14




                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(D) OF

                       THE SECURITIES EXCHANGE ACT OF 1934


For  the  quarter  ended:  September  30,  1998
Commission  file  number:  33-23617

                           MATERIAL TECHNOLOGIES, INC.
                          ----------------------------
             (Exact name of registrant as specified in its charter)



Delaware                                                      95-4622822
----------------                                  ----------------------
(State  or  other  jurisdiction  of                       (IRS  Employer
incorporation or  organization)                     identification  No.)


                            11661  San Vicente Boulevard
                                     Suite  707
                           Los  Angeles, California  90049
                          -------------------------------
                      (address of principal executive offices)




(310)  208-5589
               (Registrant's telephone number including area code)

           Securities Registered pursuant to Section 12(g) of the Act:

                                     Common
                                     ------

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

     Indicate  by check mark if disclosure of delinquent filers pursuant to Item
405  or  Regulation S-K   is not contained herein, and will not be contained, to
the  best  of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III  of this Form 10-K or any
amendment  of  this  form  10-K.  [  ]

     The  aggregate  market  value of the voting stock held by Non-affiliates of
the  registrant  at  October  30,  1998  was  approximately  $1,440,606.-

     Documents  incorporated  by  reference-None.










                                      INDEX




                                                                          PAGE
                                                                          ----

Part  1.  Financial  Statements

     Balance  Sheets                                                     3  -  4

     Statements  of  Operations  -
        Third  Quarter  Ended  September  30,  1997  and  1998  and  from
        the  Company's  inception  (October  21,  1983)  through
               September  30, 1998                                          5


     Statements  of  Cash  Flows  -
        Third  Quarter  Ended  September  30,  1997  and  1998  and  from
        the  Company's  inception  (October  21,  1983)  through
        September  30,  1998                                             6  -  7


     Notes to Financial Statements                                          8


     Management's  Discussion  and  Analysis                            9  -  11



Part  2.  Other Information                                                11


NOTE  1.  In the opinion of the Company's management, the accompanying unaudited
financial  statements  contain  all  adjustments (consisting of normal recurring
accruals)  necessary  to present fairly the financial position of the Company as
of  September 30, 1997 and 1998 and the results of operations and cash flows for
the  three  month periods then ended.  The operating results of the Company on a
quarterly  basis  may  not be indicative of operating results for the full year.


NOTE 2.     On October 9, 1998, the Company served notice to SecureFone, Inc. of
their  default on the $50,000 Note due the Company for expense reimbursement. On
October  19,  1998, the Company received back 560,000 shares of its Common stock
which  was  pledged  as  collateral  on  the  $50,000  Note.  The  shares  were
subsequently  returned  to  the  Company's  treasury  and  canceled.

RESULTS  OF  OPERATIONS
-----------------------


FOR  THE  NINE  MONTHS  ENDED  SEPTEMBER  30,  1997  AND  1998

During  the  nine  month  period ended September 30, 1997, the Company generated
approximately  $351,986  which  consisted  of  $196,070  under  its research and
development contract with Southwest Research, Inc., rental income of $2,655 from
the  sublease  of its offices, rental income of $1,188 from the short term lease
of  a  residence  on which the Company foreclosed upon, $13,901 from the sale of
marketable  securities,  net  gain  of  $17,614  from  the  sale  of  the  above
indicated  residence,  and  reimbursed  expenses  in  the  amount  $120,558.

During  the  nine  month  period ended September 30, 1998, the Company generated
approximately  $327,844  which  consisted  of  $158,594  under  its research and
development  contract  with Southwest Research, Inc., and $169,250 from the sale
of  marketable  securities.

During  the  nine  month  periods ended September 30, 1997 and 1998, the Company
incurred approximately $41,889, and $141,907, respectively, in development costs
all  of  which  related to the above indicated contract with  Southwest Research
Institute,  Inc.

Under the terms of the arrangement with  Southwest Research Institute,  Inc. the
Company  invoices  the  expenses  it  incurs  under the agreement which includes
direct  labor  and  other  direct  costs, and related general and administrative
overhead  expenses.  It  is  not  intended that the Company earn any significant
profit  under  the  agreement.

