**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT
                OF1934
                FOR THE QUARTERLY PERIOD ENDED   **JUNE 30,
                2007**









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








**ALTAIR
NANOTECHNOLOGIES
INC.**


(Exact
      name of registrant as specified in its charter)




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


**204
      Edison Way**


**Reno,
      Nevada 89502**


(Address
      of principal executive offices, including zip code)





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





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




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





Large
                accelerated filer     [  ]
            Accelerated
                filer  [X]
            Non-accelerated
                filer  [  ]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act):   YES o  NO x





**As
      of August 1, 2007 the registrant had 70,143,787 Common Shares
      outstanding.**













**PART
                I - FINANCIAL INFORMATION****Item
                1. Financial Statements****ALTAIR
                NANOTECHNOLOGIES INC. AND SUBSIDIARIES****CONDENSED
                CONSOLIDATED BALANCE SHEETS****(Expressed
                in United States Dollars)****(Unaudited)**





**June
                30,**
            
            
            **December
                31,****2007**
            
            
            **2006****ASSETS****Current
                Assets**Cash
                and cash equivalents
            
            $
            2,604,297
            
            
            $
            12,679,254Investment
                in available for sale securities
            
            
            18,241,998
            
            
            
            14,541,103Accounts
                receivable, net
            
            
            1,875,561
            
            
            
            1,624,825Notes
                receivable from related party, current portion
            
            
            611,238
            
            
            
            -Product
                inventories
            
            
            1,051,896
            
            
            
            169,666Prepaid
                expenses and other current assets
            
            
            216,728
            
            
            
            413,390Total
                current assets
            
            
            24,601,718
            
            
            
            29,428,238**Investment
                in Available for Sale Securities**
            
            
            1,720,800
            
            
            
            1,306,420**Property,
                Plant and Equipment, net**
            
            
            12,840,197
            
            
            
            11,229,406**Patents,
                net**
            
            
            762,840
            
            
            
            805,248**Notes
                Receivable from related party, long-term portion**
            
            
            347,635
            
            
            
            330,000**Other
                Assets**
            
            
            127,779
            
            
            
            21,261**Total
                Assets**
            
            $
            40,400,969
            
            
            $
            43,120,573**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                Liabilities**Trade
                accounts payable
            
            $
            2,223,997
            
            
            $
            1,533,047Accrued
                salaries and benefits
            
            
            959,096
            
            
            
            840,219Accrued
                liabilities
            
            
            1,070,268
            
            
            
            526,596Note
                payable, current portion
            
            
            600,000
            
            
            
            600,000Total
                current liabilities
            
            
            4,853,361
            
            
            
            3,499,862**Note
                Payable, Long-Term Portion**
            
            
            1,200,000
            
            
            
            1,800,000**Minority
                Interest in Subsidiary**
            
            
            1,842,320
            
            
            
            -**Stockholders'
                Equity**Common
                stock, no par value, unlimited shares authorized;70,100,535
                and 69,079,270 shares issued andoutstanding
                at June 30, 2007 and December 31, 2006
            
            
            119,194,143
            
            
            
            115,989,879Additional
                paid in capital
            
            
            3,693,782
            
            
            
            2,002,220Accumulated
                deficit
            
            
            (90,965,237
            )
            
            
            (80,353,188
            )Accumulated
                other comprehensive income
            
            
            582,600
            
            
            
            181,800**Total
                Stockholders' Equity**
            
            
            32,505,288
            
            
            
            37,820,711**Total
                Liabilities and Stockholders' Equity**
            
            $
            40,400,969
            
            
            $
            43,120,573See
                notes to the unaudited condensed consolidated financial
                statements.




2


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





**Three
                Months Ended**
            
            
            **Six
                Months Ended****June
                30,**
            
            
            **June
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Revenues**Product
                sales
            
            $
            1,755,613
            
            
            $
            2,640
            
            
            $
            1,933,003
            
            
            $
            10,658License
                fees
            
            
            -
            
            
            
            364,720
            
            
            
            -
            
            
            
            364,720Commercial
                collaborations
            
            
            734,784
            
            
            
            389,236
            
            
            
            1,082,072
            
            
            
            719,506Contracts
                and grants
            
            
            575,471
            
            
            
            300,232
            
            
            
            1,191,725
            
            
            
            507,240Total
                revenues
            
            
            3,065,868
            
            
            
            1,056,828
            
            
            
            4,206,800
            
            
            
            1,602,124**Operating
                Expenses**Cost
                of product sales
            
            
            2,192,476
            
            
            
            1,450
            
            
            
            2,402,738
            
            
            
            2,716Research
                and development
            
            
            3,238,869
            
            
            
            2,205,265
            
            
            
            6,236,197
            
            
            
            4,153,652Sales
                and marketing
            
            
            409,230
            
            
            
            618,422
            
            
            
            789,766
            
            
            
            1,011,583General
                and administrative
            
            
            2,600,818
            
            
            
            1,796,853
            
            
            
            5,212,032
            
            
            
            4,408,157Depreciation
                and amortization
            
            
            473,991
            
            
            
            363,247
            
            
            
            905,049
            
            
            
            680,118Total
                operating expenses
            
            
            8,915,384
            
            
            
            4,985,237
            
            
            
            15,545,782
            
            
            
            10,256,226**Loss
                from Operations**
            
            
            (5,849,516
            )
            
            
            (3,928,409
            )
            
            
            (11,338,982
            )
            
            
            (8,654,102
            )**Other
                Income (Expense)**Interest
                expense
            
            
            (31,500
            )
            
            
            (42,000
            )
            
            
            (66,500
            )
            
            
            (87,500
            )Interest
                income
            
            
            292,670
            
            
            
            181,522
            
            
            
            636,038
            
            
            
            392,825Gain/(Loss)
                on foreign exchange
            
            
            83
            
            
            
            (131
            )
            
            
            (285
            )
            
            
            (305
            )Total
                other income, net
            
            
            261,253
            
            
            
            139,391
            
            
            
            569,253
            
            
            
            305,020**Loss
                from continuing operations before****minority
                interest share**
            
            
            (5,588,263
            )
            
            
            (3,789,018
            )
            
            
            (10,769,729
            )
            
            
            (8,349,082
            )**Minority
                interest share**
            
            
            157,680
            
            
            
            -
            
            
            
            157,680
            
            
            
            -**Net
                Loss**
            
            $
            (5,430,583
            )
            
            $
            (3,789,018
            )
            
            $
            (10,612,049
            )
            
            $
            (8,349,082
            )**Loss
                per common share - Basic and diluted**
            
            $
            (0.08
            )
            
            $
            (0.06
            )
            
            $
            (0.15
            )
            
            $
            (0.14
            )**Weighted
                average shares - Basic and diluted**
            
            
            69,926,260
            
            
            
            59,290,242
            
            
            
            69,596,969
            
            
            
            59,256,485See
                notes to the unaudited condensed consolidated financial
                statements.





3




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





**Accumulated****Other****Additional**
            
            
            
            
            
            **Compre-****Common
                Stock**
            
            
            **Paid
                In**
            
            
            **Accumulated**
            
            
            **hensive****Shares**
            
            
            **Amount**
            
            
            **Capital**
            
            
            **Deficit**
            
            
            **Income**
            
            
            **Total**BALANCE,  JANUARY
                1, 2007
            
            
            69,079,270
            
            
            $
            115,989,879
            
            
            $
            2,002,220
            
            
            $
            (80,353,188
            )
            
            $
            181,800
            
            
            $
            37,820,711Comprehensive
                loss:Net
                loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (10,612,049
            )
            
            
            -
            
            
            
            (10,612,049
            )Other
                comprehensive income,net
                of taxes of $0
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            400,800
            
            
            
            400,800Comprehensive
                loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (10,211,249
            )Share-based
                compensation
            
            
            -
            
            
            
            109,773
            
            
            
            1,691,562
            
            
            
            -
            
            
            
            -
            
            
            
            1,801,335Exercise
                of stock options
            
            
            55,833
            
            
            
            94,491
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            94,491Issuance
                of restricted stock,net
                of cancellations/expired shares
            
            
            69,909Common
                stock issued
            
            
            895,523
            
            
            
            3,000,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,000,000BALANCE,  JUNE
                30, 2007
            
            
            70,100,535
            
            
            $
            119,194,143
            
            
            $
            3,693,782
            
            
            $
            (90,965,237
            )
            
            $
            582,600
            
            
            $
            32,505,288See
                notes to the unaudited condensed consolidated financial
                statements.





4





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





**Six
                Months Ended****June
                30,****2007**
            
            
            **2006****Cash
                flows from operating activities:**Net
                loss
            
            $
            (10,612,049
            )
            
            $
            (8,349,082
            )Adjustments
                to reconcile net loss to net cashused
                in operating activities:Depreciation
                and amortization
            
            
            905,049
            
            
            
            680,118Minority
                interest in operations
            
            
            (157,680
            )
            
            
            -Securities
                received in payment of license fees
            
            
            (13,580
            )
            
            
            (513,324
            )Share-based
                compensation
            
            
            1,801,335
            
            
            
            1,007,347Loss
                on disposal of fixed assets
            
            
            -
            
            
            
            21,101Accrued
                interest on notes receivable
            
            
            (21,021
            )
            
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable, net
            
            
            (250,736
            )
            
            
            127,722Notes
                receivable, net
            
            
            (607,852
            )
            
            
            -Product
                inventories
            
            
            (851,658
            )
            
            
            -Prepaid
                expenses and other current assets
            
            
            196,662
            
            
            
            (138,009
            )Other
                assets
            
            
            -
            
            
            
            49,939Trade
                accounts payable
            
            
            599,453
            
            
            
            479,882Accrued
                salaries and benefits
            
            
            118,877
            
            
            
            211,495Accrued
                liabilities
            
            
            437,154
            
            
            
            158,680**Net
                cash used in operating activities**
            
            
            (8,456,046
            )
            
            
            (6,264,131
            )**Cash
                flows from investing activities:**Sale
                of available for sale securities
            
            
            14,375,000
            
            
            
            10,800,000Purchase
                of available for sale securities
            
            
            (18,075,895
            )
            
            
            (2,775,187
            )Purchase
                of property and equipment
            
            
            (2,412,507
            )
            
            
            (1,888,400
            )**Net
                cash (used in) provided by investing activities**
            
            
            (6,113,402
            )
            
            
            6,136,413*(continued)*





5


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





**Six
                Months Ended****March
                31,****2007**
            
            
            **2006****Cash
                flows from financing activities:**Issuance
                of common shares for cash
            
            
            3,000,000
            
            
            
            -Proceeds
                from exercise of stock options
            
            
            94,491
            
            
            
            141,673Payment
                of notes payable
            
            
            (600,000
            )
            
            
            (600,000
            )Minority
                interest
            
            
            2,000,000
            
            
            
            -**Net
                cash provided by (used in)  financing
                activities**
            
            
            4,494,491
            
            
            
            (458,327
            )**Net
                decrease in cash and cash equivalents**
            
            
            (10,074,957
            )
            
            
            (586,046
            )**Cash
                and cash equivalents, beginning of period**
            
            
            12,679,254
            
            
            
            2,264,418**Cash
                and cash equivalents, end of period**
            
            $
            2,604,297
            
            
            $
            1,678,372**Supplemental
                disclosures:**Cash
                paid for interest
            
            $
            168,000
            
            
            $
            105,000Cash
                paid for income taxes
            
            None
            
            
            None





**Supplemental
                schedule of non-cash investing and financing
                activities:****For
                the six months ended June 30, 2007:**-
                We received 1,000,000 of common stock valued at $106,518 in connection
                with the Phoenix Motorcars, Inc. Janaury 2007 purchase
                agreement.  The investment was recorded with an offset to
                deferred revenue.-
                We issued 75,575 shares of restricted stock to employees having a
                fair
                value of approximately $237,000 for which no cash will be
                received.-
                We made property and equipment purchases of $91,497, which are included
                in
                trade accounts payable at June 30, 2007.-
                We had an unrealized gain on available for sale securities of
                $400,800.**For
                the six months ended June 30, 2006:**-
                We issued 56,875 shares of restricted stock to employees having a
                fair
                value of approximately $180,000
                for which no cash will be received*.*-
                We made property and equipment purchases of $503,245, which are included
                in trade accounts payable at June 30, 2006.-
                We had an unrealized loss on available for sale securities of
                $30,200.*(concluded)*See
                notes to the unaudited condensed consolidated financial
                statements.





