Material Technologies, Inc. (OTCBB: MTTG)

Dear Reader,

With leading market pundits like Jim Cramer extolling the future for equities in the infrastructure category, smallcap investors are searching the up-and-comers for signs of success.  It‘s often difficult to identify those with staying power and a real business model.  But a deal attracting major customers can certainly serve to validate a company’s acumen and perhaps, profit opportunities.

What can often indicate that a company indeed has the 'goods' is third-party validation.  One way to gather some understanding is to see if the emerging infrastructure company has deals with larger companies. For example, Material Technologies, Inc. (OTCBB: MTTG) just announced that its Electrochemical Fatigue Sensor (EFS) System has been selected for the Federal Highway Administration’s (FHWA) Steel Bridges Testing Program. This program will evaluate inspection methods capable of detecting growing cracks in bridges.

One would assume that the Federal Highway Administration sees value in Material Technologies to award a contract for such a critical purpose.

Breaking News from Material Technologies, Inc.

Press Release Source: Material Technologies, Inc.
Thursday October 11, 9:00 am ET

LOS ANGELES--(BUSINESS WIRE)--Material Technologies, Inc. (OTCBB:MTTG - News; MATECH) announced that their Electrochemical Fatigue Sensor (EFS) System has been selected for the Federal Highway Administration's (FHWA) Steel Bridges Testing Program. This program will evaluate inspection methods capable of detecting growing cracks in bridges. From their findings, the FHWA intends to recommend successful technologies to all state departments of transportation for their inspections.

MATECH's contract includes purchase of EFS equipment, training in the use of the EFS, and support of FHWA testing. Its initial value is $350,000. "We believe the EFS is the only inspection technology that can find growing cracks, so that bridges can be reliably and economically maintained," said Robert M. Bernstein, Material Technologies' Chairman and Chief Executive Officer. He continued, "We must assure the public that we are doing everything possible so that tragedies like the I-35W collapse in Minnesota never happen again. One way of doing this is to insist that we make best use of science and technology to take bridge inspection methods from the mid-20th Century into the 21st Century."

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About Material Technologies, Inc.

Material Technologies Inc., ("MATECH" "MTTG") was founded in 1983 and is an engineering, research and development company that specializes in technologies to measure microscopic fractures in metal structures and to monitor metal fatigue. Matech has already completed significant work for the federal government generating $8.3 million to develop technology to detect metal fatigue in aircraft. It has also received $5 million in private investments. Building on that base of experience and capital, it is now beginning to market its technologies to companies and government agencies involved in the inspection of metal highway and railroad bridges. 

Material Technologies Shareholder Letter

 MTTG SHAREHOLDERS LETTER 
FROM AUGUST 9, 2007

I am writing today to bring you up to date on the progress being made by Material Technologies Inc. (MATECH) toward meeting its strategic goals. Bottom line: The news is good. MATECH has completed its long technology-development phase and is now taking its technology to market, with impressive results. Our list of current and potential customers is growing, and Wall Street is taking notice.

As I write this, MATECH stock is up more than 29% over just the past week. Granted, it has been an eventful week for our industry, with the tragic highway bridge collapse in Minneapolis raising fresh concerns about the safety of bridges all over the nation and generating significant media attention for us. But I believe that investors also see MATECH's signature technology, the Electrochemical Fatigue Sensor (EFS) system, as the best means available to address those safety concerns quickly and cost-effectively.

We recently received another vote of investor confidence from an important and influential group of money managers. European institutional investment firms exercised MATECH warrants they had received in a round of equity financing earlier this year. Included here were big names, such as Julius Baer Asset Management of Switzerland and Anima Funds of Italy. The fund managers cited the potential of MATECH's EFS technology to detect cracks in aging bridges and infrastructure in the U.S. and Europe. One of them, Julius Baer Executive Director Alexander Shalash, foresaw a "renewed spending cycle" to repair aging U.S. infrastructure and said MATECH is "favourably positioned to benefit" from it.

Of course, the warrant exercise also helps us by adding to our capital. With our low burn rate and our expectation of rapid revenue growth in the near term, we are now confident that we have sufficient funds to finance our operations for the foreseeable future. In short, we are poised for rapid growth, starting now.

