<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
   

                                 FORM 10-Q/A
                        (Amendment No. 1 to 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 September 30, 1997

                                       OR

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

        For the transition period from ______________ to ______________

                         Commission file number 0-21042

                          Molten Metal Technology, Inc.
                          -----------------------------
             (Exact name of registrant as specified in its charter)

             Delaware                                    52-1659959
             --------                                    ----------
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

      400-2 Totten Pond Road
           Waltham, MA                                          02154
           -----------                                          -----
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:        (781) 487-9700

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, and (2) has been subject to such filing requirements
for the past 90 days.

                                    YES  X    NO 
                                        ---      ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

   Common Stock, $.01 par value                         23,669,176
   ----------------------------              -------------------------------
             Class                           Outstanding at October 20, 1997


<PAGE>   2

   

                          MOLTEN METAL TECHNOLOGY, INC.
                                      INDEX
<TABLE>
<CAPTION>
                                                                                                           PAGE NO.
                                                                                                           --------

PART I - FINANCIAL INFORMATION
------------------------------

Item 1. Financial Statements

<S>                                                                                                             <C>
         Consolidated Balance Sheet - September 30, 1997 and December 31, 1996                                  3

         Consolidated Statement of Operations for the quarters ended September
         30, 1997 and 1996 and for the nine months ended
         September 30, 1997 and 1996                                                                            4

         Consolidated Statement of Cash Flows for the nine months ended
         September 30, 1997 and 1996                                                                            5

         Notes to Consolidated Financial Statements                                                          6-11

----------                                                                                                     
</TABLE>

    






                                       2



<PAGE>   3

                 MOLTEN METAL TECHNOLOGY, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>


                                                                                            September 30,            December 31,
                                                                                                1997                    1996
                                                                                            -------------           -------------
<S>                                                                                         <C>                     <C>          
ASSETS

Current assets:
  Cash and cash equivalents                                                                 $   5,626,572           $  19,679,104
  Short-term investments                                                                       15,651,416             109,388,659
  Accounts receivable, net of allowance for doubtful accounts of $150,000
    at September 30, 1997                                                                       5,680,626               2,573,306
  Unbilled accounts receivable                                                                    991,329                      --
  Accounts receivable from affiliates                                                           3,555,000               5,525,491
  Unbilled accounts receivable from affiliates                                                         --                 798,980
  Other receivables                                                                             5,543,540                      --
  Prepaid expenses and other current assets                                                     7,929,599               6,300,727
                                                                                            -------------           -------------
          Total current assets                                                                 44,978,082             144,266,267

Restricted cash                                                                                 3,662,809               2,592,925
Fixed assets, net                                                                             129,447,343             103,553,945
Intangible assets, net                                                                         18,119,561              16,363,201
Long-term receivable                                                                           19,000,000                      --
Other assets                                                                                    8,101,132               5,968,911
                                                                                            -------------           -------------
                                                                                            $ 223,308,927           $ 272,745,249
                                                                                            =============           =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt                                                         $      15,767           $   1,884,486
  Accounts payable                                                                             22,389,978              19,273,058
  Accrued expenses                                                                             12,520,036               6,082,746
  Accrued interest                                                                              3,643,362               2,161,297
  Deferred revenue                                                                              7,230,613               1,647,472
  Deferred income from affiliate                                                                       --               4,586,870
                                                                                            -------------           -------------
          Total current liabilities                                                            45,799,756              35,635,929
                                                                                            -------------           -------------

Long-term debt                                                                                202,750,000             164,753,334
                                                                                            -------------           -------------
Due to related parties                                                                          1,385,889               1,385,889
                                                                                            -------------           -------------
Deferred income from affiliate                                                                  2,311,315               2,437,500
                                                                                            -------------           -------------
Accumulated losses of affiliate in excess of investment                                                --               5,020,765
                                                                                            -------------           -------------
Preferred stock, $.01 par value, 3,000 shares authorized
   Series A convertible, redeemable preferred stock, $.01 par value, 
   800 shares designated, issued and outstanding at September 30, 1997                         14,161,180                      --
                                                                                            -------------           -------------
Stockholders' equity:
  Common stock, $.01 par value, 100,000,000 shares authorized;
     23,775,843 shares issued and 23,665,443 outstanding at September 30, 1997 and
     23,643,707 shares issued and 23,603,707 outstanding at December 31, 1996                     237,758                 236,437
  Additional paid-in capital                                                                  170,996,887             163,124,587
  Valuation allowance for short-term investments                                                  (31,790)                (86,653)
  Accumulated deficit                                                                        (212,910,532)            (97,820,411)
                                                                                            -------------           -------------
                                                                                              (41,707,677)             65,453,960
  Less: Treasury stock, 110,400 shares at September 30, 1997 and 40,000
    shares at December 31, 1996, at cost                                                       (1,251,319)               (482,504)
  Less: Deferred compensation                                                                    (140,217)             (1,459,624)
                                                                                            -------------           -------------
          Total stockholders' equity                                                          (43,099,213)             63,511,832
                                                                                            -------------           -------------
                                                                                            $ 223,308,927           $ 272,745,249
                                                                                            =============           =============
</TABLE>