6


**ALTAIR
      NANOTECHNOLOGIES INC. AND SUBSIDIARIES**


**NOTES
      TO CONDESNED CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**





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





These
      unaudited interim condensed consolidated financial statements of Altair
      Nanotechnologies Inc. and its subsidiaries (collectively, “Altair” “we” or the
“Company”) have been prepared in accordance with the rules and regulations of
      the United States Securities and Exchange Commission (the
“Commission”).  Such rules and regulations allow the omission of
      certain information and footnote disclosures normally included in financial
      statements prepared in accordance with accounting principles generally accepted
      in the United States of America, so long as the statements are not
      misleading.  In the opinion of Company management,
      these consolidated financial statements and accompanying notes contain all
      adjustments (consisting of only normal recurring items) necessary to present
      fairly the financial position and results of operations for the periods
      shown.  These unaudited interim condensed consolidated financial
      statements should be read in conjunction with the audited consolidated
      financial statements and notes thereto contained in our Annual Report on
      Form 10-K for the year ended December 31, 2006, as filed with the Commission
      on
      March 13, 2007.





The
      results of operations for the six-month period ended June 30, 2007 are not
      necessarily indicative of the results to be expected for the full
      year.








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





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





Our
      cash
      balances are maintained in bank accounts that are insured by the Federal Deposit
      Insurance Corporation (“FDIC”) up to a maximum of $100,000.  At June
      30, 2007 and December 31, 2006, we had cash deposits of approximately $860,000
      and $3.0 million, respectively, in excess of FDIC insurance limits.





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





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





7


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





**Six
                Months Ended****June
                30, 2007****2007**
            
            
            **2006**Net
                loss
            
            $
            10,612,049
            
            
            $
            8,349,082Unrealized
                (gain)/loss on investment in availablefor
                sale securities, net of taxes of $0
            
            
            (400,800
            )
            
            
            30,200Comprehensive
                loss
            
            $
            10,211,249
            
            
            $
            8,379,282




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





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





**Revenue
      Recognition** - We recognize revenue when persuasive evidence of an
      arrangement exists, delivery has occurred or service has been performed, the
      fee
      is fixed and determinable, and collectibility is probable.  Our revenues
      were derived from product sales, commercial collaborations and contracts and
      grants.  Revenue for product sales is recognized upon delivery of the
      product, unless specific contractual terms dictate otherwise.  Based
      on the specific terms and conditions of each contract/grant, revenues are
      recognized on a time and materials basis, a percentage of completion basis
      and/or a completed contract basis.  Revenue under contracts based on
      time and materials is recognized at contractually billable rates as labor hours
      and expenses are incurred.  Revenue under contracts based on a fixed
      fee arrangement is recognized based on various performance measures, such as
      stipulated milestones.  As these milestones are achieved, revenue is
      recognized.  From time to time, facts develop that may require us to revise
      our estimated total costs or revenues expected.  The cumulative effect of
      revised estimates is recorded in the period in which the facts requiring
      revisions become known.  The full amount of anticipated losses on any type
      of contract is recognized in the period in which it becomes
      known.  Payments received in advance relating to the future
      performance of services or delivery of products are deferred until the
      performance of the service is complete or the product is
      shipped.  Upfront payments received in connection with certain rights
      granted in contractual arrangements are deferred and amortized over the related
      time period over which the benefits are received.  Based on specific
      customer bill and hold agreements, revenue is recognized when the inventory
      is
      shipped to a third party storage warehouse,the inventory is segregated and
      marked as sold, the customer takes the full rights of ownership and title to
      the
      inventory upon shipment to the warehouse per the bill and hold
      agreement.  When contract terms include multiple components that are
      considered separate units of accounting under EITF 00-21 “Revenue Arrangements
      with Multiple Deliverables”, the revenue is attributed to each component and
      revenue recognition may occur at different points in time for product shipment,
      installation, and service contracts based on substantial completion of the
      earnings process.





**Accrued
      Warranty** -  We provide a limited warranty for battery packs sold
      to Phoenix Motorcars, Inc.  A liability is recorded for estimated
      warranty obligations at the date products are sold.  Since this is a
      new product, the estimated cost of warranty coverage is based on cell and module
      life cycle testing and compared for reasonableness to warranty rates on
      competing battery products.  As sufficient actual historical data is
      collected on the new product, the estimated cost of warranty coverage will
      be
      adjusted accordingly.





8


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





**Minority
      Interest** – In April 2007, the Company and The
      Sherwin-Williams Company (“Sherwin”) entered into an agreement to form AlSher
      Titania LLC, a Delaware limited liability company (“AlSher”).  AlSher
      is a joint venture combining certain technologies of the Company and Sherwin
      in
      order to develop and produce titanium dioxide pigment for use in paint and
      coatings and nano titanium dioxide materials for use in a variety of
      applications, including those related to removing contaminants from air and
      water.  Pursuant to a Contribution Agreement dated April 24, 2007
      among Altairnano, Inc., Sherwin, and AlSher, Altairnano contributed to AlSher
      an
      exclusive license to use Altairnano’s technology (including its hydrochloride
      pigment process) for the production of titanium dioxide pigment and other
      titanium containing materials (other than battery or nanoelectrode materials)
      and certain pilot plants assets with a net book value of
      $3,110,000.  Altairnano received no consideration for the license
      granted to AlSher other than its ownership interest in
      AlSher.  Sherwin agreed to contribute to AlSher cash and a license
      agreement related to a technology for the manufacture of titanium dioxide using
      the digestion of ilmenite in hydrochloric acid.  As a condition to
      enter into the second phase of the joint venture, we agreed to complete the
      pigment pilot processing plant and related development activities by January
      2008.  The costs associated with this effort are expected to be
      partially reimbursed by AlSher.  Any work in process and fixed assets
      associated with completion of the pigment pilot processing plant are contributed
      by Altairnano to the AlSher joint venture.  For each reporting period,
      Alsher is consolidated with the Company’s subsidiaries because the Company has a
      controlling interest in Alsher and any inter-company transactions are eliminated
      (refer to Note 1 – Basis of Preparation of Consolidated Financial
      Statements).  The minority shareholder’s interest in the net assets
      and net income or loss of AlSher are reported as minority interest in subsidiary
      on the condensed consolidated balance sheet and as minority interest share
      in
      the condensed consolidated statement of operations, respectively.





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





**Recent
      Accounting Pronouncements** – In May 2007 the Financial
      Accounting Standards Board (“FASB”) issued FASB Staff Position No. FIN48-1
“Definition of Settlement in FASB Interpretation No. 48”.  This staff
      position provides guidance on how an enterprise should determine whether a
      tax
      positon is effectively settled for the purpose of recognizing previously
      unrecognized tax benefits.  This guidance is effective upon the
      initial adoption of Interpretation 48, which we implemented as of January 1,
      2007 (refer to Note 10 Income Taxes).  The adoption of this staff
      position did not impact our cash flows or financial results.





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





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





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





Investment
      in available for sale securities (long-term) consists of 240,000 shares of
      Spectrum Pharmaceuticals, Inc. (“Spectrum”) common stock.  Although
      the Spectrum shares are eligible for resale under Rule 144, the Company
      currently intends to hold them indefinitely.  Additionally, 140,000 of
      the 240,000 shares are subject to a contractual provisions preventing sale
      prior
      to June 2007.  The shares were received as partial payment of
      licensing fees when Spectrum entered into a license agreement for RenaZorb
      in
      January 2005 and in payment of the first milestone achieved in June
      2006.  On receipt, the shares were recorded at their market value of
      $1,138,200 as measured by their closing price on the Nasdaq Capital
      Market.  At June 30, 2007, their fair value was approximately
      $1,720,800, representing a cumulative unrealized holding gain of approximately
      $582,600.




9


**Note
      4.  Product Inventories**





Product
      inventories consist of the
      following:





**June
                30, 2007**
            
            
            **December
                31, 2006**Raw
                Materials
            
            $
            711,431
            
            
            $
            -Work
                in Process
            
            
            340,465
            
            
            
            112,500Demo
                Units
            
            
            -
            
            
            
            57,165Total
                Product Inventories
            
            $
            1
                ,051,896
            
            
            $
            169,666





As
      products reach the commercialization
      stage, the related inventory is recorded.  The costs associated with
      products undergoing research and development are expensed as
      incurred.  As of June 30, 2007, inventory consisted of the labor,
      materials, and overhead to produce the battery packs associated with the January
      2007 Phoenix Motorcars, Inc. supply agreement (refer to Note 11 – Related Party
      Transactions).  As of December 31, 2006, work in process consisted
      primarily of battery cells and modules in various stages of the manufacturing
      process.





**Note
      5.  Patents**





Our
      patents are associated with the nanomaterials and titanium dioxide pigment
      technology.  We are amortizing these assets over their useful
      lives.  The amortized patents balances as of June 30, 2007 and
      December 31, 2006 were:





**June
                30, 2007**
            
            
            **December
                31, 2006**Patents
                and patent applications
            
            $
            1,517,736
            
            
            $
            1,517,736Less
                accumulated amortization
            
            
            (754,896
            )
            
            
            (712,488
            )Total
                patents and patent applications
            
            $
            762,840
            
            
            $
            805,248





The
      weighted average amortization period for patents is approximately 16.5
      years.  Amortization expense, which represents the amortization
      relating to the identified amortizable patents, was $21,204 for the three months
      ended June 30, 2007 and 2006 and $42,408 for the six months ended June 30,
      2007
      and 2006.  For each of the next five years, amortization expense
      relating to patents is expected to be approximately $85,000 per
      year.  Management believes the net carrying amount of patents will be
      recovered by future cash flows generated by commercialization of the titanium
      processing technology.





**Note
      6.  Notes Receivable from Related Party**





Notes
      Receivable activity consists of
      the following:





**June
                30, 2007**
            
            
            **December
                31, 2006**Beginning
                Balance
            
            $
            330,000
            
            
            $
            -Additions
            
            
            607,852
            
            
            
            330,000Plus
                interest earned
            
            
            21,021
            
            
            
            -Ending
                Balance
            
            
            958,873
            
            
            
            330,000Less
                current portion
            
            
            611,238
            
            
            
            -Long
                term portion
            
            $
            347,635
            
            
            $
            330,000





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





10


**Note
      7.  Notes Payable**





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





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





The
      note
      payable to BHP Minerals International, Inc., in the face amount of
      $3,000,000, was entered into on August 8, 2002 and is secured by the
      property we acquired  The first two payments of $600,000 of principal
      plus accrued interest were due and paid on February 8, 2006 and February 8,
      2007. Additional payments of $600,000 plus accrued interest are due annually
      on
      February 8, 2008 through 2010.





**Note
      8.  Stock-Based Compensation**





We
      have a
      stock incentive plan, administered by the Board of Directors,
      which provides for the granting of options and restricted shares to
      employees, officers, directors and other service providers of the Company.





The
      total
      compensation cost charged in connection with these plans was $1,801,335 and
      $1,007,347 for the six-months ended June 30, 2007 and June 30, 2006,
      respectively.





