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, 2004


[_]  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)

[X]

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.

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares  outstanding of each of the issuer's classes of equity;  as
of September 30, 2004

Class A Common Stock - 100, 494,460 shares issued, 70,994,951 shares outstanding
Class B Common Stock - 600,000 shares issued and outstanding
Class A Preferred - 337 shares issued and outstanding
Class B Preferred - 167 shares issued and outstanding
Class C Preferred - 1,350 shares issued and outstanding
Class D Preferred - 4,490,000 shares issued and 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 and nine months ended
           September 30, 2004 and 2003and from the
           Company's inception (October 21, 1983)
           through September 30, 2004                                      5

          Consolidated Statements of Cash Flows
           For the nine-months ended September 30,
           2004 and 2003 and from the Company's
           inception (October 21, 1983) through
           September 30, 2004                                            6 - 7

          Notes to Consolidated Financial Statements                       8


     Item 2. Management's Discussion and Analysis                         15


     Item 3. Quantitative and Qualitative Disclosures
             about Market Risk                                            21


Part 2. Other Information                                                 21







                                        2
<PAGE>






Part 1.   Financial Information
-------------------------------

Item 1. - FINANCIAL INFORMATION
------------------------------




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


                                                                                  December 31,       September 30,
                                                                                      2003                2004
                                                                                ----------------    ----------------
                                                                                                      (Unaudited)

ASSETS

<S>                                                                             <C>                 <C>
  CURRENT ASSETS
    Cash and cash equivalents                                                   $        47,664     $       168,686
    Receivable due in research contracts                                                 28,004              19,798
    Receivable from officer                                                              83,940              94,450
    Employee receivable                                                                   1,350               2,689
    Receivable from tax authorities                                                         161                   -
    Prepaid expenses                                                                      4,179               3,000
                                                                                ----------------    ----------------

      TOTAL CURRENT ASSETS                                                              165,298             288,623
                                                                                ----------------    ----------------

  FIXED ASSETS
    Property and equipment, net
      of accumulated depreciation                                                        20,626              16,569
                                                                                ----------------    ----------------

  OTHER ASSETS
    Intangible assets, net of
      accumulated amortization                                                           10,004               8,417
    Refundable deposit                                                                    2,348               2,348
                                                                                ----------------    ----------------

      TOTAL OTHER ASSETS                                                                 12,352              10,765
                                                                                ----------------    ----------------

      TOTAL ASSETS                                                              $       198,276     $       315,957
                                                                                ================    ================




















                             See accompanying notes
                                        3
<PAGE>



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


                                                                                  December 31,       September 30,
                                                                                      2003                2004
                                                                                ----------------    ----------------
                                                                                                      (Unaudited)

<S>                                                                             <C>                 <C>
LIABILITIES AND STOCKHOLDERS'  (DEFICIT)

  CURRENT LIABILITIES
    Legal fees payable                                                          $       219,154     $       148,753
    Fees payable to R&D subcontractors                                                   25,000                   -
    Accounting fees payable                                                              37,984              18,395
    Other accounts payable and accrued expenses                                          96,591              43,133
    Accrued officer wages                                                               142,446             196,446
    Notes payable - current portion                                                      25,688              25,688
    Payable on research and
      development sponsorship                                                           638,003             728,068
    Loans payable - others                                                               60,438              61,656
                                                                                ----------------    ----------------

      TOTAL CURRENT LIABILITIES                                                       1,245,304           1,222,139

  SECURED CONVERTIBLE DEBENTURE                                                         345,333           1,193,372
                                                                                ----------------    ----------------

      TOTAL LIABILITIES                                                               1,590,637           2,415,511
                                                                                ----------------    ----------------

  MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                                              825                 825
                                                                                ----------------    ----------------


  STOCKHOLDERS'  (DEFICIT)

    Class A preferred stock , $.001 par value, authorized 350,000 Shares,
      issued and outstanding 337 shares at December 31, 2003 and
      and  September 30, 2004                                                                 -                   -
    Class B preferred stock , $.001 par value, authorized  200,000 Shares,
      issued and outstanding 167 shares at December 31, 2003 and
      September 30, 2004                                                                      -                   -
    Class C preferred stock , $.001 par value, authorized
      25,000,000 shares, issued and outstanding 4,050 at December 31, 2003
      and 1,350 shares at September 30, 2004                                                  4                   1
    Class D preferred stock , $.001 par value, authorized  20,000,000 Shares,
      issued and outstanding 5,440,000 shares at December 31, 2003 and
      4,490,000 shares at September  30, 2004                                             5,440               4,490
    Class A Common Stock, $.001 par value, authorized 1,750,000,000
      shares,  issued and outstanding 66,488,975 at December
      31, 2003 and 70,994,951 shares
      outstanding at September 30, 2004                                                  66,488              70,995
    Class B Common Stock, $.001 par value, authorized 600,000
      Shares, issued and outstanding 600,000 shares at
      December 31, 2003,and  September 30, 2004                                             600                 600
    Additional paid in capital                                                       13,124,573          17,963,237
    Less notes receivable - common stock                                                (51,096)            (54,088)
    Deficit accumulated during the development stage                                (14,539,195)        (20,085,614)
                                                                                ----------------    ----------------

      TOTAL STOCKHOLDERS' (DEFICIT)                                                  (1,393,186)         (2,100,379)
                                                                                ----------------    ----------------