                See notes to consolidated financial statements



                                       3

<PAGE>   4
   

                 MOLTEN METAL TECHNOLOGY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>

                                                                 Quarter ended September 30,      Nine Months ended September 30,
                                                               ------------------------------     --------------------------------
                                                                   1997             1996               1997              1996
                                                               ------------      ------------     -------------      ------------
<S>                                                            <C>               <C>              <C>                <C>       
Revenue:
    Waste services                                             $  4,767,293      $         --     $  13,805,623      $         --
    Equipment sales                                                 453,202                --         1,646,226                --
    Construction and research and development ("R&D")               137,649         3,187,477           656,399         8,230,774
    Construction, R&D and consulting from affiliates                     --         6,304,972           783,937        33,989,304
    Technology transfer and success fees from affiliate                  --         5,583,333                --        13,083,333
                                                               ------------      ------------     -------------      ------------
                                                                  5,358,144        15,075,782        16,892,185        55,303,411
                                                               ------------      ------------     -------------      ------------
Operating expenses:
    Cost of revenue - Waste services                             13,929,959                --        31,393,502                --
    Cost of revenue - Equipment sales                               283,707                --           875,994                --
    Cost of revenue - Construction and R&D                           49,681         3,187,646           337,350         8,090,929
    Cost of revenue - Construction, R&D, consulting,
      technology transfer and success fees from affiliates               --         8,155,726           658,804        33,970,636
    R&D                                                           4,986,207         5,189,205        20,534,198        14,516,206
    Selling, general and administrative ("SG&A")                  9,175,032         7,212,523        23,838,759        11,841,741
    Impairment charge for long-lived assets                      38,427,184                --        38,427,184                --
                                                               ------------      ------------     -------------      ------------
                                                                 66,851,770        23,745,100       116,065,791        68,419,512
Equity income (loss) from affiliate                                      --         2,818,178        (9,740,565)        5,494,214
                                                               ------------      ------------     -------------      ------------
Loss from operations                                            (61,493,626)       (5,851,140)     (108,914,171)       (7,621,887)

Other income (expense):
    Interest income                                                 437,108         2,846,313         2,917,725         6,431,691
    Interest expense                                             (2,064,997)       (2,268,115)       (6,463,736)       (4,375,814)
                                                               ------------      ------------     -------------      ------------
 Net loss                                                       (63,121,515)        5,272,942)     (112,460,182)       (5,566,010)

 Less: preferred stock dividends and preferences (Note 2)        (2,629,939)               --        (2,629,939)               --

                                                               ------------      ------------     -------------      ------------
Net loss available to common shareholders                      $(65,751,454)     $ (5,272,942)    $(115,090,121)     $ (5,566,010)
                                                               ============      ============     =============      ============

Net loss per share                                             $      (2.78)     $      (0.22)    $       (4.87)     $      (0.24)
                                                               ============      ============     =============      ============

Weighted average common and common equivalent
 shares outstanding                                              23,653,738        23,490,753        23,612,207        23,230,088
                                                               ============      ============     =============      ============
</TABLE>


                See notes to consolidated financial statements.
    


                                       4

<PAGE>   5

                 MOLTEN METAL TECHNOLOGY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                Nine months ended September 30,
                                                                                --------------------------------
                                                                                     1997               1996
                                                                                -------------      -------------

<S>                                                                             <C>                <C>           
Cash flows from operating activities:
 Net loss                                                                       $(112,460,182)     $  (5,566,010)
 Adjustments to reconcile loss to net cash used in
   operating activities (net of assets acquired from VECTRA):
   Depreciation and amortization                                                    9,393,702          4,301,200
   Equity loss (income) from affiliate                                              9,740,565         (5,494,214)
   Impairment charge for long-lived assets                                         38,427,184                 --
   Compensation expense related to restricted stock and common stock options        1,398,932            305,529
   Increase in accounts receivable                                                 (3,604,141)        (4,201,711)
   Decrease (increase) in accounts receivable from affiliate                        2,769,471         (7,274,291)
   Decrease in other accounts receivable                                              748,127                 --
   Increase in prepaid expenses and other current assets                             (698,295)        (3,908,597)
   Increase in other assets                                                          (319,713)          (874,356)
   Increase (decrease) in accounts payable                                          1,423,690         (1,057,332)
   Increase (decrease) in accrued expenses                                         (5,017,092)         2,799,313
   Increase in accrued interest                                                     1,482,065          2,820,579
   Increase (decrease) in deferred revenue                                          5,583,141         (4,083,334)
   Increase (decrease) in deferred income from affiliate                             (278,748)         4,434,952
                                                                                -------------      -------------
       Net cash used in operating activities                                      (51,411,294)       (17,798,272)
                                                                                -------------      -------------

