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 MARCH 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________
TO _________________
ALTAIR INTERNATIONAL INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Province of
Ontario,
Canada 1-12497 None
------------------------------ ---------------------- -----------------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1725 Sheridan Avenue, Suite 140
-----------------------------------------------------------------
Cody, Wyoming 82414
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (307) 587-8245
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 [ ].
As of May 8, 2002 the registrant had 24,583,791 Common Shares outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)
(Unaudited)
March 31, December 31,
2002 2001
------------ ------------
ASSETS
------
Current Assets
Cash and cash equivalents $ 359,691 $ 599,884
Other current assets 36,828 33,651
------------ ------------
Total current assets 396,519 633,535
Property and Equipment, net 5,805,654 5,987,950
Patents and Related Expenditures, net 3,647,554 3,739,864
Other Assets 459,557 491,894
------------ ------------
Total Assets $ 10,309,284 $ 10,853,243
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable and accrued liabilities $ 688,473 $ 528,405
Note payable - current portion 1,569,649 --
Stock purchase advances 558,485 --
Loans payable - related parties 124,243 143,000
Capital lease obligations - current portion -- 2,312
Deferred revenue -- 40,972
------------ ------------
Total current liabilities 2,940,850 714,689
------------ ------------
Note Payable, Long-Term Portion -- 1,462,060
------------ ------------
Commitments and Contingencies
Stockholders' Equity
Common stock, no par value, unlimited shares authorized;
22,903,831 and 22,694,142 shares issued and
outstanding at March 31, 2002 and December 31, 2001 38,460,791 38,089,320
Deficit accumulated during the development stage (31,092,357) (29,412,826)
------------ ------------
Total Shareholders' Equity 7,368,434 8,676,494
------------ ------------
Total Liabilities and Shareholders' Equity $ 10,309,284 $ 10,853,243
============ ============
(See Notes to Financial Statements)
1
ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States Dollars)
(Unaudited)
Period
April 9, 1973
(date of
Three Months Ended March 31, inception) to
---------------------------- March 31,
2002 2001 2002
------------ ------------ ------------
Sales $ 48,937 None $ 91,753
Cost of sales 30,175 None 48,350
------------ ------------ ------------
Gross Margin 18,762 None 43,403
------------ ------------ ------------
Operating Expenses
Mineral exploration and development 152,188 $ 361,454 6,070,853
Research and development 138,609 122,888 3,267,568
Professional services 226,073 105,131 2,789,985
General and administrative expenses 608,128 803,820 12,455,610
Depreciation and amortization 285,699 279,880 4,803,113
------------ ------------ ------------
Total operating expenses 1,410,697 1,673,173 29,387,129
------------ ------------ ------------
Loss from Operations 1,391,935 1,673,173 29,343,726
------------ ------------ ------------
Other (Income) Expense:
Interest expense 288,298 300,240 3,672,249
Interest income (702) (69,405) (814,542)
Gain on foreign exchange -- (234) (558,777)
------------ ------------ ------------
Total other expense, net 287,596 230,601 2,298,930
------------ ------------ ------------
Loss before extraordinary items 1,679,531 1,903,774 31,642,656
------------ ------------ ------------
Extraordinary items:
Gain on forgiveness of debt -- -- (795,972)
Loss on redemption of convertible debentures -- -- 193,256
------------ ------------ ------------
Total extraordinary items -- -- (602,716)
------------ ------------ ------------
Net loss 1,679,531 1,903,774 31,039,940
Preferential Warrant Dividend -- -- 52,417
------------ ------------ ------------
Net Loss Applicable to Shareholders $ 1,679,531 $ 1,903,774 31,092,357
============ ============ ============
Loss before extraordinary items and Preferential Warrant Dividend per common
share:
Basic and diluted $ 0.07 $ 0.10 $ 4.25
Effect of extraordinary items
on earnings per share:
Basic and diluted -- -- (0.08)
