Altair Nanotechnologies, Inc.
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30,
2007
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934
FOR THE TRANSITION PERIOD FROM _________________ TO
_________________
|
ALTAIR
NANOTECHNOLOGIES
INC.
(Exact
name of registrant as specified in its charter)
Canada
|
1-12497
|
33-1084375
|
(State
or other jurisdiction
|
(Commission
File No.)
|
(IRS
Employer
|
of
incorporation)
|
|
Identification
No.)
|
204
Edison Way
Reno,
Nevada 89502
(Address
of principal executive offices, including zip code)
Registrant’s
telephone number, including area code: (775)
856-2500
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. YES x NO 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
|
|
|
$ |
12,679,254
|
|
Investment
in available for sale securities
|
|
|
18,241,998
|
|
|
|
14,541,103
|
|
Accounts
receivable, net
|
|
|
1,875,561
|
|
|
|
1,624,825
|
|
Notes
receivable from related party, current portion
|
|
|
611,238
|
|
|
|
-
|
|
Product
inventories
|
|
|
1,051,896
|
|
|
|
169,666
|
|
Prepaid
expenses and other current assets
|
|
|
216,728
|
|
|
|
413,390
|
|
Total
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
|
|
|
$ |
1,533,047
|
|
Accrued
salaries and benefits
|
|
|
959,096
|
|
|
|
840,219
|
|
Accrued
liabilities
|
|
|
1,070,268
|
|
|
|
526,596
|
|
Note
payable, current portion
|
|
|
600,000
|
|
|
|
600,000
|
|
Total
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 and
|
|
|
|
|
|
|
|
|
outstanding
at June 30, 2007 and December 31, 2006
|
|
|
119,194,143
|
|
|
|
115,989,879
|
|
Additional
paid in capital
|
|
|
3,693,782
|
|
|
|
2,002,220
|
|
Accumulated
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
|
|
|
$ |
43,120,573
|
|
|
|
|
|
|
|
|
|
|
See
notes to the unaudited condensed consolidated financial
statements.
|
|
|
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
|
|
|
$ |
10,658
|
|
License
fees
|
|
|
-
|
|
|
|
364,720
|
|
|
|
-
|
|
|
|
364,720
|
|
Commercial
collaborations
|
|
|
734,784
|
|
|
|
389,236
|
|
|
|
1,082,072
|
|
|
|
719,506
|
|
Contracts
and grants
|
|
|
575,471
|
|
|
|
300,232
|
|
|
|
1,191,725
|
|
|
|
507,240
|
|
Total
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
|
|
|
|
2,716
|
|
Research
and development
|
|
|
3,238,869
|
|
|
|
2,205,265
|
|
|
|
6,236,197
|
|
|
|
4,153,652
|
|
Sales
and marketing
|
|
|
409,230
|
|
|
|
618,422
|
|
|
|
789,766
|
|
|
|
1,011,583
|
|
General
and administrative
|
|
|
2,600,818
|
|
|
|
1,796,853
|
|
|
|
5,212,032
|
|
|
|
4,408,157
|
|
Depreciation
and amortization
|
|
|
473,991
|
|
|
|
363,247
|
|
|
|
905,049
|
|
|
|
680,118
|
|
Total
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
|
|
|
|
392,825
|
|
Gain/(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
|
|
|
|
59,256,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
notes to the unaudited condensed consolidated financial
statements.