Already, the EFS system has been used by highway departments in Pennsylvania, Utah, Massachusetts and New Jersey. The Pennsylvania deployment is the farthest along, with MATECH benefiting from an "on-call" inspection contract under which the state could use the EFS system as needed, anywhere in the state. Five such inspections have been completed, and several more were under way this summer. And this is just scratching the surface. According to 2006 figures from the Federal Highway Administration, 2,610 of Pennsylvania's 7,605 steel bridges are structurally deficient and another 1,651 are functionally obsolete. We also have been asked in recent months to demonstrate EFS in New York and to use it for verifying crack repairs in Alabama. Overseas, we have met with bridge owners in Australia, the U.K. and elsewhere and they have expressed serious interest in using EFS.

These officials recognize - and many others will come to recognize - that EFS is simply the best technology for testing bridges when judged by accuracy, cost and ease of use. In laboratory tests, it has detected metal-fatigue cracks as small as 0.0004 inch wide and 0.001 inch long. Cracks this size are far too small to be picked up with visual inspection alone or by other methods of inspection in use today, such as acoustic emission (the exciting of metal structures and analysis of resulting sound waves). Eddy current testing, which uses electromagnetic effects to inspect metal structures, is effective at detecting small cracks, but even it can miss cracks that EFS detects. Most importantly, it cannot determine if the crack is growing. EFS can, and this is a crucial advantage.

By measuring ongoing metal fatigue, EFS enables highway agencies to focus on active cracks, which need immediate attention. Knowing the difference is critical to both safety and cost-effectiveness. It helps direct repair money to where it is most needed. Additionally, the EFS is far more effective than these "health monitoring" systems by providing direct measurement of fatigue crack activity. It does this at a fraction of the cost of the extensive strain gauging and modeling that the health monitoring systems use.

Another MATECH technology, the "Fatigue Fuse" sensor, is available to fill the gaps between EFS inspections by monitoring accumulated fatigue in real time. Each Fatigue Fuse, consisting of several notched metal strips, is placed on a high-stress area of a metal structure. As the structure experiences stresses and strains, individual notches crack and separate at calibrated fractions, thereby indicating the amount of fatigue life.

MATECH thus can offer highway agencies and private-sector bridge owners (railroads, for instance) a full safety package based on periodic inspection (EFS) and continuous monitoring (Fatigue Fuse). With no other company providing comparable technology, we have a huge, largely untapped market open to us. To give you some idea of that market's size, in U.S. highway bridges alone, here are some facts:

• Under federal law, nearly 190,000 steel highway bridges are subject to inspection every two years. In other words, the number of annual inspections for which EFS could be used is nearly 95,000.
• According to federal data, 39% of the bridges in the U.S. are structurally deficient or functionally obsolete.
• In 2006, the Federal Highway Administration (FHWA) classified 39,496 steel highway bridges as structurally deficient. Another 34,951 were labeled functionally obsolete.
• Over the past 10 years, on average, a bridge failure (closure or collapse) occurs once a week on average in the U.S.
• The average age of U.S. bridges is greater than 50 years, and most bridges in the U.S. were designed for a 50-year life.
• According to the Road Information Program® (TRIP), 26% of U.S. bridges in 2005 were not designed to handle current traffic levels or need major repairs. In the 11 Northeastern states, 39% of bridges are structurally deficient or functionally obsolete.

And this is just for the use of EFS on U.S. highway bridges. It does not factor in the potential revenues from Fatigue Fuse, or the use of EFS and/or Fatigue Fuse on railroad bridges and other non-highway structures where metal fatigue is a critical safety issue (these include oil rigs, nuclear power plants and offshore docking stations). Surveying the current state of U.S. infrastructure, and looking at the clear advantages of MATECH technology, you can see why experienced investors are so positive on the company's prospects.

I would like to close by thanking you for your interest in MATECH, and saluting your foresight as an investor in promising but unheralded technology. Your judgment about the prospects of EFS and MATECH is now being rewarded, as you can see from the recent appreciation in share prices. Wall Street is beginning to see what you have seen all along: There is an urgent need for reliable and efficient technology to ensure that bridges and other crucial structures are safe, and MATECH has the technology that best meets this need. I expect to be giving you more good news in the coming months, as the company's growth story progresses and reaches an ever-widening audience of investors.

