Medis Technologies Reports First Quarter Results

NEW YORK--(Business Wire)--
Medis Technologies Ltd. (NASDAQ:MDTL) reported financial results
today for the first quarter ended March 31, 2008. For the quarter
ended March 31, 2008, the net loss attributable to common stockholders
was $14,789,000, or $.42 per share, based on 35,556,209 weighted
average common shares, compared to a net loss attributable to common
stockholders of $9,335,000, or $.28 per share, based on 33,434,411
weighted average common shares for the quarter ended March 31, 2007.
The net loss attributable to common stockholders was impacted by
depreciation and amortization expense of approximately $1,884,000 for
the quarter ended March 31, 2008, compared to $1,019,000 for the
quarter ended March 31, 2007. Further, the net loss attributable to
common stockholders for the quarter ended March 31, 2008 was impacted
by an additional amount included in the category "depreciation and
other production facility costs" of $1,486,000, which was not incurred
in the quarter ended March 31, 2007. The net loss attributable to
common stockholders was also impacted by non-cash expenses related to
the issuance of stock options, warrants and restricted stock of
approximately $1,599,000 for the quarter ended March 31, 2008,
compared to $1,657,000 for the quarter ended March 31, 2007. Further
impacting the net loss attributable to common stockholders were
dividends declared and paid on the Company's Series A cumulative
convertible perpetual preferred stock of approximately $1,042,000 for
the quarter ended March 31, 2008, compared to $1,001,000 for the
quarter ended March 31, 2007.

Commenting on the report, Robert K. Lifton, Chairman & CEO of
Medis Technologies, stated, "During this past quarter we continued to
increase our inventories in anticipation of our production and sales
ramp-up and have incurred depreciation and other production facility
costs on our operational production facilities that we have built to
accommodate such ramp-ups. Resources also continued to be allocated
during the past quarter to qualifying our 24/7 Power Pack for
production on our high volume line. We also devoted resources during
the last quarter to paying for our production facilities, but at a
level that was considerably less than recent previous quarters.

During this past quarter we announced a strategic program with the
leading United States electronics retailer with outlets in the United
States, Canada and China. That retailer has recently announced a
transaction with a major European mobile phone retailer that
considerably expands its market outreach. We are in discussions with
other well known OEMs to make Power Pack products for their devices.
In addition, Medis Technologies and Hewlett Packard are in
confidential discussions on a number of potential programs. We are
excited about all these opportunities and look forward to mutual
benefits. We are also working with important mobile operators both
within and outside of the United States to expand our market outreach
and with our distributors and representatives to serve markets in
Europe, China, Russia, Japan, South Africa, South America, India, the
Middle East and other parts of the world. We have also begun dealing
with city and state procurement departments for police, firemen and
other government employees as well as with procurement for college
bookstores which we also believe can open the doors to viral marketing
through social networking discussions of the Power Pack.

Production Schedule

Based on feedback from our customer base, we have decided to
change the casing of our Power Packs from the present black casing to
a tinted transparent plastic casing. This new casing offers better
design features and importantly, allows the user actually to see
inside the Power Pack to the fuel cell which we believe will be
particularly attractive to those customers committed to adopting new
technologies and emphasizes the "green" qualities of the Power Pack.
The new casing is expected to be available starting in mid June when
we plan to gear up production on our automated line in Ireland to
higher levels. The line is capable of producing about 350,000 Power
Packs per month using one shift and as the Power Packs roll out into
the market, we plan to train additional personnel for the next shifts
to be ready for increased production. While we are presently selling
the Power Pack with the regular Power Management System, our hybrid
Power Management System containing a tiny lithium polymer battery,
designed for customers with heavier power needs, is planned to be in
large scale production starting in August.

New Product Development

Using our same 24/7 Power Pack but with a connector to an LED or a
light bulb rather than to a power management system, we have developed
a light source capable of providing illumination for a long period of
time relative to traditional battery power sources. For example, our
Power Pack has operated an LED capable of providing sufficient light
for reading for two months of continuing operation and a bulb capable
of lighting a room for 16 hours of operation. We believe that for
areas that have no or limited electrical power such as villages in
India, China, Africa and other parts of the world, this can be a
highly attractive product. It can also appeal to campers as well as to
companies and people who are concerned about response to natural
disasters, such as storms, that threaten the availability of power.

As previously announced, we are continuing to work with General
Dynamics in developing a more powerful fuel cell product for military
use which is also sufficient for charging laptops. Like the 2nd
generation Power Pack, the fuel cells we plan for laptops and
stationary power products are expected to use a solid fuel which we
have invented based on our patented fuel and for which we are filing
further patents. We believe that a solid fuel can help obviate the
problems associated with the establishment of a hydrogen
infrastructure to allow broader use of fuel cell technology.

Financing

We recently announced the signing of a $60 million equity line of
credit facility with Azimuth Opportunity Ltd. We believe that the
equity line offers financing which is sufficient to meet our current
and near term foreseeable needs but is also very flexible. As we move
forward with our sales and marketing programs we will determine how
best to finance our activities.

In sum, we have reached a new level of achievements in product
development, production readiness and in advancing relationships with
world class companies. We look forward to a highly successful and
rewarding future."

Management will also conduct a conference call on May 13, 2008 at
10:00 AM Eastern Time to discuss these results and the current status
of its business operations. Interested parties may participate in the
call by dialing 866-820-1713 (Domestic) or 706-643-3137
(International) approximately 10 minutes before the call is scheduled
to begin and ask to be connected to the Medis conference call.