------------ ------------ ------------
Loss per common share -
Basic and diluted $ 0.07 $ 0.10 $ 4.17
============ ============ ============
Weighted average shares -
Basic and diluted 22,842,455 19,336,214 7,442,373
============ ============ ============
(See Notes to Financial Statements)
2
ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
(Unaudited)
Period
April 9, 1973
(date of
Three Months Ended March 31, inception) to
---------------------------- March 31,
2002 2001 2002
------------ ------------ ------------
Cash flows from development activities:
Net loss $ (1,679,531) $ (1,903,774) $(31,039,940)
Adjustments to reconcile net loss to net cash
used in development activities:
Depreciation and amortization 285,699 279,880 4,803,113
Shares issued for services -- -- 99,926
Shares issued for settlement of debt -- -- 75,228
Shares issued for interest 69,770 -- 893,597
Shares issued for property -- -- 159,166
Issuance of stock options to non-employees 2,421 104,737 3,005,961
Issuance of stock options to employees -- 111,690 78,220
Issuance of stock warrants 98,280 -- 914,585
Amortization of discount on note payable 107,590 103,113 522,663
Amortization of debt issuance costs 63,426 -- 163,426
Loss on redemption of convertible debenture -- -- 193,256
Gain on forgiveness of debt -- -- (795,972)
Loss on disposal of fixed assets -- -- 1,945
Gain on foreign currency translation -- -- (559,179)
Deferred financing costs written off -- -- 515,842
Changes in assets and liabilities (net of effects
of acquisition):
Restricted cash -- (64,111) --
Other current assets (3,177) 227,222 1,697,770
Other assets 44,911 24,999 (123,809)
Accounts payable and accrued liabilities 160,068 92,335 419,259
Stock purchase advances 558,485 -- 558,485
Deferred revenue (40,972) -- --
------------ ------------ ------------
Net cash used in development activities (333,030) (1,023,909) (18,416,458)
------------ ------------ ------------
Cash flows from investing activities:
Asset acquisition -- -- (2,422,417)
Purchase of property and equipment (11,094) (126,177) (1,305,769)
Purchase of patents and related expenditures -- -- (1,882,187)
------------ ------------ ------------
Net cash used in investing activities (11,094) (126,177) (5,610,373)
------------ ------------ ------------
(continued)
(See Notes to Financial Statements)
3
ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
(Unaudited)
Period
April 9, 1973
(date of
Three Months Ended March 31, inception) to
----------------------------- March 31,
2002 2001 2002
============ ============ ============
Cash flows from financing activities:
Issuance of common shares for cash, net of
share issue costs $ 125,000 -- $ 18,298,659
Collection of stock subscription receivable -- $ 561,300 561,300
Issuance of convertible debenture -- -- 5,000,000
Proceeds from exercise of stock options -- 40,000 2,708,491
Proceeds from exercise of warrants -- -- 4,617,328
Issuance of related party notes -- -- 168,000
Issuance of notes payable -- -- 7,000,000
Payment of notes payable -- (105,420) (11,196,044)
Payment of related party notes (18,757) -- (43,757)
Payment on capital lease (2,312) -- (27,075)
Purchase of call options -- -- (449,442)
Redemption of convertible debentures -- -- (2,250,938)
------------ ------------ ------------
Net cash used in financing activities 103,931 495,880 24,386,522
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (240,193) (654,206) 359,691
Cash and cash equivalents, beginning of period 599,884 1,335,729 None
------------ ------------ ------------
Cash and cash equivalents, end of period $ 359,691 $ 681,523 $ 359,691
============ ============ ============
Supplemental disclosures:
Cash paid for interest None $ 20,637
============ ============
Cash paid for income taxes None None
============ ============
Supplemental schedule of non-cash investing and financing activities:
For thequarter ended March 31, 2002:
- None
For the quarter ended March 31, 2001:
- We cancelled call options on 228,456 shares of our common stock to pay $97,743
of principal and $244,941 of interest on the Doral 18, LLC 2000 Note. In
addition, the cancellation of the call options resulted in an additional
interest expense of $210,568.