**Stock
      Options**





The
      total
      number of shares authorized to be granted under the 2005 stock plan was
      increased from 3,000,000 to an aggregate of 9,000,000 based on the proposal
      approved at the annual and special meeting of shareholders held on May
      30, 2007.  Prior stock option plans, which are now terminated,
      authorized a total of 6,600,000 shares, of which options for 5,745,500 were
      granted and options for 1,785,600 are outstanding and unexercised at June
      30, 2007. The total number of options relating to the 2005 plan that are
      outstanding and unexercised at June 30, 2007 is 2,776,107.





Total
      options granted for the six month periods ended June 30,2007 and June 30, 2006
      were 1,465,382 and 1,155,131, respectively.  The weighted average
      grant date fair value of options granted during the six months ended June 30,
      2007 and June 30, 2006 was $1.90 and $2.32, respectively.





As
      of
      June 30, 2007, there was $1,648,825 of total unrecognized compensation cost
      related to non-vested options granted under the plans.  That cost is
      expected to be recognized over a weighted average period of 0.7 years as of
      June
      30, 2007.  Cash received from stock option exercises was $94,491 and
      $141,673 during the six-months ended June 30, 2007 and June 30, 2006,
      respectively.





**Restricted
      Stock**





During
      the six-months ended June 30, 2007, the Board of Directors granted 75,575 shares
      of restricted stock under the plan with a weighted average fair value of $3.13
      per share.  During the six-months ended June 30, 2006, the Board of
      Directors granted 56,875 shares of restricted stock under the plan with a
      weighted average fair value of $3.17 per share.





As
      of
      June 30, 2007 we had $342,634 of total unrecognized compensation expense related
      to restricted stock which will be recognized over the weighted average period
      of
      1.8 years.





**Note
      9.  Other Transactions**





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





11


**Note
      10.  Income Taxes**




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




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




For
      U.S. tax purposes, the gross deferred tax asset has been understated for
      expense items that should be recorded on the U.S. books for 2002 through
      2006.  Although the gross amount of the deferred tax asset will be
      increased as a result of the expenses to be recorded on the U.S. books, the
      additional amount of the deferred tax asset will also be fully
      reserved.  The additional expenses to be recorded on the U.S. books
      during 2007 will increase the U.S. net operating loss by approximately
      $2.6 million.





**Note
      11.  Related Party Transactions**





In
      January 2007, we entered into a multi-year purchase and supply agreement with
      Phoenix Motorcars, Inc. (“Phoenix”) for up to 500 battery pack
      systems.  The initial order of battery pack systems, valued at
      $1,040,000, was completed and billed in the second
      quarter.  Additional packs, valued at $585,000, were also completed
      and billed in the second quarter pursuant to the second release order valued
      at
      $2,210,000 received in May 2007.  The revenue associated with these
      packs was recognized under bill and hold agreements with Phoenix Motorcars,
      Inc.  (See Revenue Recognition under Summary of Significant Accounting
      Policies Note 2).  The terms of the purchase and supply agreement also
      include the payment of a technology fee in 2007 through 2008 by Phoenix based
      on
      their sale of Zero Emmission Credits (“ZEV credits”) associated with each
      electric vehicle.  ZEV credits are issued in connection with zero
      emission vehicles as defined by the California Air Resources
      Board.  Through June 30, 2007, no ZEV credits have been sold or paid
      to us.  Total accounts receivable and long term notes receivable
      including accrued interest (see Note 6) due from Phoenix at June 30, 2007
      totaled $569,068 and $975,671, respectively.  Total deferred revenue
      of $625,016 at June 30, 2007, reflects pre-payment for battery purchase orders
      and the unamortized balance of the investment described below.





Additionally,
      Phoenix issued 1,000,000 shares of its common stock in consideration for the
      three-year exclusivity agreement within the United States of America included
      in
      the contract.  Phoenix must meet minimum battery pack purchases,
      annually, to maintain the limited exclusivity agreement through its expiration
      in December 2009.  The common stock shares received represented a
      16.6% ownership interest in Phoenix.  The investment was recorded at
      $106,518 with the offset to deferred revenue, which is recognized on a
      straight-line basis over the three year term of the exclusivity
      period.




12


**Note
      12.  Business Segment Information**





Management
      views the Company as
      operating in four business segments:  Performance Materials, Life
      Sciences, Advanced Materials and Power Systems (“AMPS”), and the Altair
      Hydrochloride Pigment Process Division (“AHP”).   Two of these
      divisions were formed in the fourth quarter of 2006, AMPS and
      AHP.  The activity relating to these business units was previously
      included in Performance Materials.  For all quarters presented, this
      activity has been reclassified out of Performance Materials and reported in
      the
      new business units.  In April 2007, a new company, called AlSher
      Titania LLC (“AlSher”), was formed.  AlSher represents a joint venture with
      The Sherwin-Williams Company, manufacturer of paint and durable
      coatings.  The AlSher joint venture is included in the AHP
      Division.  For all quarters presented, fixed assets previously
      reported in the Performance Material Divisions that were contributed to the
      joint venture were reclassified to the AHP Division.





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





The
      accounting policies of these
      business segments are the same as described in Note 2 to the
      unaudited  condensed consolidated financial
      statements.  Reportable segment data reconciled to the consolidated
      financial statements as of and for the three- and six-month periods ended June
      30, 2007 and June 30, 2006:





**Depreciation****Loss/(Income)
                From**
            
            
            **and****Three
                Months Ended**
            
            **Net
                Sales**
            
            
            **Operations**
            
            
            **Amortization**
            
            
            **Assets****June
                30, 2007:**Performance
                Materials
            
            $
            461,750
            
            
            $
            878,914
            
            
            $
            233,941
            
            
            $
            5,462,008AMPS
            
            
            1,854,549
            
            
            
            1,545,263
            
            
            
            118,532
            
            
            
            5,817,943Life
                Sciences
            
            
            446,260
            
            
            
            (128,802
            )
            
            
            7,483
            
            
            
            2,329,768AHP
            
            
            303,309
            
            
            
            505,664
            
            
            
            81,153
            
            
            
            5,162,518Corporate
            
            
            -
            
            
            
            3,048,477
            
            
            
            32,882
            
            
            
            21,628,732Consolidated
                Total
            
            $
            3,065,868
            
            
            $
            5,849,516
            
            
            $
            473,991
            
            
            $
            40,400,969**June
                30, 2006:**Performance
                Materials
            
            $
            176,784
            
            
            $
            670,073
            
            
            $
            259,910
            
            
            $
            3,943,532AMPS
            
            
            78,799
            
            
            
            1,393,748
            
            
            
            71,581
            
            
            
            2,462,564Life
                Sciences
            
            
            510,607
            
            
            
            (447,556
            )
            
            
            2,353
            
            
            
            1,041,927AHP
            
            
            290,638
            
            
            
            275,679
            
            
            
            -
            
            
            
            2,337,231Corporate
            
            
            -
            
            
            
            2,036,465
            
            
            
            29,403
            
            
            
            17,201,802Consolidated
                Total
            
            $
            1,056,828
            
            
            $
            3,928,409
            
            
            $
            363,247
            
            
            $
            26,987,056





13





**Depreciation****Loss/(Income)
                From**
            
            
            **and****Six
                Months Ended**
            
            **Net
                Sales**
            
            
            **Operations**
            
            
            **Amortization**
            
            
            **Assets****June
                30, 2007:**Performance
                Materials
            
            $
            1,008,483
            
            
            $
            1,293,857
            
            
            $
            514,504
            
            
            $
            5,462,008AMPS
            
            
            2,117,554
            
            
            
            3,021,369
            
            
            
            230,029
            
            
            
            5,817,943Life
                Sciences
            
            
            457,583
            
            
            
            (4,927
            )
            
            
            14,003
            
            
            
            2,329,768AHP
            
            
            623,180
            
            
            
            663,075
            
            
            
            81,153
            
            
            
            5,162,518Corporate
            
            
            -
            
            
            
            6,365,608
            
            
            
            65,360
            
            
            
            21,628,732Consolidated
                Total
            
            $
            4,206,800
            
            
            $
            11,338,982
            
            
            $
            905,049
            
            
            $
            40,400,969**June
                30, 2006:**Performance
                Materials
            
            $
            331,523
            
            
            $
            1,463,066
            
            
            $
            513,958
            
            
            $
            3,943,532AMPS
            
            
            189,725
            
            
            
            2,281,586
            
            
            
            104,396
            
            
            
            2,462,564Life
                Sciences
            
            
            510,608
            
            
            
            (311,030
            )
            
            
            4,705
            
            
            
            1,041,927AHP
            
            
            570,268
            
            
            
            411,581
            
            
            
            -
            
            
            
            2,337,231Corporate
            
            
            -
            
            
            
            4,808,899
            
            
            
            57,059
            
            
            
            17,201,802Consolidated
                Total
            
            $
            1,602,124
            
            
            $
            8,654,102
            
            
            $
            680,118
            
            
            $
            26,987,056





In
      the
      table above, corporate expense in the Loss From Operations column includes
      such
      expenses as investor relations, business consulting, general legal expense,
      accounting and audit, general insurance expense, shareholder information expense
      and general office expense.





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





**Sales
                - 3 Months Ended**
            
            
            **Accounts**
                **Receivable
                  and**
                **Notes
                  Receivable at****Customer**
            
            **June
                30, 2007**
            
            
            **June
                30, 2007****Performance
                Materials Division:**Department
                of Energy
            
            $
            240,744
            
            
            $
            87,496**AMPS
                Division:**Phoenix
                Mortorcars, Inc.
            
            $
            1,519,632
            
            
            $
            1,474,142Department
                of Energy
            
            $
            195,032
            
            
            $
            60,378**Life
                Sciences Division:**Elanco
                Animal Health/Eli Lilly
            
            $
            421,706
            
            
            $
            421,706Department
                of Energy
            
            $
            23,660
            
            
            $
            10,727**AHP
                Division:**Western
                Oil Sands
            
            $
            303,309
            
            
            $
            345,387





14


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





**Sales
                - 3 Months Ended**
            
            
            **Accounts**
              **Receivable
                at****Customer**
            
            **June
                30, 2006**
            
            
            **June
                30, 2006****Performance
                Materials Division:**University
                of Las Vegas Research Foundation
            
            $
            222,448
            
            
            $
            156,022**AMPS
                Division:**National
                Science Foundation
            
            $
            65,535
            
            
            $
            59,625**Life
                Sciences Division:**Spectrum
                Pharmaceuticals, Inc.
            
            $
            510,608
            
            
            $
            -**AHP
                Division:**Western
                Oil Sands
            
            $
            240,758
            
            
            $
            170,236








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





**Sales
                - 6 Months Ended**
            
            
            **Accounts**
                **Receivable
                  and**
                **Notes
                  Receivable at****Customer**
            
            **June
                30, 2007**
            
            
            **June
                30, 2007****Performance
                Materials Division:**Department
                of Energy
            
            $
            398,796
            
            
            $
            87,496**AMPS
                Division:**Phoenix
                Mortorcars, Inc.
            
            $
            1,519,632
            
            
            $
            1,474,142Department
                of Energy
            
            $
            404,349
            
            
            $
            60,378**Life
                Sciences Division:**Elanco
                Animal Health/Eli Lilly
            
            $
            433,029
            
            
            $
            421,706Department
                of Energy
            
            $
            23,660
            
            
            $
            10,727**AHP
                Division:**Western
                Oil Sands
            
            $
            623,180
            
            
            $
            345,387





15


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





**Sales
                - 6 Months Ended**
            
            
            **Accounts
                Receivable at****Customer**
            
            **June
                30, 2006**
            
            
            **June
                30, 2006****Performance
                Materials Division:**University
                of Las Vegas Research Foundation
            
            $
            303,254
            
            
            $
            156,022**AMPS
                Division:**National
                Science Foundation
            
            $
            146,942
            
            
            $
            59,625**Life
                Sciences Division:**Spectrum
                Pharmaceuticals, Inc.
            
