UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

     For the quarterly period ended September 30, 2003
     -------------------------------------------------


[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

     For the transition period from                   to
                                   ------------------   ------------------

33-23617
--------
(Commission file number)

Material Technologies, Inc.
---------------------------
(Exact name of small business issuer as specified in its charter)

Delaware
--------
(State or other jurisdiction
of incorporation or organization)

95-4622822
----------
(IRS Employer
Identification No.)

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

(310) 208-5589
--------------
(Issuer's telephone number)


-----------------------------
(Former name, former address and former fiscal year, if changed since last
report)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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.   [X]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of each of the issuer's classes of common
equity; as of October 15, 2003
Class A Common Stock - 73,930,715 shares outstanding, 1,342 shares held in
reserve
Class B Common Stock - 600,000 shares outstanding
Class A Preferred - 505 shares outstanding
Class C Convertible Preferred - 4,550 shares outstanding







                                        1
<PAGE>






                                      INDEX
                                      -----




                                                                         Page
                                                                       --------

Part 1. Financial Information

     Item 1. Financial Statements

               Consolidated Balance Sheets                              3 - 4

               Consolidated Statements of Operations -
                 For the three-months and nine-months ended
                 September 30, 2002 and 2003 and from the
                 Company's inception (October 21, 1983) through
                 September 30, 2003                                       5

               Consolidated Statements of Cash Flows
                 For the three-months and nine-months ended
                 September 30, 2002 and 2003 and from the
                 Company's inception (October 21, 1983) through
                 September 30, 2003                                     6 - 7

               Notes to Consolidated Financial Statements                 8


     Item 2. Management's Discussion and Analysis                        13


     Item 3. Quantitative and Qualitative Disclosures about
             Market Risk                                                 16


Part 2. Other Information                                                16













                                        2
<PAGE>



<TABLE>
<CAPTION>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
====================================================================================================================



                                                                                  December 31,       September 30,
                                                                                      2002                2003
                                                                                ----------------    ----------------
                                                                                                      (Unaudited)
ASSETS

<S>                                                                             <C>                 <C>
      CURRENT ASSETS
        Cash                                                                    $      251,782      $      117,368
        Accounts receivable                                                                  -               4,850
        Receivable from officer                                                         76,109              81,877
        Employee receivable                                                              1,433                   -
        Prepaid expenses                                                                 1,179               4,179
                                                                                ----------------    ----------------

          TOTAL CURRENT ASSETS                                                         330,503             208,274
                                                                                ----------------    ----------------

      FIXED ASSETS
        Property and equipment, net
            of accumulated depreciation                                                 27,649              22,381
                                                                                ----------------    ----------------

      OTHER ASSETS
         Intangible assets subject to amortization, net of
            accumulated amortization                                                    12,120              10,533
        Refundable deposit                                                               2,348               2,348
                                                                                ----------------    ----------------

          TOTAL OTHER ASSETS                                                            14,468              12,881
                                                                                ----------------    ----------------

          TOTAL ASSETS                                                          $      372,620      $      243,536
                                                                                ================    ================





























                              See acompanying notes
                                        3
<PAGE>



<CAPTION>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
====================================================================================================================


                                                                                  December 31,       September 30,
                                                                                      2002                2003
                                                                                ----------------    ----------------
                                                                                                      (Unaudited)
LIABILITIES AND STOCKHOLDERS' (DEFICIT)

<S>                                                                             <C>                 <C>
      CURRENT LIABILITIES
        Legal fees payable                                                      $      216,783      $      219,929
        Accounting fees payable                                                         22,443              33,011
        Other accounts payable                                                          15,736              39,639
        Accrued expenses                                                                33,880              23,877
        Accrued officer wages                                                           75,482              17,083
        Notes payable - current portion                                                 25,688              25,688
        Payable on research and
           development sponsorship                                                     498,731             566,059
        Loans payable - others                                                          59,028              70,077
                                                                                ----------------    ----------------

          TOTAL CURRENT LIABILITIES                                                    947,771             995,363

      LONG-TERM DEBT                                                                 1,519,166             120,099
                                                                                ----------------    ----------------

          TOTAL LIABILITIES                                                          2,466,937           1,115,462
                                                                                ----------------    ----------------


      MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                                           -               2,189
                                                                                ----------------    ----------------

      STOCKHOLDERS' (DEFICIT)
        Class A Common Stock, $.001 par value, authorized 549,400,000
           shares, 109,228 shares issued at December 31, 2002 and
           73,929,499 shares at September 30, 2003, shares held in reserve
           101,603 at  December 31, 2002 and 1,343 at September 30, 2003                   109              73,929
        Class B Common Stock, $.001 par value, authorized 600,000
           shares, outstanding 300,000 shares at December 31, 2002, and
           600,000 shares outstanding at September 30, 2003                                300                 600
        Class A Preferred, $.001 par value, authorized 25,000,000 shares
           outstanding 480 shares at December 31, 2002 and
           505 shares at September 30, 2003                                                  -                   -
        Class C Convertible Preferred, $.001 par value, authorized 25,000,000
           shares, outstanding 4,050 shares at September 30, 2003;  each
           share of Preferred Convertible into one share of common stock                     -                   4
        Additional paid-in capital                                                  10,559,815          12,856,479
        Deficit accumulated during the development stage                           (12,653,767)        (13,767,309)
        Less: Notes receivable - common stock                                             (774)            (37,818)
                                                                                ----------------    ----------------