(concluded)
(See Notes to Financial Statements)
4
ALTAIR INTERNATIONAL INC. AND SUBSIDIARIES
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Preparation of Financial Statements
These unaudited interim financial statements of Altair International
Inc. and its subsidiaries (collectively, "Altair", "We" or the "Company") have
been prepared in accordance with the rules and regulations of the United States
Securities and Exchange Commission (the "Commission"). Such rules and
regulations allow the omission of certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States, so long as the statements
are not misleading. In the opinion of Company management, these financial
statements and accompanying notes contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the financial position
and results of operations for the periods shown. These interim financial
statements should be read in conjunction with the audited financial statements
and notes thereto contained in our Annual Report on Form 10-K for the year ended
December 31, 2001, as filed on April 1, 2002.
Effective August 1, 2001, we began doing business under the name "Altair
Nanotechnologies, Inc." We will submit to the shareholders of the Company at the
next annual meeting an amendment to our articles of incorporation formally
changing our name to "Altair Nanotechnologies, Inc."
Prior to fiscal year 1998, we prepared our financial statements in
accordance with accounting principles generally accepted in Canada. Due to
substantially all of our operations being located in the United States, we have
elected to present our financial statements in accordance with accounting
principles generally accepted in the United States of America ("U.S. GAAP").
Accordingly, the foregoing unaudited interim financial statements are
denominated in U.S. Dollars and presented in accordance with U.S. GAAP.
The accompanying consolidated financial statements have been prepared on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
consolidated financial statements for the quarter ended March 31, 2002, we
incurred a net loss of $1,679,531, and since the date of inception have incurred
cumulative losses of $31,092,357. At March 31, 2002, current liabilities
exceeded current assets by $2,544,331. These factors, among others, may raise
substantial doubt about the Company's ability to continue as a going concern.
The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
the amounts and classification of liabilities that might be necessary should we
be unable to continue as a going concern. Because the Company is still in the
exploration stage, there have been no adjustments to record potential impairment
on long-term assets. Our continuation as a going concern is dependent upon our
ability to generate sufficient cash flow to meet our obligations on a timely
basis, to obtain additional financing or refinancing as may be required, to
develop commercially viable products and processes, and ultimately to establish
successful operations. We are in the process of developing the titanium
processing technology, the Tennessee mineral property, and the centrifugal jig.
The recoverability of amounts capitalized as property and equipment and patents
and related expenditures is dependent upon our ability to successfully develop
and commercialize the titanium processing technology. We have financed
operations primarily through the issuance of equity securities (common stock,
convertible debentures, stock options and warrants), and by the issuance of debt
(term notes). Additional funds will be required to complete development
activities. We believe that current working capital, cash receipts from
anticipated sales, and funding through sales of common stock will be sufficient
to enable us to continue as a going concern.
The results of operations for the three-month period ended March 31,
2002 are not necessarily indicative of the results to be expected for the full
year.
5
Note 2. Summary of Significant Accounting Policies
Basic net loss per common share is calculated by dividing net loss by
the weighted average number of common shares outstanding during the period. The
existence of stock options, warrants, and convertible securities affects the
calculation of loss per share on a fully diluted basis. When a net loss is
reported, the number of shares used for basic and diluted net loss per share is
the same since the effect of including the additional common stock equivalents
would be antidilutive.
In June 2001, the FASB issued SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 establishes accounting and reporting standards
for goodwill and intangible assets, requiring annual impairment testing for
goodwill and intangible assets, and the elimination of periodic amortization of
goodwill and certain intangibles. We have not yet completed an analysis of the
impact of the adoption of the statement. The impairment analysis will be
completed by June 30, 2002 as required by SFAS No. 142.
Note 3. Common Stock
Common stock transactions during the three months ended March 31, 2002
were as follows:
Common Stock
--------------------
Stated
Shares Amount
=========== ===========
Balance, December 31, 2001 22,694,142 $38,089,320
Common stock issued through private placements 100,000 125,000
Stock options issued to non-employees 2,421
Warrants issued for services 98,280
Shares issued for services 50,000 76,000
Shares issued for payment of interest on
Doral 18, LLC note 59,689 69,770
----------- -----------
Balance, March 31, 2002 22,903,831 $38,460,791
=========== ===========
On March 11, 2002, we entered into a stock purchase agreement with an
investor that provides for the sale of 666,667 common shares and 1,000,000
warrants for total consideration of $1,000,000. At March 31, 2002, the investor
had remitted $558,485 toward the purchase price. This amount is recorded as
stock purchase advances in the accompanying Consolidated Balance Sheets. On
April 26, 2002, we entered into an amended and restated stock purchase agreement
with the investor wherein the number of shares purchased was increased to
1,200,000, the number of warrants was increased to 1,800,000 and the total
purchase price was increased to $1,260,000. The purchase price is to be paid in
full by July 31, 2002.
