<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>a2071195z424b3.txt
<DESCRIPTION>424B3
<TEXT>
<Page>
                                                Filed Pursuant to Rule 424(b)(3)
                                                      Registration No. 333-73276

                            MEDIS TECHNOLOGIES LTD.
                                RIGHTS OFFERING
                        3,500,000 SHARES OF COMMON STOCK
                             ---------------------

                                LOYALTY PROGRAM
             WARRANTS TO PURCHASE 1,753,278 SHARES OF COMMON STOCK

    Medis Technologies Ltd. is distributing subscription rights in this rights
offering to persons who owned shares of our common stock on February 13, 2002.
During the term of this rights offering, we will issue up to 3,500,000 shares of
common stock. Our common stock is currently traded on The Nasdaq National Market
under the symbol "MDTL."

    You will receive, at no charge, 0.199626083 subscription rights for each
share of our common stock that you owned on February 13, 2002. One full
subscription right entitles you to purchase one share of our common stock at a
subscription price of $2.00 per share. If you exercise all of your subscription
rights, you may also have the opportunity to purchase additional shares of our
common stock at the same subscription price. If all of the rights we are
offering are exercised, we will receive gross proceeds of $7,000,000.

    The subscription rights are exercisable beginning on February 19, 2002 and
continuing until 5:00 p.m., New York City time, on March 18, 2002. The
subscription rights may not be sold or transferred. The subscription rights will
not be listed for trading on any stock exchange.

    THE EXERCISE OF THE SUBSCRIPTION RIGHTS INVOLVES SUBSTANTIAL RISK. YOU
SHOULD REFER TO THE DISCUSSION OF RISK FACTORS, BEGINNING ON PAGE 10 OF THIS
PROSPECTUS.

    You will also receive nontransferable warrants to purchase shares of our
common stock if you satisfy each of the following conditions:

    - You must have shares of our common stock, other than those which you may
      purchase in the rights offering, registered in your own name rather than
      in the "street" name of a broker, dealer or other nominee on March 18,
      2002;

    - You must purchase shares of our common stock in the rights offering;

    - The shares of common stock you purchase in the rights offering must be
      registered in your own name rather than in "street" name; and

    - The number of shares of our common stock registered in your name on
      September 18, 2002 must equal or exceed that number of shares of our
      common stock registered in your own name on March 18, 2002, inclusive of
      those shares of our common stock purchased in the rights offering.

    If you meet these requirements, you will receive, at no charge, 0.10
warrants for each share of our common stock that you own in your own name on
February 13, 2002. One warrant entitles you to purchase one share of our common
stock through September 18, 2005 at an exercise price equal to 90% of the last
sale price of our common stock on September 18, 2002, increasing to 100% of such
sale price on September 18, 2003 and to 110% of such sale price on
September 18, 2004, respectively. These warrants will be issued to you as a
reward for satisfying the criteria set forth above.

    The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense. Neither the rights offering nor the loyalty program is being made to,
nor will we accept subscriptions from, any person in any jurisdiction in which
the rights offering, the loyalty program or the acceptance of subscriptions
would not be in compliance with the securities or "blue sky" laws of that
jurisdiction.

                            ------------------------

               The date of this prospectus is February 13, 2002.
<Page>
                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Forward Looking Statements..................................      i

Prospectus Summary..........................................      1

Risk Factors................................................     10

The Rights Offering.........................................     17

Shareholder Loyalty Program.................................     23

Use of Proceeds.............................................     25

Price Range of Common Stock.................................     25

Dividend Policy.............................................     26

Dilution....................................................     26

Selected Consolidated Historical Financial Data.............     27

Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................     29

Business....................................................     37

Management..................................................     49

Principal Stockholders......................................     55

Certain Relationships and Related-Party Transactions........     56

Material United States Federal Income Tax Consequences......     59

Description of Our Capital Stock............................     60

Legal Matters...............................................     62

Experts.....................................................     62

Available Information.......................................     62

Index To Financial Statements...............................    F-1
</Table>

                           FORWARD LOOKING STATEMENTS

    Because we want to provide you with meaningful and useful information, this
prospectus contains certain forward-looking statements that reflect our current
expectations regarding our future results of operations, performance and
achievements. We have tried, wherever possible, to identify these forward-
looking statements by using words such as "anticipates," "believes,"
"estimates," "expects," "plans," "intends" and similar expressions. These
statements reflect our current beliefs and are based on information currently
available to us. Accordingly, these statements are subject to certain risks,
uncertainties and contingencies, including the factors set forth under "Risk
Factors," which could cause our actual results, performance or achievements to
differ materially from those expressed in, or implied by, any of these
statements. You should not place undue reliance on any forward-looking
statements. Except as otherwise required by federal securities laws, we
undertake no obligation to release publicly the results of any revisions to any
such forward-looking statements that may be made to reflect events or
circumstances after the date of this prospectus or to reflect the occurrence of
unanticipated events.

                                       i
<Page>
                               PROSPECTUS SUMMARY

    THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED IN THIS PROSPECTUS. TO FULLY
UNDERSTAND OUR BUSINESS, THE RIGHTS OFFERING AND THE LOYALTY PROGRAM, YOU SHOULD
READ THE ENTIRE PROSPECTUS, INCLUDING THE RISKS DESCRIBED UNDER "RISK FACTORS"
AND THE FINANCIAL STATEMENTS AND RELATED NOTES.

              QUESTIONS AND ANSWERS ABOUT MEDIS TECHNOLOGIES LTD.

WHAT DO WE DO?

    Our primary business focus is on the development and commercialization of
direct liquid ethanol/ methanol (DLE/M) fuel cells and attendant refueling
cartridges for use in portable electronic devices which currently use
rechargeable or disposable batteries as their power source. These devices
include cell phones, personal digital assistants (PDAs), laptop computers and
certain military devices. We have developed an experimental model, commonly
known as a "breadboard," of a "power pack" charger, which uses DLE/M fuel cells
and is capable of directly charging a cell phone. We expect to have a
pre-production unit of a commercially viable power pack, which is capable of
directly charging a cell phone without the use of an external support system, by
the end of 2002. However, to achieve this goal we must first make substantial
technological advances including, among others, increasing energy density to
supply more energy at smaller sizes, increasing operating time, decreasing size
and weight, reducing temperature during operation and stabilizing power output.
We can give no assurances of success in these regards. We anticipate developing
other fuel cells that are intended to be incorporated as an original equipment
power source for cell phones and other electronic products in the second half of
2003 or the first half of 2004.

    We expect that as portable electronic devices become more advanced and offer
greater functionality, manufacturers of those devices will seek to acquire fuel
cells offering significantly increased and longer lasting sources of energy. We
believe that our DLE/M fuel cell technology, the key proprietary components of
which are our highly conductive polymers (HECPs), our electrodes, our catalysts
for anodes and cathodes and our liquid electrolyte, will enable us to meet this
requirement. We also believe that our fuel cells can be responsive to device
manufacturers' demands for reduced size and weight, increased length of
operating time and competitive pricing.

    Since HECPs have a wide and diverse range of commercial uses beyond their
use as components in our DLE/M fuel cells, we also intend to manufacture and
recycle HECPs which differ from those used in our fuel cells for sale to third
parties. HECPs have electrical properties that can be changed over the full
range of conductivity from insulators to metallic conductors and have the
non-corrosive properties, flexibility and durability of plastics. We also own
patents and intellectual property rights to other technologies relating to clean
energy that may offer greater efficiencies than conventional energy sources.
These proprietary technologies, which we are looking to exploit commercially,
include our:

    - toroidal engine and compressor, which use a rotary motion as contrasted
      with the up and down motion of pistons in a conventional internal
      combustion engine;

    - stirling cycle linear compressor, which is based upon a century-old
      technique that harnesses energy from the expansion and contraction of a
      gas forced between separate chambers, that may be capable of providing
      greater energy efficiency for refrigeration and air conditioning systems;
      and

    - reciprocating electrical machine, which seeks to use the back and forth
      motion of energy sources such as wind or sea waves to convert such
      energies' motion into electricity.

    In addition, we own the rights to the CellScan system, which is a detection
and monitoring system for human cells which may have many potential applications
relating to disease diagnostics and determining chemosensitivity.

                                       1
<Page>
WHERE ARE WE LOCATED?

    Our principal executive offices are located at 805 Third Avenue, New York,
New York 10022. Our telephone number is (212) 935-8484. All of our operating and
research facilities are located in the State of Israel.

                              RECENT DEVELOPMENTS

    In January 2002, we:

    - entered into an agreement with a U.S. company to develop a new application
      for the use of our HECPs in a proton exchange membrane fuel cell component
      which could advance the development of such fuel cells for automobile,
      home and stationary power uses. The agreement provides for the payment to
      us over time of $300,000; and

    - received a $75,000 purchase order from an Israeli electronics manufacturer
      to define a specification and carry out the preliminary design of a DLE/M
      fuel cell for a new energy pack for infantry soldiers. We believe that our
      successful execution of this order, which is part of the first phase of an
      Israeli sponsored military development program, may lead to add-on orders
      as and if this program continues.

    In November 2001, our board of directors authorized the extension of the
expiration date of all outstanding options and certain warrants to purchase
shares of our common stock to December 31, 2004.

                                       2
<Page>
                QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING

WHAT IS A RIGHTS OFFERING?

    A rights offering is an opportunity for you to purchase additional shares of
our common stock at a discount from market and in an amount proportional to your
existing interest, which enables you to maintain your current percentage of
ownership.

WHAT IS A SUBSCRIPTION RIGHT?

    We are distributing to you, at no charge, 0.199626083 subscription rights
for each share of our common stock that you owned on February 13, 2002. One full
subscription right entitles you to purchase one share of our common stock at a
subscription price of $2.00 per full share. We will not distribute any
fractional subscription rights, but will round the number of subscription rights
you receive upward or downward, as appropriate, to the nearest whole number.
When you "exercise" a subscription right, you choose to purchase the common
stock that the subscription right entitles you to purchase. You may exercise all
or a portion of your subscription rights, or you may choose not to exercise any
of your subscription rights. You cannot give or sell your subscription rights to
anybody else. Only you can exercise your subscription rights.

WHAT IS THE BASIC SUBSCRIPTION PRIVILEGE?

    The basic subscription privilege of each subscription right entitles you to
purchase one share of our common stock at a subscription price of $2.00.

WHAT IS THE OVERSUBSCRIPTION PRIVILEGE?

    Each subscription right also grants you an oversubscription privilege to
purchase additional shares of common stock that are not purchased by other
stockholders pursuant to the subscription rights they receive in this rights
offering. The oversubscription privilege of each subscription right entitles
you, if you fully exercise your basic subscription privilege, to subscribe for
additional shares of common stock at the same subscription price of $2.00 per
share.

WHAT ARE THE LIMITATIONS ON THE OVERSUBSCRIPTION PRIVILEGE?

    If sufficient shares are available, we will honor the oversubscription
requests in full. If oversubscription requests exceed the number of shares
available, we will allocate all or a portion of the available shares among the
stockholders who have requested to oversubscribe in proportion to the number of
shares each such stockholder purchased through the basic subscription privilege.

WHY ARE WE ENGAGING IN A RIGHTS OFFERING?

    We are offering the subscription rights to obtain additional working capital
to allow us to continue our research and development efforts. Instead of selling
shares of common stock to outside parties, our board of directors has chosen to
give you the opportunity to buy more shares without diluting your interest while
providing us with additional capital.

HOW MANY SHARES CAN YOU PURCHASE?

    You will receive 0.199626083 subscription rights for each share of our
common stock that you owned on February 13, 2002. One full subscription right
will entitle you to purchase one share of our common stock at a subscription
price of $2.00 per share.

    If you exercise all of the subscription rights that you receive, you may
have the opportunity to purchase additional shares of common stock if other
shareholders choose not to exercise their

                                       3
<Page>
subscription rights. On the enclosed subscription certificate, you may request
to purchase as many additional shares as you wish for $2.00 per share. While we
may be able to honor all of the oversubscription requests, if we cannot, you may
not be able to purchase as many shares as you requested on the certificate. In
addition, we have the discretion to issue less than the total number of shares
that may be available for oversubscription requests.

HOW DID WE ARRIVE AT THE $2.00 PER SHARE PRICE?

    In determining the subscription price in this rights offering, our board of
directors desired to offer shares at a price that would be attractive to our
shareholder base relative to the current trading price of our common stock. Our
board also considered the following factors, among others, in no particular
order of priority:

    - our desire to increase working capital at a minimal cost to us;

    - the historic and current market price of our common stock;

    - our history of losses;

    - general conditions in the securities market;

    - alternatives available to us for raising capital;

    - the amount of proceeds desired;

    - the liquidity of our common stock; and

    - the level of risk to our investors.

HOW DO YOU EXERCISE YOUR SUBSCRIPTION RIGHTS?

    You must properly complete the enclosed subscription certificate and deliver
it to our subscription agent before 5:00 p.m., New York City time, on March 18,
2002. Your subscription certificate must be accompanied by proper payment for
each share that you wish to purchase.

HOW LONG WILL THE RIGHTS OFFERING LAST?

    You will be able to exercise your subscription rights only during a limited
period. If you do not exercise your subscription rights before 5:00 p.m., New
York City time, on March 18, 2002, your subscription rights will expire. We may,
in our discretion, decide to extend the rights offering for up to an additional
20 business days to give our stockholders additional time to exercise their
subscription rights. In addition, if the commencement of the rights offering is
delayed, the expiration date may be similarly extended.

AFTER YOU EXERCISE YOUR SUBSCRIPTION RIGHTS, CAN YOU CHANGE YOUR MIND?

    No. Once you send in your subscription certificate and payment, you cannot
revoke the exercise of your subscription rights, even if you later learn
information about us that you consider to be unfavorable. You should not
exercise your subscription rights unless you are certain that you wish to
purchase additional shares of common stock at a price of $2.00 per share.

IS EXERCISING YOUR SUBSCRIPTION RIGHTS RISKY?

    The exercise of your subscription rights involves substantial risks.
Exercising your subscription rights means buying additional shares of our common
stock, and you should carefully consider this purchase as you would other equity
investments. Among other things, you should carefully consider the risks
described under "Risk Factors."

                                       4
<Page>
DO YOU HAVE TO EXERCISE YOUR SUBSCRIPTION RIGHTS?

    No.

WHAT HAPPENS IF YOU CHOOSE NOT TO EXERCISE YOUR SUBSCRIPTION RIGHTS?

    You will retain your current number of shares of common stock even if you do
not exercise your subscription rights. However, if you do not exercise your
subscription rights and other stockholders do, the percentage of our common
stock that you own will diminish, and your voting and other rights will be
diluted. Furthermore, if you choose not to exercise your subscription rights,
you will be ineligible to participate in our shareholder loyalty program.

CAN YOU SELL OR GIVE AWAY YOUR SUBSCRIPTION RIGHTS?

    No.

HAS OUR BOARD OF DIRECTORS MADE A RECOMMENDATION REGARDING THIS OFFERING?

    No.

WHAT SHOULD YOU DO IF YOU WANT TO PARTICIPATE IN THIS RIGHTS OFFERING, BUT YOUR
SHARES ARE HELD IN THE NAME OF YOUR BROKER, DEALER OR OTHER NOMINEE?

    If you hold your shares of our common stock through a broker, dealer or
other nominee (for example, through a custodian bank), then your broker, dealer
or other nominee is the record holder of the shares you own. This record holder
must exercise the rights on your behalf for shares you wish to purchase.
Therefore, you will need to have your record holder act for you. To indicate
your decision with respect to your rights, you should complete and sign the
reverse side of your subscription certificate and promptly return it to the
record holder. You should NOT return your subscription certificate to us.

WHAT FEES OR CHARGES APPLY IF YOU PURCHASE SHARES?

    We are not charging any fee or sales commission to issue subscription rights
to you or to issue shares to you if you exercise subscription rights. If you
exercise subscription rights through a record holder of your shares, you are
responsible for paying any fees that person may charge.

WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING YOUR SUBSCRIPTION
RIGHTS?

    The receipt and exercise of your subscription rights are intended to be
nontaxable. However, no ruling from the Internal Revenue Service will be sought
and therefore you should seek specific tax advice from your personal tax
advisor. This prospectus does not summarize tax consequences arising under state
tax laws, non-U.S. tax laws or any tax laws relating to special tax
circumstances or particular types of taxpayers.

WHEN WILL YOU RECEIVE YOUR NEW SHARES?

    If you purchase shares of common stock through the rights offering, you will
receive certificates representing those shares as soon as practicable after
March 18, 2002.

CAN WE WITHDRAW THE RIGHTS OFFERING?

    Yes. Our board of directors may withdraw the rights offering in its sole
discretion at any time on or before March 18, 2002, for any reason, including a
significant fluctuation in the market price of our

                                       5
<Page>
common stock when compared to the market price at the commencement of the
offering. If we withdraw the rights offering, any funds you paid will be
promptly refunded without interest or penalty.

HOW MUCH MONEY WILL WE RECEIVE FROM THE RIGHTS OFFERING?

    The gross proceeds from the rights offering depend on the number of shares
that are purchased. If we sell all 3,500,000 shares offered by this prospectus,
we will receive gross proceeds of $7,000,000.

    We have been informed by Robert K. Lifton, our chairman and chief executive
officer, and Howard Weingrow, our president, who, collectively, beneficially own
approximately 15.7% of our outstanding common stock, that they presently intend
to exercise all of their subscription rights to purchase an aggregate of
approximately 548,575 shares in this rights offering pursuant to their basic
subscription privilege. Further, each presently intends to exercise his
oversubscription privilege to purchase additional shares. We will receive
proceeds of approximately $1,097,150 upon the exercise in full of
Messrs. Lifton's and Weingrow's respective basic subscription rights. Neither
Mr. Lifton or Mr. Weingrow, however, has committed to purchase any shares upon
exercise of their respective subscription rights.

HOW WILL WE USE THE PROCEEDS FROM THE RIGHTS OFFERING?

    We will use any proceeds generated from the exercise of subscription rights
in this rights offering for additional working capital.

HOW MANY SHARES WILL BE OUTSTANDING AFTER THE RIGHTS OFFERING?

    The number of shares of common stock that will be outstanding after the
rights offering depends on the number of shares that are purchased. If we sell
all of the shares pursuant to the rights offering offered by this prospectus, we
will have 21,032,779 shares of common stock outstanding.

          QUESTIONS AND ANSWERS ABOUT THE SHAREHOLDER LOYALTY PROGRAM

WHAT IS THE SHAREHOLDER LOYALTY PROGRAM?

    Our shareholder loyalty program is intended to reward those of our
shareholders who both participate in this rights offering and maintain their
record equity ownership in our company at no less than their respective equity
interest immediately following the closing of the rights offering for a period
of six months after the expiration of this rights offering.

WHAT WILL YOU RECEIVE IF YOU SATISFY ALL THE REQUIREMENTS OF THE LOYALTY
PROGRAM?

    If you satisfy all of the requirements of the loyalty program, you will
receive, at no charge, nontransferable warrants to purchase shares of our common
stock which, when issued, will be initially exercisable at a discount from the
then market price of our common stock. The number of warrants you receive will
be based on the number of shares of our common stock that you owned in your own
name on February 13, 2002. We will not distribute any fractional warrants, but
will round the number of warrants you receive upward or downward, as
appropriate, to the nearest whole number. You will receive 0.10 warrant for each
share of our common stock that you owned in your own name on February 13, 2002.
Each warrant will entitle you to purchase one share of our common stock through
September 18, 2005 at an exercise price equal to 90% of the last sale price of
our common stock on September 18, 2002, increasing to 100% of such sale price on
September 18, 2003 and to 110% of such sale price on September 18, 2004,
respectively. Delivery of the warrants will be made as soon as practicable after
September 18, 2002.

                                       6
<Page>
HOW DO YOU SATISFY THE REQUIREMENTS OF THE LOYALTY PROGRAM?

    In order to satisfy the requirements of the loyalty program:

    - you MUST have shares of our common stock, other than those which you may
      purchase in the rights offering, registered in your own name rather than
      in the "street" name of a broker, dealer or other nominee on March 18,
      2002;

    - you MUST purchase shares of our common stock in the rights offering;

    - the shares of common stock you purchase in the rights offering MUST be
      registered in your own name rather than in "street" name; and

    - the number of shares of our common stock registered in your name on
      September 18, 2002 MUST equal or exceed that number of shares of common
      stock registered in your own name on March 18, 2002, inclusive of those
      shares of our common stock purchased in the rights offering.

WHAT DO YOU NEED TO DO TO HAVE SHARES REGISTERED IN YOUR OWN NAME?

    Any shares of common stock that you purchase in the rights offering will be
automatically issued in your own name unless you hold your shares in "street"
name through a broker, dealer or other nominee (for example, a custodian bank).
If you own your shares in "street" name, you must instruct your record owner to
have those shares of our common stock that you purchase in the rights offering
issued in your own name by completing the "Beneficial Owner Re-Registration
Form" (blue form) and returning it to your record owner along with your
subscription certificate. IF YOU FAIL TO INSTRUCT YOUR RECORD HOLDER TO HAVE THE
SHARES OF OUR COMMON STOCK THAT YOU PURCHASED IN THIS RIGHTS OFFERING ISSUED IN
YOUR OWN NAME, YOU WILL BE INELIGIBLE TO PARTICIPATE IN OUR LOYALTY PROGRAM.

    If you currently hold shares of our common stock in "street" name through a
broker, dealer or other nominee and you wish these shares of common stock to be
registered in your own name so as to facilitate the determination of your
eligibility to participate in the loyalty program, you must direct your record
holder to promptly reregister in your own name all or such lesser number of
shares of our common stock that are held in your account or accounts with such
record holder by completing the "Beneficial Owner Re-Registration Form" that you
should have received from your record holder with the other rights offering
material. IF YOU FAIL TO INSTRUCT YOUR RECORD HOLDER TO HAVE THE SHARES OF OUR
COMMON STOCK YOU CURRENTLY OWN ISSUED IN YOUR OWN NAME, YOU WILL BE INELIGIBLE
TO PARTICIPATE IN OUR LOYALTY PROGRAM.

DO YOU NEED TO HOLD THE SHARES OF OUR COMMON STOCK THAT YOU PRESENTLY OWN OR
WHICH YOU MAY PURCHASE IN THE RIGHTS OFFERING UNTIL SEPTEMBER 18, 2002 IN ORDER
TO SATISFY THE REQUIREMENTS OF THE LOYALTY PROGRAM?

    No. You can sell any or all of the shares of common stock that you currently
own or that you may purchase in the rights offering and still satisfy the
requirements of the loyalty program if on September 18, 2002 the number of
shares of common stock that you own in your own name equals or exceeds that
number of shares of common stock that you owned in your own name on March 18,
2002, inclusive of those shares of our common stock purchased in this rights
offering. However, if you purchase shares of our common stock in the open market
following the completion of the rights offering, you should request your broker
to register the shares in your name so as to facilitate our ability to
demonstrate your satisfaction of the eligibility criteria of the loyalty
program.

CAN YOU SELL OR GIVE AWAY THE WARRANTS YOU RECEIVE IN THE LOYALTY PROGRAM?

    No. The warrants will not be transferable except by will or the laws of
descent and distribution.

                                       7
<Page>
IS SATISFYING THE REQUIREMENTS OF THE LOYALTY PROGRAM AND EXERCISING THE
WARRANTS RISKY?

    Satisfying the requirements of the loyalty program as well as the exercise
of any warrants you receive involves substantial risks. Satisfying the
requirements of the loyalty program means that you will either hold the shares
of common stock you own on March 18, 2002, inclusive of those shares of common
stock you purchase in our rights offering or sell those and repurchase
additional shares before September 18, 2002. Exercising the warrants means
buying additional shares of our common stock. You should carefully consider the
risks involved in holding shares of our common stock as you would other equity
investments. Among other things, you should carefully consider the risks
described under "Risk Factors."

WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN THE LOYALTY
PROGRAM?

    The receipt and exercise of warrants under the loyalty program are intended
to be nontaxable. However, no ruling from the Internal Revenue Service will be
sought and therefore you should seek specific tax advise from your personal tax
advisor. This prospectus does not summarize tax consequences arising under state
tax laws, non-U.S. tax laws or any tax laws relating to special tax
circumstances or particular types of taxpayers.

                              ADDITIONAL QUESTIONS

    If you have more questions about the rights offering or the loyalty program,
please contact either Robert K. Lifton, our Chief Executive Officer, or Howard
Weingrow, our President, at (212) 935-8484.

                                       8
<Page>
                   SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

    The following table sets forth our summary consolidated financial data and
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Selected Consolidated
Historical Financial Data" and the consolidated financial statements and related
notes appearing elsewhere in this prospectus.

STATEMENT OF OPERATIONS DATA:

<Table>
<Caption>
                                                        FOR THE YEAR            FOR THE NINE MONTHS
                                                           ENDED                       ENDED
                                                        DECEMBER 31,               SEPTEMBER 30,
                                               ------------------------------   -------------------
                                                 1998       1999       2000       2000       2001
                                               --------   --------   --------   --------   --------
                                                       (IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                                            <C>        <C>        <C>        <C>        <C>
Revenues.....................................  $     8    $    --    $     --   $     --   $     --

Loss from operations.........................   (5,485)    (7,790)    (23,566)   (15,884)   (22,446)

Net loss.....................................   (4,418)    (5,965)    (22,492)   (14,865)   (22,342)

Net loss attributable to common
  shareholders...............................   (4,418)    (5,965)    (25,463)   (17,836)   (22,342)

Basic and diluted net loss per share.........    (0.52)     (0.61)      (1.79)     (1.33)     (1.30)

Weighed average shares outstanding...........    8,582      9,807      14,238     13,369     17,141
</Table>

BALANCE SHEET DATA:

<Table>
<Caption>
                                                                 AS OF           AS OF
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  2000           2001
                                                              ------------   -------------
                                                                     (IN THOUSANDS)
<S>                                                           <C>            <C>
Working capital.............................................    $  2,522       $  7,191

Total assets................................................    $ 87,202       $ 76,874

Accumulated deficit.........................................    $(49,078)      $(71,420)

Total shareholders' equity..................................    $ 86,142       $ 75,741
</Table>

PRO FORMA PER SHARE INFORMATION:

    Assuming all of the subscription rights offered in the rights offering are
exercised, we will issue 3,500,000 shares of our common stock and will receive
gross proceeds of $7,000,000. Pro forma basic and diluted loss per share,
assuming all of such subscription rights are exercised, for the year ended
December 31, 2000 and for the nine months ended September 30, 2001 is $(1.58)
and $(1.15), respectively. Such pro forma basic and diluted loss per share is
adjusted to reflect the stock dividend element contained in the rights offering,
calculated based on the $7.03 market price of our common stock at January 29,
2002.

                                       9
<Page>
                                  RISK FACTORS

    YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS, AS WELL AS OTHER
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS, BEFORE YOU DECIDE TO
PURCHASE OUR COMMON STOCK.

RISKS RELATING TO US

    WE HAVE HAD LIMITED REVENUES SINCE INCEPTION AND NONE FROM 1998 THROUGH
    2001, AND WE CANNOT PREDICT WHEN WE WILL ACHIEVE PROFITABILITY.

    We have experienced net losses since our inception in April 1992. We, on a
consolidated basis with our subsidiaries, have had limited revenues since
inception and none from 1998 through 2001. We do not anticipate generating
significant revenues until we produce and sell our HECPs as a stand-alone
product which, although we can give no assurance, we believe will be sometime in
2002. Furthermore we are unable to determine when we will generate significant
revenues from the sales of our DLE/M fuel cells or one or more of our other
technologies.

    We cannot predict when we will achieve profitability, if ever. Our inability
to become profitable may force us to curtail or temporarily discontinue our
research and development programs and our day-to-day operations. Furthermore,
there can be no assurance that profitability, if achieved, can be sustained on
an ongoing basis. As of September 30, 2001, we had an accumulated deficit of
approximately $71,420,000.

    WE MAY NEVER COMPLETE THE DEVELOPMENT OF COMMERCIALLY VIABLE FUEL CELLS OR
    ANY OF OUR OTHER TECHNOLOGIES INTO MARKETABLE PRODUCTS.

    We do not know when or whether we will successfully complete the development
of commercially viable fuel cells for any of our target markets. We must achieve
substantial advances in our fuel cell technology, particularly in the areas of
energy density, stability of power output, operating time and reduced size and
weight, as well as in the temperature conditions under which the fuel cells can
operate. We must also improve the engineering design of our fuel cells and
design effective refill cartridges, and integrate each fuel cell into a seamless
power source which can power various portable electronic devices, before we are
able to produce a commercially viable product. Additionally, we must improve the
converter used in our power pack charger to step up voltage.

    Developing any technology into a marketable product is a risky, time
consuming and expensive process. You may anticipate that we will encounter
setbacks, discrepancies requiring time consuming and costly redesigns and
changes and that there is the possibility of outright failure.

    WE MAY NOT MEET OUR PRODUCT DEVELOPMENT AND COMMERCIALIZATION MILESTONES.

    We have established milestones which we use to assess our progress toward
developing commercially viable DLE/M fuel cells. These milestones relate to
technology and design improvements as well as to dates for achieving development
goals. If our products exhibit technical defects or are unable to meet cost or
performance goals, including levels and stability of power output, useful life
and reliability, our commercialization schedule could be delayed and third
parties who are collaborating with us to develop our fuel cell technology, as
well as potential purchasers of our initial commercial products, may decline to
purchase such products or may opt to pursue alternative technologies.

    To date, we have met the milestones we set for ourselves with respect to
developing commercially viable DLE/M fuel cells, including the level of power
density and longevity of use obtained. We can give no assurance that our
commercialization schedule will continue to be met as we further develop our
products.

                                       10
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    CUSTOMERS WILL BE UNLIKELY TO BUY OUR FUEL CELL PRODUCTS UNLESS WE CAN
    DEMONSTRATE THAT THEY CAN BE PRODUCED FOR SALE TO CONSUMERS AT AFFORDABLE
    PRICES.

    To date, we have focused primarily on research and development of our fuel
cell technology. Consequently, we have no experience in manufacturing DLE/M fuel
cells or refill cartridges on a commercial basis. We plan to manufacture our
DLE/M fuel cells and refill cartridges primarily through joint venture
arrangements with third parties. We can offer no assurance that either we or our
joint venture partners will develop efficient, automated, low-cost manufacturing
capabilities and processes to meet the quality, price, engineering, design and
production standards or production volumes required to successfully mass market
our DLE/M fuel cells and refill cartridges. Even if we or our joint venture
partners are successful in developing such manufacturing capability and
processes, we do not know whether we or they will be timely in meeting our
product commercialization schedule or the production and delivery requirements
of potential customers. A failure to develop such manufacturing processes and
capabilities could have a material adverse effect on our business and financial
results.

    The price of DLE/M fuel cells and refill cartridges is dependent largely on
material and other manufacturing costs. We are unable to offer any assurance
that either we or our joint venture partners will be able to reduce costs to a
level which will allow production of a competitive product or that any product
produced using lower cost materials and manufacturing processes will not suffer
from a reduction in performance, reliability and longevity. Furthermore,
although we have estimated a pricing structure for both our proposed power pack
charger and our refueling cartridges, we can give no assurance that these
estimates will be correct in light of any manufacturing process we adopt or
distribution channels we use.

    A MASS MARKET FOR OUR DLE/M FUEL CELLS MAY NEVER DEVELOP OR MAY TAKE LONGER
    TO DEVELOP THAN WE ANTICIPATE.

    A mass market may never develop for our DLE/M fuel cells or any of our other
technologies, or may develop more slowly than we anticipate. DLE/M fuel cells
represent an emerging market, and we do not know whether end-users will want to
use them. The development of a mass market for our DLE/M fuel cells may be
affected by many factors, some of which are out of our control, including:

    - the level to which the technology of our DLE/M fuel cells has advanced;

    - the emergence of newer, more competitive technologies and products;

    - the future cost of ethanol, or any other hydrogen-based fuels powering our
      fuel cells;

    - regulatory requirements;

    - consumer perceptions of the safety of our products; and

    - consumer reluctance to try a new product.

    If a mass market fails to develop or develops more slowly than we
anticipate, we may be unable to recover the losses we will have incurred in the
development of our products and may never achieve profitability.

    WE WILL BE UNABLE TO MARKET OR SELL OUR DLE/M FUEL CELL TECHNOLOGY OR ANY OF
    OUR OTHER TECHNOLOGIES IF WE ARE UNSUCCESSFUL IN ENTERING INTO ALLIANCES,
    JOINT VENTURES OR LICENSING AGREEMENTS WITH THIRD PARTIES.

    As we do not have nor do we intend to develop our own marketing or wide
scale manufacturing infrastructure, our ability to market, manufacture and sell
our DLE/M fuel cell technologies or any of our other technologies is wholly
dependent on our entry into strategic alliances, joint ventures or licensing
agreements with third parties possessing such capabilities. We can offer no
assurance that we will be successful in entering into such alliances, joint
ventures or agreements. Furthermore, we may enter into agreements the terms of
which may not be entirely beneficial to us.

                                       11
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    PROBLEMS OR DELAYS IN OUR COLLABORATION EFFORTS WITH THIRD PARTIES TO
    DEVELOP OR MARKET OUR FUEL CELL TECHNOLOGIES COULD HURT OUR REPUTATION AND
    THE REPUTATION OF OUR PRODUCTS.

    We have entered into three agreements with third parties whereby each has
agreed to assist us in developing or marketing our fuel cell technologies. We
intend to enter into similar agreements with other third parties in the future.
These collaboration agreements contemplate that these third parties will work
with our scientists to test various aspects of our DLE/M fuel cells. Such tests
may encounter problems and delays for a number of reasons, including, without
limitation, the failure of our technology, the failure of the technology of
others, the failure to combine these technologies properly and the failure to
maintain and service any test prototypes properly. Many of these potential
problems and delays are beyond our control. In addition, collaborative efforts,
by their nature, often create problems due to miscommunications and disparate
expectations and priorities among the parties involved and may result in
unexpected modifications and delays in developing or marketing our fuel cell
technologies. Any such problems or perceived problems with these collaborative
efforts could hurt our reputation and the reputation of our products and
technologies.

    OUR EFFORTS TO PROTECT OUR INTELLECTUAL PROPERTY MAY NOT OFFER SUFFICIENT
    PROTECTION, WHICH COULD HINDER OUR GROWTH AND SUCCESS.

    We regard our patents, trade secrets, copyrights and similar intellectual
property rights as essential to our growth and success. We rely upon a
combination of patent, copyright and trademark laws, trade secret protection,
confidentiality and non-disclosure agreements and contractual provisions with
employees and with third parties to establish and protect our proprietary
rights. We own, directly or indirectly through subsidiaries or companies in
which we have an interest, patents for certain technologies and are currently
applying for additional patents. We can offer no assurance that we will succeed
in receiving patent and other proprietary protection in all markets we enter,
or, if successful, that such protection will be sufficient. If we successfully
develop and market any or all of our technologies, we expect to face efforts by
larger companies and other organizations or authorities to undermine our patents
by challenging or copying our intellectual property. Moreover, intellectual
property rights are not protected in certain parts of the world. We intend to
vigorously defend our intellectual property against any challenges that may
arise. However, any infringement action initiated by us may be very costly and
require the diversion of substantial funds from our operations and may require
management to expend efforts that might otherwise be devoted to our operations.

    CLAIMS BY THIRD PARTIES THAT OUR TECHNOLOGY INFRINGES UPON THEIR PATENTS
    MAY, IF SUCCESSFUL, PREVENT US FROM FURTHER DEVELOPING OR SELLING OUR
    TECHNOLOGIES.

    Although we do not believe our business activities infringe upon the rights
of others, nor are we aware of any pending or contemplated actions to such
effect, we can give no assurance that our business activities will not infringe
upon the proprietary rights of others, or that other parties will not assert
infringement claims against us.

    IF WE DO NOT OBTAIN ADDITIONAL FINANCING, WE MAY BE FORCED TO CURTAIL OUR
    RESEARCH AND DEVELOPMENT EFFORTS.

    Our ability to sustain our research and development program is dependent
upon our ability to secure additional funding. We believe, as of September 30,
2001, that our cash resources and funds available to borrow under our $5,000,000
revolving credit facility, excluding any proceeds from this rights offering,
will be sufficient to support our operating and developmental activities for at
least 23 months. After such time, we may need to raise additional funds through
public or private debt or equity financing in order to be competitive, to
accelerate our sales and marketing programs, to establish a stronger financial
position and to continue our operations. We can offer no assurance that we will
be able to secure additional funding, or funding on terms acceptable to us, to
meet our financial obligations, if necessary, or that a third party will be
willing to make such funds available. Our

                                       12
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failure to raise additional funds could require us to delay our research and
product development efforts or cause us to default under the repayment terms of
our revolving credit facility, if we were to borrow funds under that facility
and we are unable to repay such borrowings. Furthermore, our failure to
successfully develop or market our DLE/M fuel cell technologies may materially
adversely affect our ability to raise additional funds. In any event, it is not
possible to make any reliable estimate of the funds required to complete the
development of our DLE/M fuel cell technology or any of our other technologies.

    IF WE WERE TO LOSE MEMBERS OF OUR SENIOR MANAGEMENT AND COULD NOT FIND
    APPROPRIATE REPLACEMENTS IN A TIMELY MANNER, OUR BUSINESS COULD BE ADVERSELY
    AFFECTED.

    Our success depends to a significant extent upon Zvi Rehavi, Gennadi
Finkelshtain and the other scientists, engineers and technicians that seek out,
recognize and develop our technologies, as well as our highly skilled and
experienced management. The loss of the services of Messrs. Rehavi and
Finkelshtain, or any of our other technical talent could have a material adverse
effect on our ability to develop our DLE/M fuel cells into commercial products
or any of our other technologies into commercial products. We possess key-person
life insurance of $245,000 on Mr. Rehavi. Although to date we have been
successful in recruiting and retaining executive, managerial and technical
personnel, we can offer no assurance that we will continue to attract and retain
the qualified personnel needed for our business. The failure to attract or
retain qualified personnel could have a material adverse effect on our business.

    OUR RIGHT TO ISSUE PREFERRED STOCK MAY FACILITATE MANAGEMENT ENTRENCHMENT
    WHICH MAY DELAY, DEFER OR PREVENT A CHANGE IN OUR CONTROL, WHICH MAY NOT BE
    IN THE BEST INTERESTS OF OUR STOCKHOLDERS.

    Our Board of Directors has the authority to issue up to 10,000 shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of these shares without approval of our
stockholders. Any future issuance of shares of preferred stock could be employed
by our present management to delay, defer or prevent a change in our control or
to discourage bids for our common stock at a premium above its market price
solely to retain their respective management positions, which may not be in the
best interests of our stockholders, generally. We have no present plans to issue
any shares of preferred stock.

    OUR CURRENT STOCKHOLDERS WILL CONTINUE TO CONTROL OUR AFFAIRS, WHICH MAY
    PRECLUDE OTHER STOCKHOLDERS FROM INFLUENCING OUR CORPORATE DECISIONS.

    Our five largest stockholders, which includes some of our officers and
directors and a corporation controlled by such officers and directors,
collectively, beneficially own approximately 54.3% of our outstanding shares of
common stock. These stockholders may be able to effectively exercise control
over all matters requiring approval by our stockholders, including the election
of directors and approval of significant corporate transactions.

    THERE MAY BE ADVERSE EFFECTS ON OUR EARNINGS AND OUR STOCK PRICE DUE TO THE
    LARGE AMOUNT OF ACQUIRED INTANGIBLE TECHNOLOGY ASSETS AND GOODWILL ON OUR
    BALANCE SHEET.

    At September 30, 2001, our balance sheet showed approximately $67 million of
acquired intangible technology assets and goodwill, with estimated original
useful lives of up to five years. Such assets will be charged ratably to expense
through December 31, 2001, based on their useful lives. Commencing January 1,
2002, in accordance with the recently-enacted Statement of Financial Accounting
Standards No. 142 "Goodwill and Other Intangible Assets," such assets will no
longer be charged ratably to expense but will be subject to at least an annual
assessment for impairment. We are currently evaluating the effect that FAS 142
will have on our results of operations and our earnings.

                                       13
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    RISKS ASSOCIATED WITH CONDUCTING OPERATIONS IN ISRAEL COULD MATERIALLY
    ADVERSELY AFFECT OUR ABILITY TO COMPLETE THE DEVELOPMENT OF OUR DLE/M FUEL
    CELL TECHNOLOGY OR ANY OF OUR OTHER TECHNOLOGIES.

    Our research and development facilities and our pilot HECP manufacturing
facility, as well as some of our executive offices and back-office functions,
are located in the State of Israel. We are, therefore, directly affected by the
political, economic and military conditions in Israel. Any major hostilities
involving Israel or the interruption or curtailment of trade between Israel and
the United States or Israel and Europe, including the United States' present
military activities in Afghanistan and related terrorist action, could have a
material adverse effect on our ability to complete the development of any of our
technologies or our ability to supply our technology to development partners or
vendors. Furthermore, any interruption or curtailment of trade between Israel
and any other country in which we have strategic relationships could similarly
adversely affect such relationships. In addition, all male adult permanent
residents of Israel under the age of 54, unless exempt, are obligated to perform
up to 44 days of military reserve duty annually and are subject to being called
to active duty at any time under emergency circumstances. Some of our employees
are currently obligated to perform annual reserve duty. We are unable to assess
what impact, if any, these factors may have upon our future operations.

    In addition, historically, Israel has suffered from high inflation and the
devaluation of its currency, the New Israeli Shekel, or NIS, compared to the
U.S. dollar. Future inflation or further devaluations of the NIS may have a
negative impact on our NIS-based obligations over time upon substantial price
increases caused by inflation.

    IT MAY BE DIFFICULT TO SERVE PROCESS ON OR ENFORCE A JUDGMENT AGAINST OUR
    ISRAELI OFFICERS AND DIRECTORS, MAKING IT DIFFICULT TO BRING A SUCCESSFUL
    LAWSUIT AGAINST US, OR OUR OFFICERS AND DIRECTORS, INDIVIDUALLY OR IN THE
    AGGREGATE.

    Service of process upon our directors and officers, many of whom reside
outside the United States, may be difficult to obtain within the United States.
Furthermore, any judgment obtained in the United States against us may not be
collectible within the United States to the extent our assets are located
outside the United States. This could limit the ability of our stockholders to
sue us based upon an alleged breach of duty or other cause of action. We have
been informed by our Israeli legal counsel that there is doubt as to the
enforceability of civil liabilities under the Securities Act and the Securities
Exchange Act of 1934, as amended, in original actions instituted in Israel.
However, subject to limitation, Israeli courts may enforce United States final
executory judgments for liquidated amounts in civil matters, obtained after a
trial before a court of competent jurisdiction, according to the rules of
private international law currently prevailing in Israel, which enforce similar
Israeli judgments, provided that:

    - due service of process has been effected and the defendant was given a
      reasonable opportunity to defend;

    - the obligation imposed by the judgment is executionable according to the
      laws relating to the enforceability of judgments in Israel and such
      judgment is not contrary to public policy, security or sovereignty of the
      State of Israel;

    - such judgments were not obtained by fraud and do not conflict with any
      other valid judgments in the same manner between the same parties; and

    - an action between the same parties in the same matter is not pending in
      any Israeli court at the time the lawsuit is instituted in the foreign
      court.

    Foreign judgments enforced by Israeli courts generally will be payable in
Israeli currency, which can then be converted into United States dollars and
transferred out of Israel. The judgment debtor may also pay in dollars. Judgment
creditors must bear the risk of unfavorable exchange rates.

                                       14
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    WE INTEND TO RETAIN ALL OF OUR FUTURE EARNINGS, IF ANY, FOR USE IN OUR
    BUSINESS OPERATIONS AND DO NOT EXPECT TO PAY DIVIDENDS TO OUR SHAREHOLDERS.

    We have not paid any dividends on our common stock to date and do not
anticipate declaring any dividends in the foreseeable future. Our board
presently intends to retain all earnings, if any, for use in our business
operations.

    THE LARGE NUMBER OF SHARES AVAILABLE FOR FUTURE SALE COULD ADVERSELY AFFECT
    THE PRICE OF OUR COMMON STOCK.

    As of September 30, 2001, options to purchase approximately 1,824,000 shares
of our common stock were outstanding. The weighted average exercise price of
such options was $8.71 per share. As of September 30, 2001, warrants to purchase
approximately 1,924,000 shares of common stock were outstanding. The weighted
average exercise price of such warrants was $14.19 per share. Future sales of
any shares represented by outstanding options and warrants, or the anticipation
of such sales, could adversely affect the market price of our common stock and
could materially impair our future ability to raise capital through an offering
of equity securities.

    WE CURRENTLY FACE AND WILL CONTINUE TO FACE SIGNIFICANT COMPETITION.

    Our DLE/M fuel cells face and will continue to face significant competition.
A large number of corporations, national laboratories and universities in the
United States, Canada, Europe and Japan are actively engaged in the development
and manufacture of fuel cells, both for portable electronic devices and other
uses. Each of these competitors has the potential to capture market share in
various markets, which would have a material adverse effect on our position in
the industry and our financial results.

    We expect competition to intensify greatly as the need for new energy
alternatives becomes more apparent and continues to increase. Some of our
competitors are well established and have substantially greater managerial,
technical, financial, marketing and product development resources. Additionally,
companies, both large and small, are entering the markets in which we compete.
There can also be no assurance that current and future competitors will not be
more successful in the markets in which we compete than we have been, or will be
in the future. There can be no assurance that we will be successful in such a
competitive environment.

    WE EXPECT TO BE DEPENDENT ON THIRD PARTY SUPPLIERS FOR THE SUPPLY OF KEY
    MATERIALS AND COMPONENTS FOR OUR PRODUCTS.

    If and when either we or our strategic alliance or joint venture partners
commence production of our fuel cells, of which there can be no assurance, we
expect to rely upon third party suppliers to provide requisite materials and
components. A supplier's failure to supply materials or components in a timely
manner, or to supply materials and components that meet our quality, quantity or
cost requirements, or our inability to obtain substitute sources for these
materials and components in a timely manner or on terms acceptable to us, could
harm our ability to manufacture our DLE/M fuel cells. We or our strategic
alliance or joint venture partners may be unable to obtain comparable materials
or components from alternative suppliers, and that could adversely affect our
ability to produce viable DLE/M fuel cells or significantly raise the cost of
producing DLE/M fuel cells.

    In addition, platinum is a key component of our DLE/M fuel cells. Platinum
is a scarce natural resource and we are dependent upon a sufficient supply of
this commodity. While we do not anticipate significant near or long-term
shortages in the supply of platinum, such shortages could adversely affect our
ability to produce commercially viable DLE/M fuel cells or significantly raise
our cost of producing DLE/M fuel cells.

                                       15
<Page>
RISKS RELATED TO THE OFFERING

    THIS OFFERING MAY DILUTE YOUR PERCENTAGE OWNERSHIP OF MEDIS TECHNOLOGIES.