Yours truly,

Robert M. Bernstein
Chief Executive Officer
Materials Technology, Inc. (MATECH)
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Recent News from Matech

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Press Release Source: Material Technologies, Inc. 
Tuesday September 4, 8:30 am ET 

LOS ANGELES--(BUSINESS WIRE)--Material Technologies, Inc.'s (OTCBB: MTTG - News) Chief Operating Officer, Marybeth Miceli, has been elected as a Director at Large of the American Society for Nondestructive Testing (ASNT). ASNT exists to create a safer world by promoting the profession and technologies of nondestructive testing.

Marybeth Miceli has been an active member of ASNT since undergraduate school in 1998 at Johns Hopkins University. She assumed her current position as the Chief Operating Officer of Material Technologies in August 2007. Miceli's three year term begins in November of this year. She will be one of 17 directors who make up ASNT's Board.

Miceli commented, "I am honored to fill the role of a Director at Large for ASNT. Through its work in support of the profession and technologies of nondestructive testing, ASNT fulfills a truly indispensable role, helping to ensure the safety of much of the infrastructure we all use on a daily basis." More

LOS ANGELES--(BUSINESS WIRE)--Material Technologies, Inc. (OTCBB: MTTG - News; MATECH), an engineering and product/service company specializing in technologies that monitor and measure metal fatigue, is in continuing dialogue with various parties in The People's Republic of China. The Company believes its proprietary technology can increase bridge safety in the region.
The recent bridge collapse tragedy in central China, the second reported one in the country this year, highlights the importance of bridge safety," said Robert M. Bernstein, MATECH's Chief Executive Officer. "We believe our Electrochemical Fatigue Sensor (EFS) system has the potential to dramatically increase bridge safety in the country. We continue to have a dialogue with Chinese officials and believe the EFS system has the potential to improve the safety of China's ever-growing infrastructure."

According to The China Daily (the country's largest-circulation English-language newspaper), the Chinese Ministry of Communications reports that 6,300 bridges in the country have serious damage to their "structural components." More

LOS ANGELES--(BUSINESS WIRE)--Material Technologies, Inc.'s (OTCBB: MTTG - News) Chief Operating Officer, Marybeth Miceli, will be presenting at the 2007 NYC Bridge Conference on Tuesday, August 28th at 1:30PM EDT at the Crowne Plaza Times Square Hotel in New York City. She will be discussing active fatigue crack detection and categorization on steel highway and railroad bridges.

The conference will be hosted by the Bridge Engineering Association, a not-for-profit organization whose mission it is to promote state-of-the-art bridge engineering technology through publications, conferences, seminars and forums on various themes of interest to the bridge engineering community. More

LOS ANGELES--(BUSINESS WIRE)--Material Technologies, Inc. (OTCBB: MTTG - News; MATECH), an engineering and product/service company specializing in technologies that monitor and measure metal fatigue, was featured in recent issues of Los Angeles Business Journal (August 13) and The Los Angeles Times (August 15).

The newspapers noted that the Minneapolis bridge tragedy has resulted in MATECH being approached by five state departments of transportation (DOTs) with inquiries about the Company's Electrochemical Fatigue Sensor (EFS) that detects growing cracks in metal structures.

"The coverage of our company in Los Angeles Business Journal and The Los Angeles Times reflects the continued concern all of us have about the safety of our nation's bridges," said Robert Bernstein, Chief Executive Officer of Material Technologies. "Media coverage such as this helps to raise awareness of the critical importance of bridge safety and the fact that there is a cost-effective alternative to current inspection methods."

Material Technologies' Electrochemical Fatigue Sensor (EFS) System has the only field-testing device able to find growing cracks in bridges as small as 0.01 inches. It is a nondestructive crack inspection system similar in concept to a medical EKG for the heart, and can be used to determine if actively growing fatigue cracks are present. The cost of the EFS System is competitive with other non-destructive crack-detecting technologies which, unlike the EFS, are not capable of determining whether a crack is growing or not. Moreover, the EFS, when used on repaired fatigue cracks, can also determine whether the repair effectively stopped the crack from further growth. More
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Financial Highlights

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