During the three months ended March 31, 2002, we issued 250,000 warrants
in connection with the issuance of common stock. The exercise price of the
warrants ranged from $1.50 to $2.50.
Note 4. Note Payable
Note payable consisted of the following at March 31, 2002 and December
31, 2001:
March 31, 2002 December 31, 2001
-------------- -----------------
Note payable to Doral 18, LLC $ 1,894,286 $ 1,867,857
Less current portion
Less discount resulting from allocation
of debt proceeds to warrant (324,637) (405,797)
----------- -----------
Long-term portion of notes payable $ 1,569,649 $ 1,462,060
=========== ===========
6
Note 5. Subsequent Events
On April 16, 2002, we reduced the exercise price on 582,500 warrants to
$1.05 per share for the period April 26, 2002 through June 30, 2002. The
warrants had been previously issued with exercise prices ranging from $3.50 to
$5.00. These repricings did not increase the value of the warrants to the
warrant holder, as calculated using the Black-Scholes pricing model.
On May 7, 2002, we entered into a securities purchase agreement with
private investors pursuant to which they purchased 1,250,000 common shares and
312,500 warrants to purchase common shares for an aggregate purchase price of
$1,000,000. The warrants expire five years from the date of issuance and are
exercisable at $1.13 per share.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion summarizes the material changes in our
financial condition between December 31, 2001 and March 31, 2002 and the
material changes in our results of operations and financial condition between
the three-month periods ended March 31, 2001 and March 31, 2002. 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, 2001.
Overview
From inception through the end of 1993, our business consisted
principally of the exploration of mineral properties for acquisition and
exploration. During 1994, our focus changed as we became engaged in the
acquisition, development and testing of mineral processing equipment for use in
the recovery of fine, heavy mineral particles including gold, titanium, zircon
and environmental contaminants. Since that time, we have continued exploring
mineral properties on which we might use our patented mineral processing
equipment.
In 1996, we acquired all patent rights to the Campbell Centrifugal Jig,
since modified and renamed the Altair Centrifugal Jig. Since April 1996, we have
acquired mineral leaseholds on approximately 9,700 acres of land in Tennessee. A
prefeasibility study issued in July 1998 confirmed the existence of heavy
minerals and suggests that the property warrants further exploration. Based on
the results of these independent studies, we have initiated additional
feasibility testing.
In November 1999, we acquired all patent applications and technology
related to a hydrometallurgical process developed by BHP Minerals International,
Inc. ("BHP") primarily for the production of titanium dioxide products from
titanium bearing ores or concentrates (the "titanium processing technology") and
all tangible equipment and other assets (the "titanium processing assets") used
by BHP to develop and implement the titanium processing technology.
Results of Operations
For the three months ended March 31, 2002, net losses totaled $1,679,531
($.07 per share) compared to $1,903,774 ($.10 per share) for the same period of
2001. Principal factors contributing to the losses during these periods were the
lack of substantial revenue together with the incurrence of operating expenses.
During the first quarter of 2002, we generated revenues of $48,937
through sales of titanium dioxide nanoparticles, lithium titanate nanoparticles
and other materials. Sales revenues included $40,972 of previously deferred
revenues for which product shipments were made during the first quarter of 2002.
These products were used primarily in thermal spray coatings.
During the first quarter of 2001, we completed the installation and
began testing of the pilot plant facility at our Tennessee mineral property. In
connection with this, we incurred and expensed costs of $135,000 for completion
of fabrication and installation of the pilot plant and $69,000 for internal
labor, overheads, supplies and materials for construction and subsequent
operation of the facility. We incurred no comparable mineral exploration and
development expenses during the first quarter of 2002. The normal ongoing
expenses associated with our mineral leaseholds, which are principally advance
royalty payments and labor involved in exploration activities, did not change
significantly from the first quarter of 2001 to the first quarter of 2002.