    If you do not exercise all of your subscription rights, you may suffer
significant dilution of your percentage ownership of Medis Technologies relative
to stockholders who exercise their subscription rights. For example, if you own
10,000 shares of common stock before the rights offering, or approximately 0.06%
of our equity, and exercise none of your subscription rights, your percentage
ownership will be reduced to approximately 0.05% if all other subscription
rights are exercised. Furthermore, your percentage ownership in Medis
Technologies will be diluted if you do not qualify for the shareholder loyalty
program or do not exercise any warrants received in the shareholder loyalty
program, and program participants exercise some or all of their respective
warrants.

    IF YOU EXERCISE YOUR SUBSCRIPTION RIGHTS YOU MAY BECOME OBLIGATED TO
    PURCHASE SHARES OF OUR COMMON STOCK AT A PRICE HIGHER THAN THE MARKET PRICE
    OF OUR COMMON STOCK.

    The public trading market price of our common stock may decline before the
subscription rights expire. If you exercise your subscription rights and then
the public trading market price of the common stock decreases below $2.00, then
you will have committed to buy shares of common stock at a price above the
prevailing market price. Following the exercise of your subscription rights you
may not be able to sell your shares of common stock at a price equal to or
greater than the subscription price. In addition, you may not be able to sell
the shares of our common stock that you purchase in this rights offering until
the certificates representing such shares are delivered, which will be as soon
as practicable after expiration of the rights offering. We will not pay you
interest on funds that are delivered to the subscription agent pursuant to the
exercise of rights.

    ONCE YOU EXERCISE YOUR SUBSCRIPTION RIGHTS, YOU CANNOT CHANGE YOUR MIND, BUT
    WE MAY CANCEL THE RIGHTS OFFERING.

    Once you exercise your subscription rights, you may not revoke the exercise.
If we elect to withdraw or terminate the rights offering, neither the
subscription agent nor we will have any obligation with respect to the
subscription rights except to return, without interest or penalty, any
subscription payments.

    THE SUBSCRIPTION PRICE DETERMINED FOR THIS OFFERING IN NOT AN INDICATION OF
    OUR VALUE.

    Our board of directors set the subscription price. The subscription price
does not necessarily bear any relationship to the book value of our assets, past
operations, cash flows, losses, financial condition or any other established
criteria for value. You should not consider the subscription price as an
indication of our value.

    YOU WILL NEED TO ACT PROMPTLY AND FOLLOW INSTRUCTIONS CAREFULLY IF YOU WANT
    TO EXERCISE YOUR RIGHTS.

    Stockholders who desire to purchase shares in this rights offering must act
promptly to ensure that all required forms and payments are actually received by
our subscription agent prior to the expiration date. If you fail to complete and
sign the required subscription forms, send an incorrect payment amount, or
otherwise fail to follow the subscription procedures that apply to your desired
transaction, we may, depending on the circumstances, reject your subscription or
accept it to the extent of the payment received. Neither we nor the subscription
agent undertake to contact you concerning, or attempt to correct, an incomplete
or incorrect subscription form or payment. We have the sole discretion to
determine whether a subscription exercise properly follows the subscription
procedures. Any personal check used to pay for shares must clear prior to the
expiration date, and the clearing process may require five or more business
days.

    YOU WILL NEED TO ACT PROMPTLY AND FOLLOW INSTRUCTIONS CAREFULLY IF YOU WANT
    TO QUALIFY FOR THE LOYALTY PROGRAM.

    Stockholders who desire to qualify for the loyalty program must act promptly
to ensure that shares of our common stock are registered in their own name
rather than in "street" name. In addition, such stockholders must satisfy all of
the other conditions of the loyalty program. If you fail to satisfy any of the
conditions of the loyalty program, you will not receive any of the warrants that
will be distributed pursuant to the loyalty program.

                                       16
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                              THE RIGHTS OFFERING

THE SUBSCRIPTION RIGHTS

    We are distributing non-transferable subscription rights to stockholders who
owned shares of our common stock on February 13, 2002, at no cost to the
stockholders. We will give you 0.199626083 subscription rights for each share of
our common stock that you owned on February 13, 2002. One full subscription
right entitles you to purchase one share of our common stock at a subscription
price of $2.00 per share. We will not distribute any fractional subscription
rights, but will round the number of subscription rights you receive upward or
downward, as appropriate, to the nearest whole number. If you wish to exercise
your subscription rights, you must do so before 5:00 p.m., New York City time,
on March 18, 2002. After that date, the subscription rights will expire and will
no longer be exercisable.

BASIC SUBSCRIPTION PRIVILEGE

    One subscription right entitles you to purchase one share of our common
stock at a subscription price of $2.00 per share. You will receive certificates
representing the shares that you purchase pursuant to your basic subscription
privilege as soon as practicable after March 18, 2002, whether you exercise your
subscription rights immediately prior to that date or earlier.

OVERSUBSCRIPTION PRIVILEGE

    Subject to the allocation described below, each subscription right also
grants you an oversubscription privilege to purchase additional shares of common
stock that are not purchased by other stockholders pursuant to the subscription
rights they received in this rights offering. You are entitled to exercise your
oversubscription privilege only if you exercise your basic subscription
privilege in full. If you wish to exercise your oversubscription privilege, you
should indicate the number of additional shares that you would like to purchase
in the space provided on your subscription certificate. When you send in your
subscription certificate, you must also send the full purchase price for the
number of additional shares that you have requested to purchase (in addition to
the payment due for shares purchased through your basic subscription privilege).

    If the number of shares remaining after the exercise of all the basic
subscription privileges is not sufficient to satisfy all exercised
oversubscription privileges, you will be allocated shares pro rata (subject to
elimination of fractional shares), and in proportion to the number of shares you
purchased through your basic subscription privilege. However, if your pro rata
allocation exceeds the number of shares you requested on your subscription
certificate, then you will only receive the number of shares that you requested,
and the remaining shares from your pro rata allocation will be divided among
other stockholders exercising their oversubscription privileges. You will not
receive fractional subscription rights during the rights offering, but instead
we will round your number of oversubscription rights upward or downward, as
appropriate, to the nearest whole number. In addition, we have the discretion to
issue less than the total number of shares that may be available for
oversubscription requests. As soon as practicable after March 18, 2002, the
subscription agent will determine the number of shares of common stock that you
may purchase pursuant to the oversubscription privilege.

    We will allocate and distribute certificates representing any additional
shares that you purchase pursuant to your oversubscription privilege as soon as
practicable after March 18, 2002, unless the offering is extended. If you
request and pay for more shares than are allocated to you, we intend to refund
that overpayment, without interest or penalty, by March 28, 2002. In connection
with the exercise of the oversubscription privilege, banks, brokers and other
nominee holders of subscription rights who act on behalf of beneficial owners
will be required to certify to the subscription agent and to us as to the
aggregate number of subscription rights that have been exercised, and the number
of shares of common stock that are being requested through the oversubscription
privilege, by each beneficial owner on whose behalf the nominee holder is
acting.

                                       17
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NO RECOMMENDATIONS

    We are not making any recommendation as to whether or not you should
exercise your subscription rights. In making any investment decision to exercise
rights, you must consider your own best interests. None of the members of our
board of directors makes any recommendation as to whether you should exercise
your rights.

EXPIRATION DATE

    The rights will expire at 5:00 p.m., New York City time, on March 18, 2002,
unless we decide to extend the rights offering in our sole discretion for up to
an additional 20 business days to give our stockholders additional time to
exercise their subscription rights. If the commencement of the rights offering
is delayed, the expiration date will similarly be extended. If you do not
exercise your basic subscription privilege and oversubscription privilege prior
to that time, your subscription rights will be null and void. We will not be
required to issue shares of common stock to you if the subscription agent
receives your subscription certificate or your payment after that time,
regardless of when you sent the subscription certificate and payment, unless you
send the documents in compliance with the guaranteed delivery procedures
described later on in this prospectus.

WITHDRAWAL RIGHT

    Our board of directors may withdraw the rights offering in their sole
discretion at any time on or before March 18, 2002, for any reason, including a
substantial change in the market price of our common stock from its market price
at the commencement of the offering. If we withdraw the rights offering, any
funds you paid will be promptly refunded, without interest or penalty.

DETERMINATION OF SUBSCRIPTION PRICE

    In determining the subscription price in this rights offering, our board of
directors desired to offer shares at a price that would be attractive to our
stockholder base relative to the current trading price of our common stock. Our
board also considered the following factors, among others, in no particular
order of priority:

    - our desire to increase working capital at a minimal cost to us;

    - the historic and current market price of our common stock;

    - our history of losses;

    - general conditions in the securities market;

    - alternatives available to us for raising capital;

    - the amount of proceeds desired;

    - the liquidity of our common stock; and

    - the level of risk to our investors.

    The $2.00 per share subscription price should not be considered an
indication of our actual value or that of our common stock. We cannot assure you
that the market price of the common stock will not decline during this rights
offering. We also cannot assure you that you will be able to subsequently sell
shares of common stock purchased during this rights offering at a price equal to
or greater than $2.00 per share.

TRANSFERABILITY OF SUBSCRIPTION RIGHTS

    Only you may exercise the basic subscription privilege and the
oversubscription privilege. You may not sell, give away or otherwise transfer
the basic subscription privilege or the oversubscription privilege.

                                       18
<Page>
FOREIGN AND UNKNOWN ADDRESSES

    We are not mailing subscription certificates to stockholders whose addresses
are outside the United States or Israel or who have an APO or FPO address. The
subscription agent will hold the subscription certificates for those
stockholders. To exercise their rights, those stockholders must notify the
subscription agent prior to 5:00 p.m., New York City time, on the third business
day prior to the expiration date.

EXERCISE OF SUBSCRIPTION RIGHTS

    You may exercise your subscription rights by delivering to the subscription
agent on or prior to March 18, 2002:

    - A properly completed and duly executed subscription certificate;

    - Any required signature guarantees; and

    - Payment in full of $2.00 per share of common stock to be purchased through
      the basic subscription privilege and the oversubscription privilege.

    You should deliver your subscription certificate and payment to the
subscription agent at the address shown under the heading "Subscription Agent."
We will not pay you interest on funds that are delivered to the subscription
agent pursuant to the exercise of rights.

METHOD OF PAYMENT

    Payment for the shares must be made by check or bank draft (cashier's check)
drawn upon a United States bank or a postal, telegraphic or express money order
payable to "American Stock Transfer & Trust Company, as subscription agent" or
by wire transfer of immediately available funds. If the total price of the
shares of our common stock that you are purchasing exceeds $100,000 or more, we
may agree to an alternative payment method. If you use an alternative payment
method, the subscription agent must receive the full amount of your payment in
currently available funds within one trading day prior to March 18, 2002.
Payment will be deemed to have been received by the subscription agent only
upon:

    - clearance of any uncertified check;

    - receipt by the subscription agent of any certified check or bank draft
      drawn upon a U.S. bank, any postal, telegraphic or express money order, or
      any funds transferred by wire transfer; or

    - receipt of funds by the subscription agent through an alternative payment
      method.

    Please note that funds paid by uncertified personal check may take at least
five business days to clear. Accordingly, if you wish to pay by means of an
uncertified personal check, we urge you to make payment sufficiently in advance
of March 18, 2002, to ensure that the payment is received and clears before that
date. We also urge you to consider payment by means of a certified or cashier's
check or money order.

GUARANTEED DELIVERY PROCEDURES

    If you want to exercise your subscription rights, but time will not permit
your subscription certificate to reach the subscription agent on or prior
March 18, 2002, you may exercise your subscription rights if you satisfy the
following guaranteed delivery procedures:

    - You send, and the subscription agent receives, payment in full for each
      share of common stock being subscribed for through the basic subscription
      privilege and the oversubscription privilege, on or prior to March 18,
      2002;

    - You send, and the subscription agent receives, on or prior to March 18,
      2002, a notice of guaranteed delivery, substantially in the form provided
      with the attached instructions, from a member firm of a registered
      national securities exchange or a member of the National

                                       19
<Page>
      Association of Securities Dealers, Inc., or a commercial bank or trust
      company having an office or correspondent in the United States. The notice
      of guaranteed delivery must state your name, the number of subscription
      rights that you hold, the number of shares of common stock that you wish
      to purchase pursuant to the basic subscription privilege and the number of
      shares, if any, you wish to purchase pursuant to the oversubscription
      privilege. The notice of guaranteed delivery must guarantee the delivery
      of your subscription certificate to the subscription agent within three
      trading days after March 18, 2002; and

    - You send, and the subscription agent receives, your properly completed and
      duly executed subscription certificate, including any required signature
      guarantees, within three trading days after March 18, 2002. The notice of
      guaranteed delivery may be delivered to the subscription agent in the same
      manner as your subscription certificate at the addresses set forth under
      the heading "Subscription Agent," or may be transmitted to the
      subscription agent by facsimile transmission, to facsimile number
      (718) 921-8336. You can obtain additional copies of the form of notice of
      guaranteed delivery by requesting them from the subscription agent at the
      address set forth under the heading "Subscription Agent."

SIGNATURE GUARANTEES

    Except as described in the last sentence of this paragraph, signatures on
the subscription certificate must be guaranteed by an Eligible Guarantor
Institution, as defined in Rule 17Ad-15 of the Securities Exchange Act of 1934,
as amended, subject to the standards and procedures adopted by the subscription
agent. Eligible Guarantor Institutions include banks, brokers, dealers, credit
unions, national securities exchanges and savings associations. Signatures on
the subscription certificate do not need to be guaranteed if either the
subscription certificate provides that the shares of common stock to be
purchased are to be delivered directly to the record owner of these subscription
rights, or the subscription certificate is submitted for the account of a member
firm of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in the United States.

SHARES HELD FOR OTHERS

    If you are a broker, a trustee or a depository for securities, or you
otherwise hold shares of common stock for the account of a beneficial owner of
common stock, you should notify the beneficial owner of these shares as soon as
possible to obtain instructions with respect to their subscription rights. If
you are a beneficial owner of common stock held by a holder of record, such as a
broker, trustee or a depository for securities, you should contact the holder
and ask him or her to effect transactions in accordance with your instructions.

AMBIGUITIES IN EXERCISE OF SUBSCRIPTION RIGHTS

    If you do not specify the number of subscription rights being exercised on
your subscription certificate, or if your payment is not sufficient to pay the
total purchase price for all of the shares that you indicated you wished to
purchase, you will be deemed to have exercised the maximum number of
subscription rights that could be exercised for the amount of the payment that
the subscription agent receives from you. If your payment exceeds the total
purchase price for all of the subscription rights shown on your subscription
certificate, your payment will be applied, until depleted, to subscribe for
shares of common stock in the following order:

    (1) to subscribe for the number of shares, if any, that you indicated on the
       subscription certificate that you wished to purchase through your basic
       subscription privilege;

    (2) to subscribe for shares of common stock until your basic subscription
       privilege has been fully exercised;

                                       20
<Page>
    (3) to subscribe for additional shares of common stock pursuant to the
       oversubscription privilege, subject to any applicable proration. Any
       excess payment remaining after the foregoing allocation will be returned
       to you as soon as practicable by mail, without interest or penalty.

REGULATORY LIMITATION

    We are not offering or selling, or soliciting any purchase of, rights or
underlying shares in any foreign jurisdiction in which the rights offering is
not permitted. We reserve the right to delay the commencement of the rights
offering in any foreign jurisdiction if necessary to comply with local laws.
However, we may elect not to offer rights to residents of any foreign
jurisdiction whose laws would require a change in the rights offering in order
to carry out the rights offering in that jurisdiction. We will not be required
to issue you shares of common stock pursuant to the rights offering if, in our
opinion, you would be required to obtain prior clearance or approval from any
foreign jurisdiction to own or control these shares if, at the time the
subscription rights expire, you have not obtained this clearance or approval.

OUR DECISION BINDING

    All questions concerning the timeliness, validity, form and eligibility of
any exercise of subscription rights will be determined by us, and our
determinations will be final and binding. In our sole discretion, we may waive
any defect or irregularity, or permit a defect or irregularity to be corrected
within any time as we may determine, or reject the purported exercise of any
subscription right by reason of any defect or irregularity in this exercise.
Subscriptions will not be deemed to have been received or accepted until all
irregularities have been waived or cured within any time as we determine in our
sole discretion. Neither we nor the subscription agent will be under any duty to
notify you of any defect or irregularity in connection with the submission of a
subscription certificate or incur any liability for failure to give this
notification.

NO REVOCATION

    After you have exercised your basic subscription privilege or
oversubscription privilege, YOU MAY NOT REVOKE THAT EXERCISE. You should not
exercise your subscription rights unless you are certain that you wish to
purchase additional shares of common stock. No adjustments will be made in
connection with the rights offering to any options issued by us under our stock
incentive plans or to the number of shares reserved for issuance under any of
our stock incentive plans.

SHARES OF COMMON STOCK OUTSTANDING AFTER THE RIGHTS OFFERING

    Assuming we issue all of the shares of common stock offered in the rights
offering, 21,032,779 shares of common stock will be issued and outstanding. This
would represent an approximately 20% increase in the number of outstanding
shares of common stock as of the date of this prospectus. If you do not exercise
your basic subscription privilege, the percentage of our common stock that you
hold will decrease.

FEES AND EXPENSES

    We will pay all fees charged by the subscription agent. You are responsible
for paying any other commissions, fees, taxes or other expenses incurred in
connection with the exercise of the subscription rights. Neither we nor the
subscription agent will pay these expenses.

                                       21
<Page>
SUBSCRIPTION AGENT

    We have appointed American Stock Transfer & Trust Company as subscription
agent for the rights offering. The subscription agent's address for packages
sent:

    BY OVERNIGHT COURIER, FIRST CLASS MAIL OR REGISTERED MAIL:

           American Stock Transfer & Trust Company
           Attention: Rights Agent
           6201 Fifteenth Avenue, 3rd Floor
           Brooklyn, New York 11219

    BY HAND:
    (Mon.-Fri., 9:00 a.m.-5:00 p.m. Eastern Standard Time)

           American Stock Transfer & Trust Company
           Attention: Rights Agent
           59 Maiden Lane
           New York, New York 10038

    The subscription agent's telephone number is (718) 921-8200 and its
facsimile number is (718) 921-8336. You should deliver your subscription
certificate, payment of the subscription price and notice of guaranteed delivery
(if any) to the subscription agent. We will pay the fees and specified expenses
of the subscription agent, which we estimate will total $15,000. We have also
agreed to indemnify the subscription agent from any liability that it may incur
in connection with the rights offering.

RISK OF LOSS ON DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENTS

    Each holder of rights bears all risk of the method of delivery to the
subscription agreement of subscription certificates and payments of the
subscription price. If subscription certificates and payments are sent by mail,
you are urged to send these by registered mail, properly insured, with return
receipt requested, and to allow a sufficient number of days to ensure delivery
to the subscription agreement and clearance of payment prior to the expiration
date. Because uncertified personal checks may take at least five business days
to clear, you are strongly urged to pay, or arrange for payment, by means of
certified or cashier check, money order or wire transfer of funds.

IMPORTANT

    Please carefully read the instructions accompanying the subscription
certificate and follow those instructions in detail. Do not send subscription
certificates directly to us. You are responsible for choosing the payment and
delivery method for your subscription certificate and you bear the risks
associated with this delivery. If you choose to deliver your subscription
certificate and payment by mail, we recommend that you use registered mail,
properly insured, with return receipt requested. We also recommend that you
allow a sufficient number of days to ensure delivery to the subscription agent
and clearance of payment prior to March 18, 2002. Because uncertified personal
checks may take at least five business days to clear, we strongly urge you to
pay, or arrange for payment, by means of certified or cashier's check or money
order.

                                       22
<Page>
IF YOU HAVE ADDITIONAL QUESTIONS

    If you have questions about the rights offering or if you need assistance
concerning the procedure for exercising subscription rights, or if you would
like additional copies of this prospectus, the Instructions, the Beneficial
Owner Reregistration Form, or the Notice of Guaranteed Delivery, you should
contact either Robert K. Lifton, our Chief Executive Officer, or Howard
Weingrow, our President, at Medis Technologies Ltd., 805 Third Avenue, New York,
New York 10022; (212) 935-8484.

                          SHAREHOLDER LOYALTY PROGRAM

PURPOSE

    Our shareholder loyalty program is intended to reward those of our
shareholders who both participate in this rights offering and maintain their
record equity ownership in our company at no less than their respective equity
interest immediately following the closing of the rights offering for a period
of six months after the expiration of this rights offering.

BENEFITS OF PARTICIPATION

    If you satisfy all of the requirements of the loyalty program, you will
receive, at no charge, nontransferable warrants to purchase shares of our common
stock which, when issued, will be initially exercisable at a discount from the
then market price of our common stock. The number of warrants you receive will
be based on the number of shares of our common stock that you owned in your own
name on February 13, 2002. We will not distribute any fractional warrants, but
will round the number of warrants you receive upward or downward, as
appropriate, to the nearest whole number. You will receive 0.10 warrant for each
share of our common stock that you owned in your name on February 13, 2002. Each
warrant will entitle you to purchase one share of our common stock through
September 18, 2005 at an exercise price equal to 90% of the last sales price of
our common stock on September 18, 2002, increasing to 100% of such sale price on
September 18, 2003 and to 110% of such sale price on September 18, 2004,
respectively. Delivery of the warrants will be made as soon as practicable after
September 18, 2002.

    The warrants will be issued in registered form. We will act as our own
warrant agent for registration and permissible transfers of the warrants.

    The exercise price and number of shares of common stock issuable on exercise
of the warrants are subject to adjustment in certain circumstances including our
issuance of a stock dividend or our recapitalization, reorganization, merger or
consolidation. However, the warrants are not subject to adjustment for issuances
of common stock at a price below their exercise price.

ELIGIBILITY CRITERIA

    In order to satisfy the requirements of the loyalty program:

    - you MUST have shares of our common stock, other than those which you may
      purchase in the rights offering, registered in your own name rather than
      in the "street" name of a broker, dealer or other nominee on March 18,
      2002;

    - you MUST purchase shares of our common stock in the rights offering;

    - the shares of common stock you purchase in the rights offering MUST be
      registered in your own name rather than in "street" name; and

    - the number of shares of our common stock registered in your name on
      September 18, 2002, MUST equal or exceed that number of shares of common
      stock registered in your own name on March 18, 2002, inclusive of those
      shares of our common stock purchased in the rights offering.

                                       23
<Page>
    Participation in the loyalty program is limited to our stockholders who hold
their shares in their own name rather than in street name because it will
facilitate our ability to determine whether participants have satisified the
quantitative share retention provisions of the loyalty program.

    A possible consequence of our shareholder loyalty program is that persons
who may seek to realize a profit by selling shares of our common stock "short"
may be compelled to purchase our shares in the open market to cover their
"short" position, as their ability to borrow shares held in "street" name from
securities brokerage firms for this purpose may be curtailed by reason of the
transfer of substantially all of our shares from "street" ownership into record
ownership in order to satisfy certain of the program's eligibility criteria.
When a person sells shares "short," such person does not actually own such
shares at the time of sale, but expects to be able to buy shares at a lower
price prior to delivery of such shares to the buyer.

    We are not aware of any disadvantage to our stockholders if their shares of
our common stock are held other than in street name.

DEMONSTRATING COMPLIANCE WITH ELIGIBILITY CRITERIA

    Any shares of common stock that you purchase in the rights offering will be
automatically issued in your own name unless you hold your shares in "street"
name through a broker, dealer or other nominee (for example, a custodian bank).
If you own your shares in "street" name, you must instruct your record owner to
have those shares of our common stock that you purchase in the rights offering
issued in your own name by completing the "Beneficial Owner Re-Registration
Form" (blue form) and returning it to your record owner along with your
subscription certificate. IF YOU FAIL TO INSTRUCT YOUR RECORD HOLDER TO HAVE THE
SHARES OF OUR COMMON STOCK THAT YOU PURCHASED IN THIS RIGHTS OFFERING ISSUED IN
YOUR OWN NAME, YOU WILL BE INELIGIBLE TO PARTICIPATE IN OUR LOYALTY PROGRAM.