Cash flows from investing activities:
  Expenditures for fixed assets                                                   (58,391,971)       (26,718,793)
  Purchase of intangible assets                                                      (796,346)        (1,515,203)
  Cash paid for acquisition of VECTRA assets                                       (3,950,559)                --
  Cash investments in affiliates                                                   (9,180,521)                --
  Cash received from M4 restructuring                                                 271,468                 --
  Redemption (purchase) of short-term investments, net                             93,792,106        (68,197,027)
  Decrease (increase) in restricted cash                                           (1,069,884)         5,096,122
                                                                                -------------      -------------
      Net cash provided by (used in) investing activities                          20,674,293        (91,334,901)
                                                                                -------------      -------------

Cash flows from financing activities:
  Proceeds from issuances of common stock                                             659,550          3,222,797
  Net proceeds from issuance of preferred stock                                    18,665,787                 --
  Purchase of treasury stock                                                         (768,815)                --
  Net proceeds from issuance of long-term debt                                             --        139,338,826
  Payments to related parties                                                              --            (88,697)
  Principal repayments of long-term debt                                           (1,872,053)          (143,388)
                                                                                -------------      -------------
      Net cash provided by financing activities                                    16,684,469        142,329,538
                                                                                -------------      -------------
Increase (decrease) in cash and cash equivalents                                  (14,052,532)        33,196,365
Cash and cash equivalents at beginning of period                                   19,679,104          6,644,856
                                                                                -------------      -------------
Cash and cash equivalents at end of period                                      $   5,626,572      $  39,841,221
                                                                                =============      =============


Additional disclosure of non-cash investing and financing activities:
  Issuance of common stock in exchange for investment in affiliate              $          --      $   9,770,587
                                                                                =============      =============
</TABLE>


As a result of the restructuring of M4 Environmental L.P. ("M4") and the
 consolidation of M4 with the Company for financial reporting purposes, the
 Company assumed liabilities of $51,147,612 that included $38 million of
 long-term debt and obtained assets of $46,713,305 which consisted primarily of
 receivables from Lockheed Martin Corporation and fixed and intangible assets.

In conjuction with the restructuring, the Company offset deferred income of
 $4,434,307 against fixed assets obtained from M4.


                 See notes to consolidated financial statements.

                                       5



<PAGE>   6



                 MOLTEN METAL TECHNOLOGY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Molten Metal Technology, Inc. (the "Company" or "MMT") is an environmental
technology company engaged in the commercialization and continued development of
its proprietary processing technology, Catalytic Extraction Processing ("CEP").
The core of CEP is a molten metal bath into which feedstocks and selected
chemicals can be introduced. The catalytic and solvent effects of the molten
metal bath causes feedstocks to break down into their constituent elements and
dissolve in the molten metal. The addition of various selected chemicals to the
molten metal bath allows feedstocks to reform and be recovered as different
materials which generally can be re-used as a raw material by the feedstock
generator or can be sold to other users.

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.

The Company incurred a net loss of $112.5 million for the nine months ended
September 30, 1997. As described below, the Company raised $20 million in a
private placement of preferred stock in September 1997. However, the Company
will require immediate and substantial additional financing in order to continue
normal operations beyond November 1997. The Company is currently pursuing
various financing opportunities, including equity and/or debt financing from
private investors and a tax-exempt bond financing for MMT of Tennessee Inc., a
wholly-owned subsidiary of the Company ("MMT Tennessee"). In connection with
this proposed bond financing, the Company has received from the State of
Tennessee, where the Q-CEP Facility is located, a reservation in the amount of
$20 million of the total amount of tax-exempt private-activity bonds permitted
under federal tax rules to be issued by the State of Tennessee in 1997. Although
the Company expected that the completion of the preferred stock financing would
facilitate completion of the proposed bond financing, to date the Company has
been unable to close this financing. The Company is currently in discussions
with several different financing sources, although there can be no assurances as
to the timing or completion of any financing. Without the completion of the bond
financing and/or substantial additional financing, the Company will not have
sufficient funds to continue normal operations after November 1997 and may be
required to file a petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. In the event of a bankruptcy filing, the following indebtedness
of the Company could become immediately due and payable at the option of the
holders of such debt: $143,750,000 principal amount of the Company's 5 1/2%
Convertible Subordinated Notes Due 2006; $21,000,000 principal amount of
industrial revenue bonds issued by the Massachusetts Industrial Finance Agency;
a $2,000,000 loan from Jobs for Fall River, Inc.; and $38,000,000 principal
amount of industrial revenue bonds issued by the Industrial Development Board of
the City of Oak Ridge.