          TOTAL STOCKHOLDERS' (DEFICIT)                                             (2,094,317)           (874,115)
                                                                                ----------------    ----------------

          TOTAL LIABILITIES AND STOCKHOLDERS'  (DEFICIT)                        $      372,620      $      243,536
                                                                                ================    ================
</TABLE>




                              See acompanying notes
                                        4
<PAGE>



<TABLE>
<CAPTION>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
===================================================================================================================================

                                                                                                                   From Inception
                                                  For the Three Months Ended       For the Nine Months Ended     (October 21, 1983)
                                                        September 30,                    September 30,                Through
                                                     2002            2003             2002            2003       September 30, 2003
                                                --------------  --------------   --------------  --------------  ------------------
                                                 (Unaudited)     (Unaudited)      (Unaudited)     (Unaudited)       (Unaudited)
                                                   Restated                         Restated

REVENUES
<S>                                             <C>             <C>              <C>             <C>             <C>
  Sale of fatigue fuses                         $           -   $           -    $           -   $           -   $          64,505
  Sale of royalty interests                                 -               -                -               -             198,750
  Research and development revenue                          -               -          461,323               -           5,024,812
  Test services                                             -               -                -               -              10,870
    TOTAL REVENUES                                          -               -          461,323               -           5,298,937

COSTS AND EXPENSES
  Research and development                            123,932          16,695          508,195         118,410           5,149,173
  General and administrative                        2,206,049         361,969        3,112,156         898,447          13,352,301
                                                --------------  --------------   --------------  --------------  ------------------
    TOTAL COSTS AND EXPENSES                        2,329,981         378,664        3,620,351       1,016,857          18,501,474
                                                --------------  --------------   --------------  --------------  ------------------
    LOSS FROM OPERATIONS                           (2,329,981)       (378,664)      (3,159,028)     (1,016,857)        (13,202,537)
                                                --------------  --------------   --------------  --------------  ------------------

OTHER INCOME (EXPENSE)
  Interest income                                      11,947          12,101           36,057          38,485             339,085
  Interest expense                                    (21,095)        (42,147)         (61,807)       (134,670)           (569,117)
  Forgiveness of indebtness                                 -               -                -               -            (289,940)
  Loss on abandonement of joint venture                     -               -                -               -             (33,000)
                                                --------------  --------------   --------------  --------------  ------------------
    TOTAL OTHER INCOME (EXPENSE)                       (9,148)        (30,046)         (25,750)        (96,185)           (552,972)
                                                --------------  --------------   --------------  --------------  ------------------

NET LOSS BEFORE PROVISION FOR
  INCOME TAXES                                     (2,339,129)       (408,710)      (3,184,778)     (1,113,042)        (13,755,509)
PROVISION FOR INCOME TAXES                               (800)              -             (800)           (800)            (11,800)
                                                --------------  --------------   --------------  --------------  ------------------

    NET LOSS                                    $  (2,339,929   $    (408,710)   $  (3,185,578)  $  (1,113,842)  $     (13,767,309)
                                                ==============  ==============   ==============  ==============  ==================

PER SHARE DATA
  Basic loss                                    $      (59.95)  $       (0.07)   $      (58.58)  $       (0.56)
                                                --------------  --------------   --------------  --------------
    BASIC NET LOSS PER SHARE                    $      (59.95)  $       (0.07)   $      (58.58)  $       (0.56)
                                                ==============  ==============   ==============  ==============

    WEIGHTED AVERAGE COMMON SHARES OUTSTANDING         39,033       5,497,249           54,378       1,991,047
                                                ==============  ==============   ==============  ==============
</TABLE>























                              See acompanying notes
                                        5
<PAGE>



<TABLE>
<CAPTION>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
====================================================================================================================================


                                                                                                                    From Inception
                                                   For the Three Months Ended       For the Nine Months Ended     (October 21, 1983)
                                                         September 30,                    September 30,                Through
                                                      2002            2003             2002            2003       September 30, 2003
                                                 --------------  --------------   --------------  --------------  ------------------
                                                  (Unaudited)     (Unaudited)      (Unaudited)     (Unaudited)       (Unaudited)
                                                    Restated                         Restated