    If you currently hold shares of our common stock in "street" name through a
broker, dealer or other nominee and you wish these shares of common stock to be
registered in your own name so as to facilitate the determination of your
eligibility to participate in the loyalty program, you must direct your record
holder to promptly reregister in your own name all or such lesser number of
shares of our common stock that are held in your account or accounts with such
record holder by completing the "Beneficial Owner Re-Registration Form" that you
should have received from your record holder with the other rights offering
material. IF YOU FAIL TO INSTRUCT YOUR RECORD HOLDER TO HAVE THE SHARES OF OUR
COMMON STOCK YOU CURRENTLY OWN ISSUED IN YOUR OWN NAME, YOU WILL BE INELIGIBLE
TO PARTICIPATE IN OUR LOYALTY PROGRAM.

NO PROHIBITION UPON SALES OF OUR COMMON STOCK

    You can sell any or all of the shares of common stock that you currently own
or that you may purchase in the rights offering and still satisfy the
requirements of the loyalty program if on September 18, 2002 the number of
shares of common stock that you own in your own name equals or exceeds that
number of shares of common stock that you owned in your own name on March 18,
2002, inclusive of those shares of our common stock purchased in the rights
offering. However, if you purchase shares of our common stock in the open market
following the completion of the rights offering, you should request your broker
to register the shares in your name so as to facilitate our ability to
demonstrate your satisfaction of the eligibility criteria of the loyalty
program.

IF YOU HAVE ADDITIONAL QUESTIONS

    If you have questions about the loyalty program, or if you would like
additional copies of this prospectus or the Beneficial Owner Reregistration
Form, you should contact either Robert K. Lifton, our Chief Executive Officer,
or Howard Weingrow, our President, at Medis Technologies Ltd., 805 Third Avenue,
New York, New York 10022; (212) 935-8484.

                                       24
<Page>
                                USE OF PROCEEDS

    We will use the net proceeds from this rights offering for working capital,
particularly for continued development of our DLE/M fuel cell technology and
product development for our power pack charger. We no longer intend to finance
the construction of a manufacturing facility in Israel to produce fuel cells and
fuel cell components, as we have concluded that our resources would be better
committed to the continued research and development of our technologies rather
than to finance the construction of such a facility.

    Assuming that stockholders exercise all of the subscription rights offered,
we will receive gross proceeds from the rights offering of $7,000,000. If less
than all of the subscription rights offered are exercised, we intend to
proportionately reduce the funds allocated for the development of our DLE/M fuel
cells technology and product development for our power pack charger.

    We have been informed by Robert K. Lifton, our chairman and chief executive
officer, and Howard Weingrow, our president, who, collectively, beneficially own
approximately 15.7% of our outstanding common stock, that they presently intend
to exercise all of their subscription rights to purchase an aggregate of
approximately 548,575 shares in this rights offering pursuant to their basic
subscription privilege. Further, each presently intends to exercise his
oversubscription privilege to purchase additional shares. We will receive
proceeds of approximately $1,097,150 upon the exercise in full of
Messrs. Lifton's and Weingrow's respective basic subscription rights. Neither
Mr. Lifton or Mr. Weingrow, however, has committed to purchase any shares upon
exercise of their respective subscription rights.

                          PRICE RANGE OF COMMON STOCK

    Our common stock has traded on The Nasdaq National Market under the symbol
"MDTL" since October 3, 2000. Between June 6, 2000 and October 2, 2000, our
common stock was traded on The Nasdaq SmallCap Market under the same symbol.
Prior to June 6, 2000, there was no public market for our common stock. The
closing high and low sales prices of our common stock, as reported by The Nasdaq
National Market and The Nasdaq SmallCap Market, for the quarters indicated are
as follows:

<Table>
<Caption>
                                                                HIGH       LOW
2000:                                                         --------   --------
<S>                                                           <C>        <C>
Second Quarter (From June 6, 2000)..........................   22.750     16.563
Third Quarter...............................................   24.875     14.063
Fourth Quarter..............................................   22.500     10.250

2001:
First Quarter...............................................   23.875     13.250
Second Quarter..............................................   19.700     11.000
Third Quarter...............................................   12.930      4.010
Fourth Quarter..............................................    9.239      5.640

2002:
First Quarter (through February 12, 2002)...................    8.850      6.950
</Table>

    On February 12, 2002, the last reported sale price of our common stock was
$8.50 per share. As of February 12, 2002, there were approximately 710
stockholders of record of our common stock. Such number does not include
beneficial owners holding shares through nominee names.

                                       25
<Page>
                                DIVIDEND POLICY

    We have never declared or paid any dividends on our common stock. We
currently anticipate that we will retain all of our future earnings for use in
the expansion and operation of our business. Thus, we do not anticipate paying
any cash dividends on our common stock in the foreseeable future. Our future
dividend policy will be determined by our Board of Directors and will depend on
various factors, including our results of operations, financial condition,
capital requirements and investment opportunities. In addition, the terms of our
credit facility restrict our ability to pay dividends on our common stock.

                                    DILUTION

    The difference between the subscription price per share of our common stock
and the net tangible book value per share of our common stock after this
offering constitutes the dilution to investors of this offering. Net tangible
book value per share is determined by dividing out net tangible book value
(total tangible assets less total liabilities) by the number of outstanding
shares of common stock.

    As of September 30, 2001, our net tangible book value was $8.79 million, or
$0.50 per share of common stock. After giving effect to the sale of all of the
shares of our common stock in this rights offering at an exercise price of $2.00
per share, less the estimated expenses of this offering, our pro forma tangible
book value as of September 30, 2001 would have been approximately
$15.48 million or $0.74 per share of common stock, representing an immediate
increase in our net tangible book value of $.24 per share to current
stockholders and an immediate dilution of $1.26 per share to investors of this
offering. The following table illustrates the foregoing information as of
September 30, 2001 with respect to the dilution to investors on a per share
basis:

<Table>
<S>                                                           <C>        <C>
Exercise price per share....................................              $2.00
  Net tangible book value per share before the offering.....   $0.50
  Increase per share attributable to the offering...........   $0.24
Net tangible book value per share after the offering........              (0.74)
                                                                          -----
      Dilution per share....................................              $1.26
                                                                          =====
</Table>

                                       26
<Page>
                SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

    The selected consolidated statement of operations data for the years ended
December 31, 1996 and 1997 and the selected consolidated balance sheet data as
of December 31, 1996, 1997 and 1998 have been derived from audited financial
statements not included in this prospectus. The selected consolidated statement
of operations data for the years ended December 31, 1998, 1999, and 2000 and the
selected consolidated balance sheet data as of December 31, 1999 and 2000 have
been derived from our audited financial statements included elsewhere in this
prospectus. The selected consolidated statement of operations for the nine
months ended September 30, 2000 and 2001 and the selected consolidated balance
sheet data for the nine months ended September 30, 2000 and 2001 have been
derived from our unaudited consolidated financial statements, which we believe
include all adjustments, consisting of normal and recurring adjustments,
necessary for a fair presentation of the financial information. Such
consolidated financial statements include the financial statements of all of our
direct and indirect subsidiaries, including Medis Inc. and Medis El, beginning
on December 15, 1997. Prior to that date, our investment in Medis Inc. and Medis
El had been accounted for using the equity method of accounting. The data should
be read in conjunction with the consolidated financial statements and the notes
to such statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus. Our
results of operations for the nine months ended September 30, 2000 and 2001 are
not necessarily indicative of our results of operations for the entire year.

                                       27
<Page>
                SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
<Table>
<Caption>

                                                                 FOR THE YEAR ENDED DECEMBER 31,
                                                            ------------------------------------------
                                                                1996           1997           1998
                                                            ------------   ------------   ------------
<S>                                                         <C>            <C>            <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................................  $         --   $         --   $      8,000
Cost of sales.............................................            --             --          3,000
                                                            ------------   ------------   ------------
Gross profits.............................................            --             --          5,000
Operating expenses:
Research and development costs, net.......................  $         --   $  1,406,000   $  1,646,000
Selling, general and administrative expenses..............       193,000      1,303,000      1,399,000
Amortization of intangible assets.........................            --        102,000      2,445,000
                                                            ------------   ------------   ------------
Total operating expenses..................................       193,000      2,811,000      5,490,000
                                                            ------------   ------------   ------------
Loss from operations......................................      (193,000)    (2,811,000)    (5,485,000)
Interest and other income.................................         9,000         64,000         63,000
Interest and other expense................................    (1,660,000)      (381,000)      (101,000)
                                                            ------------   ------------   ------------
Loss before minority interest.............................    (1,844,000)    (3,128,000)    (5,523,000)
Equity in net losses of unconsolidated subsidiaries.......      (789,000)            --             --
Minority interest in loss of subsidiaries.................            --      1,584,000      1,105,000
                                                            ------------   ------------   ------------
Net loss..................................................    (2,633,000)    (1,544,000)    (4,418,000)
Value of warrant issued...................................            --             --             --
                                                            ------------   ------------   ------------
Net loss attributable to common shareholders..............  $ (2,633,000)  $ (1,544,000)  $ (4,418,000)
                                                            ============   ============   ============
Basic and diluted net loss per share......................  $      (0.71)  $      (0.33)  $      (0.52)
                                                            ============   ============   ============
Weighted average shares used in computing basic and
  diluted net loss per share..............................  $  3,734,129   $  4,645,232   $  8,581,774
                                                            ============   ============   ============
BALANCE SHEET DATA (END OF PERIOD):
Working capital (deficit).................................  $ (1,728,000)  $    266,000   $  3,536,000
Total assets..............................................  $  3,621,000   $ 14,443,000   $ 14,755,000
Long-term debt, excluding current maturities..............  $  1,000,000   $    338,000   $     96,000
Accumulated deficit.......................................  $(11,668,000)  $(13,232,000)  $(17,650,000)
Total shareholders' equity (deficit)......................  $ (1,645,000)  $ 11,378,000   $ 12,406,000

<Caption>
                                                                                                   FOR THE NINE MONTHS
                                                               FOR THE YEAR ENDED DECEMBER 31,     ENDED SEPTEMBER 30,
                                                               -----------------------------   ---------------------------
                                                                     1999           2000           2000           2001
                                                                 ------------   ------------   ------------   ------------
<S>                                                              <C>            <C>            <C>            <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................................       $         --   $         --   $         --   $         --
Cost of sales.............................................                 --             --             --             --
                                                                 ------------   ------------   ------------   ------------
Gross profits.............................................                 --             --             --             --
Operating expenses:
Research and development costs, net.......................       $  2,749,000   $  4,493,000   $  3,564,000   $  2,877,000
Selling, general and administrative expenses..............          2,467,000      5,405,000      4,010,000      3,720,000
Amortization of intangible assets.........................          2,574,000     13,668,000      8,310,000     15,849,000
                                                                 ------------   ------------   ------------   ------------
Total operating expenses..................................          7,790,000     23,566,000     15,884,000     22,446,000
                                                                 ------------   ------------   ------------   ------------
Loss from operations......................................         (7,790,000)   (23,566,000)   (15,884,000)   (22,446,000)
Interest and other income.................................            150,000        214,000        155,000        144,000
Interest and other expense................................            (22,000)       (13,000)        (9,000)       (40,000)
                                                                 ------------   ------------   ------------   ------------
Loss before minority interest.............................         (7,662,000)   (23,365,000)   (15,738,000)   (22,342,000)
Equity in net losses of unconsolidated subsidiaries.......                 --             --             --             --
Minority interest in loss of subsidiaries.................          1,697,000        873,000        873,000             --
                                                                 ------------   ------------   ------------   ------------
Net loss..................................................         (5,965,000)   (22,492,000)   (14,865,000)   (22,342,000)
Value of warrant issued...................................                 --      2,971,000      2,971,000             --
                                                                 ------------   ------------   ------------   ------------
Net loss attributable to common shareholders..............       $ (5,965,000)  $(25,463,000)  $(17,836,000)  $(22,342,000)
                                                                 ============   ============   ============   ============
Basic and diluted net loss per share......................       $      (0.61)  $      (1.79)  $      (1.33)  $      (1.30)
                                                                 ============   ============   ============   ============
Weighted average shares used in computing basic and
  diluted net loss per share..............................       $  9,807,101   $ 14,238,104   $ 13,369,245   $ 17,140,828
                                                                 ============   ============   ============   ============
BALANCE SHEET DATA (END OF PERIOD):
Working capital (deficit).................................       $  1,083,000   $  2,522,000   $  4,150,000   $  7,191,000
Total assets..............................................       $ 10,226,000   $ 87,202,000   $ 94,141,000   $ 76,874,000
Long-term debt, excluding current maturities..............       $     11,000   $         --   $         --   $         --
Accumulated deficit.......................................       $(23,615,000)  $(49,078,000)  $(41,451,000)  $(71,420,000)
Total shareholders' equity (deficit)......................       $  8,561,000   $ 86,142,000   $ 93,056,000   $ 75,741,000
</Table>

                                       28
<Page>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

    This presentation includes the operations of our wholly and majority owned
subsidiaries, including Medis El Ltd., unless we tell you otherwise.

RESULTS OF OPERATIONS

    From our inception in April 1992 through September 30, 2001 we have
generated a cumulative net loss of approximately $68,449,000, including
approximately $34,478,000 from amortization expense. We expect to incur
additional operating losses during the remainder of 2001 and possibly
thereafter, principally as a result of our continuing anticipated research and
development costs, amortization expense and the uncertainty of bringing our fuel
cell technology or any of our other technologies to commercial success. We have
increased our research and development budget since 1999 from approximately
$2,750,000 annually to approximately $4,500,000 annually; however, we anticipate
that our failure to successfully commercially develop our fuel cell technology
or any of our other technologies will force us to curtail our spending levels
until such time, if ever, as we generate revenues or otherwise receive funds
from third party sources. If we begin to market and sell any of our
technologies, we will increase such expenses to the extent necessary, which we
expect to fund out of revenues.

    NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED
     SEPTEMBER 30, 2000

    We sustained net losses of $22,342,000 during the nine months ended
September 30, 2001, compared to $14,865,000 during the nine months ended
September 30, 2000. The increase in the net loss during the nine months ended
September 30, 2001 compared to the same period in 2000 can primarily be
attributed to a substantial increase in amortization of intangible assets
acquired in connection with the acquisition of shares in the Medis El exchange
offer.

    Research and development costs amounted to $2,877,000 for the nine months
ended September 30, 2001, compared to $3,564,000 during the nine months ended
September 30, 2000. Research and development costs incurred during the nine
months ended September 30, 2001 compared to the same period in 2000 were lower
as a result of (i) expenditures aggregating $320,000 during the nine months
ended September 30, 2000 relating to the write-off of acquired in-process
research and development in connection with the acquisition of additional shares
of More Energy Ltd., our majority owned subsidiary for the development of fuel
cells, (ii) charges of approximately $561,000 during the nine months ended
September 30, 2000 relating to the write-off of acquired in-process research and
development incurred in connection with the Medis El exchange offer and (iii) a
decrease of approximately $424,000 in costs relating to the CellScan during the
nine months ended September 30, 2001 compared to the same period in 2000. These
factors, however, were somewhat offset by a substantial increase in spending on
fuel cell technologies during the nine months ended September 31, 2001 compared
to the same period in 2000. The research and development activity for the
periods presented include:

    - FUEL CELL TECHNOLOGIES. We incurred costs relating to our fuel cell
      technologies of approximately $1,112,000 during the nine month period
      ended September 30, 2001, compared to costs of approximately $1,000,000
      during the nine month period ended September 30, 2000. As described above,
      we had expenditures aggregating $320,000 during the nine months ended
      September 30, 2000 relating to the acquisition of additional shares of
      More Energy and a charge of approximately $182,000 from the write-off of
      acquired in-process research and development allocated to the development
      of our fuel cell technology in connection with the Medis El exchange offer
      in June 2000. Without the effects of such charges the increase in costs
      incurred

                                       29
<Page>
      on our fuel cell technologies would have been much greater because we
      devoted significantly more resources to the development of our fuel cell
      technologies in the nine months ended September 30, 2001 compared to the
      same period in 2000.

    - CELLSCAN. The refinement of the next generation CellScan system, in which
      we incurred costs of approximately $1,229,000 during the nine month period
      ended September 30, 2001, compared to costs of approximately $1,653,000
      during the nine month period ended September 30, 2000. The reduction in
      costs incurred during the nine month period ended September 30, 2001
      compared to the same period in 2000 is mainly due to less funds being
      devoted to collaborative research programs with third parties and
      procurement of materials for the CellScan. These factors were partially
      offset by an increase in salary and other related costs for research and
      development personnel.

    - TOROIDAL TECHNOLOGIES AND STIRLING CYCLE SYSTEM. Development of the
      toroidal engine and compressor and the stirling cycle linear system, in
      which we incurred costs of approximately $542,000 during nine month period
      ended September 30, 2001, compared to costs of approximately $879,000
      during the nine month period ended September 30, 2000. As described above,
      during the nine month period ended September 30, 2000, we incurred charges
      of approximately $379,000 from the write-off of acquired in-process
      research and development allocated to the development of our toroidal
      engine and stirling cycle linear system technologies incurred in
      connection with the Medis El exchange offer.

    Selling, general and administrative expenses for the nine months ended
September 30, 2001 amounted to approximately $3,720,000, compared to
approximately $4,010,000 for the nine months ended September 30, 2000. The
decrease can be primarily attributed to non-cash charges relating to stock
options and warrants issued to officers, directors, employees and consultants of
approximately $1,663,000 for the nine month period ended September 30, 2001,
compared to $2,674,000 during the same period in 2000, somewhat offset by
increases in salary and related costs and other expenses.

    Amortization of intangible assets amounted to $15,849,000 during the nine
months ended September 30, 2001, compared to $8,310,000 for the nine months
ended September 30, 2000. The increase during the nine months ended
September 30, 2001 compared to the same period in 2000 was primarily due to
amortization expense of approximately $13,798,000 during the nine months ended
September 30, 2001 compared to $6,332,000 for the same period in 2000, relating
to goodwill and acquired technology assets approximating $81,867,000 and
$6,071,000, respectively, acquired upon the completion of the Medis El exchange
offer.

    Management believes that, as an additional operational measurement, earnings
(loss) before interest, taxes, depreciation, and amortization, or EBITDA, is
useful and meaningful to an understanding of our operating performance. EBITDA
should not be considered in isolation or as a substitution for net income (loss)
or cash flow data or as a measure of our profitability or liquidity. Items
excluded from EBITDA, such as depreciation and amortization, are significant
components in understanding and assessing our financial performance. All
companies do not calculate EBITDA the same way.

                                       30
<Page>
    The computation of EBITDA for the nine months ended September 30, 2000 and
2001 is set forth in the table below:

<Table>
<Caption>
                                                                NINE MONTHS ENDED
                                                                  SEPTEMBER 30,
                                                           ---------------------------
                                                               2000           2001
                                                           ------------   ------------
<S>                                                        <C>            <C>
Net loss attributable to common shareholders.............  $(17,836,000)  $(22,342,000)
Add: value of warrants issued............................     2,971,000             --
Add: interest expense....................................         9,000         36,000
Less: interest income....................................      (155,000)      (144,000)
Add: amortization........................................     8,310,000     15,849,000
Add: depreciation........................................       282,000        330,000
                                                           ------------   ------------
  EBITDA.................................................  $ (6,419,000)  $ (6,271,000)
                                                           ============   ============
</Table>

    EBITDA includes as an expense non-cash compensation related to the issuance
of stock options and stock purchase warrants of approximately $1,663,000 for the
nine months ended September 30, 2001, and $2,674,000 for the nine months ended
September 30, 2000, respectively.

    Changes in the loss before interest, taxes, depreciation, and amortization,
for the nine months ended September 30, 2001 as compared to same periods in the
prior year occurred primarily due to reasons discussed earlier in this section.

    YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

    We sustained a net loss of $22,492,000 during the year ended December 31,
2000, compared to $5,965,000 during the year ended December 31, 1999. The
increase in net losses can primarily be attributed to increases in research and
development costs, selling, general and administrative expenses, amortization of
intangible assets acquired in connection with the acquisition of shares in the
Medis El exchange offer and costs related to the issuances of stock options and
warrants.

    Research and development costs increased to $4,493,000 for the year ended
December 31, 2000 as compared to $2,749,000 during the year ended December 31,
1999. The increases can be largely attributed to increased research and
development activity pertaining to:

    - Development of our DLE/M fuel cells, in which we incurred costs of
      approximately $1,697,000 during the year ended December 31, 2000 compared
      to costs of approximately $336,000 during the year ended December 31,
      1999. The increase in costs in 2000 was partially due to:
      (i) expenditures aggregating $320,000 to acquire an additional 11.5%
      interest in More Energy, which represents acquired in-process research and
      development, and (ii) an allocation to fuel cell technologies of
      approximately $182,000 of the write-off of acquired in-process research
      and development in connection with the Medis El exchange offer.

    - The further refinement of the CellScan, in which we incurred costs of
      approximately $2,148,000 during the year ended December 31, 2000, compared
      to costs of approximately $1,770,000 during the year ended December 31,
      1999.

    - Development of the toroidal compressor, in which we incurred costs of
      approximately $126,000 during the year ended December 31, 2000, compared
      to none during the year ended December 31, 1999.

    - Development of the toroidal engine, in which we incurred costs of
      approximately $322,000 during the year ended December 31, 2000, compared
      to costs of approximately $236,000 during the year ended December 31,
      1999. The increase in costs in 2000 was due to an allocation to the
      toroidal engine of approximately $151,000 of the write-off of acquired
      in-process research and

                                       31
<Page>
      development in connection with the Medis El exchange offer, somewhat
      offset by reduced spending on research and development of the toroidal
      engine.

    Selling, general and administrative expenses during the year ended
December 31, 2000 amounted to approximately $5,405,000, compared to
approximately $2,467,000 during the year ended December 31,1999. The increase
can be primarily attributed to non-cash charges of approximately $2,789,000
relating to stock options and warrants issued to officers, employees,
consultants and advisory board members, compared to approximately $125,000 in
1999.

    Amortization of intangible assets amounted to $13,668,000 during the year
ended December 31, 2000, compared to $2,574,000 during the year ended
December 31, 1999. This increase was primarily the result of amortization
expense of approximately $11,013,000 during the year ended December 31, 2000
relating to goodwill approximating $81,867,000 and acquired technology assets
approximating $6,071,000 acquired upon the completion of the Medis El exchange
offer.

    The computation of EBITDA for the years ended December 31, 1999 and 2000 is
set forth in the table below:

<Table>
<Caption>
                                                             YEAR ENDED DECEMBER 31,
                                                            --------------------------
                                                               1999           2000
                                                            -----------   ------------
<S>                                                         <C>           <C>
Net loss attributable to common Shareholder...............  $(5,965,000)  $(25,463,000)
Add: value of warrants issued.............................           --      2,971,000
Add: interest expense.....................................       22,000         13,000
Less: interest income.....................................     (150,000)      (214,000)
Add: amortization.........................................    2,574,000     13,668,000
Add: depreciation.........................................      388,000        363,000
                                                            -----------   ------------
  EBITDA..................................................  $(3,131,000)  $ (8,662,000)
                                                            ===========   ============
</Table>

    EBITDA includes as an expense non-cash compensation related to the issuance
of stock options and stock purchase warrants of approximately $3,229,000 and
$187,000 for the years ended December 31, 2000 and 1999, respectively.