      TOTAL LIABILITIES AND STOCKHOLDERS'
        (DEFICIT)                                                               $       198,276     $       315,957
                                                                                ================    ================
</TABLE>




                             See accompanying 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
                                                2003            2004             2003            2004        September 30, 2004
                                           --------------  --------------   --------------  --------------   ------------------
                                            (Unaudited)     (Unaudited)       (Unaudited)    (Unaudited)        (Unaudited)
                                             (Restated)                        (Restated)

<S>                                        <C>             <C>              <C>             <C>             <C>
REVENUES
  Sale of fatigue fuses                    $           -   $           -    $           -   $           -   $           64,505
  Sale of royalty interests                            -               -                -               -              198,750
  Research and development revenue                     -          29,186                -          99,522            5,165,883
  Test services                                        -               -                -               -               10,870
                                           --------------  --------------   --------------  --------------   ------------------
    TOTAL REVENUES                                     -          29,186                -          99,522            5,440,008
                                           --------------  --------------   --------------  --------------   ------------------

COSTS AND EXPENSES
  Research and development                        16,695       3,966,659          118,410       4,369,901            9,629,981
  General and administrative                     396,469         173,334          970,947       1,103,609           15,089,488
                                           --------------  --------------   --------------  --------------   ------------------
    TOTAL COSTS AND EXPENSES                     413,164       4,139,993        1,089,357       5,473,510           24,719,469
                                           --------------  --------------   --------------  --------------   ------------------
    INCOME (LOSS) FROM OPERATIONS               (413,164)     (4,110,807)      (1,089,357)     (5,373,988)         (19,279,461)
                                           --------------  --------------   --------------  --------------   ------------------

OTHER INCOME (EXPENSE)
  Interest income                                 12,101           3,256           38,485           9,502              351,743
  Interest expense                               (42,147)        (60,361)        (134,670)       (181,133)            (822,356)
  Forgiveness of indebtedness                          0               0                                0             (289,940)
  Loss on abandonment of joint venture                 0               0                0               0              (33,000)
                                           --------------  --------------   --------------  --------------   ------------------
    TOTAL OTHER INCOME                           (30,046)        (57,105)         (96,185)       (171,631)            (793,553)
                                           --------------  --------------   --------------  --------------   ------------------

NET INCOME (LOSS) BEFORE EXTRAORDINARY
  ITEMS AND PROVISION FOR INCOME TAXES          (443,210)     (4,167,912)      (1,185,542)     (5,545,619)         (20,073,014)
PROVISION FOR INCOME TAXES                             0               0             (800)           (800)             (12,600)
                                           --------------  --------------   --------------  --------------   ------------------

    NET INCOME (LOSS)                      $   ( 443,210)  $  (4,167,912)   $   (1,186,34)  $  (5,546,419)   $     (20,085,614)
                                           ==============  ==============   ==============  ==============   ==================

PER SHARE DATA
  Basic income (loss) before
    extraordinary item
    BASIC NET (LOSS) PER SHARE             $       (0.08)  $       (0.06)   $       (0.60)  $       (0.08)
                                           ==============  ==============   ==============  ==============
    WEIGHTED AVERAGE COMMON
      SHARES OUTSTANDING                       5,497,249      70,149,996        1,991,047      68,374,027
                                           ==============  ==============   ==============  ==============
</TABLE>


























                             See accompanying notes
                                        5
<PAGE>



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


                                                                                                     From Inception
                                                                For the Nine Months Ended          (October 21, 1983)
                                                                       September 30,                    Through
                                                                  2003               2004          September 30, 2004
                                                            ----------------   ----------------    ------------------
                                                              (Unaudited)        (Unaudited)          (Unaudited)
                                                               (Restated)                              (Restated)

<S>                                                         <C>                <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                         $    (1,186,342)   $    (5,546,419)    $     (20,085,614)
                                                            ----------------   ----------------    ------------------
  Adjustments to reconcile net income
    (loss) to net cash provided
    (used) in operating activities
  Depreciation and amortization                                       6,854              6,321               201,072
  Accrued interest income                                           (36,317)            (9,502)             (296,671)
  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                   -                  -             1,727,617
  Charge off of deferred offering costs                                   -                  -                36,480
  Charge off of long-lived assets due to impairment                       -                  -                92,919
  Modification of royalty agreement                                       -                  -                 7,332
  Gain on foreclosure                                                     -                  -               (18,697)
  (Increase) decrease in accounts receivable                         (4,850)             8,206               (70,126)
  (Increase) decrease in employee advances                            1,433                                   (1,511)
  (Increase) decrease in prepaid expense                             (3,000)                 -                (4,338)
  Loss on sale of equipment                                               -                                   12,780
  Issuance of common  stock for services                            522,400          4,596,926             8,569,918
  Issuance of stock for agreement modification                            -                  -                   152
  Forgiveness of Indebtedness                                             -                  -               215,000
  Increase (decrease) in accounts                                                            -                     -
    payable and accrued expenses                                    113,848            (49,981)            1,019,856
  Increase in legal fees secured by note payable                          -                                1,481,895
  Interest accrued on note payables                                 132,608            179,074               766,777
  Increase in research and development                                                                             -
     sponsorship payable                                                  -                  -               218,000
  (Increase) in note for litigation settlement                            -                  -               (25,753)
  (Increase) in Deposits                                                  -                  -                (2,189)
                                                            ----------------   ----------------    ------------------
    TOTAL ADJUSTMENTS                                               732,976          4,731,044            15,266,917
                                                            ----------------   ----------------    ------------------
  NET CASH PROVIDED (USED) BY
   OPERATING ACTIVITIES                                            (453,366)          (815,375)           (4,818,697)
                                                            ----------------   ----------------    ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds From sale of equipment                                         -                  -                10,250
  Purchase of property and equipment                                      -               (677)             (267,149)
  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 PROVIDED (USED) BY
   INVESTING ACTIVITIES                                          -                        (677)             (127,172)
                                                            ----------------   ----------------    ------------------