<S>                                              <C>             <C>              <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                       $  (2,339,929)  $    (408,710)   $  (3,185,578)  $  (1,113,842)  $     (13,767,309)
                                                 --------------  --------------   --------------  --------------  ------------------
  Adjustments to reconcile net
    loss to net cash used in operating
    activities
  Depreciation and amortization                          3,650           2,285            5,768           6,854             192,466
  Accrued interest income                              (10,960)        (11,112)         (32,864)        (36,317)           (284,048)
  Gain on sale of securities                                 -               -                -               -            (196,596)
  Charge off of investment in joint venture                  -               -                -               -              33,000
  Officers' and directors compensation on stock
    subscription modification                                -               -                -               -           1,500,000
  Issuance of common stock to officer for past
    services                                                 -               -                -               -             260,000
  Charge off of deferred offering costs                      -               -                -               -              36,480
  Charge off of long-lived assets due to
    impairmant                                               -               -                -               -              92,919
  Modification of royalty agreement                          -               -                -               -               7,332
  Gain on foreclosure                                        -               -                -               -             (18,697)
  (Increase) decrease in accounts receivable            57,244          (4,850)         277,315          (4,850)            (55,178)
  Decrease in employee advances                              -               -                -           1,433                   -
  (Increase) decrease in prepaid expense               109,166          (3,000)               -          (3,000)             (4,338)
  Loss on sale of equipment                                  -               -                -               -              12,780
  Issuance of common  stock for services               435,200          65,240        1,073,792         299,701           4,881,357
  Issuance of stock for agreement modification               -               -                -               -                 152
  Forgiveness of Indebtedness                                -               -                -               -             215,000
  Increase in accounts payable                               -               -                -               -                   -
    and accrued expenses                             1,445,505         250,522        1,283,944         264,047           1,167,036
  Increase in legal fees secured by note payable             -               -                -               -           1,481,895
  Increase interest accrued on notes payable            19,669          19,018           57,701         132,608             520,334
  Increase in research and development
     sponsorship payable                                     -               -                -               -             218,000
  (Increase) in note for litigation settlement               -               -                -               -             (25,753)
  (Increase) in deposits                                     -               -                -               -              (2,189)
                                                 --------------  --------------   --------------  --------------  ------------------
    TOTAL ADJUSTMENTS                                2,059,474         318,103        2,665,656         660,476          10,031,952
                                                 --------------  --------------   --------------  --------------  ------------------
  NET CASH USED IN
   OPERATING ACTIVITIES                               (280,455)        (90,607)        (519,922)       (453,366)         (3,735,357)
                                                 --------------  --------------   --------------  --------------  ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from sale of equipment                            -               -                -               -              10,250
  Purchase of property and equipment                         -               -          (29,608)              -            (266,472)
  Proceeds from sale of securities                           -               -                -               -             283,596
  Purchase of securities                                     -               -                -               -             (90,000)
  Proceeds from foreclosure                                  -               -                -               -              44,450
  Investment in joint ventures                               -               -                -               -            (102,069)
  Payment for license agreement                              -               -                -               -              (6,250)
                                                 --------------  --------------   --------------  --------------  ------------------

  NET CASH USED IN
   INVESTING ACTIVITIES                                      -               -          (29,608)              -            (126,495)
                                                 --------------  --------------   --------------  --------------  ------------------





                              See acompanying notes
                                        6
<PAGE>



<CAPTION>
MATERIAL TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
====================================================================================================================================


                                                                                                                    From Inception
                                                   For the Three Months Ended       For the Nine Months Ended     (October 21, 1983)
                                                         September 30,                    September 30,                Through
                                                      2002            2003             2002            2003       September 30, 2003
                                                 --------------  --------------   --------------  --------------  ------------------
                                                  (Unaudited)     (Unaudited)      (Unaudited)     (Unaudited)       (Unaudited)
                                                    Restated                         Restated

<S>                                              <C>             <C>              <C>             <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of common stock                       $     166,850   $      44,610    $     797,430   $     184,951   $       3,086,419
  Issuance of stock in consolidated subsidiary               -           2,189                -           2,189               2,189
  Costs incurred in offerings                          (29,035)         (5,823)        (149,231)        (38,356)           (410,869)
  Sale of common stock warrants                              -               -                -               -              18,250
  Sale of preferred stock                                    -               -                -          64,500             323,000
  Sale of redeemable preferred stock                         -               -                -               -             150,000
  Capital contributions                                      -               -                -               -             301,068
  Purchase of treasury stock                                 -               -                -         (24,332)            (24,332)
  Payment on proposed reorganization                         -               -                -               -              (5,000)
  Loans  from  officer                                       -               -                -               -             778,805
  Repayments to officer                                      -               -          (29,700)              -            (542,379)
  Increase in  notes and loans payable                       -         120,000                -         130,000             302,069
                                                 --------------  --------------   --------------  --------------  ------------------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:           137,815         160,976          618,499         318,952           3,979,220
                                                 --------------  --------------   --------------  --------------  ------------------

NET INCREASE (DECREASE) IN CASH
      AND CASH EQUIVALENTS                            (142,640)         70,369           68,969        (134,414)            117,368
BEGINNING BALANCE CASH AND
      CASH EQUIVALENTS                                 386,078          46,999          174,469         251,782                   -
                                                 --------------  --------------   --------------  --------------  ------------------
ENDING BALANCE CASH AND CASH
    EQUIVALENTS                                  $     243,438   $     117,368    $     243,438   $     117,368   $         117,368
                                                 ==============  ==============   ==============  ==============  ==================
</TABLE>

































                             See accompanying notes
                                        7
<PAGE>




                           MATERIAL TECHNOLOGIES, INC.
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                   ------------------------------------------


Note 1.   The accompanying  consolidated  financials statements include those of
          Material Technologies, Inc. and its wholly owned subsidiaries,  Matech
          Aerospace, Inc. and Matech International Corp. These subsidiaries were
          formed in 2003 and had no activity since their inception.

