
              Incorporated
                  by reference to the Annual Report on Form 10-K for the year ended
                  December
                  31, 2004 filed with the SEC on March 9, 200510.1
              
              Lease
                  (Indiana Office) with Flagship Enterprise Center
              
              Filed
                  herewith31.1
              
              Section
                  302 Certification of Chief Executive Officer
              
              Filed
                  herewith31.2
              
              Section
                  302 Certification of Chief Financial Officer
              
              Filed
                  herewith32.1
              
              Section
                  906 Certification of Chief Executive Officer
              
              Filed
                  herewith32.2
              
              Section
                  906 Certification of Chief Financial Officer
              
              Filed
                  herewith
 
 
  29