General  and administration costs were $916,598, and $507,282, respectively, for
the  nine-month  periods  ended September  30, 1997 and 1998. The major expenses
incurred  during  the  nine  month period ended September 30, 1997, consisted of
officer's  salary  of  $550,500 of which $475,500 was accrued for past services,
professional  fees  of  $118,365,  consulting  services  of $71,396, salaries of
$38,500,  payroll taxes of $28,708, travel expenses of $17,428, outside services
of  $21,102,  interest  expense  of  $16,572,  and  telephone  of  $12,062.

The  major  expenses  incurred  during the nine-month period ended September 30,
1998, consisted of $121,455 in consulting fees, $67,500 in officer's salary, bad
debt  of  $50,000,  $33,933  in interest expense, $130,996 in professional fees,
$15,161  in telephone expense, $16,562 in salaries, and $11,582 in travel costs.



FOR  THE  THREE  MONTHS  ENDED  SEPTEMBER  30,  1997  AND  1998

During  the  three  month period ended September 30, 1997, the Company generated
approximately  $213,506  which  consisted  of  $91,348  under  its  research and
development  contract  with  Southwest  Research  Institute,  Inc.,  net gain of
$1,600  from  the  sale  of  the  above  indicated  a  residence, and reimbursed
expenses  in  the  amount  $120,558.

During  the  three  month period ended September 30, 1998, the Company generated
approximately  $128,371  which  consisted  of  $13,000  under  its  research and
development contract with Southwest Research Institute, Inc.,  and a net gain of
$115,371  from  the  sale  of  marketable  securities.

During  the  three  month  period ended September 30, 1997, the Company incurred
approximately  $10,505  in  development  costs all of which related to the above
indicated  contract  with  Southwest  Research  Institute,  Inc

During  the  three  month  period ended September 30, 1998, the Company incurred
approximately  $46,993  in  development  costs all of which related to the above
indicated  contract  with  Southwest  Research  Institute,  Inc

The  deficiency  in research costs over the revenue generated from the Southwest
Research  contract  was  due  to  the  maturity of the contract during the third
quarter  of  1998.

General  and administration costs were $639,310  and $191,044, respectively, for
the  three-month  periods  ended September 30, 1997 and 1998. The major expenses
incurred  in 1997, consisted of officer's salaries of $505,500 of which $475,500
was  accrued for past services, professional fees of $43,887, office salaries of
$7,672,  consulting of $16,080, contractual services of $21,000, rent of $5,638,
and  office expense of $4,951. The major expenses incurred in 1998, consisted of
bad  debt  of  $50,000, $22,500 in officer's salary, $9,625 in interest expense,
$49,224  in  consulting  fees,  and  $26,101  in  professional  fees.



LIQUIDITY  AND  CAPITAL  RESOURCES
----------------------------------

Cash  and  cash  equivalents  as  of  September 30, 1997 and 1998 were $.00, and
$82,495,  respectively.  During  1997, the Company received $113,902 through the
issuance  of its common stock,  $71,750 through  advances made by its President,
$44,555  from  the sale of  a  residence which was foreclosed on by the Company,
$102,841  from  its  arrangement  with  Southwest  Research Institute, Inc., and
$3,843 in rental income. Of the $336,891 received in 1997,  $278,063 was used in
operations, $6,328 was used to purchase a computer system,  and $52,500 was used
to  pay  down  loans  made  by  the  Company's  President.

During  1998,  the  Company received $125,000 through the issuance of its common
stock,  $106,500  through  advances  made  by  its  President, $205,391 from its
arrangement  with Southwest Research Institute, Inc., and $250,200 from the sale
of  marketable  securities. Of the $687,091 received in 1998,  $503,947 was used
in  operations, $90,000 was used to purchase marketable securities,  and $13,100
was  used  to  pay  down  loans  made  by  the  Company's  President.


 PART  II.  OTHER  INFORMATION


ITEM  2.  CHANGES  IN  SECURITIES


On  August  10,  1998,  the  Company  filed  an  Amendment  to  the  Articles of
Incorporation  that  raised  the  authorized number of shares of common stock to
30,000,000  shares  and  increased  the voting power of the Class B common stock
from  200 votes per share to 500 votes per share. These amendments were approved
by  a majority vote of stockholders and by the Board on July 31, 1998. As Robert
M.  Bernstein owns all of the 60,000 outstanding shares of Class B Common Stock,
this  action  increased  from 12,000,000 to 30,000,000 the number of votes he is
entitled  to  cast  based  on his ownership of Class B common stock. This action
assured  Mr.  Bernstein's  continuing  voting  control  of  the  Company.