|
|
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
|
|
|
$ |
37,820,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,612,049 |
) |
|
|
-
|
|
|
|
(10,612,049 |
) |
Other
comprehensive income,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of taxes of $0
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
400,800
|
|
|
|
400,800
|
|
Comprehensive
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,211,249 |
) |
Share-based
compensation
|
|
|
-
|
|
|
|
109,773
|
|
|
|
1,691,562
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,801,335
|
|
Exercise
of stock options
|
|
|
55,833
|
|
|
|
94,491
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
94,491
|
|
Issuance
of restricted stock,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net
of cancellations/expired shares
|
|
|
69,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued
|
|
|
895,523
|
|
|
|
3,000,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, JUNE
30, 2007
|
|
|
70,100,535
|
|
|
$ |
119,194,143
|
|
|
$ |
3,693,782
|
|
|
$ |
(90,965,237 |
) |
|
$ |
582,600
|
|
|
$ |
32,505,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
notes to the unaudited condensed consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 cash
|
|
|
|
|
|
|
|
|
used
in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
905,049
|
|
|
|
680,118
|
|
Minority
interest in operations
|
|
|
(157,680 |
) |
|
|
-
|
|
Securities
received in payment of license fees
|
|
|
(13,580 |
) |
|
|
(513,324 |
) |
Share-based
compensation
|
|
|
1,801,335
|
|
|
|
1,007,347
|
|
Loss
on disposal of fixed assets
|
|
|
-
|
|
|
|
21,101
|
|
Accrued
interest on notes receivable
|
|
|
(21,021 |
) |
|
|
-
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable, net
|
|
|
(250,736 |
) |
|
|
127,722
|
|
Notes
receivable, net
|
|
|
(607,852 |
) |
|
|
-
|
|
Product
inventories
|
|
|
(851,658 |
) |
|
|
-
|
|
Prepaid
expenses and other current assets
|
|
|
196,662
|
|
|
|
(138,009 |
) |
Other
assets
|
|
|
-
|
|
|
|
49,939
|
|
Trade
accounts payable
|
|
|
599,453
|
|
|
|
479,882
|
|
Accrued
salaries and benefits
|
|
|
118,877
|
|
|
|
211,495
|
|
Accrued
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
|
|
|
|
10,800,000
|
|
Purchase
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)
|
|
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
|
|
|
|
141,673
|
|
Payment
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
|
|
|
$ |
105,000
|
|
|
|
|
|
|
|
|
|
|
Cash
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.
|
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.
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
|
|
|
$ |
8,349,082
|
|
Unrealized
(gain)/loss on investment in available
|
|
|
|
|
|
|
|
|
for
sale securities, net of taxes of $0
|
|
|
(400,800 |
) |
|
|
30,200
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
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.
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.
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
|
|
|
|
112,500
|
|
Demo
Units
|
|
|
-
|
|
|
|
57,165
|
|
Total
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
|
|
|
$ |
1,517,736
|
|
Less
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
|
|
|
|
330,000
|
|
Plus
interest earned
|
|
|
21,021
|
|
|
|
-
|
|
Ending
Balance
|
|
|
958,873
|
|
|
|
330,000
|
|
Less
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.
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 Minerals
|
|
|
|
|
|
|
International,
Inc.
|
|
$ |
1,800,000
|
|
|
$ |
2,400,000
|
|
Less
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.
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.