          On September 15, 2003,  the Company filed an amendment to its Articles
          of  Incorporation  increasing the number of Class A common stock it is
          authorized  to issue to  549,400,000  and the number of Class B common
          shares it is authorized to issue to 600,000. Holders of Class A Common
          are  entitled  to one vote for each  share  held.  Holders  of Class B
          Common are entitled to 1000 votes for each share held.

          On September 23, 2003, the Company effected a 1000 for 1 reverse stock
          split of its Class A common  stock and  preferred  stock.  All  equity
          accounts  and  related  transactions   included  in  the  accompanying
          financial  statements  have been restated to reflect the reverse stock
          split as if it occurred at the beginning of each period presented.


Note 2.   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,  2003,  and the  results of its
          operations and cash flows for the three-month and nine-months  periods
          ended June September 30, 2002 and 2003.  The operating  results of the
          Company  on a  quarterly  basis  may not be  indicative  of  operating
          results for the full year.


Note 3.   Financial  statements  for the quarter  ended  September 30, 2002 have
          been  restated to reflect the value of shares  issued for  services at
          the  quoted  price of the shares at the time of  issuance  and for the
          1000:1 reverse stock split as discussed above.


Note 4.   Accounting Policies

          Property and Equipment
          ----------------------

          Property  and  equipment  are  stated  at  cost.  Major  renewals  and
          improvements  are charged to the asset  accounts  while  replacements,
          maintenance  and repairs,  which do not improve or extend the lives of
          the  respective  assets,  are  expensed.  At  the  time  property  and
          equipment are retired or otherwise  disposed of, the asset and related
          accumulated  depreciation  accounts  are  relieved  of the  applicable
          amounts.  Gains or losses from  retirements  or sales are  credited or
          charged to income.





                                        8
<PAGE>






          Material Technologies,  Inc. depreciates its property and equipment as
          follows:

               Financial statement reporting - Straight-line method as follows:


               Machinery                                    5 years
               Computer equipment                           3-5 years
               Office equipment                             5 years

          Long-Lived Assets
          -----------------

          The Company recognizes  impairment losses on long-lived assets used in
          operations   when   indicators  of  impairment  are  present  and  the
          undiscounted  cash flows estimated to be generated by those assets are
          less than the assets' carrying amount.  In such  circumstances,  those
          assets are written down to  estimated  fair value.  Long-lived  assets
          consist primarily of fixed assets.

          Net Loss Per Share
          ------------------

          The  Company   adopted  the   provisions  of  Statement  of  Financial
          Accounting  Standards  ("SFAS") No. 128,  "Earnings Per Share" ("EPS")
          that  established  standards  for the  computation,  presentation  and
          disclosure  of  earnings  per share,  replacing  the  presentation  of
          Primary EPS with a presentation of Basic EPS.

          Accounting Estimates
          --------------------

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and assumptions  that affect certain reported amounts and disclosures.
          Accordingly, actual results could differ from those estimates.

          Fair Value of Financial Instruments
          -----------------------------------

          The Company  estimates the fair value of its financial  instruments at
          their current carrying amounts.

          Stock Based Compensation
          ------------------------

          For 1998 and subsequent  years, the Company has adopted FASB Statement
          123  which  establishes  a fair  value  method of  accounting  for its
          stock-based  compensation  plans.  Prior to 1998, the Company used APB
          Opinion 25.

          Revenue Recognition
          -------------------

          During 2002,  significantly  all of the Company's  revenue was derived
          from the  Company's  sub-contract  with the  United  States  Air Force
          relating to the further  development  of the  Electrochemical  Fatigue
          Sensor ("EFS").  Revenue on the sub-contract is recognized at the time
          services  are  rendered.  The  Company  billed  monthly  for  services
          pursuant to this  sub-contract at which time revenue is recognized for
          the period that the respective invoice relates.






                                        9
<PAGE>






          All other income is reported in the period that the income was earned.

          Cash and Cash Equivalents
          -------------------------

          For  purposes of the  statement of cash flows,  the Company  considers
          cash and  cash  equivalents  to  include  all  stable,  highly  liquid
          investments with maturities of three months or less.