                             See accompanying notes
                                        6
<PAGE>



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


                                                                                                     From Inception
                                                                For the Nine Months Ended          (October 21, 1983)
                                                                       September 30,                    Through
                                                                  2003               2004          September 30, 2004
                                                            ----------------   ----------------    ------------------
                                                              (Unaudited)        (Unaudited)          (Unaudited)
                                                               (Restated)                              (Restated)

<S>                                                         <C>                <C>                 <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of common stock                                  $       187,140    $       170,556     $       3,281,139
  Costs incurred in offerings                                       (38,356)           (10,314)             (464,802)
  Purchase of Company's common stock for cancellation               (24,332)            (4,168)              (28,600)
  Sale of common stock warrants                                           -                  -                18,250
  Sale of preferred stock                                            64,500                  -               323,005
  Sale of redeemable preferred stock                                      -                  -               150,000
  Capital contributions                                                   -                  -               301,068
  Payment on proposed reorganization                                      -                  -                (5,000)
  Loans to officer                                                        -             (7,000)              771,805
  Repayments from officer                                                 -              3,000              (539,379)
  Increase in loan payable-others                                   130,000            785,000             1,307,069
                                                            ----------------   ----------------    ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:                               318,952            937,074             5,114,555
                                                            ----------------   ----------------    ------------------

NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                                           (134,414)           121,022               168,686
BEGINNING BALANCE CASH AND
    CASH EQUIVALENTS                                                251,782             47,664                     -
                                                            ----------------   ----------------    ------------------
ENDING BALANCE CASH AND CASH
    EQUIVALENTS                                             $       117,368    $       168,686     $         168,686
                                                            ================   ================    ==================
</TABLE>

































                             See accompanying notes
                                        7
<PAGE>




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


Note 1.   Nature of Business, Organizational Structure and Principles of
------------------------------------------------------------------------
Consolidation
-------------

          Material Technologies, Inc. (the "Company") is engaged in research and
          development of metal fatigue  detection,  measurement,  and monitoring
          technologies. The Company is developing several monitoring devices for
          metal  fatigue   detection  and   measurement   and  is  considered  a
          development  stage company doing  business as  "Tensiodyne  Scientific
          Corporation".

          The  accompanying   financial  statements  include  the  accounts  and
          transactions  of Material  Technologies,  Inc. and its majority  owned
          subsidiaries,  Matech  International,  Inc and Matech Aerospace,  Inc.
          Intercompany   transactions  and  balances  have  been  eliminated  in
          consolidation.

          In the opinion of the Company's management, the accompanying unaudited
          consolidated financial statements contain all adjustments  (consisting
          of  normal  recurring   accruals)  necessary  to  present  fairly  the
          financial  position of the Company as of September  30, 2004,  and the
          results of its  operations and cash flows for the three and nine-month
          periods ended  September 30, 2004 and 2003.  The operating  results of
          the Company on an interim  basis may not be  indicative  of  operating
          results  for the full year.  Your  attention  is  directed to footnote
          disclosures  found in the  Company's  December  31, 2003 Form 10-K and
          particularly  to Note 2,  which  includes  a  summary  of  significant
          accounting policies.

          Certain 2003 amounts have been  reclassified  in order to conform with
          2004  classifications.   The  Company  has  restated  the  results  of
          operations  for the quarter and year to date periods  ended  September
          30, 2003 to properly state Officer Salary for the respective  periods.
          An  increase  of $34,500  and  $$72,500  was  recorded  in General and
          Administrative  Expenses  during the quarter and year to date  periods
          ended September 30, 2003, respectively.

          On September  23, 2003,  the Company's  Board of Directors  declared a
          1,000 for 1 reverse  stock  split of its Class A Common  Stock and all
          classes of its Preferred  Stock.  The financial  statements  have been
          retroactively  restated as if the reverse stock split  occurred at the
          beginning of each period presented.









                                        8
<PAGE>






          The accompanying condensed consolidated financial statements have been
          prepared on a going concern basis,  which contemplates the realization
          of assets and the  satisfaction of liabilities in the normal course of
          business.  The  Company has  incurred  substantial  operating  and net
          losses,  as well as negative  operating  cash flows,  in recent fiscal
          years.  In  addition,  the  Company  is in  default  on  approximately
          $804,000  of its term notes  payable.  As a result,  the  Company  has
          significant  working capital and  stockholders'  deficits at September
          30, 2004.  Additionally,  the Company has not completed development on
          its product and accordingly, has not any income . These factors, among
          others, indicate that the Company may be unable to continue as a going
          concern.  These  condensed  consolidated  financial  statements do not
          include   any   adjustments   relating  to  the   recoverability   and
          classification   of  recorded   asset   amounts  or  the  amounts  and
          classification  of  liabilities  that  might be  necessary  should the
          Company  be unable  to  continue  as a going  concern.  The  Company's
          continuation  as a going  concern  is  dependent  upon its  ability to
          generate  sufficient  cash  flow to meet its  obligations  on a timely
          basis,  to  obtain  additional  debt  or  equity  financing  as may be
          required to make up for any  shortfalls in operating  cash flows,  and
          ultimately to attain successful operations.