To address both its near-term and long-term liquidity needs, the Company, in
addition to seeking financing, is seeking to decrease future planned capital
expenditures by obtaining third party funding for such expenditures, and also is
seeking to defer certain payments owed to the prime contractor of the Company's
CEP facility in Bay City, Texas (the "Bay City CEP Facility"). Specifically, the
Company is seeking a strategic partner for its chemicals business, including the
Bay City CEP Facility. The Company's intent is to find a strategic partner that
would provide the funding necessary to start-up and initially operate this
plant. If the Company is unable to find such a strategic partner, or to
negotiate an acceptable partnering arrangement, the Company will not have
sufficient funds to complete and start-up the Bay City CEP Facility by the end
of 1997, if at all. There can be no assurances that the Company will be
successful in finding such a strategic partner or, if it does so, that the
Company will be able to negotiate a satisfactory partnering arrangement. The
Company also is negotiating with Nichimen Corporation and NKK Plant Engineering
Corporation ("NKP") to restructure the Japanese joint venture which the Company
formed with these two companies in September 1996. The Company anticipates that,
as part of the proposed restructuring, its ownership interest in the joint
venture will be reduced substantially from the current 49% in return for funding
commitments from Nichimen and NKP necessary to complete testing on the Company's
demonstration ash processing facility in Fall River, MA and the construction of
a second demonstration ash processing facility for shipment to Japan. If the
Company is unable to successfully complete this contemplated restructuring, or
otherwise obtain substantial alternative financing, the Company will not have
sufficient funds to complete the testing of the Fall River demonstration plant
or to complete construction of the second demonstration plant. There can be no
assurances that the Company will be successful in restructuring this joint
venture. The Company also is negotiating to defer payment of approximately $13
million owed by the Company to the prime contractor of the Bay City CEP
Facility. The Company expects that it will be able to negotiate such deferral on
satisfactory terms, however there can be no assurances that such negotiations
will be successful. If the Company is unable to negotiate satisfactory terms for
the deferral of such payment, the prime contractor could have a mechanics lien
placed on the Bay City CEP Facility. The Company expects that such a mechanics
lien would materially adversely affect the Company's ability to locate a
strategic partner of the Bay City CEP Facility and could materially adversely
affect the Company's ability to obtain financing for the Company as a whole.

The Company's common stock is listed on the Nasdaq National Market. Currently,
the Company is not in compliance with one or more of the criteria required for
continued listing on such market. If the Company is unable to meet such
criteria, it could be delisted from trading on the Nasdaq National Market,
however the Company expects it would have a period of several months within
which to meet such criteria if the Company had a plan for doing so. If the
Company were to be delisted, the Company could apply for listing on a national
stock exchange or another established automated over-the-counter trading
market, Although there can be no assurance that the Company would meet the      
listing criteria for such exchange or market. If the Company were to be
delisted from the Nasdaq National Market and were not to be accepted for
listing on a national stock exchange or another established over-the-counter
trading market, holders of the Company's 5 1/2% Convertible Subordinated Notes
Due 2006 could require the Company to redeem their notes at the face amount
thereof plus interest accrued to the date of redemption. $143,750,000 principal
amount of such notes are outstanding, and, in the event of a mandatory
redemption, the Company would not have sufficient funds to redeem such notes.
If after January 8, 1998 the Company were to be delisted from the Nasdaq
National Market and were not to be accepted for listing on another market or an
exchange, holders of the Company's Series A Preferred Stock also could require
the Company to redeem their shares of preferred stock in accordance with the
redemption formula described below. $20 million face amount of such preferred
stock is outstanding and the Company does not expect that it would have
sufficient funds to redeem such preferred stock. In addition, if the Company
were to change its listing from the Nasdaq National Market to the Nasdaq Small
Cap Market, holders of the Company's Series A Preferred Stock would have the
right to convert their shares of such preferred stock into common stock at a
20% discount, rather than a 15% discount. 

In addition, the Company has retained an investment banking firm to assist the
Company in obtaining necessary financing, and also to review alternatives for a
sale of some or all of the Company's assets.

Net loss per share is determined by dividing net loss available to common
shareholders by the weighted average number of common shares outstanding during
the period. Net loss available to common shareholders is derived after giving
effect to preferred stock dividends and imputed preferences (see Note 2).
Preferred stock preferences are imputed based on (i) the fair market value of
the warrants issued in connection with the preferred stock recognized on
issuance and (ii) the differences between the conversion price to the preferred
shareholders and the value of the related common stock as measured in the public
market, recognized over the one year period beginning with the date of issuance,
the period over which the preferred shareholders can realize their return.
Common share equivalents, which consist of common stock that may be issuable
upon conversion of preferred stock and upon exercise of outstanding stock
options and warrants, have been excluded from the weighted average number of
common shares since their effect is anti-dilutive. The effect of the assumed
conversion of the Company's 5 1/2% Convertible Subordinated Notes Due 2006 was
anti-dilutive for the periods presented.