On  June  25,  1998,  the  Board  authorized and the Company issued to Robert M.
Bernstein  and  Joel  Freedman  warrants  to purchase 2,000,000 shares of Common
Stock  at $.50 per share with an expiration date of June 30, 2002. Mr. Bernstein
received  a  Warrant  to  Purchase  1,800,000 shares and Mr. Freedman received a
Warrant  to  Purchase  200,000  shares.

In  August  1998,  the  Board  adopted  the Company's 1998 Stock Option Plan and
authorized  the  issuance of  800,000 shares of Common Stock under that Plan and
registered  those  shares on Form S-8. Also in August 1998, the Board authorized
and  the Company issued options to purchase 500,000 shares of Common Stock under
that  Plan  to  consultants  for  the  Company. Those options were exercised for
$125,000.

In  September  1998,  the  Board  adopted  the  Company's  1998  Stock  Plan and
authorized  the  issuance  of 800,000 shares of Common Stock under that Plan and
registered  those  shares  on  Form  S-8.  Also  in  September,  1998, the Board
authorized and the Company issued 200,000 shares of Common Stock under that plan
to  two  consultants  for  services  rendered  to  the  Company.

In  October  1998,  the  Board  authorized the issuance of an additional 100,000
shares  under  its Stock Plan to another consultant for services to the Company.

In  October 1998, the Board increased the number of options and shares available
for  issuance under the Stock Option Plan from 800,000 to 1,700,000, an increase
of  900,000.  In  addition,  the  Board  approved  the  issuance of options to a
consultant  to  purchase  400,000  shares  at  $.25  per  share.



PURSUANT TO THE REQUIREMENTS OF SECURITIES  EXCHANGE ACT OF 1934, THE REGISTRANT
HAS  DULY  CAUSED  THIS  REPORT  TO  BE  SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO  DULY  AUTHORIZED.


                           MATERIAL TECHNOLOGIES, INC.
                           ---------------------------
                                   REGISTRANT



                                    /s/  Robert  M.  Bernstein______________
                                    ----------------------------------------
                                    ROBERT M. BERNSTEIN, PRESIDENT AND CHIEF
                                                          FINANCIAL  OFFICER



                                   DATE:  NOVEMBER  2,  1998




<TABLE>

<CAPTION>

                                  MATERIAL TECHNOLOGIES, INC.
                                 (A Development Stage Company)
                                         BALANCE SHEETS

                                             ASSETS


                                                December 31,    September 30,
                                                    1997             1998
                                               --------------  ----------------
(Unaudited)
<S>                                               <C>              <C>
CURRENT ASSETS
Cash and Cash Equivalents                          $2,451          $82,495
Accounts Receivable - Net                          62,332           14,048
Employee Advances                                    -              1,500
Note Receivable on Reimbursed Expenses - Net         -                -
Prepaid Expenses                                   1,500              -
                                               --------------  ----------------       
TOTAL CURRENT ASSETS                               66,283           98,043
                                               --------------  ----------------

FIXED ASSETS
Property and Equipment, Net
of Accumulated Depreciation                        95,227           93,133
                                               --------------  ----------------

OTHER ASSETS
Note Receivable                                    50,000             -
Intangible Assets, Net of
Accumulated Amortization                           18,679           17,188
Investment in Marketable Securities                55,200           9,050
Refundable Deposit                                 1,868            1,868
                                               --------------  ----------------

TOTAL OTHER ASSETS                                125,747           28,106
                                               --------------  ----------------

TOTAL ASSETS                                   $  287,257      $   219,282
                                               ==============  ================

<FN>

                                     See accompanying notes
</TABLE>
                                                                               



<TABLE>

<CAPTION>

                                             MATERIAL TECHNOLOGIES, INC.
                                            (A Development Stage Company)
                                                    BALANCE SHEETS