Note 2.   Net Loss Per Share
----------------------------

          Basic and diluted Earnings (Loss) per share are calculated by dividing
          net loss by the weighted average number of shares  outstanding  during
          the period.  Diluted earnings per share reflect the potential dilution
          that could occur if  securities  or other  contracts  to issue  common
          stock were exercised or converted  into common stock.  As of September
          30, 2004,  the Company has an  aggregate  of 72.4  million  additional
          common  shares were  potentially  issuable  pursuant to shares held in
          escrow (see Note 7), outstanding financial instruments that have fixed
          conversion and exercise prices (see Note 6) and warrants (see Note 6).
          Based  on the net  loss  incurred  for each  period  presented  in the
          financial  statements,  the warrants are considered  anti-dilutive and
          accordingly  are not included in the  computation  of the net loss per
          share.


Note 3.   Receivable from Officer
---------------------------------

          As of September 30, 2004,  the Company is owed by its  President,  Mr.
          Robert  M.  Bernstein,  $94,450  for  various  advances  made  to  him
          including accrued  interest.  Advances are assessed interest at a rate
          of 10% per annum, are unsecured,  and due on demand.  Accrued interest
          recognized as income for the three-months ended September 30, 2003 and
          2004 was $1,935 and $2,258, respectively.  Accrued interest recognized
          as income for the  nine-months  ended  September 30, 2003 and 2004 was
          $5,767 and $6,510, respectively.





                                        9
<PAGE>






Note 4.   Intangibles
---------------------

          Intangible assets consist of the following at September 30, 2004:

                                Period of
                                Amortization
                                ------------

          Patent Costs            17 Years               $ 28,494
          License Agreement       17 Years                  6,250
            (See Note 5)
          Website                  5 Years                  5,200
                                                         ---------
                                                           39,944
          Less Accumulated Amortization                   (31,527)

                                                         $  8,417
                                                         =========

          Amortization   charged  to  operations  for  the  three-months   ended
          September  30,  2003  and 2004 was  $529,  respectively.  Amortization
          charged to operations for the nine-months ended September 30, 2003 and
          2004 was $1,587, respectively.

          Estimated amortization expense for the next five years is as follows:

                          2005             $2,116
                          2006             $1,596
                          2007             $1,076
                          2008             $1,076
                          2009             $1,076


Note 5.   Notes and Loans Payable
---------------------------------

     a.   In October 1996, the Company  borrowed $25,000 from an unrelated third
          party.  The loan  balance as of September  30, 2004 was $25,688.  This
          loan is in default.

     b.   On May 27, 1994, the Company  borrowed $25,000 from Mr. Sherman Baker,
          a current shareholder. The loan is evidenced by a promissory note that
          is assessed interest at major bank prime rate. The note matured on May
          31, 2002,  when  principal and accrued  interest  became fully due and
          payable.  The Company has  pledged its patents as  collateral  against
          this loan. This loan is in default.

          As additional  consideration  for the loan, the Company granted to Mr.
          Baker,  a 1% royalty  interest in the Fatigue  Fuse and a 0.5% royalty
          interest in the  Electrochemical  Fatigue Sensor.  The Company has not
          placed a value on the  royalty  interest  granted.  The balance due on
          this loan as of September 30, 2004, was $51,487.

     c.   On April 28, 2003,  the Company  borrowed  $10,169 from third parties.
          These loans are unsecured, non-interest bearing, and due on demand.



                                       10
<PAGE>






     d.   The Company is indebted to the University of Pennsylvania  pursuant to
          a Sponsorship  Agreement.  The balance due as of September 30, 2004 is
          $728,068. This loan is in default.


Note 6.   Convertible Debentures
--------------------------------

          On  September  23,  2003,  the Company  entered  into a Class A Senior
          Secured   Convertible   Debenture  (the  "Debenture")  with  Palisades
          Capital,  LLC or its registered  assignee  ("Palisades"),  pursuant to
          which Palisades has agreed to loan to the Company up to $1,500,000, of
          which a total of  $1,125,000  has been funded  through  September  30,
          2004.

          Under the Debenture,  Palisades has the option,  after March 30, 2004,
          to  convert  the  principal  amount  of all  moneys  loaned  under the
          Debenture,  together with accrued  interest,  into Common Stock of the
          Company at the lesser of (i) 50% of the average ten closing prices for
          the Company's  Common Stock for the ten (10) trading days  immediately
          preceding  the  Conversion  Date or (ii) $0.10 (the  lesser of the two
          being referred to as the "Conversion  Price").  In the event Palisades
          loans the full  $1,500,000 face amount of the Debenture to the Company
          and subsequently elects to exercise its right to convert the Debenture
          into the Company's Common Stock at a time when the Conversion Price is
          less than four cents per share  Palisades would receive at least fifty
          million  (50,000,000)  shares of Common Stock resulting in a change in
          control of the Common Stock of the Company.  However,  Mr.  Bernstein,
          the Company's President and Chief Financial Officer would still retain
          voting  control  as a result of his  holding  of one  hundred  percent
          (100%) of the Class B Common Stock.