          Income Taxes
          ------------

          The Company  accounts  for its income  taxes under the  provisions  of
          Statement of Financial  Accounting  Standards  109 ("SFAS  109").  The
          method of  accounting  for income taxes under SFAS 109 is an asset and
          liability  method.   The  asset  and  liability  method  requires  the
          recognition  of deferred tax  liabilities  and assets for the expected
          future tax consequences of temporary differences between tax bases and
          financial reporting bases of other assets and liabilities.


Note 5.   Long-term Debt

          On September  23, 2003,  the Company  issued  20,000,000  (post-split)
          shares of its Class A common stock and warrants to purchase 30,000,000
          (post-split)  Class  A  common  shares  at $.10  per  share  to  seven
          investors in exchange for their  assumption of indebtedness due by the
          Company to two attorneys for legal services  totaling  $1,583,129.  In
          addition, on September 23, 2003 the Company issued 2,000,000 shares to
          the  Company's  same two  attorneys l for a release of any claims that
          they might have against the Company for past services.

          Also on  September  23,  2003,  the Company  entered  into a financing
          agreement with Palisades Capital LLC, whereby Palisades agreed to loan
          the Company up to  $1,500,000.  The loan will be evidenced by a Senior
          Secured Convertible  Debenture convertible at any time after March 30,
          2004 into  common  stock at a rate of the  lesser of $.10 per share or
          50% of the  average  closing  price of the  common  stock  for the ten
          trading  days prior to the date of  conversion.  The  debenture  bears
          interest at a rate of 10% per annum and matures on December  31, 2006,
          when any and all outstanding  principal and accrued  interest  becomes
          due and  payable.  Accrued  interest  is paid out of,  and only to the
          extent of positive earnings before taxes,  interest,  amortization and
          deprecation.

          The warrants to purchase  30,000,000  shares of the Company's  Class A
          common  vest in  proportion  to the  amount  of the  debenture  funded
          divided  by  $1,500,000.  If the  Company  elects  not to  accept  any
          additional advances prior to receiving $1,500,000,  then all of the 30
          million warrants automatically vest.

          At September 30, 2003,  the balance due on the  debenture  amounted to
          $120,000 in principal and accrued interest of $98.





                                       10
<PAGE>






Note 6.   Transactions with Management

          On September 23, 2003, the Company issued to its President, Mr. Robert
          Bernstein  37,000,000  (post-split) shares of its Class A common stock
          and 300,000 shares of its Class B common shares in  consideration  for
          releasing all claims he had against the Company through  September 24,
          2003, which included  accrued wages due him amounting to $320,000.  As
          additional consideration for the shares received, Mr. Bernstein agreed
          to pay the Company  $37,000 as evidenced  by an  unsecured  promissory
          note, which is assessed  interest at an annual rate of 6%. The $37,000
          and accrued interest are due and payable on in September 23, 2006. The
          37,000,000 shares received are subject to certain restrictions. During
          the quarter,  the Company recognized past accrued compensation due Mr.
          Bernstein of $261,601, which was charged to operations,  pursuant to a
          previous year's board  resolution  which authorized the accrual of Mr.
          Bernstein's  salary  at a rate of  $150,000  a year.  Pursuant  to the
          resolution,  the $30,000 a year  difference  between the  $150,000 and
          amount of the $120,000  annual salary  actually paid to Mr.  Bernstein
          was deferred and payable to Mr.  Bernstein  at the  discretion  of the
          Board and was  based  upon the  financial  condition  of the  Company.
          During the quarter ended September 30, 2003, the Board  authorized the
          payment of the  deferred  compensation  through  the  issuance  of the
          Company's stock.

          In connection with the $1,500,000  financing,  Mr.  Bernstein  entered
          into a voting agreement and irrevocable  proxy with Palisades  Capital
          LLC. Under the terms of that agreement,  in the event of a default, as
          defined in the  debenture,  if such default  continuesd  for more than
          thirty days after notice  thereon,  all Class B common  shares that he
          owns at the  time of  default  will be voted  by a  representative  of
          Palisades,  thus  creating  a change in control  of the  Company.  The
          voting  rights of the Class B shares remain with Mr.  Bernstein  until
          and during the occurrence of an event of default.  So long as no event
          of default  occurs or is occurring,  Mr.  Bernstein  remains in voting
          control of the Company,  and in all events,  the Voting  Agreement and
          Irrevocable  Proxy terminate upon payment in full of all principal and
          accrued interest under the debenture.

          All amounts due the Company from Mr.  Bernstein and Mr. Joel Freedman,
          a Director and corporate secretary, on subscriptions relating to prior
          purchases of common stock have also been reduced  pursuant to the 1000
          to  1  reverse  stock  split.   At  the  time  of  the  split,   total
          subscriptions  owed by  them to the  Company  totaling  $769,861  were
          reduced to $769.  The  difference  of $ 769,092  was  charged  against
          additional paid-in capital.