                                       LIABILITIES AND STOCKHOLDERS'  (DEFICIT)
                                       ----------------------------------------


                                                                     December 31,      September 30,
                                                                         1997              1998
                                                                    ---------------  -----------------
(Unaudited)
<S>                                                                   <C>               <C>
CURRENT LIABILITIES
Legal Fees Payable                                                     $103,757          $128,765
Consulting Fees Payable                                                 67,778            67,067
Accounts Payable - Other                                                17,108            30,516
Wages Payable                                                              -              22,298
Accrued Payroll Taxes                                                   24,269            19,124
Loan Payable - Officer                                                  118,863           47,958
Loan Payable-Others                                                     68,807            68,807
                                                                    ---------------  -----------------

TOTAL CURRENT LIABILITIES                                               400,582           384,535
                                                                    ---------------  -----------------

Payable on Research and
Development Sponsorship                                                 218,000           245,000
                                                                    ---------------  -----------------


REDEEMABLE PREFERRED STOCK
Class B Preferred Stock, $.001 Par Value
Authorized 15 Shares, Outstanding 15 Shares at December
31, 1997 and September 30,  1998; Redeemable at $10,000 Per Share
After January 31, 2004                                                  150,000           150,000
                                                                    ---------------  -----------------

STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock, $.001 Par Value, Authorized 30,000,000
Shares, Outstanding 5,787,000, at December 31, 1997, and
10,211,897 Shares at September 30, 1998                                  5,787            10,212
Class B Common Stock, $.001 Par Value, Authorized 100,000
Shares, Outstanding 60,000 Shares                                         60                60
Class A Preferred, $.001 Par Value, Authorized 900,000 Shares
Outstanding 350,000 Shares                                                350               350
Additional Paid in Capital                                             2,436,445         2,741,969
Less Notes Receivable - Common Stock                                   (14,720)          (14,720)
Deficit Accumulated During the Development Stage                      (2,964,447)       (3,298,124)
Unrealized Holding Gain on Investments in Securities                    55,200               -
                                                                    ---------------  -----------------


TOTAL STOCKHOLDERS' (DEFICIT)                                          (481,325)         (560,253)
                                                                    ---------------  -----------------

TOTAL LIABILITIES AND STOCKHOLDERS'                                 $   287,257       $   219,282
                                                                    ===============  =================

<FN>

                                                See accompanying notes
</TABLE>



<TABLE>

<CAPTION>

                                                 MATERIAL TECHNOLOGIES, INC.
                                                (A Development Stage Company)
                                                   STATEMENTS OF OPERATIONS


                                                      From Inception
                                                For the Three Months Ended    For the Nine Months Ended   (October 21, 1983)
                                                      September 30,                 September 30,               Through
                                                           1997                         1998                     1997
                                               ----------------------------  ---------------------------  -------------------
(Unaudited)                                            (Unaudited)                   (Unaudited)              (Unaudited)
<S>                                                      <C>                         <C>                      <C>

REVENUES
Sale of Fatigue Fuses                                       $-                           $-                       $-
Sale of Royalty Interests                                   -                             -                        -
Research and Development Revenue                          91,348                       13,000                   196,070
Test Services                                               -                             -                        -
                                               ----------------------------  ---------------------------  -------------------
TOTAL REVENUES                                            91,348                       13,000                   196,070
                                               ----------------------------  ---------------------------  -------------------

COSTS AND EXPENSES
Research and Development                                  10,505                       46,993                   41,889
General and Administrative                               639,310                       191,044                  916,598
                                               ----------------------------  ---------------------------  -------------------
TOTAL COSTS AND EXPENSES                                 649,815                       238,037                  958,487
                                               ----------------------------  ---------------------------  -------------------
INCOME (LOSS) FROM OPERATIONS                           (649,815)                     (225,037)                (958,487)
                                               ----------------------------  ---------------------------  -------------------