Our research and development ("R&D") efforts in the first quarter of
2002 were directed principally to batteries, thermal spray coatings and fuel
cells. R&D expenses increased by $15,721 from $122,888 in the first quarter of
2001 to $138,609 in the same period of 2002 as a result of increased staff time
being devoted to these R&D projects with a resulting decrease in time spent on
construction projects and administrative and general activities. We also
experienced an increase in payroll overhead costs charged to R&D due to a rise
in employee health insurance costs.
8
Professional services, which consist principally of legal, consulting
and audit expenses, increased from $105,131 during the first quarter 2001 to
$226,073 in the first quarter 2002. The increase is attributable to an increase
in consulting expenses of $98,000 for the estimated fair value of warrants
issued to consultants for services rendered, and $22,000 for legal charges
associated with nanotechnology patent applications.
General and administrative expenses decreased from $803,820 in first
quarter 2001 to $608,128 in the same period of 2002. Expenses associated with
stock options issued to employees and service providers decreased by $216,000.
In the first quarter of 2001, we repriced certain options granted to employees
at a cost of $111,000 and issued options to service providers at a cost of
$105,000. Comparable costs were not incurred in the first quarter of 2002. In
addition, investor relations expense decreased by $20,000 as we cut back some of
our investor relations programs. These decreases in expense were partially
offset by a reduction of $27,000 in income recognized on the value of call
options held by us in the first quarter of 2001. All of the call options were
cancelled during 2001.
During the first quarter of 2001, we had $4,000,000 of restricted cash
received in connection with our issuance of a $7,000,000 asset-backed
exchangeable term note. Interest income earned on this cash was $64,000 during
the quarter. On December 28, 2001, the term note was exchanged for a new note
and the restricted cash was paid to the lender. As a result of this, our cash
balance available for investment was significantly reduced during the first
quarter of 2002 and interest income declined.
Liquidity and Capital Resources
We generated $48,937 of sales revenues in the first quarter of 2002 but
incurred a net loss of $1,679,531. At March 31, 2002, our accumulated deficit
was $31,092,357, or an increase of $1,679,531 over the accumulated deficit at
December 31, 2001. This increase was due to the net loss for the quarter.
Our cash and short-term investments decreased from $599,884 at December
31, 2001 to $359,691 at March 31, 2002, due to the incurrence of operating costs
and the effect of financing transactions which are described below.
During the quarter ended March 31, 2002, we sold 100,000 common shares
together with 250,000 warrants in a private placement for gross proceeds of
$125,000. Of the 250,000 warrants, 100,000 are exercisable at $1.50 per share
and expire on the earlier of five years from the date of issue or the 180th day
after which the closing price equals or exceeds $2.50 for 10 days. An additional
100,000 warrants are exercisable at $2.00 per share and expire on the earlier of
five years from the date of issue or the 180th day after which the closing price
equals or exceeds $3.00 for 10 days. The remaining 50,000 warrants are
exercisable at $2.50 per share and expire on the earlier of five years from the
date of issue or the 180th day after which the closing price equals or exceeds
$3.50 for 10 days.
On March 11, 2002, we entered into a stock subscription agreement with a
private investor which provides for the purchase and sale, for $1,000,000 to be
paid on or before May 31, 2002, of 666,667 common shares and 1,000,002 warrants
to purchase common shares at exercise prices between $2.00 and $3.00 per share.
At March 31, 2002, we had received $558,485 of advances toward the purchase
price of the shares. On April 26, 2002, we entered into an amended and restated
stock purchase agreement with the investor wherein the number of shares
purchased was increased to 1,200,000, the number of warrants was increased to
1,800,000 and the total purchase price was increased to $1,260,000. One-third of
the warrants are exercisable at $1.50 per share and expire on the earlier of
five years from the date of issue or the date 30 days following the fifth day
(whether or not consecutive) the closing price of our common shares equals or
exceeds $4.50. A further one-third of the warrants are exercisable at $2.00 per
share and expire on the earlier of five years from the date of issue or the date
30 days following the fifth day (whether or not consecutive) the closing price
of our common shares equals or exceeds $5.00. The final one-third of the
warrants are exercisable at $2.50 per share and expire on the earlier of five
years from the date of issue or the date 30 days following the fifth day
(whether or not consecutive) the closing price of our common shares equals or
exceeds $5.50.