            $
            510,608
            
            
            $
            -**AHP
                Division:**Western
                Oil Sands
            
            $
            520,388
            
            
            $
            170,236





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





**Revenues
                -**
            
            
            **Revenues
                -****3
                Months Ended**
            
            
            **3
                Months Ended****Geographic
                information (a):**
            
            **June
                30, 2007**
            
            
            **June
                30, 2006**United
                States
            
            $
            2,632,095
            
            
            $
            816,578Canada
            
            
            325,633
            
            
            
            240,250Other
                foreign countries
            
            
            108,140
            
            
            
            -Total
            
            $
            3,065,868
            
            
            $
            1,056,828(a)
                Revenues are attributed to countries based on location of
                customer.





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





**Revenues
                -**
            
            
            **Revenues
                -****6
                Months Ended**
            
            
            **6
                Months Ended****Geographic
                information (a):**
            
            **June
                30, 2007**
            
            
            **June
                30, 2006**United
                States
            
            $
            3,400,566
            
            
            $
            1,029,192Canada
            
            
            621,271
            
            
            
            523,052Other
                foreign countries
            
            
            184,963
            
            
            
            49,880Total
            
            $
            4,206,800
            
            
            $
            1,602,124(a)
                Revenues are attributed to countries based on location of
                customer.





**Note
      13.  Subsequent Events**





On
      July
      20, 2007, we entered into a multi-year Joint Development and Equipment Purchase
      Agreement with AES Energy Storage, LLC  (“AES”).  Under the
      terms of the agreement we will work jointly with AES to develop a suite of
      energy storage solutions for purchase by AES and potentially third
      parties.  We are required to deliver to AES a prototype of the energy
      storage products by the end of 2007.  In connection with this
      agreement, a Warrant Issuance Agreement was also signed.  Pursuant to
      this agreement, an initial warrant to purchase 200,000 common shares of the
      Company at $3.64 per share was issued.  The Initial Warrant becomes
      exercisable upon the earlier to occur of December 31, 2007 or the date the
      pilot
      energy storage system is delivered pursuant to the Joint Development Agreement,
      and it expires on July 20, 2011.  Additionally, we also agreed to
      issue AES additional warrants (referred to as “Milestone Warrants”) to purchase
      common shares of the Company based on a formula derived from revenue received
      from sales of energy storage systems to AES and its affiliates during the term
      of the Joint Development Agreement   The number of Milestone
      Warrants the Company may be required to issue is subject to an aggregate cap
      of
      1.8 million Milestone Warrants, which would be reached only if the Company
      received at least $90 million in revenue from sales of energy storage systems
      to
      AES during the term of the Joint Development Agreement. The Milestone Warrants
      are to be issued annually by March 31 with respect to the prior
      year.  They will have a four-year term and an exercise price equal to
      the greater of (i) $3.64 and (ii) the closing price on January 31 of the year
      of
      issuance less $5.00.  The number of Milestone Warrants the Company is
      obligated to issue in any year is capped at the lesser of 500,000 Milestone
      Warrants and the number of Milestone Warrants with an associated expense,
      determined in accordance with GAAP, that is 10% of energy storage system revenue
      from AES (although warrants not issued as a result of the cap may roll over
      to a
      following year provided certain minimum sales have been
      acheived).  The Milestone Warrants will include cashless exercise
      provisions, and the Company has granted AES certain registration rights with
      respect to common shares issuable upon the exercise of the
      Warrants.





16


On
      August
      3, 2007, we received an initial $1,000,000 order in connection with the AES
      Joint Development and Equipment Purchase Agreement for a 500 kilowatt-hour
      energy storage product.  This product will be designed, manufactured,
      and tested at our Indiana and Reno facilities, and is expected to ship in the
      fourth quarter of 2007.





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





On
      July 13, 2007, we signed an agreement with PPG Industries, Inc., as a
      sub-contractor to their United States Air Force Research Labs
      grant.  Under the terms of this grant, we will work jointly with PPG
      to develop a nanometal oxide material and dispersion concentrates to create
      a
      primer to be utilized in aerospace applications.  The total value of
      the agreement is $290,000 over a 6 month term.  We also received a
      $200,000 purchase order in July from a division of PPG, PRC-DeSoto
      International, Inc., to perform research and development over a 6 month period
      related to the same objectives as the grant noted above.








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




**Forward-Looking
      Statements**




This
      Quarterly Report on Form 10-Q (this “Report”) contains various forward-looking
      statements. Such statements can be identified by the use of the forward-looking
      words "anticipate," "estimate," "project," "likely," "believe," "intend,"
      "expect," or similar words.   These statements discuss future
      expectations, contain projections regarding future developments, operations,
      or
      financial conditions, or state other forward-looking
      information.  When considering such forward-looking statements, you
      should keep in mind the risk factors noted in Part II – Other Information, “Item
      1A. Risk Factors” and other cautionary statements throughout this Report and our
      other filings with the Securities and Exchange Commission.  You should
      also keep in mind that all forward-looking statements are based on management’s
      existing beliefs about present and future events outside of management’s control
      and on assumptions that may prove to be incorrect.  If one or more
      risks identified in this Report or any other applicable filings materializes,
      or
      any other underlying assumptions prove incorrect, our actual results may vary
      materially from those anticipated, estimated, projected, or
      intended.





**Overview**





The
      following discussion summarizes the material changes in our financial condition
      between December 31, 2006 and June 30, 2007 and the material changes in our
      results of operations and financial condition between the three-and six-month
      periods ended June 30, 2007 and June 30, 2006.  This discussion should
      be read in conjunction with Management’s Discussion and Analysis of Financial
      Condition and Results of Operations included in the Company’s Annual Report on
      Form 10-K for the year ended December 31, 2006.





17


We
      are a
      Canadian corporation, with principal assets and operations in the United States,
      whose primary business is developing and commercializing nanomaterial and
      titanium dioxide pigment technologies. We are organized into
      four divisions, an Advanced Materials and Power Systems Division, or AMPS,
      a Life Sciences Division, an Altair Hydrochloride Pigment Process Division,
      or
      AHP, which includes the AlSher Titania joint venture, and a Performance
      Materials Division.  Our research, development, production and
      marketing efforts are currently directed toward four primary market applications
      that utilize our proprietary technologies:





·
            AMPS:  The
                design, development, and production of our NanoSafe brand nanoTitanate
                battery cells, batteries, and battery packs as well as related design
                and
                test services.





·
            Life
                Sciences


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


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





·
            AHP: In
                April 2007, the
                AlSher Titania joint venture was formed to develop and produce high
                quality titanium dioxide pigment for use in paint and coatings, and
                nano
                titanium dioxide materials for use in a variety of applications including
                those related to removing contaminants from air and
                water.  Current customers utilizing the AHP technology and
                internal research and development activities are also conducted by
                the AHP
                divison.





·
            Performance
                Materials


o
            The
                testing, development, marketing and/or licensing of nano-structured
                ceramic powders for use in various application, such as advanced
                performance coatings, air and water purification systems, and nano-sensor
                applications.   As part of the AlSher Titania joint
                venture, an exclusive license was granted to AlSher Titania to produce
                nano titanium dioxide materials that will be purchased by the Company
                for
                internal development and commercial
                sales.


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





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





Our
      revenues have been, and we expect them to continue to be, generated by license
      fees, product sales, commercial collaborations and contracts and
      grants.  We currently have agreements in place to (1) provide research
      involving a technology used in the detection of chemical, biological and
      radiological agents, (2) provide laboratory space and services in connection
      with testing and development related to the use of our AHP to produce titanium
      dioxidepigment
      and
      pigment-related products from titanium-bearing oil sands, (3) supply nano-sized
      anode and cathode materials for design and development of high capacity lithium
      ion battery and super capacitor applications, (4) provide research utilizing
      nanotechnology processes for the production and commercialization of solar-based
      hydrogen technologies, (5) produce battery packs, (6) provide research to
      further develop battery electrode materials, nanosensors, and nanomaterials
      characterization, and (7) jointly develop a suite of energy storage
      solutions.  In addition, we have entered into a licensing agreement
      for RenaZorb, our pharmaceutical candidate for treatment of chronic renal
      failure in humans; we have licensed all potential pharmaceutical products for
      animal applications; have entered into a joint venture to develop and produce
      titanium dioxide pigment for use in paint and coatings and nano titamium dioxide
      materials for use in a variety of advanced materials applications; and we have
      made product sales consisting principally of battery packs and lithium
      titanate.  Future revenues will depend on the success of our
      contracted projects, the results of our other research and development work,
      the
      success of the RenaZorb and animal applicationlicensees
      in
      obtaining regulatory approval for the drugs, or other products, the successful
      completion of pilot plant operations in connection with AlSher Titania, the
      successful completion of pilot plant operations in connection with energy
      storage devices, and the success of our marketing efforts with respect to both
      product sales and technology licenses.





18




**General
      Outlook**









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





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





·
            On
                July 20, 2007, we entered into a multi-year joint development and
                equipment purchase agreement related to our battery technology and
                energy
                storage products with AES Energy Storage, LLC (“AES”), a subsidiary of The
                AES Corporation. (Refer to Note 13 Subsequent Events).  Under
                this agreement, a pilot project to jointly develop an energy storage
                system with AES is expected to be completed by the second quarter
                of
                2008.  Successful completion of this project is key to begin
                commercially marketing and selling these energy storage
                systems.





·
            On
                January 9, 2007, we entered into a multi-year purchase and supply
                agreement with Phoenix Motorcars, Inc. (“Phoenix”) for NanoSafe
                nanoTitanate battery packs to be used in electric vehicles produced
                by
                Phoenix.  Phoenix has placed firm purchase orders for $3,250,000
                in NanoSafe nanoTitanate battery packs through June 30,
                2007.  Management believes that the projected orders for 2007 of
                between $16 and $42 million for the remainder of 2007 may not be
                achieved,
                and that orders may fall below $16 million.  We are currently
                working with Phoenix to firm up orders through the remainder of
                2007.  Packs generating revenue of $1,625,000 were produced and
                invoiced in the second quarter of 2007, with the remainder of the
                $3,250,000 in ordered packs expected to be completed in the third
                quarter.  The agreement provides Phoenix with limited
                exclusivity in the all-electric vehicle market during a three-year
                period.  In order to maintain exclusivity, Phoenix must purchase
                at least $16 million in battery packs during 2007.  Phoenix must
                be successful in their business strategy and we must build and deliver
                battery packs on a scale we have never before achieved, in order
                to fully
                benefit from this purchase
                agreement.





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





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





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





19





**Recent
      Business Developments**





**Advanced
      Materials and Power Systems Division**




In
      July
      2007, we entered into a multi-year development and equipment purchase agreement
      with AES, a subsidiary of global power leader The AES
      Corporation.  The AES Corporation is one of the world’s largest power
      companies, with operations in 28 countries on five continents.  The
      AES Corporation generation and distribution facilities have the capacity to
      serve 100 million people worldwide.  Under the terms of the deal, we
      will work jointly with AES to develop a suite of energy storage solutions
      specifically for AES.  These energy storage products are expected to
      deliver in excess of 1 megawatt of power and 500 kilowatt-hours of
      energy.  Altairnano is working with AES to apply these products and
      systems at strategic points within the electrical grid to more efficiently
      deal
      with congestion, peak energy consumption, and real-time fluctuations in
      electricity demand.  We believe that the quick response time, extended
      life, and power profile of the Altairnano batteries and energy storage products
      are well suited to improving performance in these areas with lower environmental
      impact than traditional generation solutions. Delivery to AES of the
      prototype Altairnano energy storage products is scheduled for the end of the
      year. (Refer to Subsequent Events Note 13).