Note 7.   Stock Activity

          During the quarter  ended  September  30, 2003,  the Company  received
          $38,787 net of offering  costs in exchange  for the issuance of 19,069
          (post split) shares of its Class A common stock.  In addition,  during





                                       11
<PAGE>






          the quarter,  the Company issued  5,760,000 (post split) shares of its
          Class A common stock for  consulting  services  valued at $30,240.  As
          discussed   above,   the  Company  also  issued  during  the  quarter,
          20,000,000 (post split) shares in consideration  for the assumption of
          indebtedness owed by the Company for past legal services  amounting to
          $1,583,129  and  issued  2,000,000  shares  in  consideration  for the
          release of any  potential  claims  that may exist  against the Company
          for, among other things, past legal services. Also during the quarter,
          the Company  issued  7,002,749  (post split) shares of common stock in
          connection  with its  Regulation  S offering  valued at  $71,645,  and
          issued  2,000,000  (post split)  shares in  consideration  for certain
          capital-raising  services on the Company's  behalf.  The shares issued
          for  non-cash  consideration  were valued at their  respective  quoted
          market price at date of issuance.

          On July 31, 2003,  the Company issued stock options priced at $.01 per
          share to two  consultants  for a number of shares  equaling 15% of the
          issued and  outstanding  shares at the time the Company has  increased
          its revenue by at least  $5,000,000.  The options  expire in March 31,
          2008.

          Also during the quarter,  the Company  granted to certain  consultants
          and investors warrants to acquire up to 31,000,000 (post split) shares
          in consideration for certain consulting  services and investments made
          to the Company.


Note 8.   Subsequent Events

          Effective  October 1, 2003,  the Company  entered  into an  employment
          agreement with its  President,  under which the Company will pay him a
          monthly salary of $16,000,  of which $6,000 is deferred.  The deferred
          compensation  becomes  fully due and payable on March 31, 2005, or the
          date  the  Company  reports  at  least  $250,000  in  earnings  before
          deprecation and amortization in one quarter, whichever occurs sooner.

          Also effective  October 1, 2003, the Company entered into a consulting
          agreement whereby the Company issued 5,760,000 shares of the Company's
          Class A common  stock . The  Company  has the right to  purchase  such
          shares  from the  consultant  at a  purchase  price of $.10 per share;
          provided, that the purchase right shall expire as to 160,000 shares on
          October 1, 2003,  and an additional  160,000  shares on the 1st day of
          each month thereafter.

          The  consultant  shall also receive,  upon the  successful  closing or
          acquisition by the Company of any business, corporation or division (a
          "Target")  in which the  consultant  assisted  with the  introduction,
          consulting  or  advisory   services,   a  fee  of  10%  of  the  total
          consideration  paid in the  acquisition  or sale  of such  Target  for
          consulting services. The Company, at its option, may pay these fees by
          issuance of restricted  common stock or freely  tradeable,  registered
          common stock.  Restricted common stock shall be issued at a rate equal
          to the lessor of (i) fifty  percent  (50%) of the market  price of the
          Company  common  stock  on the  day  prior  to the  closing  date of a





                                       12
<PAGE>






          transaction  which  entitles the  consultant  to receive such fees, or
          (ii)  $.50  per  share.  Freely  tradable,  registered  common  stock,
          pursuant to an effective and current registration statement,  shall be
          issued at the rate equal to seventy  percent (70%) of the market price
          of the Company's  common stock on the day prior to the closing date of
          a transaction which entitles the consultant to receive such fees.

          Finally,  the Company  also issued to  consultant  or its  designees a
          warrant to purchase up to an aggregate  of 1,000,000  shares of common
          stock  at  an  exercise   price  of  $.10  per  share,   which  vested
          immediately, and which may be exercised at any time.


Item 2.   Management's Discussion  and  Analysis  of  Financial  Conditions  and
--------------------------------------------------------------------------------
          Results of Operations
          ---------------------

     For the nine-months ended September 30, 2003 and 2002
     -----------------------------------------------------

     The Company had no sales during the nine-month  period ended  September 30,
     2003 or during the nine-month period ended September 30, 2002.

     The Company did not generate any research and  development  revenue  during
     the nine-months ended September 30, 2003 as compared to $461,323 during the
     first nine-months of 2002.

     Interest  earned during the  nine-months  ended  September 30, 2003 totaled
     $38,485 as  compared  to  $36,057  earned  during the same  period in 2002.
     Earned interest  consists  mostly of accrued  interest earned on promissory
     notes due from the Company's  President  and a director on stock  purchased
     during the second quarter of 2000.

     During the nine-month  period ended September 30, 2003 the Company incurred
     research and development costs of $118,410 as compared to $508,195 incurred
     in the same nine-month period in 2002. Of the $508,195 in development costs
     incurred in 2002, $440,201 relates to subcontract costs. The Company earned
     the full  amount of its grant from the U.S.  Air Force  during the  quarter
     ended June 30, 2002, but continued its product development during the third
     quarter of 2002.  All of the  research  and  development  incurred  in 2003
     related to internal projects of Company.

     General   and   administrative   costs  were   $898,447   and   $3,112,156,
     respectively, for the nine-month periods ended September 30, 2003 and 2002.