          In connection with the financing, the Company's President entered into
          a voting  agreement and irrevocable  proxy,  which provides that until
          September  23,  2006,  if an  Event  of  Default,  as  defined  in the
          Debenture in favor of Palisades and continues for a period of not less
          than 30 days,  all Class B Common  Stock which Mr.  Bernstein  owns of
          record,  or becomes the owner of record in the future will be voted in
          accordance with the directions of Mr. Monty Freedman,  an affiliate of
          Palisades,  or his  designated  successor.  This loss of voting rights
          would create a change in the voting control of the Company.

          The debenture  bears  interest at an annual rate of 10% and matures on
          December  31, 2006 when the  principal  and accrued  interest  becomes
          fully due. During the three-month period ended September 30, 2004, the
          Company  was  advanced  $100,000  from  Palisades.  The balance of the
          debenture  at  September  30, 2004 was  $1,193,372  including  accrued
          interest.  Interest charged to operations for the  three-months  ended
          September 30, 2003 and 2004 pertaining to this obligation were $99 and
          $27,  915  respectively.   Interest  charged  to  operations  for  the
          nine-months  ended  September  30,  2003 and 2004  pertaining  to this
          obligation were $99 and $63,039, respectively.






                                       11
<PAGE>






Note 7.   Stock Activity
------------------------

          On  April  23,  2004,   the  Company   amended  its   Certificate   of
          Incorporation  increasing  the number of  authorized  common shares to
          1,750,000,000 and number of authorized preferred shares to 50,000,000.

          During the three-months  ended September 30, 2004, the Company had the
          following stock activity::

          a)   Common  Stock  issued  and   outstanding
                Shares issued for $152,000                        1,061,760
                Shares issued for  consulting  services,
                  valued at $3,897,851                            1,615,200 (1)
                Shares issued in connection with private
                  offerings, valued at $3,400                         1,000
                Shares  purchased in the open market for
                  cancellation                                       (1,000)
                                                                 -----------
                                                                  2,676,960

                Add: shares issued and outstanding as of
                  June 30, 2004                                  68,317,991
                                                                 -----------

                Common shares issued and  outstanding as
                 of September 30, 2004                           70,994,951
                                                                ============

          b)   Common share activity  issued during the
                three-months  ended  September 30, 2004,
                but held in escrow  and  considered  not
                outstanding                                      23,198,666 (2)


                Add:  Shares  held in  escrow as of June
                  30, 2004 and considered not  outstanding        6,300,843
                                                                ------------

                Common  shares  held  in  escrow  as  of
                 September 30, 2004                              29,499,509
                                                                ============

                  Total shares  issued as of September 30,
                    2004                                        100,494,460
                                                                ============

          1)   Of the  1,615,200  ahares,  1,599,000  were issued  pursuant to a
               three-year lock up agreement.  Under this agreement, these shares
               cannot  be sold or  transferred  for a  three-year  period,  with
               certain limited  exceptions.  Due to the  restrictions  placed on
               these  shares  marketability,  the shares  were  valued at 70% of
               their market price on date of issuance.




                                       12
<PAGE>




          2)   A description of the shares held in escrow are as follows

               a),  4,200,000  shares  were  issued  as  part  of the  on  going
                    negotiations on a $7,000,000 loan.

               b)   8,666,666  shares were  issued to escrow  pursuant to a July
                    23, 2004 Stock Purchase Agreement ("Langley Agreement") with
                    Langley Park Investments PLC, a corporation  organized under
                    the laws of England and Wales ("Langley"). The Agreement was
                    subject to a number of material conditions precedents before
                    the  obligations  of any of the parties  under the Agreement
                    matured.  The last of the conditions precedent was satisfied
                    on  October 1, 2004,  at which time the  Agreement  became a
                    binding and enforceable  obligation of the parties  thereto.
                    There is no material relationship between the registrant and
                    Langley other then the obligations created by the Agreement.

                    The  Agreement  obligates  the  Company  to  issue  and sell
                    8,666,666  shares of its Common  Stock par value  $.001 (the
                    "Shares") to Langley for a purchase price of $1.50 per share
                    (the "Purchase Price"). The Purchase Price for the Shares is
                    represented  by the  issuance  to the  Company of  6,621,696
                    shares of Langley (the  "Langley  Shares"),  which is net of
                    the 7.5% finder's fee. The Agreement provides that 3,579,295
                    shares will be held in an escrow  account and the balance of
                    3,042,445  shares is  saleable on the London  Exchange.  The
                    Shares of the Company are restricted stock for a period of 2
                    years from date of issuance. If the Shares of the Company do
                    not have a market  price of at least  $1.50 per share at the
                    end of the 2 year period,  the Company is required to return
                    the shares of Langley held in escrow based on a formula,  as
                    defined.

               c)   10,332,000  shares of common  stock were issued to escrow as
                    part of the negotiations on potential financing with Seaside
                    Partners Fund LP ("Seaside").  The Agreement is subject to a
                    number  of  material   conditions   precedents   before  the
                    obligations  of any  of  the  parties  under  the  Agreement
                    matures.