On
      August 3, 2007, we received an
      initial $1,000,000 order in connection with the AES Joint Development and
      Equipment Purchase Agreement for a 500 kilowatt-hour energy storage
      product.  This product will be designed, manufactured, and tested at
      our Indiana and Reno facilities, and is expected to ship before the end of
      the
      fourth quarter of 2007.  This initial product is intended for use as a
      short term duration buffer to regulate the frequency and voltage of the
      electrical utility system grid.  This buffering is called Regulation
      Services and it serves to smooth the short term supply-demand imbalances
      inherent in power generation and delivery, thereby improving the quality of
      power delivered.





In
      January 2007, we entered into a multi-year purchase and supply agreement with
      Phoenix for lithium nanoTitanate battery packs to be used in electric vehicles
      produced by Phoenix.  Contemporaneously, Phoenix placed firm purchase
      orders for 35 kilowatt hour (“KWh”) battery pack systems valued at $1,040,000
      and placed an indicative blanket purchase order for up to 500 battery pack
      systems to be delivered during 2007 (projected value between $16 and $42
      million).  Management believes that the projected orders for 2007 of
      between $16 and $42 million for the remainder of 2007 may not be achieved,
      in
      that orders may fall below $16 million.  We are currently working with
      Phoenix to firm up orders through the remainder of 2007.  The initial
      order for $1,040,000 was completed and invoiced on a bill and hold basis in
      the
      second quarter of 2007.  Additionally, $585,000 of packs relating to a
      May 2007 purchase order valued at $2,210,000 were completed and invoiced on
      a
      bill and hold basis  in the second quarter of 2007. (Refer to Revenue
      section in Summary of Significant Accounting Policies Note 2, which details
      our
      policy regarding bill and hold shipments).





**AHP
      Division**





In
      April 2007, a new company, called
      AlSher Titania LLC (“AlSher”), was formed.  AlSher represents a joint
      venture with The Sherwin-Williams Company, one of the world's leading
      manufacturers of paint and durable coatings.  AlSher will combine the
      Altairnano Hydrochloride Pigment (AHP) process and the Sherwin-Williams Hychlor
      Pigment (SWHP) process and other technologies to develop and produce high
      quality titanium dioxide pigment for use in paint and coatings, and nano
      titanium dioxide materials for use in a variety of applications including those
      related to removing contaminants from air and water.  Construction of
      the pigment processing pilot plant, which is expected to be commissioned in
      late
      2007, continues and testing of completed processing stages are scheduled to
      begin in the third quarter.





**Performance
      Materials**





****In
      July 2007, we signed an agreement with PPG Industries, Inc. (“PPG”), as a
      sub-contractor to their United States Air Force Research Labs
      grant.  Under the terms of this grant, we will work jointly with PPG
      to develop a nanometal oxide material and dispersion concentrates to create
      a
      primer to be utilized in aerospace applications.  The total value of
      the agreement is $290,000 over a 6 month term.  We also received a
      $200,000 purchase order in July from a division of PPG, PRC-DeSoto
      International, Inc., to perform research and development over a 6 month period
      related to the same objectives as the grant noted above.





20


****In
      January 2007, Sulzer Metco placed a $75,000 order for TiO2 thermal
      spray
      grade.  A partial shipment was made in January 2007 and the remaining
      order is expected to ship in the third and fourth quarter.





**Life
      Sciences**





Work
      completed January through June of 2007 of $330,200 associated with our research
      and license agreement with Elanco Animal Health Division of Eli Lilly and
      Company was billed in the second quarter.  Remaining work under
      current purchase orders expected to be completed by the end of the third quarter
      totaled $265,500.





We
      continue to support Elanco and Spectrum in development of Renalan and RenaZorb,
      respectively, and seeking product approvals from the FDA.





**Liquidity
      and Capital Resources**





**Current
      and Expected Liquidity**





Historically,
      we have financed operations primarily through the issuance of equity securities
      (common shares, convertible notes, stock options and warrants) and by the
      issuance of debt.  We do not presently have any plans to pursue
      additional debt or equity financing, however, we may be required to raise
      additional capital in the near term and reserve the right to do so in connection
      with a business opportunity, transaction or other event not anticipated by
      our
      current budget.  We do not have any commitments with respect to future
      financing and may, or may not, be able to obtain such financing on reasonable
      terms, or at all.  We have a single note payable in the principal
      amount of $3,000,000 that does not contain any restrictive covenants with
      respect to the issuance of additional debt or equity securities by
      Altair.  The first two payments of $600,000 of principal plus accrued
      interest were due and paid on February 8, 2006 and February 8,
      2007.  Future payments of principal and interest are due annually on
      February 8, 2008 through 2010.





Our
      cash
      and short-term investments decreased by $6,374,062, from $27,220,357 at December
      31, 2006 to $20,846,295 at June 30, 2007, due primarily to the incurrence of
      operating expenses (approximately $8,500,000) purchases of property and
      equipment (approximately $2,400,000) and payment of notes payable
      ($600,000).  This decrease was partially offset by the receipt of
      proceeds in connection with the private placement of common shares purchased
      by
      The AES Corporation in March 2007 and receipt of cash in connection with the
      AlSher Titania Joint Venture.





During
      the six months ended June 30, 2007, our cash used in operations was
      $8,456,046.  The amount of cash we use in operations is partially dependent
      on the amount and mix of revenues we generate.  In the six months ended
      2007, revenues were $4,206,800, which included $1,933,003 of product
      sales.  Although we expect quarterly revenues to increase during the
      remainder of the year, and we expect product sales to become a larger percentage
      of the sales mix, we cannot be certain that this will occur.  As
      revenues associated with product sales increase, a higher level of inventory
      and
      long term notes receivable impact cashflows as well.





Our
      objective is to manage cash expenditures in a manner consistent with rapid
      product development that leads to the generation of revenues in the shortest
      possible time.  We believe we have adequate cash resources, and
      availability of additional capital if needed, to continue product development
      until higher-margin revenues and positive cash flow can be
      generated.





At
      August
      1, 2007, we had 70,143,787 common shares issued and outstanding.  As
      of that same date, there were outstanding warrants to purchase up to 3,422,525
      common shares and options to purchase up to 4,557,955 common
      shares.




21


**Capital
      Commitments**





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




**Less
                Than**
            
            
            
            
            
            
            
            
            **After****Contractual
                Obligations**
            
            **Total**
            
            
            **1
                Year**
            
            
            **1-3
                Years**
            
            
            **4-5
                Years**
            
            
            **5
                Years**Notes
                Payable
            
            $
            1,800,000
            
            
            $
            600,000
            
            
            $
            1,200,000
            
            
            $
            -
            
            
            $
            -Interest
                on notes payable
            
            
            252,000
            
            
            
            126,000
            
            
            
            126,000
            
            
            
            -
            
            
            
            -Contractual
                Service Agreements
            
            
            1,551,957
            
            
            
            1,469,503
            
            
            
            82,454
            
            
            
            -
            
            
            
            -Facilities
                and Property Leases
            
            
            851,770
            
            
            
            284,435
            
            
            
            376,085
            
            
            
            191,250
            
            
            
            -Unfulfilled
                Purchase Orders
            
            
            2,893,737
            
            
            
            2,893,737
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
                Contractual Obligations
            
            $
            7,349,464
            
            
            $
            5,373,675
            
            
            $
            1,784,539
            
            
            $
            191,250
            
            
            $
            -





In
      connection with the formation of the AlSher Titania joint venture, the Company
      committed to complete its pigment processing pilot plant and expects to
      commission the plant by late 2007.  Total capital expenditures, labor
      and development costs associated with this effort are expected to total
      approximately $3.9 million. Through June 30, 2007, approximately $1,056,000
      of costs associated with the pigment processing pilot plant have been
      incurred.





A
      total
      of approximately $2,000,000 is anticipated to be spent on equipment and building
      improvements through the end of December 2007 relating to our preparations
      to
      manufacture our pharmaceutical products.





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





We
      also
      intend to purchase equipment for our Reno, Nevada facility for use in the
      development and expansion of our current advanced battery materials production
      capabilities.  Through June 30, 2007, approximately $576,000 was
      expended on production equipment, and we expect to spend approximately $319,000
      during the quarter ending September 30, 2007.





**Off-Balance
      Sheet Arrangements**





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





**Critical
      Accounting Policies and Estimates**




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




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




22





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





·
            Long-Lived
                Assets.  Our long-lived assets consist principally of the
                nanomaterials and titanium dioxide pigment assets, the intellectual
                property (patents and patent applications) associated with them,
                and a
                building.  Included in these long-lived assets are those that
                relate to our research and development process.  These assets are
                initially evaluated for capitalization based on Statement of Financial
                Accounting Standards No. 2, *Accounting for Research and Development
                Costs*.  If the assets have alternative future uses (in research
                and development projects or otherwise), they are capitalized when
                acquired
                or constructed; if they do not have alternative future uses, they
                are
                expensed as incurred. At June 30, 2007, the carrying value of these
                assets was $13,243,947, or 33% of total assets.  We evaluate the
                carrying value of long-lived assets when events or circumstances
                indicate
                that impairment may exist.  In our evaluation, we estimate the
                net undiscounted cash flows expected to be generated by the assets,
                and
                recognize impairment when such cash flows will be less than the carrying
                values.  Events or circumstances that could indicate the
                existence of a possible impairment include obsolescence of the technology,
                an absence of market demand for the product, and/or the partial or
                complete lapse of technology rights
                protection.





·
            Share-Based
                Compensation.  We have a stock incentive plan that provides for
                the issuance of common stock options to employees and service
                providers.  We calculate compensation expense under SFAS 123R
                using a Black-Scholes option pricing model.  In so doing, we
                estimate certain key assumptions used in the model.  We believe
                the estimates we use are appropriate and
                reasonable.





·
            Revenue
                Recognition.  We recognize revenue when persuasive evidence of
                an arrangement exists, delivery has occurred or service has been
                performed, the fee is fixed and determinable, and collectibility
                is
                probable, in accordance with the Securities and Exchange Commission
                *“Staff Accounting Bulletin No. 104 – Revenue Recognition in Financial
                Statements”*.  Historically, our revenues have been derived from
                four sources: license fees, commercial collaborations, contract research
                and development and product sales.  License fees are recognized when
                the agreement is signed, we have performed all material obligations
                related to the particular milestone payment or other revenue component
                and
                the earnings process is complete.  Revenue for product sales is
                recognized upon delivery of the product, unless specific contractual
                terms
                dictate otherwise.  Based on the specific terms and conditions
                of each contract/grant, revenues are recognized on a time and materials
                basis, a percentage of completion basis and/or a completed contract
                basis.  Revenue under contracts based on time and materials is
                recognized at contractually billable rates as labor hours and expenses
                are
                incurred.  Revenue under contracts based on a fixed fee
                arrangement is recognized based on various performance measures,
                such as
                stipulated milestones.  As these milestones are achieved, revenue is
                recognized.  From time to time, facts develop that may require us to
                revise our estimated total costs or revenues expected.  The
                cumulative effect of revised estimates is recorded in the period
                in which
                the facts requiring revisions become known.  The full amount of
                anticipated losses on any type of contract is recognized in the period
                in
                which it becomes known.  Based on specific customer bill and
                hold agreements, revenue is recognized when the inventory is shipped
                to a
                third party storage warehouse,the inventory is segregated and marked
                as
                sold, the customer takes the full rights of ownership and title to
                the inventory upon shipment to the warehouse per the bill and hold
                agreement.  When contract terms include multiple components that
                are considered separate units of accounting under EITF 00-21 “Revenue
                Arrangements with Multiple Deliverables”, the revenue is attributed to
                each component and revenue recognition may occur at different points
                in
                time for product shipment, installation, and service contracts based
                on
                substantial completion of the earnings
                process.