On April 16, 2002, we reduced the exercise price on 582,500 warrants to
$1.05 per share for the period April 26, 2002 through June 30, 2002. The
9
warrants had been previously issued with exercise prices ranging from $3.50 to
$5.00. As of May 8, 2002, 2002, 286,169 of such warrants had been exercised
resulting in net proceeds to us of $300,477.
On May 7, 2002, we entered into a securities purchase agreement with
private investors pursuant to which they purchased 1,250,000 common shares and
312,500 warrants to purchase common shares for an aggregate purchase price of
$1,000,000. The warrants expire five years from the date of issuance and are
exercisable at $1.13 per share.
At March 31, 2002, we had cash and cash equivalents of $359,691, an
amount which, together with the $300,477 of proceeds received from the exercise
of warrants and the $1,000,000 of proceeds received from the sale of 1,250,000
common shares described above, is sufficient to fund our basic operations
through July 31, 2002. We anticipate that the remaining 296,331 repriced
warrants will be exercised prior to June 30, 2002 with proceeds to us of
$311,148. We also anticipate that we will receive the remaining $701,515 of the
purchase price owed under the amended and restated stock purchase agreement
described above on or before July 31, 2002. Although this additional capital
will be sufficient to fund our basic operations through at least October 31,
2002], we will require additional financing at some point during 2002 in order
to provide working capital to fund our day-to-day operations. We will also
require additional financing to continue our development work on the titanium
processing technology and the Tennessee mineral property, and to expand our
nanoparticle production facility when, and if, current capacity cannot keep pace
with product sales. We expect to generate funds through additional private
placements of our common stock and warrants to purchase our common stock,
additional exercises of warrants and sales of titanium dioxide nanoparticles. As
of May 8, 2002, we have no commitments to provide additional financing or to
purchase titanium dioxide nanoparticles.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
can be identified by the use of the forward-looking words "anticipate,"
"estimate," "project," "likely," "believe," "intend," "expect," or similar
words. These statements discuss future expectations, contain projections
regarding future developments, operations, or financial conditions, or state
other forward-looking information. Statements in this report regarding the
ability of the Company to raise working capital necessary to fund our
operations, development of the titanium processing technology and assets, the
centrifugal jig or any mineral properties, and any future acquisition activities
are forward-looking statements. You should keep in mind that all forward-looking
statements are based on management's existing beliefs about present and future
events outside of management's control and on assumptions that may prove to be
incorrect.
Among the key factors that may have a direct bearing on the Company's
operating results are various risks and uncertainties including, but not limited
to, those attributable to the absence of significant operating revenues, the
absence of profits, uncertainties regarding the development and
commercialization of the centrifugal jig, development risks associated with the
Tennessee mineral property, risks related to the Company's proposed development
and exploitation of the titanium processing technology and assets and
uncertainties regarding the Company's ability to obtain capital sufficient to
pursue its proposed business strategy. Risk factors, cautionary statements and
other conditions that could cause actual results to differ are contained in the
Company's filings with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for the year ended December 31, 2001, as
filed on April 1, 2002.
10
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On February 4, 2002, we sold 100,000 common shares together with 250,000
warrants in a private placement for gross proceeds of $125,000. Of the 250,000
warrants, 100,000 are exercisable at $1.50 per share and expire on the earlier
of five years from the date of issue or the 180th day after which the closing
price equals or exceeds $2.50 for 10 days. An additional 100,000 warrants are
exercisable at $2.00 per share and expire on the earlier of five years from the
date of issue or the 180th day after which the closing price equals or exceeds
$3.00 for 10 days. The remaining 50,000 warrants are exercisable at $2.50 per
share and expire on the earlier of five years from the date of issue or the
180th day after which the closing price equals or exceeds $3.50 for 10 days.
On March 11, 2002, we entered into a stock subscription agreement with a
private investor which provides for the purchase and sale, for $1,000,000 to be
paid on or before May 31, 2002, of 666,667 common shares and 1,000,002 warrants
to purchase common shares at exercise prices between $2.00 and $3.00 per share.