    The increase in loss before interest, taxes, depreciation and amortization
for the year ended December 31, 2000 as compared to the year ended December 31,
1999 occurred due to increases in research and development costs and selling,
general and administrative expenses for the reasons discussed earlier in this
section.

    YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998.

    We sustained a net loss of $5,965,000 during the year ended December 31,
1999 compared to $4,418,000 during the year ended December 31, 1998. The
increase can primarily be attributed to a significant rise in research and
development costs and increased selling, general and administrative expenses,
partially offset by increased interest income due to higher average cash
balances and lower interest expense due to lower debt balances during the year
ended December 31, 1999, as compared to the year ended December 31, 1998.

    Research and development costs were up sharply at $2,749,000 for 1999, as
compared to $1,646,000 during the year ended December 31, 1988. This increase
can be largely attributed to increased research and development activity
pertaining to the CellScan, stirling cycle linear technology and fuel cells,
costs aggregating $115,000 to acquire an additional 11.5% interest in More
Energy, depreciation expense of $388,000 as compared to $101,000 for the year
ended December 31, 1998 and costs incurred of $255,000 to write off our
inventory of cell carriers, antigens and neuritors, a technology licensed to
Medis El, to research and development expense. These factors were somewhat

                                       32
<Page>
offset by a payment of $200,000 Medis El received under a December 1998
technology development agreement with The Coca-Cola Company in which it:

    - paid $100,000 to obtain a right of first refusal to obtain exclusive
      rights to use the stirling cycle, fuel cells and other technologies in its
      field of business; and

    - paid $100,000 to assist in the development of the stirling cycle
      technology for use in its field of business.

    Such payments aggregating $200,000 were recorded as a credit to research and
development costs for the year ended December 31, 1999.

    Selling, general and administrative expenses for the year ended
December 31, 1999 were $2,467,000 compared to $1,399,000 for the year ended
December 31, 1998. This increase can be primarily attributed to a charge of
$437,000 to selling and general administrative expenses in the fourth quarter of
1999 pursuant to the terms of a settlement agreement with an Argentine company
and a substantial increase to approximately $425,000 in legal and accounting
fees and related expenses primarily relating to the Medis El exchange offer.

LIQUIDITY AND CAPITAL RESOURCES

    We have historically financed our operations primarily through the proceeds
of investor equity financing, long-term bank loans and grants to Medis El from
the Chief Scientist of the Ministry of Industry and Commerce of Israel with
respect to the CellScan, initial sales of our products and fees from the
granting of exclusive distribution rights.

    In 2000, we issued a total of 1,598,811 shares of our common stock and
warrants to purchase 680,361 shares of common stock for aggregate proceeds of
approximately $7,758,000. We used and intend to use the proceeds of such
offerings to fund the further research and development of our products and
technologies and for selling, general and administrative expenses. Additionally,
in the first quarter of 2000, prior to the Medis El exchange offer, employees,
including Medis El's executive vice president and vice president-finance, and a
director, exercised options to purchase an aggregate of 66,100 ordinary shares
of Medis El, for an aggregate exercise price of approximately $336,000. The
proceeds of such option exercises were similarly used for research and
development and selling, general and administrative expenses. We do not intend
to cause Medis El to issue any more of its shares to third parties, whether
through the exercise of stock options or otherwise, as we intend that all future
financings of Medis El will be effected through us.

    In May and June 2001, we issued in private placements a total of 660,688
shares of our common stock and warrants to purchase 660,688 shares of our common
stock, for aggregate proceeds of $10,571,000, less issuance costs of
approximately $331,000. Additionally, in July 2001, we issued pursuant to the
exercise of warrants 10,275 shares of our common stock, for aggregate proceeds
of approximately $38,000. The net proceeds of such issuances are being used for
research and development projects with respect to our products and technologies
and selling, general and administrative expenses.

    For the nine months ended September 30, 2001, net cash used in operating
activities was $4,341,000 as compared to $3,528,000 for the nine months ended
September 30, 2000. The increase was primarily attributable to increases in
expenditures for research and development and selling, general and
administrative expenses during the period, for the reasons discussed above,
partially offset by changes in operating asset and liability balances.

    For the nine months ended September 30, 2001, net cash used in investing
activities was $1,150,000, which represented $520,000 used to acquire an option
to purchase the remaining 7% of More Energy we do not own and $655,000 for the
purchase of property and equipment, partially offset

                                       33
<Page>
by proceeds of $25,000 from the disposal of property and equipment. This is
compared to $926,000 used in investing activities during the nine months ended
September 30, 2000, which represented acquisition of shares of Medis El and More
Energy not owned by us aggregating $718,000 and the purchase of property and
equipment of $230,000, partially offset by proceeds of $22,000 from disposals of
property and equipment.

    For the nine months ended September 30, 2001, cash aggregating $10,278,000
was provided by financing activities, as discussed above, compared to $7,445,000
being provided for the nine months ended September 30, 2000. The cash provided
by financing activities during the nine months ended September 30, 2000 was
primarily due to funds raised from private placements of our securities and the
exercise of Medis El options, for aggregate proceeds of $7,934,000, partially
offset by direct costs of the Medis El exchange offer of $395,000 and the
repayment of long term debt of $97,000.

    As of September 30, 2001, we had approximately $7,672,000 in cash and cash
equivalents, as well as an unused $5,000,000 revolving credit line. Our working
capital and capital requirements at any given time depend upon numerous factors,
including, but not limited to:

    - the progress of research and development programs;

    - the status of our technologies; and

    - the level of resources that we devote to the development of our
      technologies, patents, marketing and sales capabilities.

    Another contributing factor is the status of collaborative arrangements with
businesses and institutes for research and development and companies
participating in the development of our technologies.

    We believe, as of September 30, 2001, that our cash resources and funds
available to borrow under our $5,000,000 revolving credit facility, excluding
any proceeds from this rights offering, will be sufficient to support our
operating and developmental activities for at least 23 months. Beyond such time,
we may require capital infusions of cash to continue our operations, whether
through debt financing, issuance of shares or from companies or other
organizations participating in the development of our technologies. However, to
the extent we are unable to raise or acquire additional other funds, we will
curtail research and development of one or more technologies until such time as
we acquire additional funds.

TAX MATTERS

    As of December 31, 2000, for U.S. federal income tax purposes, we have net
operating loss carry-forwards of approximately $5,299,000. For Israeli income
tax purposes, we have net operating loss carry-forwards of approximately
US$28,847,000. Since our inception, we have not had any taxable income. Also,
neither we nor Medis El have ever been audited by the United States or Israeli
tax authorities since incorporation.

    The availability of our U.S. net operating loss carry-forwards may be
reduced to the extent one or more direct or indirect holders of 5% or greater
amount of our common stock increases their equity interest in us by more than
50% in the aggregate.

GRANTS OBTAINED FROM THE STATE OF ISRAEL

    Medis El received approximately $1,800,000 in research and development
grants from the Office of the Chief Scientist of the Ministry of Commerce and
Industry of the State of Israel from its inception to 1997. This is based upon a
policy of the government of Israel to provide grants of between 50% and 66% of
qualifying approved research and development expenditures to promote research
and development by Israeli companies. Medis El received 50% of qualifying
approved research and

                                       34
<Page>
development expenditures, with $1,629,000 of such funds being allotted for the
CellScan and $167,000 allotted for the neuritor. Pursuant to the grant
arrangement, Medis El is required to pay 3% of its sales of CellScan and
neuritor products developed with the grant funds until the grant amounts are
paid in full. There is no requirement to repay the grants if the products
developed with the grant funds are not sold. If Medis El sells the underlying
technology prior to repaying the grant funds, it must first seek permission from
the Israeli government for such sale. Prior to Medis El receiving grant funds in
1992, Medis El assumed from Israel Aircraft its obligation relating to the
repayment of grants of approximately $805,000. As of the date of this
prospectus, Medis El's total contingent obligation for the repayment of grants,
which includes the $805,000, is $2,601,000. Medis El is not presently receiving
any grants from the State of Israel.

APPROVED ENTERPRISE

    Under the Israeli Law for the Encouragement of Capital Investments, 1959,
Medis El was issued a certificate of approval as an "Approved Enterprise." Under
the law, Medis El elected the "combined path," pursuant to which Medis El had
the right to receive a government guaranteed bank loan of 66% of the amount of
the approved investment. In addition, Medis El had the right to receive a grant
of 25% of the approved investment, in which case the loan would be reduced by
the amount of the grant. Medis El received investment grants of approximately
$97,000 and loans of approximately $893,000. The investment grants were used to
invest in equipment, furniture and fixtures and commercial vehicles. The loan
proceeds were used for the above as well as to acquire know-how, leasehold
improvements, marketing and working capital. The loans were paid-off in full
during the year ended December 31, 2000. The loans which were from Bank Leumi Le
Israel and guaranteed by the State of Israel, are secured by substantially all
of Medis El's assets. Additionally, the tax liability in respect of Medis El's
income deriving from its Approved Enterprise activities is calculated at a rate
of 20% of income for a ten-year period, with tax on dividends distributed of
15%, instead of 25%. These tax benefits can be utilized at least through 2006.

    In September 2001, More Energy received Approved Enterprise status relating
to a planned manufacturing facility for our catalyst, electrolytes and the
individual fuel cells in Israel. The Approved Enterprise status provides that
More Energy will receive a complete exemption from the payment of corporate
taxes on undistributed income for a period ranging from 6 to 10 years and other
benefits. More Energy is required to invest an aggregate of $5,300,000 (30% of
which must be equity-based financing) in the manufacturing facility by July 30,
2003. If, however, More Energy has invested 40% of such amount by July 30, 2003,
it can apply for a one year extension as well as additional extensions
thereafter, which we can give no assurance will be approved. Otherwise, More
Energy's Approved Enterprise status will terminate.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    In connection with our currency use, we operate in a mixed environment.
Payroll is paid in our local currency and the local currency of each of our
subsidiaries as are most of our other operating expenses. Consideration for
virtually all sales is either in dollars or dollar-linked currency. As a result,
not all monetary assets and all monetary liabilities are linked to the same base
in the same amount at all points in time, which may cause currency fluctuation
related losses. In order to help minimize such losses, we currently invest our
liquid funds in both dollar-based and NIS-based assets.

    For many years prior to 1986, the Israeli economy was characterized by high
rates of inflation and devaluation of the Israeli currency against the United
States dollar and other currencies. Since the institution of the Israeli
Economic Program in 1985, inflation, while continuing, has been significantly

                                       35
<Page>
reduced and the rate of devaluation has been substantially diminished. However,
Israel effected devaluations of the NIS against the dollar as follows:

<Table>
<S>                                                           <C>
1996........................................................     3.7  %

1997........................................................     8.8

1998........................................................    17.6

1999........................................................    (0.17)

2000........................................................    (2.7)
</Table>

    In 1996, 1999 and 2000, the rate of inflation in Israel exceeded the rate of
devaluation of the NIS against the dollar, but in 1998 and 1997 the rate of
devaluation of the NIS against the dollar exceeded the rate of inflation in
Israel. In 2000, there was no inflation in Israel and the NIS appreciated by
2.7% against the dollar.

    The state of hostility which has existed in varying degrees in Israel since
1948, its unfavorable balance of payments and its history of inflation and
currency devaluation, all represent uncertainties which may adversely affect our
business.

RECENT ACCOUNTING PRONOUNCEMENT

    In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, Business Combination ("FAS 141") and
No. 142, Goodwill and Other Intangible Assets ("FAS 142"). FAS 141 requires that
all business combinations initiated after June 30, 2001 be accounted for using
the purchase method. FAS 142 requires goodwill be subject to at least an annual
assessment for impairment with amortization over its estimated useful life to be
discontinued effective January 1, 2002. We are currently evaluating the effect
of the adoption of FAS 141 and FAS 142 on our consolidated financial statements.

                                       36
<Page>
                                    BUSINESS

INTRODUCTION

    Our primary business focus is on the development and commercialization of
direct liquid ethanol/ methanol (DLE/M) fuel cells and attendant refueling
cartridges for use in portable electronic devices which currently use
rechargeable or disposable batteries as their power source. These devices
include cell phones, personal digital assistants (PDAs), laptop computers and
certain military devices. We have developed an experimental model, commonly
known as a "breadboard," of a "power pack" charger, which uses DLE/M fuel cells
and is capable of directly charging a cell phone. We expect to have a
pre-production unit of a commercially viable power pack, which is capable of
directly charging a cell phone without the use of an external support system, by
the end of 2002. However, to achieve this goal we must first make substantial
technological advances including, among others, increasing energy density to
supply more energy at smaller sizes, increasing operating time, decreasing size
and weight, reducing temperature during operation and stabilizing power output.
We can give no assurances of success in these regards. We anticipate developing
other fuel cells that are intended to be incorporated as an original equipment
power source for cell phones and other electronic products in the second half of
2003 or the first half of 2004.

    We expect that as portable electronic devices become more advanced and offer
greater functionality, manufacturers of those devices will seek to acquire fuel
cells offering significantly increased and longer lasting sources of energy. We
believe that our DLE/M fuel cell technology, the key proprietary components of
which are our highly conductive polymers (HECPs), our electrodes, our catalysts
for anodes and cathodes and our liquid electrolyte, will enable us to meet this
requirement. We also believe that our fuel cells can be responsive to device
manufacturers' demands for reduced size and weight, increased length of
operating time and competitive pricing.

    Since HECPs have a wide and diverse range of commercial uses beyond their
use as components in our DLE/M fuel cells, we also intend to manufacture and
recycle HECPs which differ from those used in our fuel cells for sale to third
parties. HECPs have electrical properties that can be changed over the full
range of conductivity from insulators to metallic conductors and have the
non-corrosive properties, flexibility and durability of plastics. We also own
patents and intellectual property rights to other technologies relating to clean
energy that may offer greater efficiencies than conventional energy sources.
These proprietary technologies, which we are looking to exploit commercially,
include:

    - toroidal engine and compressor, which use a rotary motion as contrasted
      with the up and down motion of pistons in a conventional internal
      combustion engine;

    - stirling cycle linear compressor, which us based upon a century-old
      technique that harnesses energy from the expansion and contraction of a
      gas forced between seperate chambers, that may be capable of providing
      greater energy efficiency for refrigeration and air conditioning systems;
      and

    - reciprocating electrical machine, which seeks to use the back and forth
      motion of energy sources such as wind or sea waves to convert such
      energies' motion into electricity.

    In addition, we own the rights to the CellScan system, which is a detection
and monitoring system for human cells which may have many potential applications
relating to disease diagnostics and determining chemosensitivity.

    We are a Delaware corporation organized in April 1992. Our executive offices
are located at 805 Third Avenue, New York, New York 10022. Our telephone number
is (212) 935-8484. Our website is located at www.medistechnologies.com. The
information on our website is not part of this prospectus.

FUEL CELLS

    A fuel cell is an electro-chemical device that converts the chemical energy
of a fuel, such as hydrogen, ethanol or methanol, into electrical energy. There
are many different types of fuel cells being

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developed for commercial applications, many of which are intended for large
scale applications such as stationary power generation application. By contrast,
our fuel cells are being developed for small scale applications, and in
particular for use in portable electronic devices.

    Fuel cells for small scale applications have many of the characteristics of
batteries without some of their negative attributes. While they share similar
operating characteristics, a key distinguishing feature is that a fuel cell
relies on an external fuel supply while batteries are energy storage devices. As
a result, fuel cells are more convenient to operate because they produce power
as long as fuel is supplied, unlike a battery which provides power only as long
as it has stored power. Because ethanol or methanol has many times the energy
storage capacity as the operative components in batteries, the DLE/M fuel cell
has the potential for far greater operating time than any of today's batteries.
Moreover, the external fuel supply can be refilled or replaced quickly, unlike a
battery which either has to be disposed of or, alternatively, undergoes a long
recharging process of three or more hours. Finally, from an environmental
perspective, fuel cells are far easier and less costly to dispose of than
batteries since they, unlike batteries, have no or minimal heavy metal
components.

    MARKET OPPORTUNITIES

    PORTABLE ELECTRONIC DEVICE MARKET.  It has been widely reported that over
$100 billion has been committed by the telecommunications companies to license
radio spectrum space for the development of wireless networks and equal amounts
are estimated as the cost of building out these wireless systems. Furthermore,
recent announcements by large handset manufacturers reflect the fact that sales
of handsets are slowing as the available demand for present state-of-the-art
cell phones is increasingly being satisfied. To justify these huge investments
and in order for the cell phone companies to significantly increase sales of
handsets, these companies are expected to offer a more advanced unit, commonly
referred to as a third generation or 3G cell phone, with greater functionality,
i.e., many more applications, such as e-mail and internet availability,
shopping, banking and stock purchasing capabilities, music, movies and the like.
Whether offered on a next-generation 3G cell phone, a currently available cell
phone or some other device such as a combination of a PDA and a cell phone, such
functionality will require greater power capability than that possessed by
currently available devices, as well as much longer-lasting power to extend use
time, if the consumer expectation regarding the availability of those
applications is to be fully satisfied. Currently, there is an increasing
recognition of the value of fuel cells for these small applications since they
have the ability to deliver more lasting power in smaller sizes and weights than
the equivalent batteries. Fuel cells can also be an important source of power
for other portable electronic devices, such as laptop computers, digital cameras
and power tools, that currently use conventional rechargeable batteries as their
power source.

    CHARGERS.  We are seeking to develop fuel cells to charge portable
electronic devices and will be capable of fully charging a cell phone in the
regular time required by the phone for charging. Unlike a rechargeable battery,
which requires external power support, a fuel cell charger will be more easily
portable because it uses an internal concentration of fuel, such as ethanol or
methanol, as its power source. The fuel cell charger is then refueled by
inserting a small, lightweight, and inexpensive refueling cartridge directly
into the fuel cell charger. We expect that cell phone users will perceive value
in a fuel cell charger that is easily portable and will provide longer lasting
power than batteries without the inconvenient need to recharge at an external
power support system, such as a wall socket. As cell phones add additional
functions and require more power, we expect the convenience of having a fuel
cell charger will spur a greater demand for this capability. As a result,
electronic device manufacturers could benefit by having a fuel cell power source
actually operating in the market place that they can immediately offer to their
customers. We also expect to find a large market for fuel cell chargers in
countries like China where cell phone use is expected to expand but where people
ride more bicycles than cars and electrical connections may be less readily
available that in the United States and other countries. As fuel cell chargers
gain greater acceptance, we expect that electronic device manufacturers will
become more inclined to incorporate them into the cell phone itself.

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    MILITARY APPLICATIONS.  The U.S. Department of Defense has stated that it
has a pressing need for lighter and more compact electrical power sources as the
modern soldier is increasingly equipped with many new portable electronic
devices. As with the latest portable electronics for consumers, these devices
require significant power sources and are currently dependent on batteries that
are heavy and expensive and must be recharged frequently at a central charging
source. We are working to develop fuel cells to satisfy these needs. One of our
first efforts will be to develop a fuel cell charger capable of charging the
batteries that are to be carried by foot soldiers in the Land Warrior program of
the U.S. Department of Defense, with the aim of eventually replacing the
batteries themselves with fuel cells. The Land Warrior program is designed to
make each individual soldier function as a complete weapon system, integrating
small arms with high-tech equipment such as special communications devices,
weapons imaging systems, video, and global positioning systems. We have
commenced discussions, together with General Dynamics, with whom we have entered
into a collaboration agreement, with the U.S. military in these regards.

    On January 2, 2002, we received a $75,000 purchase order from an Israeli
electronics manufacturer to define a specification and carry out the preliminary
design of a DLE/M fuel cell for a new energy pack for infantry soldiers. We
believe that our successful execution of this order, which is part of the first
phase of an Israeli sponsored military development program, may lead to add-on
orders as and if this program continues.

    OUR FUEL CELLS COMPARED TO OTHER FUEL CELLS

    Our DLE/M fuel cell differs from direct methanol fuel cells being developed
for the portable electronic device market in that we use a proprietary liquid
electrolyte instead of a solid polymer membrane (proton exchange membrane, or
PEM). We believe the presence of a PEM makes it difficult to reduce size and
increase the power densities to a needed level for portable electronic devices.
In a direct methanol fuel cell with a PEM, the concentration of methanol is
generally limited to 3% to 5%, reducing the performance of the fuel cell. As a
result, some direct methanol fuel cells are planned with an external delivery
system to feed the methanol into the fuel cell which have some form of regulator
to control the amount of methanol. Other direct methanol fuel cell external
support systems may include a water management systems and where fuel cells are
traditionally stacked, a forced air system. This direct methanol fuel cell
therefore requires additional delivery mechanisms involving more size,
complexity and cost. By reason of our fuel cell's design and architecture and
the use of our liquid electrolyte which replaces the PEM in our fuel cell, we
are able to increase the concentration of fuel (such as methanol or ethanol),
thereby increasing the power, electrical output and service life of the fuel
cell between each refueling, without harming the fuel cell and without
additional mechanisms to regulate the ethanol (methanol) intake. Our DLE/M fuel
cells are presently capable of carrying a 30%-35% concentration of ethanol
(methanol), a far larger proportion of ethanol (methanol) than any direct
methanol fuel cell we know of. Additionally, our fuel cell is self-regulating,
providing sufficient power to meet the draw-down as required.

    We have recently attained a breakthrough with our fuel cell technology which
enables us to substitute the methanol we have historically used to power our
fuel cells with ethanol. We consider the ability to use ethanol rather than
methanol a highly beneficial characteristic of our fuel cell technology because
it avoids the limitations placed on methanol, such as its prohibited carriage on
commercial aircraft, and in certain areas, ethanol is less expensive than
methanol. There are three proprietary components used in our DLE/M fuel cells
that help us achieve these results--our HECPs, catalyst and liquid electrolyte.
Our HECPs perform important functions in aiding fuel cell performance. Based on
laboratory tests, our proprietary catalyst, which is used for oxidation of
liquid fuel, acts more effectively than standard catalysts, improving
performance of the fuel cell. Because of its effectiveness, we have been able to
reduce the amount of platinum needed in our DLE/M fuel cell, thus enabling us to
lower the component costs of our product. Our liquid electrolyte replaces the
PEM in our fuel cell, enabling the substantial increase in the concentration of
ethanol in our fuel.

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    STATE OF OUR FUEL CELL TECHNOLOGY

    We must make substantial advances in the development of our technology prior
to achieving the commercial viability of our power pack charger and of our DLE/M
fuel cell as a primary power source. These advances include the following:

    - SUPPLYING INCREASED ENERGY WHILE ALSO REDUCING SIZE AND WEIGHT. We are
      working to increase the energy density of our fuel cells, which helps
      determine the ability to supply more energy at smaller sizes. We expect
      that a commercially viable power pack charger for a cell phone must be
      able to maintain an energy density of approximately 70mW/cm(2)
      (70mW/0.155in(2)), or milliwatts per square centimeter (milliwatts per
      0.155 of one square inch), which we have attained in laboratory tests, and
      a commercially viable fuel cell operating as the primary power source for
      a cell phone must be able to maintain an energy density from approximately
      120mW/cm(2) (120mW/0.155in(2)) to 150mW/cm(2) (150mW/0.155in(2)). We
      anticipate that our fuel cells will maintain an energy density of
      70mW/cm(2)(70mW/0.155in(2)) on a consistent basis by the end of 2002 and
      from 120mW/cm(2) (120mW/0.155in(2)) to 150mW/cm(2) (150mW/0.155in(2)) on a
      consistent basis some time in the second half of 2003 or the first half of
      2004.