·
            Accrued
                Warranty.  We provide a limited warranty for battery packs sold
                to Phoenix Motorcars, Inc.  A liability is recorded for
                estimated warranty obligations at the date products are
                sold.  Since this is a new product, the estimated cost of
                warranty coverage is based on cell and module life cycle testing
                and
                compared for reasonableness to warranty rates on competing battery
                products.  As sufficient actual historical data is collected on
                the new product, the estimated cost of warranty coverage will be
                adjusted
                accordingly.





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





23


·
            Minority
                Interest – In April 2007, the Company and The Sherwin-Williams
                Company (“Sherwin”) entered into an agreement to form AlSher Titania LLC,
                a Delaware limited liability company (“AlSher”).  AlSher is a
                joint venture combining certain technologies of the Company and Sherwin
                in
                order to develop and produce titanium dioxide pigment for use in
                paint and
                coatings and nano titanium dioxide materials for use in a variety
                of
                applications, including those related to removing contaminants from
                air
                and water.  Pursuant to a Contribution Agreement dated April 24,
                2007 among Altairnano, Inc, Sherwin and AlSher, Altairnano contributed
                to
                AlSher an exclusive license to use Altairnano’s technology (including its
                hydrochloride pigment process) for the production of titanium dioxide
                pigment and other titanium containing materials (other than battery
                or
                nanoelectrode materials) and certain pilot plants assets with a net
                book
                value of $3,110,000.  Altairnano received no consideration for
                the license granted to AlSher other than its ownership interest in
                AlSher.  Sherwin agreed to contribute to AlSher cash and a
                license agreement related to a technology for the manufacture of
                titanium
                dioxide using the digestion of ilmenite in hydrochloric
                acid.  As a condition to enter into the second phase of the
                joint venture, we agreed to complete the pigment pilot processing
                plant
                and related development activities by January 2008.  The costs
                associated with this effort are expected to be partially reimbursed
                by
                AlSher.  Any work in process and fixed assets associated with
                completion of the pigment pilot processing plant are contributed
                by
                Altairnano to the AlSher joint venture.  For each reporting
                period, Alsher is consolidated with the Company’s subsidiaries because the
                Company has a controlling interest in AlSher and any inter-company
                transactions are eliminated (refer to Note 1 – Basis of Preparation of
                Consolidated Financial Statements).  The minority shareholder’s
                interest in the net assets and net income or loss of AlSher are reported
                as minority interest in subsidiary on the condensed consolidated
                balance
                sheet and as minority interest share in the condensed consolidated
                statement of operations,
                respectively.





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





·
            Deferred
                Income Taxes.  Income taxes are accounted for using the asset
                and liability method.  Deferred income tax assets and liabilities are
                recognized for the future tax consequences attributable to differences
                between the financial statement carrying amounts of existing assets
                and
                liabilities and their respective tax bases and operating loss and
                tax
                credit carry-forwards.  Deferred income tax assets and liabilities
                are measured using enacted tax rates expected to apply to taxable
                income
                in the years in which those temporary differences are expected to
                be
                recovered or settled.  The effect on deferred income tax assets and
                liabilities of a change in tax rates is recognized in income in the
                period
                that includes the enactment date.  Future tax benefits are subject to
                a valuation allowance when management is unable to conclude that
                its
                deferred income tax assets will more likely than not be realized
                from the
                results of operations.  The Company has recorded a valuation
                allowance to reflect the estimated amount of deferred income tax
                assets
                that may not be realized. The ultimate realization of deferred income
                tax
                assets is dependent upon generation of future taxable income during
                the
                periods in which those temporary differences become deductible. Management
                considers projected future taxable income and tax planning strategies
                in
                making this assessment. Based on the historical taxable income and
                projections for future taxable income over the periods in which the
                deferred income tax assets become deductible, management believes
                there is
                insufficient basis for projecting that the Company will realize the
                benefits of these deductible differences as of June 30, 2007. 
                Management has, therefore, established a full valuation allowance
                against
                its net deferred income tax assets as of June 30,
                2007.





24


**Results
      of Operations**





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





The
      net
      loss for the second quarter ended June 30, 2007 totaled $5,430,583 ($.08 per
      share) compared to a net loss of $3,789,018 ($.06 per share) in the second
      quarter of 2006.





Total
      revenues for the second quarter ended June 30, 2007 were
      $3,065,868 compared to $1,056,828 for the second quarter of
      2006.  License fee revenue decreased by $364,720 in the second quarter
      ended June 30, 2007 as compared to the same period in 2006 due to a milestone
      payment received in the second quarter of 2006 in connection with the Spectrum
      agreement.  No additional milestones were achieved for the same period
      in 2007.





Product
      revenues increased by $1,752,973 from $2,640 in the second quarter of 2006
      to
      $1,755,613 in the second quarter of 2007.  During the second quarter of
      2007, we recorded approximately $1,739,700 of product revenues associated with
      NanoSafe nanoTitanate battery materials, alumina and prototype
      cells.  There were no comparable product revenues in the second
      quarter of 2006.  Additionally, sales of other TiO2 related products
      increased by approximately $13,300 for the second quarter ending June 30, 2007
      over the prior year quarter.





Revenues
      from commercial collaborations increased by $345,548, from $389,236 in the
      second quarter of 2006 to $734,784 in the second quarter of
      2007.  Revenues of approximately $421,700 were recorded in connection
      with research and development of Renalan performed per the Elanco Animal Health
      contract in June 2007.  This contract was not signed until May 2006
      and no billable research and development charges were incurred in the second
      quarter of 2006.  Additional revenue of $62,600 associated with
      Western Oil Sands primarily related to materials purchases and other increases
      totaled $6,200 in the second quarter of 2007.  These increases were
      offset by a decrease in revenue of approximately $145,000 relating to the
      RenaZorb development revenues under the Spectrum contract recorded in the second
      quarter of 2006.  No development revenues have been recorded in
      2007.





Revenues
      from contracts and grants increased by $275,239, from $300,232 in the
      second quarter of 2006, to $575,471 in the second quarter of 2007.
 Revenues of $459,400 were recorded in connection with the $2.5 million
      Department of Energy grant in the second quarter of 2007.  In the
      prior year, revenues associated with this grant did not commence until September
      2006.  This increase and other increases due to the timing of new
      grants of $18,200 was offset by $164,900 due to the completion of
      the $750,000 University of Nevada, Las Vegas Research Foundation
      subcontract and by $37,500 due to the completion of a subcontract with
      Rutgers University to provide testing services associated with the National
      Science Foundation grant.





Cost
      of
      product sales increased by $2,191,026, from $1,450 in the second quarter of
      2006
      to $2,192,476 in the same quarter of 2007.  This increase is primarily
      driven by the changes in product sales discussed in the paragraph
      above.   Positive margins have not yet been achieved associated
      with the sale of battery packs due to scaling issues, and a portion of the
      revenues relating to the battery packs is dependent upon the receipt of Zero
      Emission Credits (refer to Note 11 – Related Party
      Transactions).  Through June 30, 2007, no ZEV credits have been sold
      or paid to us by Phoenix Motorcars, Inc.  As higher production volumes
      and cost reduction efforts are achieved and ZEV credits are paid, the margin
      on
      battery pack sales is expected to become positive.





Research
      and development expenses increased by $1,033,604, from $2,205,265 in
      the second quarter of 2006 to $3,238,869 in the same quarter of 2007. 
Labor costs increased by approximately $469,400 due to the addition of 34
      new employees.  Excluding labor, research and development costs
      increased in the following business units:  $127,200 net increase in
      Performance Materials primarily due to the Department of Energy Nanosensors
      grant that was not signed until September 2006 offset by a reduction in battery
      materials costs, which are now recorded in cost of sales; $271,500 net increase
      in Life Sciences primarily due to RenaZorb and Renalan research
      costs;  $100,300 net increase in AHP due to the pigment pilot plant
      associated with the AlSher joint venture and increase in Western Oil Sands
      materials costs; and $65,200 net increase in AMPS which reflects research costs
      associated with existing battery packs, as well as new products offset by
      decreases in travel and other marketing related costs that are now reported
      in  sales and marketing expenses  (the AMPS sales and
      marketing group was not formed until May
      2006).





Sales
      and
      marketing expenses decreased by $209,192, from $618,422 in the second quarter
      of
      2006 to $409,230 in the second quarter of 2007.  Sales and marketing
      decreased by approximately $329,200 in the second quarter of 2007 primarily
      due
      to a shift in personnel from executive level to lower level management and
      a
      reduction in spending on travel.  This decrease is offset by an
      increase of approximately $120,000 relating to hiring an outside marketing
      firm in May 2006.





25


General
      and administrative expenses increased by $803,965, from $1,796,853 in the second
      quarter of 2006 to $2,600,818 in the same quarter of 2007.  Labor and
      benefit costs increased by approximately $237,400 due to 7 additional personnel
      required to support Company growth.  Share based compensation
      increased by $649,800 due to a higher level of new employees eligible for and
      receiving option grants and an overall higher level of employees who received
      retention grants in January 2007.  These increases are offset by a
      decrease in other general and administrative expenses of $83,260 primarily
      due
      to a decrease in patent legal costs incurred in 2007.





Depreciation
      and amortization increased by $110,744, from $363,247 in the second quarter
      of 2006 to $473,991 in the same quarter of 2007. The increase in
      depreciation reflects the addition of approximately $3,600,000 in lab and
      production equipment since July 2006, primarily relating to expansion of
      production capabilities at the Indiana and Reno facilities.





Interest
      income increased by $111,148, from $181,522 in the second quarter of 2006 to
      $292,670 in the same quarter of 2007 due to an increase in cash available for
      investment of approximately $5.5 million that was generated through the sale
      of
      common shares in December 2006, the private sale of stock to The AES Corporation
      in March 2007, and the receipt of the initial contribution to the AlSher joint
      venture in May 2007.





Minority
      interest increased by $157,680
      in the second quarter of 2007.  This increase reflects Sherwin
      Williams minority interest share of the AlSher Titania joint venture’s loss for
      the quarter ending June 30, 2007.   AlSher Titania was not formed
      until April 2007.








*Six
      Months Ended June 30, 2007 Compared to Six Months Ended June 30,
      2006*





The
      net
      loss for the six months ended June 30, 2007 totaled $10,612,049 ($.15 per share)
      compared to a net loss of $8,349,082 ($.14 per share) in the same period of
      2006.





Total
      revenues for the six months ended June 30, 2007 were $4,206,800 compared to
      $1,602,124 for the same period of 2006. License fee revenue decreased by
      $364,720 in the six months ended June 30, 2007 as compared to the same period
      in
      2006 due to a milestone payment received in the second quarter of 2006 in
      connection with the Spectrum agreement.  No additional milestones were
      achieved for the same period in 2007.





Product
      revenues increased by $1,922,345 from $10,658 for the six months ended June
      30, 2006 to $1,933,003 in the same period of 2007.  During the
      six months ended June 30, 2007, we recorded approximately $1,905,100 of product
      revenues associated with NanoSafe nanoTitanate battery materials, alumina and
      prototype cells.  There were no comparable product revenues for the
      same period of 2006.  Additionally, sales of other TiO2 related
      products increased by approximately $17,200 for the six months ended June 30,
      2007 over the same period in 2006.





Revenues
      from commercial collaborations increased by $362,566, from $719,506 for the
      six
      months ended June 30, 2006 to $1,082,072 for the same period of
      2007.  Revenues of approximately $433,000 were recorded in connection
      with research and development of Renalan performed per the Elanco Animal Health
      contract in June 2007.  This contract was not signed until May 2006
      and no billable research and development charges were incurred in the second
      quarter of 2006.  Additional revenue of $102,800 associated with
      Western Oil Sands primarily related to materials purchases for the six months
      ended June 30, 2007.  These increases were offset by a decrease in
      revenue of approximately $145,000 relating to the RenaZorb development revenues
      under the Spectrum contract recorded in the second quarter of 2006 and a
      decrease of $28,200 in other contracts.  No development revenues
      associated with the Spectrum contract have been recorded in 2007.