In February 1997, Financial Accounting Standards No. 128 "Earnings Per Share"
("FAS 128") was issued by the Financial Accounting Standards Board. FAS 128
specifies modifications to the calculation of earnings per share from that
currently used by the Company. Under FAS 128, "basic earnings per share" will be
calculated based upon the weighted average number of common shares actually
outstanding, and "diluted earnings per share" will be calculated based upon the
weighted average number of common shares outstanding and other potential common
shares (stock options, warrants and convertible debt) if they are dilutive. FAS
128 is effective for the Company's fourth quarter of 1997 and will be adopted at


                                       6


<PAGE>   7


that time. Had the Company determined earnings per share in accordance with FAS
128, basic loss per share and diluted loss per share for the periods ended
September 30, 1997 and 1996 would not have been materially different from the
net loss per share reported by the Company.

Certain reclassifications have been made for consistent presentation. The
reclassifications have no effect on the net loss for the periods ended September
30, 1996.

The information furnished is unaudited and reflects all adjustments (consisting
of only normal recurring adjustments) which, in the opinion of management, are
necessary for a fair presentation of the financial position and results of
operations for the interim periods. The accompanying financial statements should
be read in conjunction with the Company's audited financial statements and
related footnotes for the year ended December 31, 1996 which are included in the
Company's annual report on Form 10-K for the year ended December 31, 1996. The
results of operations for the quarter ended September 30, 1997 are not
necessarily indicative of the results to be expected for the full year.

NOTE 2. CONVERTIBLE REDEEMABLE PREFERRED STOCK AND EQUITY TRANSACTIONS

On September 8, 1997, the Company completed a private placement with a group of
institutional investors (the "Private Placement") whereby the Company sold 800
shares of Series A Preferred Stock for an aggregate purchase price of $20.4
million. The Series A Preferred Stock is convertible into shares of the
Company's common stock on the basis described below.

The Series A Preferred Stock has a stated value of $25,000 per share and has an
annual premium accruing at five percent. Upon any bankruptcy or liquidation of
the Company, the holders of the Series A Preferred Stock will be entitled to
receive the stated value of the Series A Preferred Stock ($25,000) plus a five
percent premium per annum to the date of such bankruptcy or liquidation. The
Series A Preferred Stock is non-voting, is subject to voluntary conversion at
the option of the holders at any time commencing 120 days after September 8,
1997, and will automatically convert into common stock on September 8, 2000. The
conversion price per share will be the lower of (i) a fixed price (the "Fixed
Price") of $5.83 (110% of the average closing bid prices of the Company's common
stock over the five trading days ending September 5, 1997), or (ii) a variable
price (the "Variable Price") equal to 85% of the average of the closing bid
prices of the common stock for the five trading days immediately preceding a
notice of conversion. However, during the first year after closing, any holder
of Series A Preferred Stock who converts any Series A Preferred Stock based on
the Variable Price and requests removal of the legend on the underlying shares
of common stock will pay a legend removal fee to the Company, initially in the
amount of 8% and decreasing over time to 0% by September 1998. In addition,
until approved by the Company's stockholders in accordance with the rules of The
Nasdaq Stock Market, the Company may not issue shares of common stock upon
conversion of the Series A Preferred Stock equal to or in excess of 20% of the
Company's outstanding common stock at a price less than the market value of the
common stock.

The conversion price of the Series A Preferred Stock is subject to possible
upward performance adjustments. If, at the time of conversion, the closing bid
price of the common stock has increased by more than 40% over the original Fixed
Price, the Fixed Price will be automatically increased to equal:

                                       C
                                -----------------
                                [(C/F) + (1.4)]/2
Where:
C = the average of the closing bid prices of the common stock for the five
    trading days immediately preceding a notice of conversion; and
F = the original Fixed Price ($5.83 per share).