      We have developed a fuel cell providing an output of 1.0 watt that has a
      volume of 66 cubic centimeters (4.0260 cubic inches), and a weight of 70
      grams (2.471 ounces). We intend that our power pack charger that will be
      able to charge a cell phone will provide an output of approximately 2.5
      watts, have a volume between 140 cubic centimeters (8.54 cubic inches) and
      160 cubic centimeters (9.76 cubic inches) and weigh between 120 grams
      (4.236 ounces) and 140 grams (4.942 ounces).

    - PERFECTING THE DISCHARGE CHARACTERISTICS AND THE LENGTH OF OPERATING TIME.
      Discharge characteristics determine how much power the fuel cell can
      deliver over a period of time before refueling. We have developed a test
      unit individual fuel cell with an energy density of
     50mW/cm(2) (50mW/0.155in(2)) and a volume of 16 cubic centimeters (0.9760
      cubic inches) that can operate for approximately 43 hours, providing a
      total of 5,100mA (milliamperes) hours in laboratory tests, although output
      declines over time. Our target for 2002 for this test unit is 10,000mA
      hours while operating at a consistent output for approximately 25 hours.

    - IMPROVING THE ENGINEERING DESIGN. Currently, our fuel cells are produced
      primarily by hand and are not yet designed to achieve maximum efficiency.
      Upon successful development of our
     DLE/M fuel cell technology, as to which we can give no assurance, we expect
      to design a final product using modern industrial production techniques,
      which will allow us to achieve maximum efficiency for our fuel cells.

    - REDUCING THE INTERNAL AND EXTERNAL TEMPERATURE DURING OPERATION. The
      internal and external temperature of our DLE/M fuel cell is related to its
      efficiency. We expect that improving the power density and longevity of
      our fuel cells will allow the fuel cells to operate more efficiently, thus
      lowering the internal and external temperature of the fuel cells.

      We are also developing ways to make our fuel cells resistant to outside
      weather conditions. For example, fuel cells used in military products may
      be required to operate in very cold or very hot environments. Meeting
      these conditions will require changes in the fuel and electrolytes which
      we are currently evaluating.

    - INTEGRATING OUR INDIVIDUAL FUEL CELLS INTO A SEAMLESS POWER SOURCE. Our
      fuel cell system integrates each fuel cell through the use of a DC to DC
      converter, which increases the voltage without having to connect a number
      of fuel cells in a series. We believe that this provides for a simple,
      efficient and reliable design. We are seeking to outsource or develop, if
      necessary, a more efficient DC to DC converter.

    We believe that the results we currently obtain are superior to those
achieved in any other direct liquid methanol fuel cell that we know of and, if
we attain our goals, as to which we can give no

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assurance, we may be able to satisfy the power requirements of today's and the
next generation of portable electronic devices.

OUR PROPOSED FUEL CELLS PRODUCTS

    POWER PACK

    We expect that our first commercially viable DLE/M fuel cell product will be
a miniature power pack, capable of charging a cell phone as if the user had
connected to an electrical outlet. By taking this approach, we are looking to
serve an immediate large potential market--all of the users who already have or
intend to buy cell phones or other wireless devices that use existing
technologies. We would not have to wait until a new generation of devices is
ready for market to offer a fuel cell product.

    To date, we have developed a breadboard version of a power pack charger,
which uses DLE/M fuel cells and is capable of directly charging a cell phone as
fully as if the cell phone was connected by a charger to a wall socket. The
power pack consists of two one-watt DLE/M fuel cells with a DC to DC converter.
Each fuel cell is 3.40 inches long by 1.65 inches wide by 0.70 inches deep and
weighs 70 grams. There are no external fuel feeders, water management systems or
other external support systems. At present, the power pack is capable of fully
charging a cell phone twice prior to refueling.

    We expect to have a pre-production unit of a commercially viable power pack
in 2002. Prior to that time, we intend to further reduce its size and weight by
at least 25% and expand its power and operating time to six charges per
refueling.

    We are also developing a larger fuel cell power pack as a secondary power
source for laptop computers and other larger, portable electronic devices,
including certain military products.

    LARGE FUEL CELLS

    While our major focus is on our DLE/M fuel cell for portable electronic
devices, we believe that certain technologies used in our fuel cell can be
applied towards the development of larger fuel cells delivering up to 5
kilowatts, which would be superior to fuel cell technologies for other larger
fuel cells currently under development by others. A major advantage of a fuel
cell developed along this line would be the elimination of any external
mechanisms other than a feeder for methanol or ethanol. Moreover, although
comparative figures for other larger fuel cells are not widely available, we
believe that we may be able to improve upon the power density, the catalytic
performance and the electrode life of such other larger fuel cells. We have
developed a 50 watt PEM fuel cell that provides us with the opportunity to test
certain of our technologies in that context. Although we have no current
intention to manufacture larger fuel cells, we might seek a strategic partner or
other arrangement so that we can exploit this technology.

    HIGHLY CONDUCTIVE POLYMERS

    HECPs are an important component of our DLE/M fuel cell. Additionally, HECPs
have a wide and diverse range of commercial uses beyond their use as components
in our DLE/M fuel cells, including for civilian and military products,
particularly in electronic products such as sensors and capacitors.
Consequently, we intend to manufacture and recycle HECPs which differ from those
used in our fuel cells for sale to third parties. HECPs have electrical
properties that can be changed over the full range of conductivity from
insulators to metallic conductors and have the non-corrosive properties,
superior flexibility and durability of plastics. We have demonstrated our HECPs
for these uses to a few potential customers who have expressed interest in them.
We are currently in the process of demonstrating that we can make the transition
from advanced polymers made in small quantities in the laboratory to large scale
production of uniform, attractively priced, commercially acceptable products. We
have leased space near our offices in Israel and have established a small pilot
facility to manufacture HECPs.

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    In January 2002, we entered into an agreement with a U.S. company to develop
a new application for the use of our HECPs in a PEM fuel cell component which
could advance the development of such fuel cells for automobile, home and
stationary power uses. The agreement provides for the payment to us over time of
$300,000.

    We believe that the catalyst component of our fuel cells may also have
stand-alone applications in such fields as electro and organic synthesis,
producing mineral fertilizer and reforming, cleaning and purifying industrial
and automotive gases and exhaust fumes, however, we are not looking to exploit
the catalyst as a stand-alone product at the present time.

BUSINESS STRATEGY

    Our business strategy is to translate our advanced fuel cell technology into
commercially viable products, such as our power pack cell phone charger, that
will compete with and ultimately replace rechargeable batteries and other power
sources in the portable electronic devices market. We hope to be the first fuel
cell development company to make a commercially viable fuel cell product for
portable electronic devices, and consequently capture a large market share of
what promises to be a multi-billion dollar industry. In making the transition
from laboratory to commercial production, use and sales, we will seek assistance
in the engineering design and production of our fuel cells, as well as in
marketing and distributing our fuel cell products, from large multinational
battery and electronic device manufacturers with whom we have, and are looking
to enter into, cooperation agreements.

    Our first product focus is on the power pack charger for use in existing
cell phones and upcoming models, such as 3G cell phones, and on the power pack
charger refueling cartridge needed to fuel the power pack charger. A larger
version of the power pack charger is planned to charge a laptop computer and
other portable electronic devices. Ultimately we expect our fuel cells to
directly power cell phones, laptops and other portable electronic products by
being a permanent, internal component of such products.

    As we are hopeful that our fuel cell technology will be able to provide the
greatest amount of power relative to size and weight for portable electronic
devices when compared to the most advanced batteries that we are currently aware
are offered or under development by our competitors, we believe both consumers
and portable electronics manufacturers would prefer our DLE/M fuel cell as an
alternative power source, as long as the cost and other factors are competitive.
Moreover, our DLE/M fuel cell offers the possibility of being refueled in
seconds by inserting a small, lightweight and inexpensive refueling cartridge
compared to the approximately 3 hours required to charge a phone having the most
advanced rechargeable technology--the lithium polymer battery.

    STRATEGIC ALLIANCES

    To accomplish our strategy of achieving a successful transition from the
laboratory to commercial use, we must determine how best to design products
employing our fuel cells that are attractive to the consumer, as well as how to
connect them to the circuitry inside the phones and other electronic devices as
the original equipment power sources. This includes such decisions as the best
way to package and market the refills to satisfy consumer demands. We also have
to develop the know-how to produce the fuel cells using the newest automated
equipment that enables the most efficient production. We believe that the most
effective and least costly way for us to achieve these objectives is to enter
into strategic alliances with partners who will help us develop fuel cell
products that will satisfy the consumer's demand for maximum power and operating
time for their equipment. We plan to enter into a strategic alliance or joint
venture with a multinational company to improve the engineering design and
performance of our power pack charger and refueling cartridge. We also expect to
enter into strategic alliances or joint ventures with manufacturers of portable
electronic devices so that together we can develop fuel cell products for use
with existing and future portable electronic devices and ultimately product
devices embodying fuel cell technology as their energy source. We are also

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looking to these alliances and joint ventures to provide us with manufacturing
expertise and marketing and distribution channels.

    To date, we have entered into the following strategic arrangements:

    - We have entered into a non-exclusive cooperative agreement with
      France-based Sagem, SA, to develop the power pack charger. Sagem is one of
      Europe's largest manufacturers of cell phone handsets and other electronic
      equipment with sales in year 2000 of approximately $4 billion.

    - We have entered into an exclusive agreement with General Dynamics
      Government Systems Corporation, a unit of General Dynamics Corporation, to
      develop and market fuel cells and fuel cell-powered portable electronic
      devices for the United States Department of Defense. As part of such
      agreement, among other things, General Dynamics agrees to market our DLE/M
      fuel cells to the Department of Defense.

    - We have entered into an agreement with an Israeli electronics manufacturer
      to define a specification and carry out the preliminary design of a DLE/M
      fuel cell for a new energy pack for infantry soldiers, as part of the
      first phase of an Israeli sponsored military development program.

    - We have entered into an agreement with a U.S. company to develop a new
      application for the use of our HECPs in a PEM fuel cell component which
      could advance the development of such fuel cells for automobile, home and
      stationary power uses.

    We are looking to enter into additional agreements with other cell phone,
laptop computer, portable electronic device and battery manufacturers who can
help us expedite the development of a commercial fuel cell, as well as to
demonstrate the viability of our fuel cell technologies and develop a product
designed to each of such companies' specifications and product requirements.

    PRODUCTION

    POWER PACK CHARGER.  We plan to enter into strategic alliances with
multinational companies to improve the engineering design and performance of our
power pack charger and we expect to have a pre-production unit of a commercially
viable power pack by the end of 2002. Based on assumptions we have made
concerning estimated component, manufacturing and distribution costs and sales
prices, our preliminary estimates are that we will be able to manufacture in
commercial quantities a power pack charger or fuel cell system at a cost of
$9.00, sell such power pack charger to wholesalers/retailers or fuel cell system
to original equipment manufacturers at a price of approximately $15.00, which
would result in a gross profit on that product of approximately $6.00. We can
give no assurance that the assumptions and estimates will prove to be accurate
if and when our products are commercially successful.

    REFILL CARTRIDGES.  We also intend to separately offer proprietary refueling
cartridges to power our power pack chargers and fuel cells once the fuel has
depleted. We plan to enter into strategic alliances to improve the engineering
design and performance of the power pack refueling cartridges and we expect to
have a pre-production unit of a commercially viable refueling cartridge in 2002.

    We see our refueling cartridge as a "razorblade" equivalent, holding out the
prospect of repeated sales. Assuming that a next generation phone is used an
average of two hours a day (60 hours a month) and that our fuel cell provides
power for twenty hours, the user will need three refueling cartridges a month.
Based on assumptions we have made concerning estimated component, manufacturing
and distribution costs and sales prices, our preliminary estimates are that we
will be able to manufacture in commercial quantities each refueling cartridge at
a cost of $0.20, sell such refueling cartridge to wholesalers or original
equipment manufacturers at a price of approximately $0.53 and, assuming the sale
to consumers of three refueling cartridges per month at a price of $1.00 each,
would result in a gross profit from refill cartridges of approximately $1.00 per
month for each power pack charger or fuel cell system on the market. We can give
no assurance that these assumptions and estimates will prove to be accurate if
and when our products are commercially successful.

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    MANUFACTURING FACILITIES. We have established a small pilot facility to
manufacture HECPs in Or-Yehuda, Israel. Although we intended to finance the
construction of an additional manufacturing facility in Israel to produce fuel
cells and fuel cell components, we have since concluded that our resources would
be better committed to the continued research and development of our
technologies rather than to finance the construction of such a facility. We plan
to satisfy demand for our fuel cell products, if and when developed, by entering
into license, joint venture or other arrangements with a company or companies
that are capable of worldwide mass production of our products.

RESEARCH AND DEVELOPMENT

    Our research and development programs are generally pursued by scientists
employed by us in Israel on a full-time basis or hired as per diem consultants.
Most of the scientists working in the fuel cell field are emigres from the
former Soviet Union where they worked on developing fuel cells for as much as
fifteen years. Our programs are also pursued in collaboration with multinational
companies with interests in our fuel cell technologies.

    Currently, our major focus is on achieving a greater power output at smaller
sizes, improving stability and extending the length of use time for our DLE/M
fuel cell. Our target is to increase the level of power density and longevity to
10,000mA with a stable output or one which declines very little. Our development
team is also working to lower the cost of the components of the fuel cell. We
are further working to lower the platinum content of our catalyst, which
represents a significant expense in manufacturing a fuel cell.

    Another objective of our research and development programs is to find new
applications for the components that make up our fuel cells, including our HECPs
and catalysts.

COMPETITION

    We expect to compete against other fuel cell developers as well as against
other advanced battery technologies.

    We expect that our primary direct competitors will be companies developing
small fuel cells for the portable electronics market, such as Manhattan
Scientifics Inc., which has reported that it is developing a fuel cell to power
cellular phones and pagers. Our other direct competitors in the fuel cell market
are developing mid-range fuel cells to power larger applications such as laptop
computers. Motorola, along with the Los Alamos National Laboratory in New
Mexico, is also developing a direct methanol fuel cell for mobile phones that it
expects to run up to ten times longer than existing batteries. Motorola has
announced it expects to have a commercially viable product in 3-5 years.
Mechanical Technology Inc., which is working with talent formerly of the Los
Alamos National Laboratory, has also licensed certain fuel cell technology from
Los Alamos National Laboratory to further its efforts to develop direct methanol
fuel cells. We believe other large cell phone companies may also be developing
fuel cells for the portable electronics market.

    We believe that most other fuel cell companies are focusing on different
markets than the portable electronic device market that we are targeting. These
companies, including Plug Power, Avista Systems Inc., Fuel Cell Energy Inc. and
H Power, are not primarily targeting the portable electronics market, although
at any time these companies could introduce new products that compete directly
in the markets we are targeting. Ballard Power Inc., a recognized leader in PEM
fuel cell technology, has announced it is developing a direct methanol fuel cell
for transportation and portable applications, however, we do not know if this is
intended for the portable electronic device market.

    Additionally, we expect to compete with companies that develop, manufacture,
and sell battery-operated chargers for portable electronic devices, such as
Electric Fuel Corp., which develops,

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manufactures and markets a zinc-air battery powered charger for cell phones,
PDAs and other portable electronic devices that targets many of the same markets
we intend to target with our power pack.

    We also expect indirect competition from battery manufacturers who utilize
existing battery technologies (both chargeable and rechargeable). Existing
battery technologies have the significant advantage of having commercially
available products today, and are backed by companies who are continuously
investing in marketing and further research and development to improve their
existing products and explore alternative technologies.

    We expect our fuel cell products to compete on the bases of size and weight,
length of operating time, ease of use and cost.

OUR OTHER TECHNOLOGIES

    Starting with our formation in 1992, we have been working to develop and
commercialize next generation technologies. The first of these technologies, the
CellScan, was the primary product of our indirect subsidiary, Medis El Ltd.,
through 1996. At the time of our formation, Medis El granted us distribution
rights to the CellScan in the United States and its territories and possessions.
In 1994, Medis El acquired its stirling cycle linear technologies and over the
ensuing years, acquired additional technologies, including our DLE/M fuel cell
technology and the other technologies listed below. In 1998, we became Medis
El's exclusive agent in North America for coordinating licensing arrangements
with respect to the stirling cycle and these other technologies. In 2000, Medis
El became our indirect, wholly-owned subsidiary. We have and continue to seek to
exploit our relationship with Russian scientists who have immigrated to Israel
as well as with Israel Aircraft Industries Ltd., a company wholly owned by the
State of Israel and a leader in aerospace technology, to acquire and develop
these and possibly other technologies. Israel Aircraft is also our largest
stockholder.

    With the exception of our CellScan system, all of the below-listed
technologies are in the development stage and no successful prototypes have as
yet been developed, nor can we assure you that any such prototypes will be
developed or, if developed, commercialized.

    - CELLSCAN. We have completed development of a prototype desktop CellScan.
      The desktop CellScan is a state of the art cytometer that can repeatedly
      and continuously monitor the fluorescence intensity and polarization of
      individual, non-adherent living cells. This system substantially extends
      the range and enhances the capabilities of other cytometric measuring
      devices, including earlier CellScan models. We expect to produce the
      desktop CellScan at a lower cost than the earlier CellScan models. As
      before, the heart of the CellScan is a unique, patented cell carrier that
      contains up to 10,000 wells, each of which can accommodate a single cell.
      The capacity to precisely and faithfully measure optical parameters of
      individual living cells greatly facilitates kinetic analyses of individual
      cells within a heterogeneous cell populations, which is particularly
      useful for investigating physiological, clinical and diagnostic aspects of
      cells.

      The CellScan can be used as a diagnostic tool to detect diseases such as
      breast, prostate and gynecological cancers, tuberculosis and
      atherosclerosis as well as a research tool to develop individual patient
      chemotherapy, drugs, vaccines, antigens and aspects of gene therapy.

      We intend to transfer the assets relating to the CellScan to a newly
      formed subsidiary which will have independent management and its own
      research and development team. We are currently seeking a person or
      persons capable of managing this subsidiary. We are also attempting to
      obtain private venture financing for the subsidiary with a view ultimately
      to spinning it off as a separate entity. At the same time, we are also
      interested in the possibility of entering into a transaction with a
      company in the biotechnology field whereby that company would acquire all
      or part of our interest in the CellScan.

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    - TOROIDAL TECHNOLOGIES. We are seeking commercially viable applications of
      our toroidal technology in three areas.

       - As a compressor for existing refrigeration and air conditioning. We
         believe that a toroidal compressor may achieve energy savings over
         existing Rankine-cycle cooling systems, which is the system now used in
         most refrigeration and air conditioning systems, and enable
         manufacturers to meet new energy standards.

       - As an internal combustion engine which could be up to one-half the size
         and weight of a conventional internal combustion engine and could
         significantly increase engine efficiency.

       - As an essential element, together with our reciprocating electrical
         machine, to develop a stationary power generation system that would be
         more efficient than present systems.

    - STIRLING CYCLE LINEAR TECHNOLOGY. Our stirling cycle linear technology is
      based upon a century-old thermodynamic technique that may be capable of
      providing greater energy efficiency for refrigeration and air-conditioning
      systems. A major advantage to the stirling cycle system is that it uses
      helium as its working gas, which is a natural gas found in the atmosphere
      that is environmentally friendly. The use of a stirling cycle system would
      therefore replace the use of freon or freon compounds found in existing
      refrigeration and air-conditioning systems. These substances contain
      chlorofluorocarbons, which are commonly believed to deplete the atmosphere
      and contribute to the "greenhouse effect" and global warming.

    - RECIPROCATING ELECTRICAL MACHINE. The reciprocating electrical machine
      seeks to use the reciprocating motion of energy sources such as wind or
      sea waves to convert such energies' motion into electricity, while
      achieving cost savings of up to 30%, while also being cleaner and
      environmentally safer than traditional power sources. Furthermore, we are
      exploring the possibility of applying the technology underlying the
      reciprocating electrical machine to advance the development of a power
      generation system using our toroidal technology.

    MISCELLANEOUS

    We also own 75% of a company that owns a patent and other rights to a
technology that switches and regulates direct current, or DC, electricity. Using
existing power lines, the device is expected to enable the transmission of
two-thirds more current than the existing system and would eliminate the need
for alternate current, or AC, power lines and the transformers which convert DC
electricity to AC electricity. Furthermore, we may commence testing of
technologies that, if successfully developed, would be used to generate potable
water from the atmosphere or brackish water. We have no current intention to
develop such technologies due to our inability to commit further limited
resources to such undertakings. We may continue research and development of such
technologies upon our obtaining additional funds for such purposes.

GOVERNMENT REGULATION

    Currently, the only regulations we encounter are the regulations that are
common to all businesses, such as employment legislation, implied warranty laws,
and environmental, health and safety standards, both in the United States and
Israel, to the extent applicable. It is likely we will encounter industry
specific government regulations in the future in the jurisdictions in which we
operate. It may become the case that regulatory approvals will be required for
the design and manufacture of our fuel cells and the use of methanol or ethanol
as fuel. There are limitations on the use of methanol, such as its prohibited
carriage on commercial aircraft. We are not aware of any similar limitations on
the use of ethanol. Furthermore, we must obtain from the State of Israel permits
to work with certain chemicals used to make our fuel cells. To the extent that
there are delays in gaining regulatory approval, our development and growth may
be constrained.

                                       46
<Page>
INTELLECTUAL PROPERTY

    We rely on a combination of patent, copyright, trademark, trade secret and
contract laws, as well as international treaties, to protect our proprietary
rights to our intellectual property which includes technical know-how, designs,
special materials, manufacturing techniques, test equipment and procedures for
fuel cells, fuel cell components and fuel cell systems, as well as our other
technologies. Our policy is to secure, directly or through licensing
arrangements, patent protection for significant innovations to the fullest
extent practicable.

    We have received a Notice of Allowance from the U.S. Patent Office relating
to one pending patent for our fuel cell technology. We expect this patent to be
issued in the first quarter of 2002. Furthermore, we have seven patents pending
which we are pursuing and are preparing new patent applications with respect to
our fuel cell technology in the United States. Corresponding applications have
been filed under the Patent Cooperation Treaty, which allows us limited
protection in all of its 45 member countries for periods ranging from
24-30 months, during which time patent applications can be filed in such
countries. We recently were granted one patent under the Patent Cooperation
Treaty relating to the catalyst and electrode components of our fuel cell
technology. Although we expect to file patent applications in most of the larger
markets that are member countries, we have not yet ascertained which of these
jurisdictions we will file in. We are contemplating filing a number of
additional patents in the United States and elsewhere as regards our fuel cell
technology. Patent applications filed in foreign countries are subject to laws,
rules and procedures which differ from those of the United States, and even if
foreign patent applications issue, some foreign countries provide significantly
less patent protection than the United States.

    We have been granted two patents relating to our stirling cycle linear
system, three patents, one of which is owned by a 75% indirect subsidiary of
ours, and two patents pending relating to our toroidal technologies, one patent
relating to our reciprocating electrical machine and one patent relating to our
direct current regulating device, which is owned by a 75% indirect subsidiary of
ours. Each of such patents expires 17 years from the issue date of such patent,
the earliest of which will be in 2014.

    Furthermore, we are the exclusive worldwide licensee of Bar-Ilan
University's patents, patent applications and any other proprietary rights
relating to the CellScan. Bar-Ilan owns, or has applied for, corresponding
patents in Europe, Japan, Israel, Canada and various other countries, of which
we are the licensees. We are required to pay Bar-Ilan a royalty through 2005 at
the rate of 6.5% of proceeds of sales, after deducting sales commissions and
other customary charges, and 4.5% of any fees received on account of the grant
of territorial rights, and for the ensuing ten years a royalty of 3.5% of all
revenues, whether from sales or fees. In addition, we are required to pay
$100,000 to Bar-Ilan during the first year in which our post-tax profits
relating to the CellScan exceed $300,000. The license contains provisions
relating to the joint protection of the licensed patent rights and other
provisions customary in such instruments.