                    The  Agreement  obligates  the  Company  to  issue  and sell
                    10,332,000  shares of its Common  Stock par value $.001 (the
                    "Shares") to Seaside for a purchase price of $0.55 per share
                    (the "Purchase Price"). The Purchase Price for the Shares is
                    represented  by the  issuance  to the  Company of  4,920,000
                    shares of Seaside which is net of the 9.1% finder's fee. The
                    Agreement  provides that 1,623,600 shares will be held in an
                    escrow  account  and the  balance  of  3,296,400  shares  is
                    saleable on the London  Exchange.  The Shares of the Company
                    are  restricted  stock  for a period  of 1 year from date of
                    issuance.  If the Shares of the Company do not have a market
                    price of at least  $0.55 per share,  the Company is required




                                       13
<PAGE>






                    to return the shares of  Langley  held in escrow  based on a
                    formula, as defined.


Note 8.   Subsequent Events
---------------------------

          The Company  consummated its transaction with Langley,  and on October
          15, 2004, the Company sold  1,000,000  shares in Langley on the London
          Stock  Exchange  through a registered  broker  dealer  licensed in the
          United Kingdom for $466,000.

          In addition,  on November 8, 2004,  the Company sold 500,000 shares of
          Langley on the  London  Stock  Exchange  through a  registered  broker
          dealer licensed in the United Kingdom for $220,283.

          The Company is expects to consummate the  transaction  with Seaside in
          November 2004.

          During the period from October 1, 2004 through  November 8, 2004,  the
          Company had the following stock  activity:  (i) issued 1,000 shares of
          common  stock for services  rendered in its  research and  development
          project  valued at $3,040;  (ii) issued 200,000 shares of common stock
          for consulting services subject to a two year lock up agreement valued
          at $422,800; (iii) issued 2,570,000 shares of common stock through the
          conversion of 2,570,000 shares of convertible Class D Preferred;  (iv)
          sold130,000  shares of common  stock ,  subject  to a two year lock up
          agreement for $10,000; (v) issued 2,260,000 shares of its common stock
          to its Corporate  Secretary,  subject to a two year lock up agreement,
          which were  valued at  $3,970,820;  (vi) issued  36,923  shares of its
          common stock to a consultant  who is assisting  the Company in finding
          licensing  technologies  relevant to the Company's  business valued at
          $78,055;  (vii)  issued  100,000  shares  to  its  outside  accounting
          consultant,  subject  to a  three-year  lock up  agreement,  valued at
          $251,000;  and (viii)  issued  1,500,000  shares to John  Goodman,  an
          employee and director in connection with engineering services, subject
          to a three-year lock up agreement, valued at $2,520,000.




















                                       14
<PAGE>






Item 2.   Management's  discussion  and  analysis  of  financial  conditions and
--------------------------------------------------------------------------------
results of operations
---------------------

Results of Operations for the Nine Months Ended September 30, 2004 and 2003
---------------------------------------------------------------------------

A summary  of the  Company's  operating  activities  for the  nine-months  ended
September 30, 2004 as compared to the  Company's  operating  activities  for the
nine-months ended September 30, 2003 is as follows:

<TABLE>
<CAPTION>
                                                 For the Nine Months
                                                        Ended
                                                    September 30                    Increase
                                               2004               2003             (Decrease)
                                         ----------------   ----------------    ----------------
                                           (Unaudited)        (Unaudited)         2004 v 2003
                                                                                ================

<S>                                      <C>                <C>                 <C>
Research and development revenue         $        99,522    $             -     $        99,522
                                         ================   ================    ================

Research and development costs
   Stock issued for services             $     4,019,715    $        45,000     $     3,974,715
   Cash and accrued expenses
      Salaries                                    88,725             66,381              22,344
      Consultants and other expenses             261,461              7,029             254,432
                                         ----------------   ----------------    ----------------

                                         $     4,369,901    $       118,410     $     4,251,491
                                         ================   ================    ================

General and administrative expenses
   Stock issued for services             $       577,210    $       477,400     $        99,810
   Cash and accrued expenses
      Officer's salary                           144,000            103,500              40,500
      Salaries - other                            33,467             34,288                (821)
      Consulting fees                             69,007            102,963             (33,956)
      Professional fees                           89,767            124,851             (35,084)
      Rent                                        21,127             21,132                  (5)
      Office expense                              24,800             20,287               4,513
      Telephone                                   13,903             13,385                 518
      Travel expense                              34,060             17,257              16,803
      Other expenses                              96,268             55,884              40,384
                                         ----------------   ----------------    ----------------

                                         $     1,103,609    $       970,947     $       132,662
                                         ================   ================    ================

Interest Expense                         $       181,133            134,670     $        46,463
                                         ================   ================    ================

Interest income                          $         9,502    $        38,485     $       (28,983)
                                         ================   ================    ================
</TABLE>











                                       15
<PAGE>






During the nine months ended  September  30, 2004,  the Company  issued  127,700
shares of its common stock (free  trading) to various  consultants  for services
rendered in the Company's research and development  projects.  These shares were
valued at $150,980.  The Company also issued during the nine-month period ending
September  30, 2004,  599,000 to various  consultants  for services  rendered in
connection with the Company's research and development efforts. These shares are
subject  to a  three-year  lock up and were  valued  at  $1,394,172  (70% of the
respective shares' market value on date of issuance).  In addition,  the Company
issued  1,007,500  shares  (restricted)  to Mr.  William  Berks,  a director and
vice-president of the Company for services rendered. These shares are subject to
three-year  lock up agreement and were valued at $2,474,563  (70% of the shares'
market value on date of issuance).