The Series A Preferred Stock is subject to optional redemption by the Company
for cash at any time at an amount equal to 140% of the stated value of the
Series A Preferred Stock and for common stock provided that the closing bid
price of the common stock for the twenty trading days preceding such redemption
has exceeded 140% of the original Fixed Price. Upon the occurrence of certain
events specified in the



                                       7


<PAGE>   8





Certificate of Designations, Preferences and Rights for the Series A Preferred
Stock (the "Certificate of Designations") (including, among other things,
suspension of trading or delisting of the common stock and failure by the
Company's stockholders to approve the issuance of shares of common stock upon
conversion of the Series A Preferred Stock in excess of twenty percent of the
common stock outstanding within 120 days after September 8, 1997), the Series A
Preferred Stock may be required to be redeemed by the Company at a redemption
price equal to the greater of (i) 140% of the stated value of the Series A
Preferred Stock ($25,000) and (ii) the amount determined as follows:

                                  (SV + PR) X M
                                  -------------
                                       CP
Where:
SV = the stated value of the Series A Preferred Stock;
Pr = the accrued premium on the Series A Preferred Stock;
M  = the highest closing bid price of the common stock from the date of the
     redemption notice delivered by the holder of the Series A Preferred Stock
     requesting redemption through the date of redemption; and
CP = the conversion price of the Series A Preferred Stock at such time.

In lieu of redemption, the Company may elect to pay to each holder of the Series
A Preferred Stock cash in the amount of 5% per week of the sum of the aggregate
stated value of the then outstanding Series A Preferred Stock held by such
holder plus any accrued premium, until such event no longer exists. The Company
shall not be required to pay more than 25% of such amount in the aggregate to
such holder with respect to any such event.

Upon the occurrence of certain other events specified in the Certificate of
Designations (including, among other things, failure of the Company to remove
any restrictive legend on any certificate or any shares issued to the holders of
the Series A Preferred Stock upon conversion of the Series A Preferred Stock,
notice by the Company to any holder of the Series A Preferred Stock of its
intention not to issue shares of common stock to any holder upon conversion of
the Series A Preferred Stock, determination that any representation or warranty
of the Company was false or misleading in any material respect and the Company
knew that the representation or warranty was false or misleading, and failure of
the Company to issue shares of common stock within ten days after the conversion
of Series A Preferred Stock), the Series A Preferred Stock must be redeemed by
the Company at the amounts set forth above.

In connection with the Private Placement the Company issued a warrant (the "GEM
Warrant") to GEM Ventures Ltd. exercisable at any time over a three year period
for 566,000 shares of common stock at an exercise price of $6.625 per share. The
GEM Warrant expires on September 8, 2000.

During the quarter ended September 30, 1997, 62,463 shares of common stock were
issued upon the exercise of options.

NOTE 3. RESTRUCTURING OF M4

On June 16, 1997, the Company and Lockheed Martin Corporation ("LMC") executed
agreements to restructure their relationship embodied in M4 Environmental L.P.
("M4"). The agreements stipulate the following: (1) LMC has the exclusive right
to lead and pursue contracts for the clean up of the US Department of Energy's
("DOE") tanked waste site in Hanford, Washington, and the Company will provide
directly to LMC certain construction and development services with respect to
Q-CEP(R). (2) The Company has the exclusive right to lead and pursue the
worldwide opportunities for processing UF6 and LMC has the right to participate
in this market on a case-by-case basis, subject to mutual agreement of the
parties. (3) The Company and LMC formed a new limited liability company to be
their exclusive vehicle to pursue the processing of chemical weapons worldwide.
(4) Retech was transferred to LMC. (5) The Company became the sole owner of M4
of which the principal asset is the Technology Center in Oak Ridge, Tennessee
(the "M4 Technology Center"). The Company is responsible for the operation of
the M4 Technology Center and is entitled to all future revenue from such
operations. The Company and LMC



                                       8


<PAGE>   9


have agreed to share equally the debt service of the $38 million of bonds issued
by the Industrial Development Board of Oak Ridge relating to the M4 Technology
Center. (6) LMC terminated its line of credit with M4 and deemed the
approximately $15.8 million aggregate principal and accrued interest outstanding
thereunder to have been paid in full and the Company contributed $14.6 million
in outstanding accounts receivable to the capital of M4. (7) LMC and the Company
generally share equally in substantially all of the costs of the restructuring.
(8) All existing agreements between the Company, LMC and M4 are terminated,
including the CEP license to M4. (9) LMC and the Company established a first
offer process pursuant to which they will jointly discuss new market
opportunities within the DOE and US Department of Defense ("DoD") markets prior
to pursuing them individually.

In connection with the M4 restructuring, the Company entered into an agreement
to deliver a pilot-scale, demonstration CEP plant to the LMC Hanford team in
1997 for a fixed price of $5 million. If the Company is unable to obtain
substantial financing to address its short-term and long-term liquidity needs,
the Company will not have sufficient funds to complete the construction and
delivery of this demonstration plant.

Prior to the restructuring, the Company accounted for its investment in M4 using
the equity method. Under the M4 limited partnership agreement, the Company and
LMC shared equally in M4's revenues and other income and all expenses were
allocated to LMC until the capital accounts of the Company and LMC became equal.
The capital accounts became equal in the fourth quarter of 1996, and from that
date until March 26, 1997 the Company and LMC shared equally in the losses of
M4. On March 26, 1997, the Company and LMC executed a letter of intent that
contemplated the restructuring described above. After the date of the letter of
intent, the Company and LMC agreed to fund the operations of M4 in a manner
consistent with the terms of the restructuring agreements and the Company
recognized losses from M4 in accordance with its funding obligation.