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
|
|
|
$ |
5,462,008
|
|
AMPS
|
|
|
1,854,549
|
|
|
|
1,545,263
|
|
|
|
118,532
|
|
|
|
5,817,943
|
|
Life
Sciences
|
|
|
446,260
|
|
|
|
(128,802 |
) |
|
|
7,483
|
|
|
|
2,329,768
|
|
AHP
|
|
|
303,309
|
|
|
|
505,664
|
|
|
|
81,153
|
|
|
|
5,162,518
|
|
Corporate
|
|
|
-
|
|
|
|
3,048,477
|
|
|
|
32,882
|
|
|
|
21,628,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Total
|
|
$ |
3,065,868
|
|
|
$ |
5,849,516
|
|
|
$ |
473,991
|
|
|
$ |
40,400,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Materials
|
|
$ |
176,784
|
|
|
$ |
670,073
|
|
|
$ |
259,910
|
|
|
$ |
3,943,532
|
|
AMPS
|
|
|
78,799
|
|
|
|
1,393,748
|
|
|
|
71,581
|
|
|
|
2,462,564
|
|
Life
Sciences
|
|
|
510,607
|
|
|
|
(447,556 |
) |
|
|
2,353
|
|
|
|
1,041,927
|
|
AHP
|
|
|
290,638
|
|
|
|
275,679
|
|
|
|
-
|
|
|
|
2,337,231
|
|
Corporate
|
|
|
-
|
|
|
|
2,036,465
|
|
|
|
29,403
|
|
|
|
17,201,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Total
|
|
$ |
1,056,828
|
|
|
$ |
3,928,409
|
|
|
$ |
363,247
|
|
|
$ |
26,987,056
|
|
|
|
|
|
|
|
|
|
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
|
|
|
$ |
5,462,008
|
|
AMPS
|
|
|
2,117,554
|
|
|
|
3,021,369
|
|
|
|
230,029
|
|
|
|
5,817,943
|
|
Life
Sciences
|
|
|
457,583
|
|
|
|
(4,927 |
) |
|
|
14,003
|
|
|
|
2,329,768
|
|
AHP
|
|
|
623,180
|
|
|
|
663,075
|
|
|
|
81,153
|
|
|
|
5,162,518
|
|
Corporate
|
|
|
-
|
|
|
|
6,365,608
|
|
|
|
65,360
|
|
|
|
21,628,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Total
|
|
$ |
4,206,800
|
|
|
$ |
11,338,982
|
|
|
$ |
905,049
|
|
|
$ |
40,400,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Materials
|
|
$ |
331,523
|
|
|
$ |
1,463,066
|
|
|
$ |
513,958
|
|
|
$ |
3,943,532
|
|
AMPS
|
|
|
189,725
|
|
|
|
2,281,586
|
|
|
|
104,396
|
|
|
|
2,462,564
|
|
Life
Sciences
|
|
|
510,608
|
|
|
|
(311,030 |
) |
|
|
4,705
|
|
|
|
1,041,927
|
|
AHP
|
|
|
570,268
|
|
|
|
411,581
|
|
|
|
-
|
|
|
|
2,337,231
|
|
Corporate
|
|
|
-
|
|
|
|
4,808,899
|
|
|
|
57,059
|
|
|
|
17,201,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
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
|
|
|
$ |
1,474,142
|
|
Department
of Energy
|
|
$ |
195,032
|
|
|
$ |
60,378
|
|
|
|
|
|
|
|
|
|
|
Life
Sciences Division:
|
|
|
|
|
|
|
|
|
Elanco
Animal Health/Eli Lilly
|
|
$ |
421,706
|
|
|
$ |
421,706
|
|
Department
of Energy
|
|
$ |
23,660
|
|
|
$ |
10,727
|
|
|
|
|
|
|
|
|
|
|
AHP
Division:
|
|
|
|
|
|
|
|
|
Western
Oil Sands
|
|
$ |
303,309
|
|
|
$ |
345,387
|
|
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
|
|
|
$ |
1,474,142
|
|
Department
of Energy
|
|
$ |
404,349
|
|
|
$ |
60,378
|
|
|
|
|
|
|
|
|
|
|
Life
Sciences Division:
|
|
|
|
|
|
|
|
|
Elanco
Animal Health/Eli Lilly
|
|
$ |
433,029
|
|
|
$ |
421,706
|
|
Department
of Energy
|
|
$ |
23,660
|
|
|
$ |
10,727
|
|
|
|
|
|
|
|
|
|
|
AHP
Division:
|
|
|
|
|
|
|
|
|
Western
Oil Sands
|
|
$ |
623,180
|
|
|
$ |
345,387
|
|
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
|
|
|
$ |
816,578
|
|
Canada
|
|
|
325,633
|
|
|
|
240,250
|
|
Other
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
|
|
|
$ |
1,029,192
|
|
Canada
|
|
|
621,271
|
|
|
|
523,052
|
|
Other
foreign countries
|
|
|
184,963
|
|
|
|
49,880
|
|
Total
|
|
$ |
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.