OTHER INCOME (EXPENSE)
Expense Reimbursed                                       120,558                          -                     120,558
Rental  Income                                              -                             -                      3,843
Interest Income                                             -                             -                        -
Gain on Sale of Marketable Securities                       -                          115,371                  13,901
Gain on Sale of Real Estate                               1,600                           -                      1,600
Gain on Foreclosure of Real Estate                          -                             -                     16,014
Miscellaneous Income                                        -                             -                        -
Loss on Sale of Equipment                                   -                             -                        -
Settlement of Teaming Agreement                             -                             -                        -
Cancellation of Royalty                                     -                             -                        -
Litigation Settlement                                       -                             -                        -
                                               ----------------------------  ---------------------------  -------------------
TOTAL OTHER INCOME                                       122,158                       115,371                  155,916
                                               ----------------------------  ---------------------------  -------------------

NET INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS AND PROVISION FOR INCOME TAXES                    (436,309)                     (109,666)                (606,501)
PROVISION FOR INCOME TAXES                                  -                             -                        -
                                               ----------------------------  ---------------------------  -------------------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS                                     (436,309)                     (109,666)                (606,501)
EXTRAORDINARY ITEMS
Forgiveness of Debt                                         -                             -                        -
Utilization of Operating  Loss Carry forward                -                             -                        -
NET INCOME (LOSS)                                   $       (436,309)             $       (109,666)          $   (606,501)
                                               ============================  ===========================  ===================

PER SHARE DATA
Income (Loss) Before Extraordinary Item                     -                          (0.011)                     -
                                                                             ===========================           
Extraordinary Items
NET INCOME (LOSS)
COMMON SHARES OUTSTANDING                                   -                        10,211,897                    -
                                                                             ===========================           






                                                     1998         September 30, 1998
                                               ----------------  ---------------------
(Unaudited)                                      (Unaudited)
<S>                                                 <C>               <C>

REVENUES
Sale of Fatigue Fuses                                 $-                $64,505
Sale of Royalty Interests                             -                 198,750
Research and Development Revenue                   158,594             1,207,584
Test Services                                         -                 10,870
                                               ----------------  ---------------------
TOTAL REVENUES                                     158,594             1,481,709
                                               ----------------  ---------------------

COSTS AND EXPENSES
Research and Development                           141,907             1,728,612
General and Administrative                         507,282             3,093,012
                                               ----------------  ---------------------
TOTAL COSTS AND EXPENSES                           649,189             4,821,624
                                               ----------------  ---------------------
INCOME (LOSS) FROM OPERATIONS                     (490,595)           (3,339,915)
                                               ----------------  ---------------------

OTHER INCOME (EXPENSE)
Expense Reimbursed                                    -                  4,510
Rental  Income                                        -                    -
Interest Income                                       -                 39,495
Gain on Sale of Marketable Securities              169,250              200,901
Gain on Sale of Real Estate                           -                    -
Gain on Foreclosure of Real Estate                    -                 18,697
Miscellaneous Income                                  -                 25,145
Loss on Sale of Equipment                             -                (12,780)
Settlement of Teaming Agreement                       -                 50,000
Cancellation of Royalty                            (12,332)            (12,332)
Litigation Settlement                                 -                 18,095
                                               ----------------  ---------------------
TOTAL OTHER INCOME                                 156,918              331,731
                                               ----------------  ---------------------

NET INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS AND PROVISION FOR INCOME TAXES              (333,677)           (3,008,184)
PROVISION FOR INCOME TAXES                            -                 (7,000)
                                               ----------------  ---------------------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS                               (333,677)           (3,015,184)
EXTRAORDINARY ITEMS
Forgiveness of Debt                                   -                 (289,940)
Utilization of Operating  Loss Carry forward          -                  7,000
NET INCOME (LOSS)                              $      (333,677)  $    (3,298,124)
                                               ================  =====================

PER SHARE DATA
Income (Loss) Before Extraordinary Item            (0.033)                 -
                                               ================            
Extraordinary Items
NET INCOME (LOSS)
COMMON SHARES OUTSTANDING                         10,211,897               -
                                               ================            

</TABLE>



                                                                               
<TABLE>

<CAPTION>

                                                   MATERIAL TECHNOLOGIES, INC.
                                                  (A Development Stage Company)
                                                    STATEMENTS OF CASH FLOWS