Revenues
      from contracts and grants increased by $684,485, from $507,240 for the six
      months ended June 30, 2006, to $1,191,725 in the same period of
      2007.  Revenues of approximately $827,000 were recorded in connection
      with the $2.5 million Department of Energy grant for the six months ended June
      30, 2007.  In the prior year, revenues associated with this grant were
      not recorded until September 2006.  This increase was offset by
      decreases of $116,600 due to the completion of a subcontract with
      Rutgers University to provide testing services associated with the National
      Science Foundation grant and a decrease of approximately $25,900 due to the
      completion of the $750,000 University of Nevada, Las Vegas Research Foundation
      subcontract.





26


Cost
      of
      product sales increased by $2,400,022, from $2,716 for the six months ended
      June
      30, 2006 to $2,402,738 in the same period of 2007.  This increase is
      primarily driven by the changes in product sales discussed
      above.  Positive margins have not yet been achieved associated with
      the sale of battery packs due to scaling issues, and a portion of the revenues
      relating to the battery packs is dependent upon the receipt of Zero Emission
      Credits (refer to Note 11 – Related Party Transactions).  Through
      June 30, 2007, no ZEV credits have been sold or paid to us by Phoenix Motorcars,
      Inc.  As higher production volumes and cost reduction efforts are
      achieved and ZEV credits are paid, the margin on battery pack sales is expected
      to become positive.





Research
      and development expenses increased by $2,082,545, from $4,153,652 for the
      six months ended June 30, 2006 to $6,236,197 in the same period of
      2007.  Labor costs increased by approximately $771,100 due to the
      addition of 34 new employees.  Excluding labor, research and
      development costs increased in the following business units:  $318,200
      net increase in Performance Materials primarily due to the Department of Energy
      Nanosensors grant that was not signed until September 2006 offset by a reduction
      in battery materials costs, which are now recorded in cost of sales; $306,000
      net increase in Life Sciences primarily due to RenaZorb and Renalan research
      costs;  $103,100 net increase in AHP due to the pigment pilot plant
      associated with the AlSher joint venture and increase in Western Oil Sands
      materials costs; and $584,200 net increase in AMPS which reflects research
      costs
      associated with existing battery packs, as well as new products offset by
      decreases in travel and other marketing related costs that are now reported
      in  sales and marketing expenses (the AMPS sales and marketing group
      was not formed until May 2006).





Sales
      and
      marketing expenses decreased by $221,817, from $1,011,583 for the six
      months ended June 30, 2006 to $789,766 in the same period of
      2007.  Sales and marketing decreased by approximately $341,800 in the
      six months ended June 30, 2007 primarily due to a shift in personnel from
      executive level to lower level management and a reduction in spending on
      travel.  This decrease is offset by an increase of approximately
      $120,000 relating to hiring an outside marketing firm in May 2006.





General
      and administrative expenses increased by $803,875, from $4,408,157 for the
      six
      months ended June 30, 2006 to $5,212,032 in the same period of
      2007.  Labor, fringe and recruiting costs increased by approximately
      $452,400 due to 7 additional personnel required to support Company growth and
      the search for additional talent.  Travel costs have also increased by
      approximately $118,500 due to increased headcount and trips to identify new
      supplier sources.  Share based compensation increased by $794,000 due
      to a higher level of new employees eligible for and receiving option grants
      and
      an overall higher level of employees who received retention grants in January
      2007.  These increases along with other increases in general and
      administrative expenses of $52,000 are offset by a decrease in expense of
      $401,400 due to the flood that occurred in the first quarter of 2006 and a
      decrease of $211,500 in legal costs that were incurred in 2006 relating to
      the
      lawsuits that were settled in 2006.





Depreciation
      and amortization increased by $224,931, from $680,118 for the six months
      ended June 30, 2006 to $905,049 in the same period of 2007.  The
      increase in depreciation reflects the addition of approximately $3,600,000
      in
      lab and production equipment since July 2006, primarily relating to expansion
      of
      production capabilities at the Indiana and Reno facilities.





Interest
      income increased by $243,213, from $392,825 for the six months ended June
      30, 2006 to $636,038 in the same period of 2007 due to an increase in cash
      available for investment of approximately $5.5 million that was generated
      through the sale of common shares in December 2006, the private sale of stock
      to
      The AES Corporation in March 2007, and the receipt of the initial contribution
      to the AlSher joint venture in May 2007.





Minority
      interest increased by $157,680 in the second quarter of 2007.  This
      increase reflects Sherwin Williams minority interest share of the AlSher Titania
      joint venture’s loss for the quarter ending June 30,
      2007.   AlSher Titania was not formed until April
      2007.











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





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





27





**Item
      4.   Controls and Procedures**





(a)           Based
      on the evaluation of our "disclosure controls and procedures" (as defined in
      the
      Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) required by
      paragraph (b) of Rules 13a-15 or 15d-15, our chief executive officer and our
      chief financial officer have concluded that, as of June 30, 2007, our disclosure
      controls and procedures were effective in ensuring that information
      required to be disclosed by the Company in reports that it files under the
      Exchange Act is recorded, processed, summarized and reported within the time
      periods required by governing rules and forms.




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






28


**PART
      II – OTHER INFORMATION**





***Item
      1A.  Risk Factors***





**Material
      Changes in Risk Factors**




*The
      Risk Factors set forth below do not reflect any material changes from the “Risk
      Factors” identified in our Annual Report on Form 10-K for the fiscal year ended
      December 31, 2006 (the “Form 10-K”).*





Immaterial
      edits and the financial and other data referenced in the risk factors have
      been
      updated as of a recent practicable date.





**Risk
      Factors**





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





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





We
      have
      experienced a loss in every fiscal year since our inception.  Our
      losses from operations were $17,681,415 in 2006 and $11,338,982 for the six
      months ended June 30, 2007.  Even if we do generate operating income
      in one or more quarters in the future, subsequent developments in our industry,
      customer base, business or cost structure, or an event such as significant
      litigation or a significant transaction, may cause us to again experience
      operating losses. We may never become profitable for the long-term, or even
      for
      any quarter.




***Our
      quarterly operating results have fluctuated significantly in the past and will
      continue to fluctuate in the future, which could cause our stock price to
      decline.***




Our
      quarterly operating results have fluctuated significantly in the past, and
      we
      believe that they will continue to fluctuate in the future, due to a number
      of
      factors, many of which are beyond our control. If in future periods our
      operating results do not meet the expectations of investors or analysts who
      choose to follow our company, our stock price may fall. Factors that may affect
      our quarterly operating results include the following:




•
            fluctuations
                in the size and timing of customer orders from one quarter to the
                next;


•
            timing
                of delivery of our services and
                products;


•
            addition
                of new customers or loss of existing
                customers;


•
            our
                ability to commercialize and obtain orders for products we are
                developing;


•
            costs
                associated with developing our manufacturing
                capabilities;


•
            new
                product announcements or introductions by our competitors or potential
                competitors;


•
            the
                effect of variations in the market price of our common shares on
                our
                equity-based compensation expenses;


•
            acquisitions
                of businesses or customers;


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


•
            general
                economic trends, including changes in energy prices, or geopolitical
                events such as war or incidents of
                terrorism.




***Our
      revenues have historically been generated from low-margin contract research
      services; if we cannot expand revenues from other products and services, our
      business will fail.***




Historically,
      a significant portion of our revenues has come from contract research services
      for businesses and government agencies. During the years ended December 31,
      2006, 2005 and 2004, contract services revenues comprised 67%, 70%, and 99%,
      respectively, of our operating revenues. Contract services revenue is low margin
      and unlikely to grow at a rapid pace. Our business plan anticipates revenues
      from product sales and licensing, both of which are higher margin than contract
      services and have potential for rapid growth, increasing in coming years. If
      we
      are not successful in significantly expanding our revenues from higher margin
      products and services, our revenue growth will be slow, and it is unlikely
      that
      we will achieve profitability.




29




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




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




·
            Our
                pending patent applications may not be granted for various reasons,
                including the existence of conflicting patents or defects in our
                applications;·
            The
                patents we have been granted may be challenged, invalidated or
                circumvented because of the pre-existence of similar patented or
                unpatented intellectual property rights or for other
                reasons;·
            Parties
                to the confidentiality and invention agreements may have such agreements
                declared unenforceable or, even if the agreements are enforceable,
                may
                breach such agreements;·
            The
                costs associated with enforcing patents, confidentiality and invention
                agreements or other intellectual property rights may make aggressive
                enforcement cost prohibitive;·
            Even
                if we enforce our rights aggressively, injunctions, fines and other
                penalties may be insufficient to deter violations of our intellectual
                property rights; and·
            Other
                persons may independently develop proprietary information and techniques
                that, although functionally equivalent or superior to our intellectual
                proprietary information and techniques, do not breach our patented
                or
                unpatented proprietary rights.




Because
      the value of our company and common shares is rooted primarily in our
      proprietary intellectual property rights, our inability to protect our
      proprietary intellectual property rights or gain a competitive advantage from
      such rights could harm our ability to generate revenues and, as a result, our
      business and operations.




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




***Because
      our products are generally components of end products, the viability of many
      or
      our products is tied to the success of third parties' existing and potential
      end
      products.***




Few
      of
      the existing or potential products being developed with our nanomaterials and
      titanium dioxide pigment technology are designed for direct use by the ultimate
      end user. Phrased differently, most of our products are components of other
      products. For example, our nano-structured LTO battery materials and NanoSafe
      batteries are designed for use in end-user products such as electric vehicles,
      hybrid electric vehicles and other potential products. Other potential products
      and processes we and our partners are developing using our technology, such
      as
      titanium dioxide pigments, life science materials, air and water treatment
      products, and coatings, are similarly expected to be components of third-party
      products. As a result, the market for our products is dependent upon third
      parties creating or expanding markets for their end-user products that utilize
      our products. If such end-user products are not developed, or the market for
      such end-user products contracts or fails to develop, the market for our
      component products would be expected to similarly contract or collapse. This
      would limit our ability to generate revenues and would harm our business and
      operations.




30




***The
      commercialization of many of our technologies is dependent upon the efforts
      of
      commercial partners and other third parties over which we have no or little
      control.***




We
      do not
      have the expertise or resources to commercialize all potential applications
      of
      our nanomaterials and titanium dioxide pigment technology. For example, we
      do
      not have the resources necessary to complete the testing of, and obtain FDA
      approval for, RenaZorb and other potential life sciences products or to
      construct a commercial facility to use our titanium dioxide pigment production
      technology. Other potential applications of our technology, such as those
      related to our nano-structure LTO electrode materials, coating materials and
      dental materials, are likely to be developed in collaboration with third
      parties, if at all. With respect to these and substantially all other
      applications of our technology, the commercialization of a potential application
      of our technology is dependent, in part, upon the expertise, resources and
      efforts of our commercial partners. This presents certain risks, including
      the
      following:




•
            we
                may not be able to enter into development, licensing, supply and
                other
                agreements with commercial partners with appropriate resources, technology
                and expertise on reasonable terms or at all;•
            our
                commercial partners may not place the same priority on a project
                as we do,
                may fail to honor contractual commitments, may not have the level
                of
                resources, expertise, market strength or other characteristics necessary
                for the success of the project, may dedicate only limited resources
                and/or
                may abandon a development project for reasons, including reasons,
                such as
                a shift in corporate focus, unrelated to its
                merits;




•
            our
                commercial partners may terminate joint testing, development or marketing
                projects on the merits of the projects for various reasons, including
                determinations that a project is not feasible, cost-effective or
                likely to
                lead to a marketable end product;




•
            at
                various stages in the testing, development, marketing or production
                process, we may have disputes with our commercial partners, which
                may
                inhibit development, lead to an abandonment of the project or have
                other
                negative consequences; and




•
            even
                if the commercialization and marketing of jointly developed products
                is
                successful, our revenue share may be limited and may not exceed our
                associated development and operating
                costs.