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.
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.
|
|
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.
|
|
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
dioxide pigment
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 application licensees
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.
General
Outlook
We
have generated net losses in each fiscal year since
incorporation. In fiscal 2006, revenues from product sales,
commercial collaborations and contracts and grants increased significantly,
but
operating expenses also increased significantly as we added employees and
committed additional funds to our customer contracts, battery initiative,
pigment process technology and sales and marketing efforts. Our
gross profit margins on customer contracts for research and development work
are
very low, and in order that we may be profitable in the long run, our business
plan focuses on the development of products and technologies that we expect
will
eventually bring a substantial amount of higher-margin revenues from licensing,
manufacturing, product sales and other sources. We expect our NanoSafe
nanoTitanate battery materials to be a source of such higher-margin
revenues. In 2007, we intend to increase spending for the battery
initiative, manufacturing of the potential drug candidates, and pigment process
development.
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.
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.
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.
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.
|
·
|
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.
|
|
·
|
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.
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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.
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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.
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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.
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.
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.
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.
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:
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fluctuations
in the size and timing of customer orders from one quarter to the
next;
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timing
of delivery of our services and
products;
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addition
of new customers or loss of existing
customers;
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our
ability to commercialize and obtain orders for products we are
developing;
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costs
associated with developing our manufacturing
capabilities;
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new
product announcements or introductions by our competitors or potential
competitors;
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the
effect of variations in the market price of our common shares on
our
equity-based compensation expenses;
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acquisitions
of businesses or customers;
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technology
and intellectual property issues associated with our products;
and
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general
economic trends, including changes in energy prices, or geopolitical
events such as war or incidents of
terrorism.
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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.
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:
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Our
pending patent applications may not be granted for various reasons,
including the existence of conflicting patents or defects in our
applications;
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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;
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Parties
to the confidentiality and invention agreements may have such agreements
declared unenforceable or, even if the agreements are enforceable,
may
breach such agreements;
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The
costs associated with enforcing patents, confidentiality and invention
agreements or other intellectual property rights may make aggressive
enforcement cost prohibitive;
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Even
if we enforce our rights aggressively, injunctions, fines and other
penalties may be insufficient to deter violations of our intellectual
property rights; and
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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.
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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.
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:
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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;
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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;
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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;
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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
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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.
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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:
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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;
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we
may have difficulty integrating the assets, technologies, operations
or
personnel of an acquired company, or retaining the key personnel
of the
acquired company;
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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;
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we
may encounter difficulty entering and competing in new product or
geographic markets or increased competition, including price competition
or intellectual property litigation;
and
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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.
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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.
|
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.
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.
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.
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.
Item
6. Exhibits
a) See
Exhibit Index attached hereto following the signature page.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
|
|
Altair
Nanotechnologies Inc.
|
|
|
|
|
|
|
|
|
|
August
9, 2007
|
|
By: /s/ Alan
J. Gotcher
|
|
Date
|
|
Alan
J. Gotcher, Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
August
9, 2007
|
|
By: /s/ Edward
H. Dickinson
|
|
Date
|
|
Edward
H. Dickinson, Chief Financial
Officer
|
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, 2005
|
|
|
|
|
|
10.1
|
|
Flagship
Business Accelerator Tenant Lease
|
|
Filed
herewith
|
|
|
|
|
|
31.1
|
|
Section
302 Certification of Chief Executive Officer
|
|
Filed
herewith
|
|
|
|
|
|
31.2
|
|
Section
302 Certification of Chief Financial Officer
|
|
Filed
herewith
|
|
|
|
|
|
32.1
|
|
Section
906 Certification of Chief Executive Officer
|
|
Filed
herewith
|
|
|
|
|
|
32.2
|
|
Section
906 Certification of Chief Financial Officer
|
|
Filed
herewith
|
39