                                                         From Inception
                                                   For the Three Months Ended    For the Nine Months Ended   (October 21, 1983)
                                                         September 30,                 September 30,               Through
                                                              1997                         1998                     1997
                                                  ----------------------------  ---------------------------  -------------------
(Unaudited)                                               (Unaudited)                   (Unaudited)              (Unaudited)
<S>                                                        <C>                           <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)                                       $     (436,309)               $    (109,666)           $    (606,501)
                                                  ----------------------------  ---------------------------  -------------------
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided
(Used) by Operating Activities
Depreciation and Amortization                                1,194                         1,195                    3,585
Bad Debt                                                       -                          50,000                      -
Gain on Sale of Marketable Securities                          -                         (115,371)                (13,901)
Gain on Real Estate Foreclosure                              4,045                           -                    (17,202)
Gain on Sale of Real Estate                                 (1,600)                          -                     (1,600)
Charge off of Deferred Offering Costs                          -                             -                        -
Loss on Sale of Equipment                                      -                             -                        -
Issuance of Common  Stock for Services                         -                           2,000                    2,000
Issuance of Stock for Agreement Modification                   -                             -                        -
Forgiveness of Indebtedness                                    -                             -                        -
(Increase) Decrease in Accounts Receivable                  (48,055)                      (4,454)                 (93,229)
(Increase) in Receivable on Reimbursed Expenses             (50,000)                         -                    (50,000)
Decrease in Prepaid Expenses                                 5,223                           -                      6,472
Increase (Decrease) in Accounts
Payable and Accrued Expenses                                485,968                        2,930                   583,897
Interest Accrued on Note Payable                              403                            -                     15,100
Increase in Research and Development
Sponsorship Payable                                            -                           9,000                      -
(Increase) in Note for Litigation Settlement                   -                             -                        -
(Increase) in Deposits                                         -                             -                        -
                                                  ----------------------------  ---------------------------  -------------------
TOTAL ADJUSTMENTS                                           397,178                      (54,700)                  435,122
                                                  ----------------------------  ---------------------------  -------------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES                                        (39,131)                     (164,366)                (171,379)
                                                  ----------------------------  ---------------------------  -------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sale of Equipment                                -                             -                        -
Proceeds from Sale of Marketable Securities                    -                          133,321                     -
Purchase of Marketable Securities                              -                             -                        -
Net Proceeds from Sale of Real Estate                        44,555                          -                     44,555
Purchase of Property and Equipment                             -                             -                     (6,328)
(Increase) in Other Assets                                     -                             -                        -
Payment for License Agreement                                  -                             -                        -
                                                  ----------------------------  ---------------------------  -------------------

NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES                                         44,555                       133,321                  38,227
                                                  ----------------------------  ---------------------------  -------------------





                                                      1998          September 30, 1998
                                                  ------------  ---------------------------
(Unaudited)                                       (Unaudited)
<S>                                                  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)                                 $  (333,677)  $     (3,298,124)
                                                  ------------  ---------------------------
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided
(Used) by Operating Activities
Depreciation and Amortization                        3,585                168,079
Bad Debt                                             50,000               50,000
Gain on Sale of Marketable Securities              (169,250)             (187,000)
Gain on Real Estate Foreclosure                        -                 (18,697)
Gain on Sale of Real Estate                            -                     -
Charge off of Deferred Offering Costs                  -                  36,480
Loss on Sale of Equipment                              -                  12,780
Issuance of Common  Stock for Services               7,617                306,052
Issuance of Stock for Agreement Modification         7,332                 7,484
Forgiveness of Indebtedness                            -                  165,000
(Increase) Decrease in Accounts Receivable           48,284              (15,548)
(Increase) in Receivable on Reimbursed Expenses        -                 (50,000)
Decrease in Prepaid Expenses                           -                    321
Increase (Decrease) in Accounts
Payable and Accrued Expenses                         54,858               639,769
Interest Accrued on Note Payable                     5,695                45,512
Increase in Research and Development
Sponsorship Payable                                  27,000               245,000
(Increase) in Note for Litigation Settlement           -                 (25,753)
(Increase) in Deposits                                 -                  (2,189)
                                                  ------------  ---------------------------
TOTAL ADJUSTMENTS                                    35,121              1,377,290
                                                  ------------  ---------------------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES                               (298,556)            (1,920,834)
                                                  ------------  ---------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Sale of Equipment                        -                  10,250
Proceeds from Sale of Marketable Securities         250,200               267,950
Purchase of Marketable Securities                   (90,000)             (90,000)
Net Proceeds from Sale of Real Estate                  -                  44,450
Purchase of Property and Equipment                     -                 (226,109)
(Increase) in Other Assets                             -                 (69,069)
Payment for License Agreement                          -                  (6,250)
                                                  ------------  ---------------------------

NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES                                160,200              (68,778)
                                                  ------------  ---------------------------
</TABLE>














<TABLE>

<CAPTION>

                                                   See accompanying notes
                                                             6
                                                MATERIAL TECHNOLOGIES, INC.
                                               (A Development Stage Company)
                                                  STATEMENTS OF CASH FLOWS



                                               From Inception
                                         For the Three Months Ended    For the Nine Months Ended      (October 21, 1983)
                                               September 30,                 September 30,                 Through
                                                    1997                         1998                        1997
                                        ----------------------------  ---------------------------  ------------------------
(Unaudited)                                     (Unaudited)                   (Unaudited)                (Unaudited)
<S>                                              <C>                          <C>                          <C>    
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock
Net of Offering Costs                                $-                        $125,000                    $113,902

Costs incurred in Offering                           -                             -                          -
Sale of Common Stock Warrants                        -                             -                          -
Sale of Preferred Stock                              -                             -                          -
Sale of Redeemable Preferred Stock                   -                             -                          -
Capital Contributions                                -                             -                          -
Loans  From  Officers                                -                             -                        71,750
Repayments to Officer                             (8,500)                      (13,100)                    (52,500)
( Increase) in Loans - Other                         -                             -                          -
                                        ----------------------------  ---------------------------  ------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:             (8,500)                       111,900                    133,152
                                        ----------------------------  ---------------------------  ------------------------

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS                              (3,076)                       80,855                        -
BEGINNING BALANCE CASH AND
CASH EQUIVALENTS                                   3,076                         1,640                        -
                                        ----------------------------  ---------------------------  ------------------------
ENDING BALANCE CASH AND CASH
EQUIVALENTS                               $                     -     $         82,495             $                     -
                                        ============================  ===========================  ========================






                                             1998              September 30, 1998
                                        ---------------  -------------------------------
(Unaudited)                               (Unaudited)
<S>                                      <C>                       <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock
Net of Offering Costs                      $125,000       $         957,319
                                                         -------------------------------
Costs incurred in Offering                     -                    (36,480)
Sale of Common Stock Warrants                  -                     18,250
Sale of Preferred Stock                        -                     258,500
Sale of Redeemable Preferred Stock             -                     150,000
Capital Contributions                          -                     301,068
Loans  From  Officers                       106,500                  581,807
Repayments to Officer                      (13,100)                 (323,021)
( Increase) in Loans - Other                   -                     164,664
                                        ---------------  -------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:       218,400                 2,072,107
                                        ---------------  -------------------------------

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS                        80,044                   82,495
BEGINNING BALANCE CASH AND
CASH EQUIVALENTS                             2,451                      -
                                        ---------------  -------------------------------
ENDING BALANCE CASH AND CASH
EQUIVALENTS                             $  82,495           $       82,495
                                        ===============  ===============================

<FN>

                                                   See accompanying notes

</TABLE>








		
		
Material Technologies, Inc.		
10-Q Period Ended September 30, 1998		
Schedule 27		

		
	Period Type                    9-Mos
	Fiscal Year End              2/31/98
	Period End                   9/30/98
	Cash                           82495
	Securities                      9050
	Receivables                    65548
	Allowances                    -50000
	Inventory                          0
	Current Assets                 98043
	PP&E	
	Depreciation	
	Total Assets                  219282
	Current Liabilities           384535
	Bonds                              0
	Preferred - Mandatory         150000
	Preferred                        350
	Common                         10272
	Other SE                     -570875
	Total Liability and Equity    219282
	Sales	
	Total Revenue                 158594
	CGS                                0
	Total Costs	
	Other Expenses                649189
	Interest Expense               33933
	Income (Pretax)              -333677
	Income Tax                         0
	Income Continuing            -333677
	Discontinued                       0
	Extraordinary                      0
	Changes                            0
	Net Income                   -333677
	EPS Primary                    0.033
	EPS Diluted                        0