As
      a
      result of the actions or omissions of our commercial partners, or our inability
      to identify and enter
      into        suitable arrangements with
      qualified commercial partners, we may be unable to commercialize apparently
      viable products on a timely and cost-effective basis, or at all.  Our
      business is not dependent upon a single application of our technology; however,
      we will not become profitable and be able to sustain operations in the long
      run
      if we fail to commercialize several of our potential products.





***If
      we acquire or invest in other companies, assets or technologies and we are
      not
      able to integrate them with our business, or we do not realize the anticipated
      financial and strategic goals for any of these transactions, our financial
      performance may be impaired.***




As
      part
      of our growth strategy, we routinely consider acquiring or making investments
      in
      companies, assets or technologies that we believe are strategic to our business.
      We do not have extensive experience in integrating new businesses or
      technologies, and if we do succeed in acquiring or investing in a company or
      technology, we will be exposed to a number of risks, including:




•
            we
                may find that the acquired company or technology does not further
                our
                business strategy, that we overpaid for the company or technology
                or that
                the economic conditions underlying our acquisition decision have
                changed;




•
            we
                may have difficulty integrating the assets, technologies, operations
                or
                personnel of an acquired company, or retaining the key personnel
                of the
                acquired company;




•
            our
                ongoing business and management's attention may be disrupted or diverted
                by transition or integration issues and the complexity of managing
                geographically or culturally diverse
                enterprises;




•
            we
                may encounter difficulty entering and competing in new product or
                geographic markets or increased competition, including price competition
                or intellectual property litigation;
                and




•
            we
                may experience significant problems or liabilities associated with
                product
                quality, technology and legal contingencies relating to the acquired
                business or technology, such as intellectual property or employment
                matters.





31




In
      addition, from time to time we may enter into negotiations for acquisitions
      or
      investments that are not ultimately consummated. These negotiations could result
      in significant diversion of management time, as well as substantial
      out-of-pocket costs. If we were to proceed with one or more significant
      acquisitions or investments in which the consideration included cash, we could
      be required to use a substantial portion of our available cash. If we issue
      shares of capital stock or other rights to purchase capital stock, including
      options and warrants, existing stockholders would be diluted. In addition,
      acquisitions and investments may result in the incurrence of debt, large
      one-time write-offs, such as acquired in-process research and development costs,
      and restructuring charges.




***We
      intend to expand our operations and increase our expenditures in an effort
      to
      grow our business. If we are unable to achieve or manage significant growth
      and
      expansion, or if our business does not grow as we expect, our operating results
      may suffer.***




During
      the past year, we have significantly increased our research and development
      expenditures in an attempt to accelerate the commercialization of certain
      products, particularly our nano-structured LTO electrode materials and NanoSafe
      battery systems. Our business plan anticipates continued additional expenditure
      on development, manufacturing and other growth initiatives. We may not achieve
      significant growth. If achieved, significant growth would place increased
      demands on our management, accounting systems, network infrastructure and
      systems of financial and internal controls. We may be unable to expand
      associated resources and refine associated systems fast enough to keep pace
      with
      expansion, especially as we expand into multiple facilities at distant
      locations. If we fail to ensure that our management, control and other systems
      keep pace with growth, we may experience a decline in the effectiveness and
      focus of our management team, problems with timely or accurate reporting, issues
      with costs and quality controls and other problems associated with a failure
      to
      manage rapid growth, all of which would harm our results of
      operations.





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




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





***We
      will not generate substantial revenues from our life science products unless
      proposed products receive FDA approval and achieve substantial market
      penetration.***





We
      have
      entered into development and license agreements with respect to RenaZorb, a
      potential drug candidate for humans with kidney disease, and other life science
      products, and expect to enter into additional licensing and/or supply agreements
      in the future.  Most of the potential life sciences applications of
      our technologies are subject to regulation by the FDA and similar regulatory
      bodies.  In general, license agreements in the life sciences area call
      for milestone payments as certain milestones related to the development of
      the
      products and the obtaining of regulatory approval are met; however, the receipt
      by the licensor of substantial recurring revenues is generally tied to the
      receipt of marketing approval from the FDA and the amount of revenue generated
      from the sale of end products.   There are substantial risks
      associated with licensing arrangements, including the following:





•
            Further
                testing of potential life science products using our technology may
                indicate that such products are less effective than existing products,
                unsafe, have significant side effects or are otherwise not
                viable;




•
            The
                licensees may be unable to obtain FDA or other regulatory approval
                for
                technical, political or other reasons or, even if it obtains such
                approval, may not obtain such approval on a timely basis;
                and




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





32


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




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





We
      have
      not produced any pigments, nanoparticles or other products using our
      nanomaterials and titanium dioxide pigment technology and equipment on a
      sustained commercial basis.  In-house or outsourced manufacturing is
      becoming an increasingly significant part of our business.  If, and as
      manufacturing, becomes a larger part of our business, we will become
      increasingly subject to various risks associated with the manufacturing and
      supply of products, including the following:





•
            If
                we fail to supply products in accordance with contractual terms,
                including
                terms related to time of delivery and performance specifications,
                we may
                become liable for direct, special, consequential and other damages,
                even
                if manufacturing or delivery was
                outsourced;




•
            Raw
                materials used in the manufacturing process, labor and other key
                inputs
                may become scarce and expensive, causing our costs to exceed cost
                projections and associated
                revenues;




•
            Manufacturing
                processes typically involve large machinery, fuels and chemicals,
                any or
                all of which may lead to accidents involving bodily harm, destruction
                of
                facilities and environmental contamination and associated liabilities;
                and




•
            We
                may have, and may be required to, make representations as to our
                right to
                supply and/or license intellectual property and to our compliance
                with
                laws. Such representations are usually supported by indemnification
                provisions requiring us to defend our customers and otherwise make
                them
                whole if we license or supply products that infringe on third-party
                technologies or violate government
                regulations.





Any
      failure to adequately manage risks associated with the manufacture and supply
      of
      materials and products could lead to losses (or small gross profits) from that
      segment of our business and/or significant liabilities, which would adversely
      affect our business, operations and financial condition.





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





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





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




As
      of
      June 30, 2007, we had approximately $20.8 million in cash, cash equivalents
      and
      short-term investments.  As we take additional steps to enhance our
      commercialization and marketing efforts, or respond to acquisition opportunities
      or potential adverse events, our use of working capital may increase
      significantly. In any such event, absent a comparatively significant increase
      in
      revenue, we will need to raise additional capital in order to sustain our
      ongoing operations, continue unfinished testing and additional development
      work
      and, if certain of our products are commercialized, construct and operate
      facilities for the production of those products.




33





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





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




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




•
            our
                financial results, particularly the amount of revenue we are generating
                from operations;•
            the
                amount of our capital needs;




•
            the
                market's perception of companies in one or more of our lines of
                business;




•
            the
                economics of projects being pursued;
                and




•
            the
                market's perception of our ability to execute our business plan and
                any
                specific projects identified as uses of
                proceeds.




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





***Our
      past and future operations may lead to substantial environmental
      liability.***




Virtually
      any prior or future use of our nanomaterials and titanium dioxide pigment
      technology is subject to federal, state and local environmental laws. In
      addition, we are in the process of reclaiming mineral property that we leased
      in
      Tennessee.  Under applicable environmental laws, we may be jointly and
      severally liable with prior property owners for the treatment, cleanup,
      remediation and/or removal of any hazardous substances discovered at any
      property we use. In addition, courts or government agencies may impose liability
      for, among other things, the improper release, discharge, storage, use, disposal
      or transportation of hazardous substances.  If we incur any
      significant environmental liabilities, our ability to execute our business
      plan
      and our financial condition would be harmed.




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





We
      are a
      Canadian corporation, and 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 enforce judgments of U.S. courts obtained against us
      or
      such directors, officers or experts predicated upon the civil liability
      provisions of U.S. securities laws or impose liability in original actions
      against us or our directors, officers or experts predicated upon U.S. securities
      laws.





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





Our
      continued success will depend to a significant extent on the services of Dr.
      Alan J. Gotcher, our Chief Executive Officer and President, Edward Dickinson,
      our Chief Financial Officer, and Dr. Bruce Sabacky, our Chief Technology
      Officer. We have key man insurance on the lives of Dr. Gotcher and Dr.
      Sabacky.  We do not have agreements requiring any of our key personnel
      to remain with our company.  The loss or unavailability of any or all
      of these individuals would harm our ability to execute our business plan,
      maintain important business relationships and complete certain product
      development initiatives, which would harm our business.





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





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





34


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





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





•
            Intentional
                manipulation of our stock price by existing or future shareholders
                or a
                reaction by investors to trends in our stock rather than the fundamentals
                of our business;•
            A
                single acquisition or disposition, or several related acquisitions
                or
                dispositions, of a large number of our shares, including by short
                sellers
                covering their position;•
            The
                interest of the market in our business sector, without regard to
                our
                financial condition, results of operations or business
                prospects;•
            Positive
                or negative statements or projections about our company or our industry,
                by analysts, stock gurus and other persons;•
            The
                adoption of governmental regulations or government grant programs
                and
                similar developments in the United States or abroad that may enhance
                or
                detract from our ability to offer our products and services or affect
                our
                cost structure; and•
            Economic
                and other external market factors, such as a general decline in market
                prices due to poor economic indicators or investor
                distrust.





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




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





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





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





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




35




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




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





We
      held an Annual Meeting of Shareholders on May 30, 2007 at which the shareholders
      considered and voted as follows on the items described below:





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







**Name
                of Nominee**
            **Votes
                For**
            **Votes
                Withheld/Abstentions**
            **Broker
                Non-Votes**Michel
                Bazinet
            56,755,631
            782,680
            -0-Jon
                Bengtson
            56,754,961
            783,350
            -0-Alan
                J. Gotcher
            56,751,791
            786,520
            -0-George
                Hartman
            56,758,846
            779,465
            -0-Robert
                F. Hemphill, Jr
            56,756,291
            782,020
            -0-Christopher
                Jones
            56,760,691
            777,620
            -0-Pierre
                Lortie
            56,752,653
            785,658
            -0-




2.
            The
                shareholders considered whether to appoint Perry-Smith, LLP as independent
                auditors and authorized the Audit Committee of the Board of Directors
                to
                fix their remuneration.  There were 56,733,023 votes cast in
                favor, 361,465 votes cast against, 443,823 votes withheld, and no
                broker
                non-votes, which vote was sufficient for
                approval.





3.
            The
                shareholders considered whether to approve the increase by 6,000,000
                the
                number of authorized shares available under the Altair Nanotechnologies,
                Inc. 2005 Stock Incentive Plan to an aggregate of 9,000,000 common
                shares.  There were 5,605,366 votes cast in favor, 5,281,389
                votes cast against, 299,456 votes withheld, and no broker non-votes,
                which
                vote was sufficient for approval.





**Item
      5.  Other Information**




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




36





**Item
      6.  Exhibits**





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







37


**SIGNATURES**





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








Altair
                Nanotechnologies Inc.August
                9, 2007
            
            By:  /s/  Alan
                J. GotcherDate
            
            Alan
                J. Gotcher, Chief Executive OfficerAugust
                9, 2007
            
            By:  /s/  Edward
                H. DickinsonDate
            
            Edward
                H. Dickinson, Chief Financial
                Officer








38





**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
            
            Flagship
                Business Accelerator Tenant Lease
            
            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







39