    In addition to patent protection, we rely on the laws of unfair competition
and trade secrets to protect our licensed or proprietary rights. We attempt to
protect our trade secrets and other proprietary information through agreements
with our collaborators, through confidentiality agreements with employees,
consultants, potential joint ventures and licensees and other security measures.

EMPLOYEES

    As of September 30, 2001, we had 42 full time employees, of which
approximately 35 were engineers, scientists and other degreed professionals and
7 were technical, administrative and manufacturing support personnel. We also
employ approximately 14 engineers, scientists and other degreed professionals as
consultants who work with us researching and developing our technologies on a
part time basis. We consider relations with our employees to be satisfactory.

                                       47
<Page>
PROPERTY

    We presently maintain our U.S. executive offices in premises of
approximately 3,000 square feet at 805 Third Avenue, New York, New York 10022
under a sublease from the Stanoff Corporation, which is controlled by Robert K.
Lifton, our chairman and chief executive officer, and Howard Weingrow, our
president. We pay approximately $72,000 for rent per year. The sublease is on a
month to month basis.

    Our research laboratory and technology center and Israel-based executive
offices and back office functions are located at a leased facility of
approximately 11,500 square feet in Yehud, Israel. The rental expense for this
lease, which has a term until December 2002 with a one-year option on a portion
of the facilities extending to December 2003, is approximately US$164,000 per
year. We also lease manufacturing facilities of approximately 1,500 square feet
in Jerusalem, Israel relating to the CellScan and approximately 2,000 square
feet in Or-Yehuda, Israel relating to the HECPs. The Jerusalem lease expires on
December 31, 2002. The annual aggregate rent is approximately US$27,000. The
Or-Yehuda lease expires on December 31, 2002 and has two one-year options
extending to December 31, 2004. The annual aggregate rent is approximately
US$14,000. We believe our facilities are adequate for our present purposes;
however, if there are orders to purchase our HECPs in excess of that facility's
current capacity, we will be required to expand that facility as necessary to
meet such increased demand.

                                       48
<Page>
                                   MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

    Our executive officers and directors are as follows:

<Table>
<Caption>
NAME                                          AGE      POSITION
----                                        --------   --------
<S>                                         <C>        <C>
Robert K. Lifton..........................     74      Chairman of the Board, Chief Executive Officer and
                                                       Secretary

Howard Weingrow...........................     79      President, Treasurer and Director

Zvi Rehavi................................     66      Executive Vice President

Jacob S. Weiss............................     49      Senior Vice President--Business Development and
                                                       Director

Israel Fisher.............................     54      Vice President--Finance

Amos Eiran................................     65      Director

Zeev Nahmoni..............................     60      Director

Jacob E. Goldman..........................     81      Director

Seymour Heinberg..........................     80      Director

Shmuel Peretz.............................     61      Director
</Table>

    ROBERT K. LIFTON has been our chairman of the board, chief executive officer
and secretary since our inception and a director of Medis El since its inception
in July 1992. He is principally engaged in managing his own investments through
the Stanoff Corporation, of which he is a major shareholder and a principal, and
other investment vehicles. Mr. Lifton is a director and member of the executive
and investment committees of Bank Leumi USA, a director of Leumi Investment
Services, Inc., the co-chairman of the U.S.-Middle East Project of the Council
on Foreign Relations, chair of the Public Health Research Institute and serves
on the boards of numerous philanthropic organizations. He also is an officer and
director of a number of privately held companies. From 1988 to 1994, he was
president of the American Jewish Congress and is the founding chairman and
chairman emeritus of the Israel Policy Forum. In 1983, he was a founder of
Preferred Health Care Ltd. and served as its president. In 1961, he co-founded
with Mr. Weingrow the Transcontinental Investing Corporation, serving as its
president until 1968, when it was listed on the New York Stock Exchange, and
then chairman of the board until its merger in 1972. Mr. Lifton was an associate
attorney with the law firm of Kaye, Scholer, Fierman, Hays and Handler in 1955
and 1956, after receiving a law degree from Yale Law School and being admitted
to the New York Bar, and has taught at Yale and Columbia law schools.
Mr. Lifton has written extensively on business and political matters.

    HOWARD WEINGROW has been our president, treasurer and one of our directors
since our inception and a director of Medis El since its inception.
Mr. Weingrow is principally engaged in managing his own investments through the
Stanoff Corporation, of which he is a major shareholder and a principal, and
other investment vehicles. Mr. Weingrow is a trustee of the Children's Medical
Fund and the North Shore-Long Island Jewish Health System. He is also a trustee
of the James S. Brady Presidential Foundation and the Nassau County Museum of
Art. Mr. Weingrow is the founder of the Weingrow Family Children's Research
Laboratory of Long Island Jewish Hospital and the Weingrow Collection of Avant
Garde Art and Literature at Hofstra University. He was chairman and a director
of Mercury Paging & Communications, Inc. from 1995 until its sale in 1997. In
1961, he co-founded with Mr. Lifton the Transcontinental Investing Corporation,
serving as its executive vice president until 1968

                                       49
<Page>
and then president until its merger in 1972. Mr. Weingrow served as treasurer of
the Democratic National Committee in 1971 and 1972.

    ZVI REHAVI has been our executive vice president since June 2000 and the
executive vice president and General Manager of Medis El since its inception.
Mr. Rehavi was also general manager of More Energy from its inception in
December 1998 to October 2000. From 1989 to 1991, he was manager of development
and production of Patriot Missile Sensors, a joint venture of Israel Aircraft
and Martin Marietta. From 1984 to 1989, he was Israel Aircraft's director of
sensors and electro mechanical components. From 1966 to 1974, he was manager,
inertial components laboratory at Israel Aircraft. From 1958 to 1966, he served
with the Technical Office of the Ministry of Defense of Israel. He has a Master
of Engineering Science from the University of Pennsylvania. He was a Ph.D.
candidate in Applied Physics at Hebrew University, Jerusalem, and an MBA
candidate at the Wharton School.

    JACOB S. WEISS has been our senior vice president--business development
since August 2000, one of our directors since December 1997 and one of Medis
El's directors since October 1993. He was also engaged by us in a consulting
capacity from November 1999 through August 2000. Mr. Weiss served as the
corporate vice president and general counsel to Israel Aircraft, from 1996 to
2000. Prior to that, he was deputy general counsel--international division of
Israel Aircraft. Mr. Weiss was the chief executive officer until December 2001
of ImageSat International, a company established by Israel Aircraft to
commercialize its remote sensing satellite technology.

    ISRAEL FISHER has been our vice president--finance since June 2000 and the
vice president-finance and secretary of Medis El since its inception.
Mr. Fisher is also vice president-finance of More Energy. From 1990 to 1992, he
served as the deputy manager of Israel Aircraft for financial planning and
credit management. From 1987 to 1990, he served as the deputy finance manager of
the Tamam Plant of the Electronics Division of Israel Aircraft. He has a MBA
from the University of Tel Aviv and two BA degrees from Bar-Ilan University: one
in accounting and the other in Economics and Business Administration.

    AMOS EIRAN has been one of our directors since December 1997 and one of
Medis El's directors since its inception. Mr. Eiran serves as chairman of the
Industrial Cooperation Authority, the agency in charge of the buy-back and
offset program of the State of Israel, for at least the past 5 years. Mr. Eiran
also serves as director for Clal Insurance Group, an Israeli insurance company,
Clal Electronics Pension Fund and serves as chairman of ATUDOT, an Israeli
insurance company. Previously, Mr. Eiran was director general of the Prime
Minister's office during Yitzhak Rabin's first term as Prime Minister and
director general and chairman of Mivtahim, the largest pension fund in Israel.

    ZEEV NAHMONI has been one of our directors since December 1997 and one of
Medis El's directors from August 1994 to March 1996 and from October 1996 to
present. Mr. Nahmoni is the vice president and general manager of the
Electronics Group of Israel Aircraft since 1997 and the Deputy General Manager
of the Electronics Group of Israel Aircraft from 1995 to 1997. Prior to that, he
was the general manager of the Tamam Division of the Electronics Group of Israel
Aircraft from 1992 to 1995. Mr. Nahmoni is also a director of ImageSat
International.

    JACOB E. GOLDMAN has been one of our directors since September 2000.
Dr. Goldman is chairman of the board and a consultant to Umbanet, Inc., a
company developing software for securing e-mail messages, since April 2000. From
1996 to 1999, he was a consultant to Oxbridge Inc., an investment banking firm.
From 1977 to the present, Dr. Goldman has served on the board of directors and
as a member of the executive committee of Bank Leumi USA. From 1983 to 1994, he
founded and served as chairman and chief executive officer of Softstrip, Inc.
From 1968 to 1983 he served as senior vice president and chief technical officer
of Xerox Corporation where he founded and presided over its Palo Alto Research
Center (PARC). Between 1955 and 1968 he served as Director of Ford Motor
Company's scientific research laboratory. Dr. Goldman has served on Boards of
various corporations

                                       50
<Page>
and institutions including Xerox, GAF, Inc., General Instrument Corporation, Lex
Services PLC, Peerlogic Inc. and United Brands and was president of the American
Technion Society. He received his Ph.D. in physics from the University of
Pennsylvania.

    SEYMOUR HEINBERG has been one of our directors since September 2000.
Mr. Heinberg was the founder in 1973 and principal of the accounting firm of
Seymour Heinberg, CPA, P.C. until 1992, when that firm merged with Edward I.
Isaacs & Co. LLP, where he was a retired partner until October 2000 when it
merged with RSM McLadrey, Inc. Mr. Heinberg started his career at the public
accounting firm Escoe and Heinberg, where he served as a general partner
form 1951 to 1973. In 1998 he received the first Special Recognition Award from
the Foundation for Accounting Education of the New York State Society of CPAs
for his 50 years of outstanding committee service and tax lectures.

    SHMUEL PERETZ has been one of our directors since December 1997 and one of
Medis El's directors since its inception. Mr. Peretz is currently the president
of Israel Aircraft Europe and has served in such capacity since 1997. From 1988
to 1996, he was the corporate vice president--finance of Israel Aircraft.
Mr. Peretz serves as a director of the Israeli corporations Elta Ltd. and
Magel, Ltd.

    Messrs. Lifton, Weingrow, Eiran, Weiss and Nahmoni are directors of
Medis Inc. and, with Mr. Peretz, directors of CDS Distributor, Inc., our wholly
owned subsidiaries. Messrs. Lifton, Weingrow and Weiss are also directors of
More Energy, with Messrs. Lifton and Weingrow each entitled to two votes for all
matters coming before the board of directors.

    Each director is elected for a one year term at our annual meeting of
shareholders.

KEY EMPLOYEE

    GENNADI FINKELSHTAIN has been the general manager of More Energy since
October 2000. In December 1998, Mr. Finkelshtain and Medis El founded More
Energy, at which time he was appointed its research and development director.
From 1996 to 1998 he served as production manager at Limat Electrochemical
Company in Israel. After immigrating to Israel in 1990, he served in various
engineering positions. From 1984 to 1989, Mr. Finkelshtain served as the chief
project engineer at the Leningrad Technological Institute. He holds a Master of
Science degree from the Leningrad Technological Institute.

ADVISORY BOARD

    We have appointed a corporate advisory board to assist us with our business
strategy and to build relationships with third parties to assist in the
development of our technologies. The advisory board consists of:

    - LESTER CROWN, the current chairman of the executive and nominating
      committees of General Dynamics Corporation, chairman of Material Service
      Corporation and president of Henry Crown and Company.

    - LOUIS PERLMUTTER, a retired senior partner and executive managing director
      of Lazard Freres & Co., LLC, currently serves as chairman of the science
      and technology committee of the Board of Fellows of Harvard Medical
      School.

    - FOUAD M.T. ALGHANIM, the chairman of Fouad Alghanim & Sons Group of
      Companies, consultants to multinational commercial contractors, chairman
      of Advanced Technology Company, health-care equipment suppliers and
      service providers in Kuwait and chairman of Energy International Petroleum
      Projects Company, specialists in the field of oil exploration and
      production.

    - STUART ZIMMER, the managing member of Zimmer Lucas Partners LLC, which
      manages a family of funds.

                                       51
<Page>
SUMMARY COMPENSATION

    The following table sets forth information with respect to compensation
earned by Robert K. Lifton, our chief executive officer, and Zvi Rehavi and
Israel Fisher, our only other executive officers who earned in excess of
$100,000, for the year ended December 31, 2000.

<Table>
<Caption>
                                                                                                   LONG-TERM
                                                              ANNUAL COMPENSATION             COMPENSATION AWARDS
                                                       ----------------------------------   -----------------------
                                                                                OTHER       RESTRICTED   SECURITIES
                                                                                ANNUAL        STOCK      UNDERLYING
NAME AND PRINCIPAL POSITION                   YEAR      SALARY     BONUS     COMPENSATION    AWARD(S)     OPTIONS
---------------------------                 --------   --------   --------   ------------   ----------   ----------
<S>                                         <C>        <C>        <C>        <C>            <C>          <C>
Robert K. Lifton .........................    2000           --        --     $183,000(1)          --      300,000
  Chief Executive Officer

Zvi Rehavi ...............................    2000     $198,000   $87,000     $113,000(2)          --      100,000
  Executive Vice President

Israel Fisher ............................    2000     $134,000   $12,000     $ 32,000(3)          --       15,000
  Vice President--Finance
</Table>

------------------------

(1) Mr. Lifton is paid as an independent consultant for his services.

(2) Includes a monthly apartment allowance aggregating $44,000, a $30,000
    payment for an educational fund and a contribution of $19,700 to a key
    person life insurance policy whereby upon termination of employment,
    Mr. Rehavi shall receive a lump sum distribution based upon the number of
    years of premium payout. Medis El is the death beneficiary of such policy.

(3) Includes a contribution of $23,000 by Medis El to an insurance pension fund.

    We have employment agreements with Zvi Rehavi and Israel Fisher.
Mr. Rehavi's agreement is for a two year term expiring on September 30, 2002 and
Mr. Fisher's agreement is for a one year term expiring on March 23, 2002 with
automatic one year renewal terms commencing on the expiration of such term. Each
of the agreements, in addition to salary, stock options and fringe benefits,
provides for 6 months salary upon notification of resignation or dismissal and
upon a change of ownership of Medis El with subsequent dismissal by the new
owners.

OPTION GRANTS IN LAST FISCAL YEAR

    The following table sets forth information with respect to options grants
issued by us in the fiscal year ended December 31, 2000.

<Table>
<Caption>
                                                 PERCENT OF TOTAL
                          NUMBER OF SECURITIES   OPTION GRANTED TO
                           UNDERLYING OPTIONS      EMPLOYEES IN      EXERCISE PRICE PER
NAME                           GRANTED(1)           FISCAL YEAR            SHARE           EXPIRATION DATE
----                      --------------------   -----------------   ------------------   -----------------
<S>                       <C>                    <C>                 <C>                  <C>
Robert K. Lifton........        100,000                10.1                $16.42         June 15, 2002
                                200,000                20.1                $13.50         December 22, 2004
Zvi Rehavi..............        100,000                10.1                $13.50         December 22, 2004
Israel Fisher...........         15,000                 1.5                $ 5.00         February 21, 2004
</Table>

------------------------

(1) Options to purchase ordinary shares of Medis El held by the named executive
    officers were exchanged or we expect to exchange shortly for options to
    purchase shares of our commons stock in the following aggregate amounts:
    Robert K. Lifton--89,100; Zvi Rehavi--109,600; and Israel Fisher--13,700.
    The exercise prices of these options were adjusted for the terms of the
    Medis El exchange offer. The expiration date and other terms did not change.

                                       52
<Page>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
  VALUES

    The following table sets forth information with respect to each exercise of
stock options during the fiscal year ended December 31, 2000 and the fiscal year
end value of unexercised options.

<Table>
<Caption>
                                                               NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                                              UNDERLYING UNEXERCISED        IN-THE-MONEY OPTIONS AT
                                     SHARES                 OPTIONS AT FISCAL YEAR-END          FISCAL YEAR-END
                                    ACQUIRED      VALUE     ---------------------------   ---------------------------
NAME                               ON EXERCISE   REALIZED   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                               -----------   --------   -----------   -------------   -----------   -------------
<S>                                <C>           <C>        <C>           <C>             <C>           <C>
Robert K. Lifton.................     20,550     $353,756      68,550         400,000       753,675       1,882,000
Zvi Rehavi(1)....................         --           --           0         300,000             0       2,939,000
Israel Fisher(2).................         --           --           0          15,000             0         168,750
</Table>

------------------------

(1) Mr. Rehavi exercised options to purchase an aggregate of 45,000 ordinary
    shares of Medis El in January and February 2000. The value realized was
    approximately $763,450. Does not include options to purchase an aggregate of
    80,000 ordinary shares of Medis El granted to Mr. Rehavi prior to the Medis
    El exchange offer that will be exchanged for options to purchase 109,600
    shares of our common stock upon receipt of certain tax treatment from the
    Israeli tax authorities. The value of such options cannot be ascertained.

(2) Mr. Fisher exercised options to purchase an aggregate of 9,500 ordinary
    shares of Medis El in January 2000. The value realized was approximately
    $41,750. Does not include options to purchase an aggregate of 10,000
    ordinary shares of Medis El granted to Mr. Fisher prior to the Medis El
    exchange offer that will be exchanged for options to purchase 13,700 shares
    of our common stock issued upon receipt of certain tax treatment from the
    Israeli tax authorities. The value of such options cannot be ascertained.

COMPENSATION OF DIRECTORS

    Directors receive reimbursement for out-of-pocket expenses or a flat per
diem for each board or committee meeting attended, whether in the United States
or Israel. Directors also receive stock options as fixed by the Board of
Directors upon becoming a director and each year thereafter, at the discretion
of the board.

    We paid Amos Eiran a non-employee director, an aggregate of approximately
$15,000 for consulting services he provided to us during 2000. Additionally, we
paid Jacob Weiss, a director and our senior vice president-business development,
an aggregate of approximately $28,000 for consulting services he provided to us
during 2000 prior to becoming an officer in August 2000.

1999 STOCK OPTION PLAN

    We adopted our 1999 stock option plan on July 13, 1999. We have reserved
2,000,000 shares of common stock with respect to which options and stock
appreciation rights may be granted under the plan. The purpose of the plan is to
promote our interests and the interests of our stockholders by strengthening our
ability to attract and retain competent employees, to make service on our board
more attractive to present and prospective non-employee directors and to provide
a means to encourage stock ownership and proprietary interest in Medis
Technologies by officers, non-employee directors and valued employees and other
individuals upon whose judgment, initiative and efforts our financial growth
largely depends.

    The plan may be administered by either the entire board or a committee
consisting of two or more members of our board, each of whom is a non-employee
director. The plan is currently administered by our board.

    Incentive stock options may be granted only to our and our subsidiaries'
officers and key employees. Nonqualified stock options and stock appreciation
rights may be granted to our officers, employees, directors, agents and
consultants. In determining the eligibility of an individual for grants

                                       53
<Page>
under the plan, as well as in determining the number of shares to be optioned to
any individual, the stock option committee takes into account the position and
responsibilities of the individual being considered, the nature and value to us
of his or her service or accomplishments, his or her present or potential
contribution to our success or the success of our subsidiaries, the number and
terms of options and stock appreciation rights already held by an individual and
such other factors as the stock option committee may deem relevant.

    The plan provides for the granting of incentive stock options to purchase
our common stock at not less than the fair market value on the date of the
option grant and the granting of nonqualified options and stock appreciation
rights with any exercise price. Stock appreciation rights granted in tandem with
an option have the same exercise price as the related option. The plan contains
certain limitations applicable only to ISOs granted there under. To the extent
that the aggregate fair market value, as of the date of grant, of the shares to
which incentive stock options become exercisable for the first time by an
optionee during the calendar year exceeds $100,000, the option will be treated
as a nonqualified option. In addition, if an optionee owns more than 10% of the
total voting power of all of our capital stock at the time the individual is
granted an incentive stock options the option price per share cannot be less
than 110% of the fair market value per share and the term of the incentive stock
options cannot exceed five years. No option or stock appreciation rights may be
granted under the plan after June 30, 2009, and no option or stock appreciation
rights may be outstanding for more than ten years after its grant.

    Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash, check or, under certain
circumstances, in shares of our common stock, or any combination thereof. Stock
appreciation rights, which give the holder the privilege of surrendering such
rights for the appreciation in the common stock between the time of the grant
and the surrender, may be settled, in the discretion of our board or committee,
as the case may be, in cash, common stock, or in any combination thereof. The
exercise of an stock appreciation rights granted in tandem with an option
cancels the option to which it relates with respect to the same number of shares
as to which the stock appreciation rights was exercised. The exercise of an
option cancels any related stock appreciation rights with respect to the same
number of shares as to which the option was exercised. Generally, options and
stock appreciation rights may be exercised while the recipient is performing
services for us and within three months after termination of such services.

    The plan may be terminated at any time by our board, which may also amend
the plan, except that without stockholder approval, it may not increase the
number of shares subject to the plan or change the class of persons eligible to
receive options under the plan.

                                       54
<Page>
                             PRINCIPAL STOCKHOLDERS

    The following table sets forth certain information regarding ownership of
our common stock as of September 30, 2001 by:

    - each beneficial owner of five percent or more of our common stock;

    - each of our directors and named executive officers; and

    - all of our directors and executive officers as a group.

    Unless otherwise indicated, we believe that all persons named in the table
have sole voting and investment power with respect to all shares of common stock
beneficially owned by them. A person is deemed to be the beneficial owner of
securities which may be acquired by such person within 60 days from the date on
which beneficial ownership is to be determined, upon the exercise of options,
warrants or convertible securities. Each beneficial owner's percentage ownership
is determined by assuming that options, warrants and convertible securities that
are held by such person, but not those held by any other person, and which are
exercisable within such 60 day period, have been exercised. Unless otherwise
noted, the address of each holder of five percent or more of our common stock is
our corporate address.

<Table>
<Caption>
                                                              NUMBER OF SHARES OF
                                                                 COMMON STOCK       OWNERSHIP
NAME AND ADDRESS OF BENEFICIAL OWNER                          BENEFICIALLY OWNED    PERCENTAGE
------------------------------------                          -------------------   ----------
<S>                                                           <C>                   <C>
Israel Aircraft Industries Ltd.(1)..........................       5,553,957           31.6
Robert K. Lifton(2).........................................       2,243,184           12.4
Howard Weingrow(3)..........................................       1,946,864           10.8
CVF, LLC(4).................................................       1,471,252            8.3
Zvi Rehavi(5)...............................................         309,600            1.7
Jacob S. Weiss(6)...........................................         103,400              *
Israel Fisher(7)............................................          13,700              *
Amos Eiran(8)...............................................          13,700              *
Zeev Nahmoni................................................              --             --
Jacob E. Goldman............................................              --             --
Seymour Heinberg............................................              --             --
All directors and executive officer as a group
  (9 persons)(2)(3)(5)(6)(7)(8).............................       4,060,612           21.6
</Table>

------------------------

*   Less than 1%

(1) Includes 37,500 shares of our common stock underlying warrants held by
    Israel Aircraft. Voting control of Israel Aircraft is held by the State of
    Israel. Israel Aircraft's address is Ben Gurion International Airport, Tel
    Aviv 70100, Israel.

(2) Includes 168,490 shares of our common stock underlying warrants held by
    Mr. Lifton and an aggregate of 569,836 shares of our common stock and common
    stock underlying warrants held by the Stanoff Corporation, which is
    beneficially owned by Messrs. Lifton and Weingrow. Also includes options to
    acquire 268,550 shares of our common stock which are currently exercisable.
    Does not include an aggregate of 338,000 shares of our common stock held in
    trust for relatives of Mr. Weingrow of which Mr. Lifton is a trustee.