During the nine months  ended  September  30,  2003,  the Company  issued  4,250
(post-split) shares of its common stock for services rendered in connection with
its research and development endeavors that were valued at $45,000. Of the 4,250
shares  issued,  1,000  shares were issued to Mr. John  Goodman,  a director and
officer of the Company and 3,000 shares were issued to Mr. Williams Berks.

During the nine months ended September 30, 2004, the Company issued 1,000 shares
(free trading) to its outside accounting consultant, which was valued at $3,235.
Other  shares of its  common  stock  totaling  638,000  were  issued to  various
consultants for marketing and other services and were valued at $573,975.

During the nine months  ended  September  30,  2003,  the Company  issued  7,765
(post-split)  shares of its  common  stock  for  consulting  services  valued at
$98,701. Also during this nine-month period, it issued 8,650 (post-split) shares
of its common stock for  professional  services  valued at $131,500,  and issued
30,000  (post-split) shares of its common stock to its president as compensation
valued at $247,199.























                                       16
<PAGE>






During the nine-months  ended September 30, 2004, the Company incurred  $261,461
in cash and accrued expenses relating to its research and development  endeavors
as  compared  to $7,029  for the same  period in 2003.  The main  reason for the
difference  in amounts  incurred  for the two periods  relates to the  Company's
funding  during the two periods and the amount it had  available  to pay for its
research and  development  projects.  The net funding from financing  activities
during the nine-months ended September 30, 2004 amounted to $937,074 as compared
to  $318,952.  As it did not have  sufficient  resources to fund its programs in
2003, the Company  suspended its research and  development  projects  during the
2003.

During the nine-months  ended September 30, 2004, the Company incurred  $144,000
in Officer's compensation,  which consisted of $90,000 paid in cash, and $54,000
that was accrued pursuant to the President's  employment  agreement.  During the
nine months ended September 30, 2003,  Officer's  accrued  compensation  totaled
$103,500.  The increase in 2004 as compared to 2003 for  Officer's  compensation
pertains directly to the new employment agreement in October 2003.

Consulting fees paid in cash and accrued during the nine-months  ended September
30, 2004 was $33,956 less than  amounts paid and accrued  during the same period
in  2003.  The  reduction  pertains  to  increased  fees  incurred  in 2003  for
consultants involved in seeking financing for the Company.

Professional  fees  paid  in cash  and  accrued  during  the  nine-months  ended
September  30, 2004 was $35,084 less than  amounts  paid and accrued  during the
same  period  in 2003.  The  reduction  pertains  to the fees  incurred  in 2003
relating to the  Company's  filing of an SB-2  Registration  Statement  that was
subsequently withdrawn.
























                                       17
<PAGE>






Results of Operations for the Three Months Ended September 30, 2004 and 2003
----------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                             For the Three Months Ended
                                                    September 30,                   Increase
                                               2004               2003             (Decrease)
                                         -------------------------------------------------------
                                           (Unaudited)        (Unaudited)         2004 v 2003


<S>                                      <C>                <C>                 <C>
Research and development revenue         $        29,186    $             -     $        29,186
                                         ================   ================    ================

Research and development costs
   Stock based compensation              $     3,894,615    $             -     $     3,894,615
   Cash and accrued expenses
      Salaries                                    27,598             15,667              11,931
      Consultants and other expenses              44,446              1,028              43,418
                                         ----------------   ----------------    ----------------
                                         $     3,966,659    $        16,695     $     3,949,964
                                         ================   ================    ================

General and administrative expenses
   Stock based compensation              $         3,235    $       258,939     $      (255,704)
   Cash and accrued expenses
      Officer's salary                            48,000             34,500              13,500
      Salaries - other                            12,022              9,715               2,307
      Consulting fees                             17,352             35,643             (18,291)
      Professional fees                           34,881             29,235               5,646
      Rent                                         9,392              7,044               2,348
      Office expense                               5,916              7,827              (1,911)
      Telephone                                    5,536              4,943                 593
      Travel expense                              17,239              4,871              12,368
      Other expenses                              19,761              3,752              16,009
                                         ----------------   ----------------    ----------------
                                         $       173,334    $       396,469     $      (177.135)
                                         ================   ================    ================

Interest Expense                         $        60,361    $        42,147     $        18,214
                                         ================   ================    ================

Interest income                          $         3,256    $        12,101     $       ( 8,845)
                                         ================   ================    ================
</TABLE>

During the three  months ended  September  30,  2004,  the Company  issued 7,700
shares of its common stock (free  trading) to various  consultants  for services
rendered in the Company's research and development  projects.  These shares were
valued at  $25,880.  The  Company  also  issued  599,000  shares to three of its
advisors for  engineering and consulting  services  relating to its research and
development projects.. These shares are subject to a three-year lock up and were
valued at $1,394,172  (70% of the shares' market value on date of issuance).  In
addition, the Company issued 1,007,500 shares (restricted) to Mr. William Berks,
a director and vice-president of the Company for services rendered. These shares
are subject to three-year  lock up agreement and were valued at $2,474,563  (70%
of the shares' market value on date of issuance).