     The major costs incurred during 2003, included officer's salary of $278,199
     of which only $31,000 was paid in cash. Other expenses  incurred during the
     nine-months  ended  September 30, 2003 included office salaries of $34,288,
     professional  fees of  $256,351,  consulting  fees of  $201,664,  travel of
     $17,257,  telephone expense of $13,385, rent of $21,132, and office expense
     of $20,287.

     Of the  $256,351  in  professional  fees,  $  $124,851  was paid in cash or
     accrued  and the  remaining  $131,500  was paid  through  the  issuance  of
     8,650,000  (pre-split)  (8,650  shares post split)  shares of the Company's





                                       13
<PAGE>






     common stock. Of the $201,664 in consulting fees, $102,963 was paid in cash
     or accrued,  and the  remaining  $98,701 was paid  through the  issuance of
     7,764,864 (post split) shares of the Company's common stock.

     The major costs incurred during 2002,  included officer's salary of $90,000
     of which $33,000 was accrued, office salaries of $29,597, professional fees
     of $1,986,488,  consulting fees of $850,750,  travel of $38,290,  telephone
     expense of $18,919, rent of $21,132, and office expense of $25,343.

     Of the $ $1,986,488 in professional fees,  $1,481,895 is accrued and due to
     two  attorneys  in  the  settlement  of  the  Beck  matter.  The  Company's
     obligation to pay this fee was contingent upon the Company's  earnings (See
     Note 5 to the  financial  statements).  Also  included  are  legal  fees of
     $437,473  that were paid through the issuance of  9,072,100  (pre-split)  (
     9,072 post split) shares of the Company's common stock.

     Of the $850,750 incurred in consulting fees,  $631,099 was paid through the
     issuance of 9,033,918  (pre split) shares ( 9,034 post split) shares of the
     Company's common stock. Also included in consulting fees were the 1,000,000
     (pre split) (1,000 post split)  shares of the  Company's  common stock that
     were issued in full  settlement to Stephen Beck. The 1,000,000  shares were
     valued at $30,000.

     Interest  expense for the  nine-months  ended  September  30, 2003  totaled
     $134,670 as compared to $61,807 incurred during the same nine-month  period
     of 2002. The majority of interest  incurred  during the nine months of 2003
     and 2002 relate to interest  accruing on the  Company's  obligation  to the
     University of Pennsylvania.

     For the three months ended September 30, 2003 and 2002
     ------------------------------------------------------

     The Company had no sales during the three-month  period ended September 30,
     2003 or during the three-month period ended September 30, 2002.

     The Company  generated no revenue from the development  contract during the
     three-months  ended  September 30, 2003;  However  during the quarter,  the
     Company  received  notification  that it would  receive  $11,730 from prior
     year's  billing of which  $6,880  was  received  during  the three  months.
     Previously,  the  Company  set up a bad debt  reserve  in full for the hold
     back. The amounts receivable where offset against the charge off.

     The Company received its full award through its agreement with the U.S. Air
     Force  during the quarter  ended June 30, 2002 and had no revenue  from the
     contract during the quarter ended September 30, 2002.

     During the  three-month  periods  ended  September  30, 2003 and 2002,  the
     Company incurred  approximately  $16,695,  and $123,932,  respectively,  in
     development  costs. Of the $123,932  incurred in 2002,  $54,580 was paid to
     subcontractors.

     General   and   administration   costs  were   $361,969   and   $2,206,049,
     respectively,  for the  three-month  periods  ended  September 30, 2003 and
     2002. The major expenses incurred in 2003,  consisted of officer's salaries
     of $218,199 all of which was paid  through the  issuance of common  shares.
     Other expenses  incurred  during the  three-month  period  included  office





                                       14
<PAGE>






     salaries  of  $9,715,  consulting  fees of  $76,383,  professional  fees of
     $29,235,  rent of $7,044,  office expense of $7,827,  telephone  expense of
     $4,943, and travel expense of $4,871.

     Of the $76,383  incurred in consulting  fees,  $40,740 was paid through the
     issuance of 7,760,000 (post split) shares of the Company's common stock.

     The major  expenses  incurred in 2002,  consisted of officer's  salaries of
     $30,000,   office  salaries  of  $10,618,   consulting  fees  of  $392,658,
     professional fees of $1,714,479,  rent of $6,411, office expense of $6,246,
     telephone expense of $5,236, and travel expense of $3,672.

     Of the $1,714,479 in  professional  fees,  $1,481,895 is accrued and due to
     two  attorneys  in  the  settlement  of  the  Beck  matter.  The  Company's
     obligation to pay this fee is contingent  upon the Company's  earnings (See
     Note 2 to the  financial  statements).  Also  included  are  legal  fees of
     $208,700  that were paid  through  the  issuance of  7,005,000  (pre-split)
     shares (7,005 shares post-split) of the Company's common stock.