To listen to the live webcast, please go to
www.medistechnologies.com and click on the conference call link, or go
directly to:
http://investor.shareholder.com/media/eventdetail.cfm?mediaid=31310&c=
MDTL&mediakey=EAED46BA68044B6A65690A00639812F5&e=0 (Due to its length,
this URL may need to be copied/pasted into your Internet browser's
address field. Remove the extra space if one exists.)

The conference call will be archived and accessible for
approximately 30 days if you are unable to listen to the live call.

Medis Technologies' primary focus is on its fuel cell technology.
Its business strategy is to sell its products to end users through
branded OEM partnerships, retail outlets, service providers and to the
military and other markets. Medis' majority-owned subsidiary, Cell
Kinetics Ltd., is developing and will market a series of products,
based on its Cell Carrier technology, under the "CKChip(TM)" trade
name. The CKChip can accommodate up to 10,000 cells on individual
wells for measuring reactions of living cells in a static state over
time, using simple imaging methods such as fluorescence microscopy.
Cell Kinetics has also invested in an early stage Israeli-based
medical device company and intends to continue to source, vet and
invest in early stage Israeli-based medical device technologies.

This press release may contain forward-looking statements, which
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. In some cases you can
identify those so-called "forward looking statements" by words such as
"may," "will," "should," "expects," plans," "targets," "believes,"
"anticipates," "estimates," "predicts," "potential," or "continue" or
the negative of those words and other comparable words. These forward
looking statements are subject to risks and uncertainties, product
tests, commercialization risks, availability of financing and results
of financing efforts that could cause actual results to differ
materially from historical results or those anticipated. Further
information regarding these and other risks is described from time to
time in the Company's filings with the SEC. We assume no obligation to
update or alter our forward-looking statements made in this release or
in any periodic report filed by us under the Securities Exchange Act
of 1934 or any other document, whether as a result of new information,
future events or otherwise, except as otherwise required by applicable
federal securities laws.

This press release is available on Medis' web site at
www.medistechnologies.com.

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*T
MEDIS TECHNOLOGIES LTD.
SUMMARY OF RESULTS
March 31, 2008
(In thousands, except loss per share)
(See notes below)

Statements of Three Months Three Months
------------------------------------------- ------------ ------------
Operations Data Ended Ended
------------------------------------------- ------------ ------------
March. 31, March. 31,
------------ ------------
2007 2008
------------ ------------
(Unaudited) (Unaudited)
=========================

Depreciation and other production facility
costs $ - $ 2,366
-------------------------

R&D costs 5,947 8,048
SG&A expenses 3,236 3,369
Amortization of intangible assets 52 48
-------------------------
Operating loss (9,235) (13,831)
Interest income (expenses), net 901 (160)
-------------------------
Net loss before minority interest (8,334) (13,991)
Minority interest - 244
-------------------------
Net loss (13,747)

Dividends on preferred stock (1,001) (1,042)
-------------------------
Net loss attributable to common
stockholders $ (9,335) $ (14,789)
=========================
Basic and diluted net loss per share $ (.28) $ (.42)
=========================

Weighted-average common shares used in
computing basic and diluted net loss per
share 33,434 35,556
=========================
*T

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*T
December 31, March 31,
------------ ------------
Selected Condensed Balance
Sheet Data 2007 2008
-------------------------------------------- ------------ ------------
(Unaudited)
-------------------------
Cash and cash equivalents $ 16,626 $ 12,151
Short-term investments 1,160 1,160
Restricted cash and deposits 5,700 5,910
Working capital 27,725 25,183
Property, plant and equipment, net 61,703 63,074
Goodwill and intangible assets, net 58,253 58,205
Total assets 157,233 157,421
Long-term liabilities 4,367 4,490
Series A preferred stock, net 53,240 53,240
Stockholders' equity 91,751 90,333
*T

NOTES

In April 2008 the Company received $4,841,000 in additional funds
under its Equity Distribution Agreement with UBS. Additionally, the
Company commenced on April 28, 2008 raising additional funds for
working capital and other operating needs pursuant to its $60,000,000
equity line of credit facility with Azimuth Opportunity Ltd..

The Company recorded non-cash expenses related to the issuance of
stock options, warrants and restricted stock of approximately
$1,599,000 during the quarter ended March 31, 2008, compared to
$1,657,000 during the quarter ended March 31, 2007.

During the quarter ended March 31, 2008, the Company incurred
costs aggregating approximately $2,366,000 with respect to
depreciation and other production facility costs in excess of that
which it utilized. Such amount also includes inventory obsolescence
reserve costs of approximately $152,000. In accordance with SFAS 151
"Inventory Costs an amendment of ARB No. 43, Chapter 4," the Company
has recognized unallocated depreciation, labor and other costs as
current period charges.

Financial information included in the Summary of Results has been
derived from the Company's unaudited condensed interim consolidated
financial statements ("interim statements") as of and for the three
months ended March 31, 2008. The interim statements should be read in
conjunction with the Company's annual financial statements as of
December 31, 2007 and the year then ended, together with the
accompanying notes.

Medis Technologies Ltd.
Robert K. Lifton, 212-935-8484
Chairman & CEO
or
Investor Relations Counsel:
The Equity Group Inc.
Adam Prior, 212-836-9606

Copyright Business Wire 2008