                                       18
<PAGE>






During the three  months ended  September  30,  2004,  the Company  issued 1,000
shares (free trading) to its outside accounting consultant,  which was valued at
$3,235.  The Company also issued 599,000 shares to three of its advisors.  These
shares are subject to a three-year lock up and were valued at $1,394,173 (70% of
the shares' market value on date of issuance).

During the three  months ended  September  30,  2003,  the Company  issued 7,760
(post-split)  shares of its  common  stock  for  consulting  services  valued at
$76,383. Also during this nine-month period, it issued 8,650 (post-split) shares
of its common stock for  professional  services  valued at $131,500,  and issued
30,000  (post-split) shares of its common stock to its president as compensation
valued at $247,199.

During the  three-months  ended September 30, 2004, the Company incurred $44,446
in cash and accrued expenses relating to its research and development  endeavors
as compared to $1,028 for the same period in 2003. As indicated  above, the main
reason for the difference in amounts incurred for the two periods relates to the
Company's  lack of funds in 2003 as compared to 2004,  and the suspension of its
research and development projects during 2003.

During the  three-months  ended September 30, 2004, the Company incurred $48,000
in Officer's compensation, which consisted of $30,000 paid in cash, and $18,000,
which was accrued pursuant to the President's employment agreement.  The accrued
compensation for the three months ended September 30, 2003 amounted $34,500. The
increase is attributable to the new employment contract in October 2003.

Consulting fees paid in cash and accrued during the three-months ended September
30, 2004 was $18,291 less than  amounts paid and accrued  during the same period
in  2003.  The  reduction  pertains  to  increased  fees  incurred  in 2003  for
consultants involved in seeking financing for the Company.

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

Cash and cash  equivalents  as of September  30, 2004 and 2003 were $168,686 and
$117,368,  respectively.  During the  nine-months  ended September 30, 2004, the
Company received a total of $1,066,284, which consisted of $107,728 from its two
research  and  development  contracts,  $170,556  through the sale of  1,080,336
shares of its common stock,  $785,000 in advances on the  Company's  convertible
debenture, and a $3,000 repayment from the Company's President.  During the same
nine-months,  the Company  used  $923,103 in its  operations,  purchased  office
equipment for $677, used $10,314 for expenses in its Regulation S offering, made
a $7,000  advance to its  President and used $4,168 to purchase its 1,260 shares
of common stock from a shareholder.

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




                                       19
<PAGE>






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.

















































                                       20
<PAGE>






Item 3.   Quantitative and Qualitative Disclosures about Market Risk
--------------------------------------------------------------------

n/a.


Item 4.   Controls and Procedures
---------------------------------

The Company's management has evaluated,  with the participation of the Company's
Chief  Executive  Officer and  Principal  Financial  Officer  and its  Corporate
Controller and Treasurer,  the  effectiveness of the design and operation of the
Company's disclosure controls and procedures, and have concluded that, as of the
end of the period covered by this  Quarterly  Report,  the Company's  disclosure
controls  and  procedures  as defined  in Rule  13a-14(e)  under the  Securities
Exchange Act of 1934, as amended,  are effective  for  gathering,  analyzing and
disclosing  information  the Company is  required  to  disclose in its  periodic
reports filed under such Act. During the most recent fiscal  quarter,  there has
been no change in the Company's  internal control over financial  reporting that
has  materially  affected,  or is reasonably  likely to materially  affect,  the
Company's internal control over financial reporting.


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

Item 2. Changes in Securities

During the three-months  ended September 30, 2004, the Company had the following
stock activity::

     a)   Common  Stock  issued  and   outstanding
           Shares issued for $152,000                             1,061,760
           Shares issued for  consulting  services,
            valued at $3,897,851                                  1,615,200 (1)
           Shares issued in connection with private
            offerings, valued at $3,400                               1,000
           Shares  purchased in the open market for
            cancellation                                             (1,000)
                                                                ------------
                                                                  2,676,960

     b)   Common share activity  issued during the
            three-months  ended  September 30, 2004,
            but held in escrow  and  considered  not
            outstanding                                          23,198,666 (1)
                                                                ------------
           Common  shares  issue  during  the three
            months ended September 30, 2004                      25,875,626
                                                                ============

     1)   See Note 6 to the accompanying financial statements.




                                       21
<PAGE>






During the period from  October 1, 2004  through  November 8, 2004,  the Company
issued the following shares of its common stock:

     For services rendered in connection with finding
     New technologies                                                36,923
     For services rendered in research development
     projects                                                         1,000
     Shares issued for consulting services subject to a
     three-year lock up agreement                                   200,000
     Conversion of 2,570,000 shares of Class D
     Preferred                                                    2,570,000
     Sale of 130,000 shares for $10,000 subject to a
     two-year lock up agreement                                     130,000
     Shares issued to the Company's Secretary, And
     Board member subject to a two-year lock up
     agreement                                                    2,260,000
     Shares issued to the Company's Outside accountant,
     subject to a three year lock up agreement                      100,000
     Shares issued to Mr. John Goodman for engineering
     services, subject to a three-year lock up
     agreement                                                    1,500,000
                                                                ------------
          Total                                                   6,797,923
                                                                ============






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







                                       22