At March 31, 2002, we had received $558,485 of advances toward the purchase
price of the shares. On April 26, 2002, we entered into an amended and restated
stock purchase agreement with the investor wherein the number of shares
purchased was increased to 1,200,000, the number of warrants was increased to
1,800,000 and the total purchase price was increased to $1,260,000. One-third of
the warrants are exercisable at $1.50 per share and expire on the earlier of
five years from the date of issue or the date 30 days following the fifth day
(whether or not consecutive) the closing price of our common shares equals or
exceeds $4.50. A further one-third of the warrants are exercisable at $2.00 per
share and expire on the earlier of five years from the date of issue or the date
30 days following the fifth day (whether or not consecutive) the closing price
of our common shares equals or exceeds $5.00. The final one-third of the
warrants are exercisable at $2.50 per share and expire on the earlier of five
years from the date of issue or the date 30 days following the fifth day
(whether or not consecutive) the closing price of our common shares equals or
exceeds $5.50.
The above-described common shares and warrants were offered and sold in
reliance upon the exemption for sales of securities not involving a public
offering, as set forth in Section 4(2) of the Securities Act based upon the
following: (a) each investor represented and warranted to the Company that it
was an "accredited investor," as defined in Rule 501 of Regulation D promulgated
under the Securities Act and had such background, education, and experience in
financial and business matters as to be able to evaluate the merits and risks of
an investment in the securities; (b) there was no public offering or general
solicitation with respect to the offering, and each investor represented and
warranted that it was acquiring the securities for its own account and not with
an intent to distribute such securities; (c) each investor was provided with a
copy of the most recent Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Report on Form 8-K of the Company and all other information
requested by the investor with respect to the Company, (d) each investor
acknowledged that all securities being purchased were "restricted securities"
for purposes of the Securities Act, and agreed to transfer such securities only
in a transaction registered with the SEC under the Securities Act or exempt from
registration under the Securities Act; and (e) a legend was placed on the
certificates and other documents representing each such security stating that it
was restricted and could only be transferred if subsequently registered under
the Securities Act or transferred in a transaction exempt from registration
under the Securities Act.
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index attached hereto.
(b) On January 4, 2002, the Company filed an Amendment No. 1 to
Current Report on Form 8-K/A reporting the termination of the
$7,000,000 10% Exchangeable Secured Term Note the Company had
issued on December 15, 2000 and reported in an Current Report
on Form 8-K filed with the SEC on December 26, 2000.
On January 4, 2002, the Company filed a Current Report on Form
8-K reporting the issuance (in connection with the
cancellation of the note described above) of a $2,000,000
Secured Term Note and warrants to purchase common stock on
December 28, 2001.
11
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 International Inc.
May 13, 2002 By: /s/ William P. Long
------------ ---------------------------
Date William P. Long
Chief Executive Officer
May 13, 2002 By: /s/ Edward H.Dickinson
------------ ----------------------------
Date Edward H. Dickinson
Chief Financial Officer
12
EXHIBIT INDEX
Exhibit Incorporated Filed
No. Exhibit by Reference Herewith
---------- --------------------------------------------------------- ---------------------------
3.1 Articles of Incorporation of the Registrant (1)
3.2 Amendment to Articles of Incorporation of the (2)
Registrant dated November 6, 1996
3.3 Bylaws of the Registrant (1)
4.1 Repricing Amendment to Common Share Purchase Warrants X
4.2 Form of Investor Warrant issued May 7, 2002 (3)
10.1 Securities Purchase Agreement dated May 7, 2002 (3)
10.2 Registration Rights Agreement dated May 7, 2002 (3)
10.3 Amended and Restated Stock Purchase and Subscription X
Agreement dated April 2002
-----------------------
(1) Incorporated by reference to Registration Statement on Form 10-SB filed with
the Commission on November 25, 1996.
(2) Incorporated by reference to Amendment No. 1 to Registration Statement on
Form 10-SB/A filed with the Commission on December 23, 1996.
(3) Incorporated by reference to Current Report on Form 8-K filed with the SEC
on May 10, 2002
13