Effective on June 16, 1997, M4 became a wholly owned subsidiary of the Company.
Accordingly, use of the equity method of accounting for the Company's investment
in M4 ceased as of that date and M4 was consolidated with the Company for
financial reporting purposes from that date forward. As a result of the
restructuring, the Company assumed liabilities of $51,147,612 that included $38
million of long-term debt and obtained assets of $46,713,305 which consisted
primarily of receivables from LMC and fixed and intangible assets.

In periods prior to the restructuring, the Company billed M4 for construction
services. For billings that were capitalized by M4, the Company deferred the
portion of the gross profit representing the Company's designated ownership
interest related to such sales. The deferred income was being recognized by the
Company as the related assets were depreciated by M4. The deferred income
balance at June 16, 1997 related to assets that, as a result of the
restructuring, are now owned by the Company, and such balance has been offset
against the carrying value of such assets.

In 1996, the Company sold the rights to the Japanese chemical weapons market to
M4 and deferred the portion of the gross profit representing the Company's
designated ownership interest. As a result of the restructuring, these rights
are now held by the new limited liability company formed by the Company and LMC
(the "LLC") to pursue the worldwide chemical weapons market. Accordingly, the
deferred income related to the sale of the rights to the Japanese chemical
weapons market will be recognized as a reduction of cost of revenue as the
rights are amortized by the LLC.

The net amount of funding due from LMC under the restructuring agreements was
recorded as short-term and long-term receivables of $6,292,000 ($5,544,000 at
September 30, 1997) and $19,000,000, respectively.




                                       9

<PAGE>   10


NOTE 4. JAPANESE JOINT VENTURE

In February 1996, MMT, Nichimen Corporation, one of Japan's major trading
companies, and NKK Plant Engineering Corporation, one of Japan's largest
engineering providers of municipal waste systems ("NKP"), signed a letter of
intent to form a joint venture to process fly ash produced by Japanese municipal
solid waste incinerators. A definitive agreement to form this joint venture was
executed in October 1996 by the Company, Nichimen and NKP. The agreement grants
the joint venture the exclusive right to introduce CEP to the Japanese municipal
incinerator ash market. The joint venture will employ MMT's proprietary
Cerex-CEP technology to process and recycle incinerator ash to recover ceramic
and metal products. Under the agreement, the Company owns 49% of the joint
venture, will receive a two percent royalty on all revenues of the joint
venture, and will receive a $12.5 million licensing fee, to be paid from the
joint venture's profits. The Company and the joint venture have entered into an
agreement pursuant to which the joint venture will purchase an initial
demonstration CEP system from MMT for a fixed price of $7.9 million. The
agreement contemplates that this system will be shipped to Japan in the first
quarter of 1998, but the Company expects that it will not be able to meet this
timing unless it is able to restructure the joint venture as described below or
otherwise obtain substantial additional financing. Prior to the quarter ended
September 30, 1997, revenue under this agreement was being recognized using the
percentage of completion method based on the ratio that costs incurred to date
bear to estimated total costs at completion. During the quarter ended September
30, 1997, the Company did not recognize any revenue under this agreement due to
the potential risk of the Company being unable to fulfill its obligations under
this agreement.

The Company is currently negotiating with Nichimen and NKP to restructure this
joint venture. The Company anticipates that, as part of the proposed
restructuring, its ownership interest in the joint venture will be reduced
substantially from the current 49% in return for funding commitments from
Nichimen and NKP necessary to complete testing on the Company's demonstration
ash processing facility in Fall River, MA and the construction of the initial
CEP system described above. If the Company is unable to successfully complete
this contemplated restructuring, or otherwise obtain substantial alternative
financing, the Company will not have sufficient funds to complete the testing of
the Fall River demonstration plant or to complete construction of the initial
CEP system intended for shipment to Japan. There can be no assurances that the
Company will be successful in restructuring this joint venture.

NOTE 5. LITIGATION

In February and March 1997, purchasers of the Company's common stock filed five
purported class action suits against the Company and certain of its present and
former directors and executive officers in the United States District Court for
the District of Massachusetts. These cases have been consolidated and on October
30, 1997, the plaintiffs filed a consolidated complaint. The consolidated
complaint variously alleges that defendants made false and misleading statements
and disseminated financial statements not prepared in accordance with generally
accepted accounting principles, in violation of federal securities laws and
state law, in order to enhance the value of the Company's common stock and to
enable the Company to issue securities and the individual defendants to sell
shares of the Company's common stock at inflated prices. The suit seeks
compensatory damages for unspecified alleged losses during the alleged class
period, which extends from March 28, 1995 through October 18, 1996. This action
is at an early procedural stage. While the Company has not yet filed a response
to the consolidated complaint, the Company intends to deny liability and/or move
to dismiss the action. However, the ultimate outcome cannot be determined at
present. As such, no provision for liability from these suits has been made in
the financial statements as of September 30, 1997.