     Of the $392,658 incurred in consulting fees,  $196,500 was paid through the
     issuance  of  5,750,000   (pre-split)  (5,750  post-split)  shares  of  the
     Company's common stock. Also included in consulting fees were the 1,000,000
     (pre-split)  (1,000 shares post-split) shares of the Company's common stock
     that was issued in full  settlement to Stephen Beck.  The 1,000,000  shares
     were valued at $40,000.

     Interest  expense for the  three-months  ended  September  30, 2003 totaled
     $42,147 as compared to $21,095  incurred  during the first  nine-months  of
     2002.

     Liquidity and Capital Resources
     -------------------------------

     Cash as of  September  30,  2003  and 2002  were  $117,368,  and  $243,438,
     respectively.  During  2003,  the  Company  received  $6,880 from the prior
     year's development contract, $184,951 through the issuance of 33,117 shares
     (post split) of Class A common  stock,  $24,100  through the issuance of 24
     (post split)  shares of the  Company's  Class A Preferred  Shares,  $40,400
     through  the  issuance of the 4,050 (post  split)  shares of the  Company's
     Class C  Convertible  shares,  and $2,189  through  the  issuance of 43,750
     shares of common stock of Matech Aerospace,  Inc., an inactive  corporation
     that was wholly  owned by the Company  prior to the  issuance of the 43,750
     shares.  The Company  holds  4,000,000  shares of the  subsidiary's  common
     stock. Of the $258,520 received,  $460,246 was used in operations,  $38,356
     was used to pay offering  expenses,  and $24,332 was used to repurchase 997
     (post split) shares of its common stock from investors.

     During 2002, the Company received $738,638 through its research  contracts,
     $797,430  through  the  issuance of  Company's  common  stock,  $1,555 from
     interest earned on savings. Of the $1,537,623 received, $1,258,560 was used
     in operations,  $29,608 was used in the purchase of equipment, $149,231 was
     used to pay offering expenses, and $29,700 was repaid to its President.





                                       15
<PAGE>






Item 3.   Quantitative and Qualitative Disclosures about Market Risk

     n/a.


Part II.  Other Information
---------------------------

     Item 1.   Legal Proceedings
     ---------------------------

          None.


     Item 2.   Changes in Securities
     -------------------------------

     During the quarter ended September 30, 2003, the Company  received  $38,787
     net of offering  costs in exchange for the issuance of 19,069  shares (post
     split) of Class A common stock. In addition, during the quarter the Company
     issued  7,760,000  (post  split)  shares of Class A common  for  consulting
     services  valued at $40,740,  and 7,002,749  (post split) shares of Class A
     common were issued in connection  with its Regulation S offering  valued at
     $61,145. The Company also during the quarter issued 37,000,000 (post split)
     shares to its President for the  cancellation of accrued  compensation  due
     him of $320,000  and a $37,000  note due the company The shares  issued for
     non-cash  consideration were valued at their respective quoted market price
     at date of issuance. Also during the quarter, the Company issued 20,000,000
     (post split) shares of its Class A common stock in consideration of certain
     investors for their  assumption  of the  $1,583,129  obligation  due to two
     attorneys. In addition, the Company issued 2,000,000 (post split) shares of
     its common  stock to the same two  attorneys in exchange for the release of
     any claims which they might have  against the Company.  During the quarter,
     the Company also issued 2,000,000 shares (post split) of its Class A common
     stock for fees incurred  relating to the $1,500,000  financing  arrangement
     with Palasides, LLC.


     Item 3.   Defaults Upon Senior Securities
     -----------------------------------------

          None


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


     Item 5.   Other Information
     ---------------------------


     Item 6.   Exhibits and Reports on Form 8-K
     ------------------------------------------





                                       16
<PAGE>






     Exhibits
     --------

     Number 31.1
     -----------
     Certifications  Pursuant to 18 U.S.C.  Section 1350 as Adopted  Pursuant to
     Section 302 of the Sarbanes-Oxley Act of 2002.

     Number 32.1
     -----------
     Certification  Pursuant to 18 U.S.C.  Section  1350 as Adopted  Pursuant to
     Section 906 of the Sarbanes-Oxley Act of 2002.


     Reports on Form 8-K
     -------------------


     Item 7.   Controls and Procedures
     ---------------------------------

     Material Technologies,  Inc. management,  including the Principal Executive
     Officer and Principal  Financial  Officer,  have conducted an evaluation of
     the  effectiveness  of  disclosure  controls  and  procedures  pursuant  to
     Exchange Act Rule  13a-14(c) and 15d-14(c).  This  evaluation was conducted
     within  90  days  prior  to the  filing  of  this  report.  Based  on  that
     evaluation, the Principal Executive Officer and Principal Financial Officer
     concluded  that the  disclosure  controls and  procedures  are effective in
     ensuring that all material  information required to be filed in this annual
     report has been made known to them in a timely fashion.  There have been no
     significant  changes in internal  controls or in other  factors  that could
     significantly affect internal controls subsequent to the date the Principal
     Executive   Officer  and  Principal   Financial   Officer  completed  their
     evaluation


     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














                                       17