L. A. SECTION ENTERPRISE CHAPTER

Robert M. Bernstein, Chairman and CEO of Material Technologies, Inc. (Matech) spoke to the Enterprise Chapter on February 10, 2004. The trials and tribulations he has experienced would daunt many would-be entrepreneurs. The history of his company features almost continual adaptations in organizational structure, management, financing schemes, engineering development, political lobbying, and changing market targets.

The company has been in business for almost 20 years. Bernstein, a graduate of the Wharton School, saw potential riches in marketing a fatigue fuse, a device that warns of impending fatigue failure in major structures so as to prevent loss of life and excessive repair costs. In 1985, he raised $1 M and formed an R & D partnership with the inventor and a group of investors. Within 30 days, the inventor died. In 1987, the company ran out of money, Bernstein bought a shell company with rights to the technology. In 1989 he hired a consultant to mature the technology, but the consultant is discredited after writing false reports. Bernstein hired a replacement. By 1992, the Batelle Institute had validated that the device worked.

A similar but more convenient device, the EFS (Electrochemical Fatigue Sensor), which adds the use of chemical changes in structural metals to detect fatigue, captured Bernstein’s attention. The EFS originated at the University of Pennsylvania (UPenn). In 1993 he licensed the EFS from UPenn, with the promise to pay a specific sum; he also raised cash for operations from a stock promoter. In 1994 he lobbied a U. S. Senator who was concerned about the structural integrity of bridges. This effort resulted in a Department of Defense commitment of about $3 M by 1997. His first contract was as a subcontractor to Southwest Research Institute. In 1998 he landed a second contract in which Matech was prime with subcontracts to Southwest Research and UPenn. The market targeted by these contracts was load-bearing structures on airframes.

In 1999 Matech landed a third government contract, this time for a borescope to deliver EFS to turbine blades inside an engine. The device, built by a subcontractor, did not work, and in 2002 the Air Force also rejected as inadequate an "improved" borescope which was to utilize ultrasound and eddy current non-destructive testing (NDT) techniques. Matech has since reinvented the concept to utilize NDT, calls it a Videoscope, and a patent is pending. A prototype was delivered in February 2004 and demonstrations are scheduled with UAL, Fedex, Honeywell, and others.

The third market Matech has pursued is bridges. The law requires bridges to be inspected every two years. Matech has been promoting the EFS as the product of choice, and hired Rockwell Scientific to verify EFS under the typical load spectrum of bridges carrying a stream of traffic. Rockwell’s lab simulation was completed in 2003. Matech is now under contract to examine two bridges in Pennsylvania and has a lobbyist working on revising the law to mandate EFS for bridge inspections.

The company is listed on the NASDAQ as MTNA.OB. During the 1994-1997 period, the company suffered financial reversals because of swindling stock brokers. Stock offerings raised money in 2001, but when the hi-tech bubble burst, the shares became almost worthless. Additional money was raised in 2003 in a reverse stock split.

The company operates with a very small staff of employees and uses specialists, a Board of Advisors, a lobbyist, and an associate for foreign sales. William Berks, longtime AIAA L. A. Section member and retiree from TRW, is a Vice President/Director. He managed the contracts for the development of the Matech’s EFS.

Mr. Bernstein has certainly had an exciting and tortuous ride. His message to his audience was that persistence pays off. He has certainly hung in there, and we wish him well.