The Company has certain contingent liabilities resulting from other litigation
and claims incident to the ordinary course of business. Management believes that
the probable resolution of such contingencies will not materially affect the
financial condition or results of operations of the Company.



                                       10


<PAGE>   11


NOTE 6. IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically assesses whether any events or changes in circumstances
have occurred that would indicate that the carrying amount of a long-lived asset
may not be recoverable. When such an event or change in circumstance occurs, the
Company evaluates whether the carrying amount of such asset is recoverable by
comparing the net book value of the asset to estimated future undiscounted cash
flows, excluding interest charges, attributable to such asset. If it is
determined that the carrying amount is not recoverable, the Company recognizes
an impairment loss equal to the excess of the carrying amount of the asset over
the estimated fair value of such asset.

Due to losses in excess of expectations for the quarter ended September 30,
1997, management performed an assessment of the recoverability of all of the
Company's long-lived assets (including fixed assets and intangible assets) as of
September 30, 1997.

In connection with the assessment, management prepared forecasts of the expected
future cash flows related to these assets on an undiscounted basis and without
interest charges. For purposes of these forecasts, assets were grouped at the
lowest level for which there are expected to be identifiable cash flows that are
largely independent of expected cash flows related to other groups of assets.
These forecasts were developed based on assumptions developed by management
using management's best estimates of future trends and events. The Company first
generated revenues from its waste services operations in January 1997 and has
not yet demonstrated sustained revenues from waste services operations.
Accordingly, management's estimates of future cash flows are based largely on
expected future trends and events, rather than historical experience. In
estimating future cash flows, management considered a range of the amount and
timing of future cash flows and the likelihood of possible outcomes. The range
and likelihood of possible outcomes considered by management were based on
assumptions regarding various factors, including the likelihood of the CEP
plants operating at the levels required to produce such cash flows, the ranges
of prices the Company is likely to be able to charge for its services, the
percentage of the market that the Company is likely to capture, the likelihood
of an emergence of a competing technology, anticipated capital improvements, and
the regulatory environment. Considering the above assumptions, management
assigned a probability percentage to each of the estimated cash flow scenarios
within the range of estimates and computed a weighted average estimated cash
flow for each grouping of assets.
   

For each grouping of long-lived assets, the sum of the weighted average
forecasted cash flows from management's models exceeded the carrying amount of
the Company's long-lived assets, except for the Company's CEP facility located
in Bay City, Texas (the "Bay City CEP Facility"). The sum of the future
estimated cash flows related to the Bay City CEP Facility was less than the
carrying value of the related asset as of September 30, 1997, which resulted
because the Company currently does not have sufficient funds to start-up and
initially operate this facility and will seek a strategic partner for its
chemicals business, including the Bay City CEP Facility. Accordingly, the Bay
City CEP Facility was written down to its estimated fair value using a
discounted cash flow model and an impairment charge of $38,427,184 was
recognized in the statement of operations for the quarter ended September 30,
1997. The Company's intent is to find a strategic partner that would provide
the funding necessary to start-up and initially operate this plant. If the
Company is unable to find such a strategic partner, or to negotiate an
acceptable partnering arrangement, the Company will not have sufficient funds
to start-up the Bay City CEP Facility by the end of 1997, if at all, and would
be required to recognize an additional impairment charge of approximately
$25,000,000. There can be no assurances that the Company will be successful in
finding such a strategic partner or, if it does so, that the Company will be
able to negotiate a satisfactory partnering arrangement.
    

Management's estimates of forecasted cash flows required an evaluation of
various risks and uncertainties. Although management has made its best estimate
of these factors based on current conditions and expected trends and events, it
is reasonably possible that changes could occur in the near term which could
adversely affect management's estimates of forecasted cash flows. If such
changes occur, asset impairment write-downs could be required in the future and
such write-downs would be material to the Company's financial statements. In
particular, if the Company is unable to satisfy its short-term and long-term
liquidity needs, the Company would be required to write down certain other of
its long-lived assets.


                                       11


<PAGE>   12



                                   SIGNATURES

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



                               MOLTEN METAL TECHNOLOGY, INC.
                               -----------------------------


Date: November 26, 1997        By: /s/ F. Gordon Bitter
      -----------------            --------------------
                                   F. Gordon Bitter
                                   Chief Executive Officer, Chief Financial 
                                   Officer and Treasurer
                                   (Principal Financial Officer and
                                   Authorized Signatory)

    

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