(3) Includes 139,323 shares of our common stock underlying warrants held by
    Mr. Weingrow and an aggregate of 569,836 shares of our common stock and
    common stock underlying warrants held by the Stanoff Corporation, which is
    beneficially owned by Messrs. Lifton and Weingrow. Also includes options to
    acquire 150,000 shares of our common stock which are currently exercisable.

                                       55
<Page>
(4) Includes 214,584 shares of our common stock underlying warrants. Based on
    information contained in a Schedule 13D jointly filed by the following
    persons on October 5, 2001, CVF, LLC, Robert C. Goodman, Longview Management
    Group, LLC, Charles H. Goodman and Goeffrey F. Grossman, not individually,
    but as trustee of The Edward Trust, have shared voting power and shared
    dispositive power of such shares of common stock, including shares of common
    stock issuable upon exercise of outstanding warrants. These shares are held
    of record by CVF. Robert C. Goodman is the Executive Manager of CVF.
    Longview Management Group provides investment advisory services to CVF.
    Charles H. Goodman is president of Longview Management Group. In his
    capacity as trustee of The Edmund Trust, Goeffrey F. Goodman is deemed to
    hold a 100% interest in The Edmund Trust. The address of CVF is 222 N.
    LaSalle Street, Suite 2000, Chicago, Illinois 60601.

(5) Represents options to acquire shares of our common stock which are currently
    exercisable.

(6) Includes options to acquire 100,000 shares of our common stock which are
    currently exercisable.

(7) Represents options to acquire shares of our common stock which are currently
    exercisable.

(8) Represents options to acquire shares of our common stock which are currently
    exercisable.

              CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

    On December 15, 1997, we acquired from Israel Aircraft Industries Ltd., our
largest stockholder, all of its capital shares of Medis Inc., a Delaware
corporation we then jointly controlled with Israel Aircraft, representing a 40%
equity interest in such company, in exchange for 3,600,457 of our shares of
common stock. Medis Inc. is now our wholly-owned subsidiary and the holder of
all of Medis El's shares beneficially owned by us. In connection with the
acquisition, certain of our stockholders entered into a shareholders agreement
with Israel Aircraft providing for certain management and control matters. The
shareholders agreement terminated in accordance with its terms upon consummation
of the exchange offer.

    We used $2,000,000 of proceeds from a private placement on June 30, 1998 to
repay Medis El Ltd., our indirect subsidiary at that time, pursuant to a
promissory note entered into between us and Medis Inc. in December 1993, which
had been assigned by Medis Inc. to Medis El through a capital contribution.

    In December 1998, we made the final $300,000 interest payment under the
promissory note to Medis El which had been repaid in June 1998. Such payment was
made with funds invested by the Stanoff Corporation, which is controlled by
Robert K. Lifton, our chairman and chief executive officer, and Howard L.
Weingrow, our president. The Stanoff Corporation received 25,000 units, each
unit consisting of three shares of our common stock and a warrant to purchase
one share of our common stock at $5.00 per share, or an aggregate of 75,000
shares and 25,000 warrants, for such investment. Also in December 1998, we
purchased from Medis El in a private placement 400,000 of its ordinary shares
for an aggregate of $2,000,000.

    On May 19, 1999, we purchased from Medis El in a private placement 318,181
of its ordinary shares for an aggregate of $1,750,000.

    In May 1999, Israel Aircraft purchased from us in a private placement 25,000
units, each unit consisting of three shares of our common stock and a warrant to
purchase one share of our common stock at $5.00 per share, or an aggregate of
75,000 shares and 25,000 warrants, for an aggregate of $300,000.

    On June 28, 1999 we transferred 718,181 shares of Medis El owned by us to
Medis Inc., our wholly-owned subsidiary.

                                       56
<Page>
    In November 1999, our board of directors approved a resolution to hire a
U.S. consulting company whose key employee was Jacob Weiss, currently our senior
vice president-business development and a member of our board and of Medis El's
board, and the then general counsel of Israel Aircraft, to provide consulting
services to us and Medis El on matters and in areas deemed appropriate by
management. We granted to such consulting company options to purchase 100,000
shares of our common stock at an exercise price per share of $2.93.

    In January 2000, we sold in a private placement units, each consisting of
66,000 shares of our common stock and a warrant to purchase 25,000 shares of our
common stock, at a purchase price of $300,000 per unit. The following affiliates
purchased units in this offering:

    - Israel Aircraft purchased one unit.

    - Robert K. Lifton purchased one-quarter of one unit.

    - Howard Weingrow purchased one-quarter of one unit.

    - CVF, LLC, currently one of our principal stockholders, purchased two and
      one-half units.

    - Stanoff Corporation purchased one and one half units.

    In January and February 2000, Zvi Rehavi, our executive vice president,
exercised options to purchase an aggregate of 45,000 ordinary shares of Medis El
at an average exercise price of approximately $4.76 per share, or an aggregate
of approximately $215,000.

    In January 2000, Israel Fisher, our vice president--finance, exercised
options to purchase an aggregate of 9,500 ordinary shares of Medis El at an
exercise price of approximate $7.43 per share, or an aggregate of approximately
$70,538.

    In December 1999, Medis El purchased an additional 11.5% of the outstanding
shares of More Energy Ltd., a subsidiary of Medis El's which owns our fuel cell
technology, giving Medis El an 81.5% interest in such company, for an aggregate
purchase price of $115,000. From January to June 2000, Medis El purchased an
aggregate of an additional 11.5% of the outstanding shares of More Energy,
giving Medis El a 93% interest in such company, for an aggregate purchase price
of $320,000. Additionally, in November 2000, we purchased an option for the
remaining 7% of the outstanding shares of More Energy held by Gennadi
Finkelshtain, its general manager and director, at an exercise price of 1,714
shares of our common stock for each More Energy share. The aggregate purchase
price of the option was US$520,000, which we paid in full in June 2001.

    In February 2000, we purchased from Medis El in a private placement 107,759
of its ordinary shares, representing approximately 1.0% of its then outstanding
shares, for an aggregate of $2,500,000.

    In June 2000, Israel Aircraft exercised warrants to purchase 50,000 shares
of our common stock at an average exercise price of approximately $5.38 per
share, or aggregate cash consideration of approximately $269,000. As an
incentive to exercise, Israel Aircraft received 25,000 new warrants that are
exercisable at $16.42 per share until June 15, 2002.

    In June 2000, Robert K. Lifton exercised warrants to purchase 60,000 shares
of our common stock at an exercise price of $5.00 per share, or aggregate cash
consideration of approximately $300,000. As an incentive to exercise,
Mr. Lifton received 30,000 new warrants that are exercisable at $16.42 per share
until June 15, 2002.

    In June 2000, Howard Weingrow exercised warrants to purchase 60,000 shares
of our common stock at an exercise price of $5.00 per share, or aggregate cash
consideration of approximately $300,000. As an incentive to exercise,
Mr. Weingrow received 30,000 new warrants that are exercisable at $16.42 per
share until June 15, 2002.

                                       57
<Page>
    In June 2000, CVF, LLC exercised warrants to purchase 304,167 shares of our
common stock at an average exercise price of approximately $5.15 per share, or
aggregate cash consideration of approximately $1,568,000. As an incentive to
exercise, CVF received 152,084 new warrants that are exercisable at $16.42 per
share until June 15, 2002.

    Medis El is presently included as an additional insured party on Israel
Aircraft's product, casualty, and third party liability coverage. During the
year ended December 31, 2000, Medis El charged IAI approximately $64,000
relating to property loss insurance claims.

    On April 24, 2000, we commenced an exchange offer for the approximately 36%
of Medis El we did not already beneficially own, offering 1.37 of our shares of
common stock for each ordinary share tendered. At the expiration of the offer on
June 5, 2000, shareholders of Medis El tendered an aggregate of 3,643,241
ordinary shares, giving us beneficial ownership of approximately 98% of Medis
El's outstanding ordinary shares. The remaining 182,669 shares passed to us
under operation of Israeli law upon the expiration of the exchange offer.

    On December 29, 2000, we entered into a $5 million revolving credit line
loan agreement with Fleet National Bank which terminates on December 28, 2002.
Under the loan agreement, the outstanding balances bear interest based on either
the LIBOR or Prime Rate. Furthermore, any outstanding balance would be
collateralized by all cash and other assets on deposit with the bank at any time
and an assignment of certain leases owned by a partnership in which Robert K.
Lifton and Howard Weingrow are partners. Messrs. Lifton and Weingrow each
personally guaranteed any principal and interest on and all other sums payable
with respect to our obligations or liabilities to Fleet under the loan
agreement.

    In July 2001, our Board of Directors granted options to purchase an
aggregate of 163,700 shares of common stock under its 1999 Stock Option Plan, as
amended, to our chief executive officer, president and a director. The aggregate
of 150,000 options granted to the chief executive officer and president, are
exercisable at $10.50 per share and vest after two years and expire after four
years. The 13,700 options issued to the director are exercisable at $.4106 per
share. They vest immediately and expire after one year.

    We pay rent of approximately $72,000 per year for the use of office space in
premises occupied by the Stanoff Corporation, which is beneficially owned by
Messrs. Lifton and Weingrow.

    We believe that all transactions between us and our affiliates were and are
on terms no less favorable than can be obtained from unaffiliated parties.

                                       58
<Page>
             MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

    The following is a summary of the material United States federal income tax
consequences of this offering to the holders of our common stock upon the
distribution of rights and warrants and to the holders of the rights or warrants
upon their exercise. The legal conclusions stated in this summary constitute the
opinion of our counsel, Sonnenschein Nath & Rosenthal. Such opinion is based on
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed Treasury regulations promulgated thereunder and
administrative and judicial interpretations thereof, all as of the date hereof
and all of which are subject to change, possibly on a retroactive basis.

    This summary is limited to our stockholders who have held our common stock,
and will hold the rights and warrants and any shares acquired upon the exercise
of rights or warrants, as "capital assets" within the meaning of section 1221 of
the Code. This summary does not address all of the tax consequences that may be
relevant to particular holders in light of their personal circumstances, or to
holders who are subject to special rules (such as banks and other financial
institutions, broker-dealers, real estate investment trusts, regulated
investment companies, insurance companies, tax-exempt organizations and non-U.S.
individuals or entities). In addition, this summary does not include any
description of the tax laws of any state, local or non-U.S. government that may
be applicable to a particular holder.

    No ruling from the Internal Revenue Service will be sought in connection
with the matters discussed herein and therefore holders are urged to consult
their own tax advisors with respect to the U.S. federal income and estate tax
consequences to them of this offering, as well as the tax consequences under
state, local, non-U.S. and other tax laws and the possible effects of changes in
tax laws.

    - DISTRIBUTION OF RIGHTS OR WARRANTS. A corporate distribution of cash or
      property to a shareholder is ordinarily taxable as a dividend to the
      extent of the corporation's current and accumulated earnings and profits
      with the excess treated first as a return of capital and thereafter
      capital gain. However, a corporate distribution of rights to acquire its
      own stock is not treated as a distribution of property unless (1) a
      shareholder has the option to receive property (other than the
      corporation's own stock or rights to acquire its own stock) or (2) the
      distribution has the result of some shareholders receiving property (other
      than the corporation's own stock or rights to acquire its own stock).
      Because the common shareholders do not have the option to receive a
      distribution of property and we have not and do not intend to make a
      distribution of property, holders of our common stock will not recognize
      taxable income as a result of the distribution of the rights or warrants.

    - LAPSE OF THE RIGHTS OR WARRANTS. A holder of the rights or warrants that
      allows the rights or warrants to lapse will not recognize any gain or loss
      upon such lapse, and no adjustment should be made to the basis of the
      common stock with respect to which the rights or warrants were
      distributed.

    - STOCKHOLDER TAX BASIS OF THE RIGHTS OR WARRANTS. Except as provided in the
      following sentence, the tax basis of the rights or warrants received by a
      holder of our common stock will be zero. If, however, either: (i) the fair
      market value of the rights or warrants on the date the rights or warrants
      are distributed is 15% or more of the fair market value (on the date of
      distribution) of the shares of common stock with respect to which the
      rights or warrants are distributed or (ii) the holder properly elects, in
      the holder's U.S. federal income tax return for the taxable year in which
      the holder receives the rights or warrants, to allocate part of the tax
      basis of such common stock to the rights or warrants, then, upon the
      exercise of the rights or warrants, the holder's tax basis in such common
      stock will be allocated between such common stock and the rights or
      warrants in proportion to the fair market values of each on the date of
      distribution.

                                       59
<Page>
    - EXERCISE OF THE RIGHTS OR WARRANTS; BASIS AND HOLDING PERIOD OF THE COMMON
      STOCK. Holders of the rights or warrants will not recognize any gain or
      loss upon the exercise of the rights or warrants. The tax basis of the
      shares of our common stock acquired through the exercise of the rights or
      warrants will be equal to the sum of the subscription price for the rights
      or warrants and the holder's tax basis in the rights or warrants, if any.
      The holding period for the shares acquired through the exercise of the
      rights or warrants will begin on the date that the rights or warrants are
      exercised.

    - SALE OF COMMON STOCK. The sale of common stock acquired through the
      exercise of the rights or warrants will result in the recognition of
      capital gain or loss to the holder in an amount equal to the difference
      between the amount realized and the holder's tax basis in the common stock
      sold. The gain or loss will be long-term capital gain or loss if the
      common stock is held for more than one year.

    - INFORMATION REPORTING AND BACKUP WITHHOLDING. Information reporting will
      apply to a holder that is not a corporation (or other exempt recipient) to
      any dividend payments on common stock received upon the exercise of the
      rights or warrants and to payments on the proceeds of a sale of the common
      stock. Backup withholding at a rate equal to the fourth lowest rate of tax
      under Section 1(c) of the Code (which is 30.5% for amounts paid before
      2002 and 30.0% for amounts paid during 2002) will apply to these payments
      to a holder that is not a corporation (or other exempt recipient) if the
      holder (1) fails to furnish its taxpayer identification number on an
      Internal Revenue Service Form W-9 (or suitable substitute form) within a
      reasonable time after a request therefor; (2) furnishes an incorrect
      taxpayer identification number; (3) fails to report properly any interest
      or dividends; or (4) fails, under certain circumstances, to provide a
      certified statement signed under penalty of perjury that the taxpayer
      identification number provided is its correct number and that the holder
      is not subject to backup withholding.

                        DESCRIPTION OF OUR CAPITAL STOCK

GENERAL

    Our authorized capitalization consists of 25,000,000 shares of common stock,
par value $.01 per share, and 10,000 shares of preferred stock, par value $.01
per share. As of the date of this prospectus, approximately 17,532,779 shares of
our common stock were issued and outstanding, held of record by approximately
710 persons. No shares of preferred stock are currently outstanding.

COMMON STOCK

    Each stockholder of record is entitled to one vote for each share of our
common stock owned by that stockholder on all matters properly submitted to the
stockholders for their vote. Our certificate of incorporation does not provide
for cumulative voting for the election of our directors, with the result that
stockholders owning or controlling more than 50% of the shares voted for the
election of directors can elect all of the directors. Subject to the dividend
rights of holders of preferred stock, if any, holders of common stock are
entitled to receive dividends when, as and if declared by our board out of funds
legally available for this purpose. In the event of our liquidation, dissolution
or winding up, the holders of common stock are entitled to receive on a pro rata
basis any assets remaining available for distribution after payment of our
liabilities and after provision has been made for payment of liquidation
preferences to all holders of preferred stock. Holders of common stock have no
conversion or redemption provisions or preemptive or other subscription rights.
The outstanding shares of common stock are, and when issued as set forth in this
prospectus, will be, fully paid and non-assessable.

                                       60
<Page>
PREFERRED STOCK

    Our certificate of incorporation authorizes us to issue 10,000 shares of
so-called "blank check" preferred stock having rights senior to our common
stock. Our Board of Directors is authorized, without further stockholder
approval, to issue preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, redemption terms and liquidation preferences,
and to fix the number of shares constituting any series and the designations of
these series. The issuance of preferred stock may have the effect of delaying or
preventing a change of control of Medis Technologies. The issuance of preferred
stock could decrease the amount of earnings and assets available for
distribution to the holders of common stock or could adversely affect the voting
power or other rights of the holders of common stock. We currently have no plans
to issue any shares of preferred stock.

SHAREHOLDER LOYALTY PROGRAM WARRANTS

    Each warrant entitles the registered holder to purchase one share of our
common stock at a price per share equal to 90% of the last sales price of our
common stock on September 18, 2002, increasing to 100% of such sale price on
September 18, 2003 and to 110% of such sales price on September 18, 2004,
respectively, subject to adjustment in certain circumstances, at any time or
from time to time commencing on September 18, 2002 and ending at 5:00 p.m., New
York City time, on September 18, 2005, at which time the warrants will expire.

    The warrants will be issued in registered form. We will act as our own
warrant agent for registration and permissible transfers of the warrants. The
warrants will be non-transferable except by will or the laws of descent and
distribution.

    The exercise price and number of shares of common stock issuable on exercise
of the warrants are subject to adjustment in certain circumstances including our
issuance of a stock dividend or our recapitalization, reorganization, merger or
consolidation. However, the warrants are not subject to adjustment for issuances
of common stock at a price below their exercise price.

    We have the right, in our sole discretion, to extend the expiration date of
the warrants on five business days' prior written notice to the warrantholders.

    The warrants may be exercised upon surrender to us of the warrant
certificate on or prior to the expiration date at our U.S. offices, with the
exercise form on the reverse of the warrant certificate completed and executed
as indicated, accompanied by full payment of the exercise price (by certified
check, payable to us) for the number of warrants being exercised. Warrantholders
do not have the rights or privileges of holders of common stock.

    No warrants will be exercisable unless at the time of exercise we have on
file with the SEC a current prospectus covering the shares of common stock
issuable upon exercise of such warrants and such shares have been registered or
qualified under the securities laws of the state of residence of the holder of
such warrants. We will use our best efforts to maintain a current prospectus
until the expiration of the warrants, subject to the terms of the warrant
agreement.

    No fractional shares will be issued upon exercise of the warrants. We will
instead round the number of shares upon exercise of the warrants upward or
downward, as appropriate, to the nearest whole number.

    We refer you to the form of warrant agreement, which has been filed as an
exhibit to the Registration Statement of which this prospectus is a part, for a
complete description of the terms and conditions of the warrants.

                                       61
<Page>
TRANSFER AGENT

    American Stock Transfer & Trust Company, 59 Maiden Lane, New York, New York
10038 is transfer agent for our common stock.

                                 LEGAL MATTERS

    The validity of the shares of common stock offered in this rights offering
will be passed upon for us by Sonnenschein Nath & Rosenthal, New York, New York.

                                    EXPERTS

    Our consolidated financial statements as of December 31, 1999 and for the
years ended December 31, 1998 and 1999 included in this prospectus have been
audited by Grant Thornton LLP, independent certified public accountants, as
indicated in their report, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.

    Our consolidated financial statements as of December 31, 2000 and for the
year then ended included in this prospectus have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.

                             AVAILABLE INFORMATION

    We have filed with the SEC a registration statement on Form S-1 (including
all amendments, exhibits, schedules and supplements thereto), under the
Securities Act and the rules and regulations thereunder, for the registration of
the rights, common stock and warrants offered hereby. Although this prospectus,
which forms a part of the registration statement, contains all material
information included in the registration statement, parts of the registration
statement have been omitted as permitted by the rules and regulations of the
SEC. For further information with respect to our company and the rights, common
stock and warrants offered hereby, you should refer to the registration
statement. Statements contained in this prospectus as to the contents of any
contracts or other document referred to herein are not necessarily complete and,
where such contract or other document is an exhibit to the registration
statement, each such statement is qualified in all respects by the provisions of
such exhibit, to which reference is hereby made. The registration statement can
be inspected and copied at prescribed rates at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information
regarding the Washington, D.C. Public Reference Room by calling SEC at
1-800-SEC-0330. In addition, the registration statement is publicly available
through the SEC's site on the Internet's World Wide Web, located at:
http://www.sec.gov.

                                       62
<Page>
                                     INDEX

<Table>
<Caption>
                                                                 PAGE
                                                              -----------
<S>                                                           <C>
MEDIS TECHNOLOGIES LTD. FINANCIAL STATEMENTS

Report of Independent Public Accountants....................          F-2

Report of Independent Certified Public Accountants..........          F-3

Financial Statements

  Consolidated Balance Sheets as of December 31, 1999 and
    2000....................................................          F-4

  Consolidated Statements of Operations for the years ended
    December 31, 1998, 1999 and 2000........................          F-5

  Consolidated Statements of Stockholders' Equity for the
    years ended December 31, 1998, 1999 and 2000............          F-6

  Consolidated Statements of Cash Flows for the years ended
    December 31, 1998, 1999 and 2000........................          F-7

Notes to Consolidated Financial Statements..................          F-9

MEDIS TECHNOLOGIES LTD. CONDENSED CONSOLIDATED INTERIM
  FINANCIAL STATEMENTS

  Condensed Consolidated Balance Sheet as of September 30,
    2001 (Unaudited)........................................         F-31

  Condensed Consolidated Statements of Operations
    (Unaudited) for the nine months ended September 30, 2000
    and 2001................................................         F-32

  Condensed Consolidated Statements of Cash Flows
    (Unaudited) for the nine months ended September 30, 2000
    and 2001................................................         F-33

  Notes to Condensed Consolidated Financial Statements
    (Unaudited).............................................         F-35
</Table>

                                      F-1
<Page>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors and Stockholders of
  MEDIS TECHNOLOGIES LTD.

    We have audited the accompanying consolidated balance sheet of Medis
Technologies Ltd. (a Delaware corporation) and Subsidiaries as of December 31,
2000, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

    We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Medis Technologies Ltd. and
Subsidiaries as of December 31, 2000, and the results of their operations and
their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

New York, New York
March 13, 2001

                                      F-2
<Page>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
  MEDIS TECHNOLOGIES LTD.

    We have audited the accompanying consolidated balance sheets of Medis
Technologies Ltd. and Subsidiaries (a Delaware corporation) as of December 31,
1999, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the two years in the period ended
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Medis
Technologies Ltd. and Subsidiaries as of December 31, 1999, and the consolidated
results of their operations and their consolidated cash flows for each of the
two years in the period ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States of America.

GRANT THORNTON LLP

New York, New York
March 9, 2000

                                      F-3
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                               (IN U.S. DOLLARS)

<Table>
<Caption>
                                                                    December 31,
                                                              -------------------------
                                                                 1999          2000
                                                              -----------   -----------
<S>                                                           <C>           <C>
                           ASSETS
Current assets
  Cash and cash equivalents.................................  $ 1,842,000   $ 2,885,000
  Accounts receivable--other................................       58,000       228,000
  Prepaid expenses and other current assets.................      101,000       245,000
                                                              -----------   -----------
    Total current assets....................................    2,001,000     3,358,000
Property and equipment, net (Note E)........................      983,000     1,045,000
Intangible assets, net (Note F).............................    7,242,000    82,799,000
                                                              -----------   -----------
    Total assets............................................  $10,226,000   $87,202,000
                                                              ===========   ===========
                      LIABILITIES AND
                    STOCKHOLDERS' EQUITY
Current liabilities
  Current portion of long-term debt (Note G)................  $    86,000   $        --
  Accounts payable..........................................      102,000       139,000
  Accrued expenses and other current liabilities............      730,000       697,000
                                                              -----------   -----------
    Total current liabilities...............................      918,000       836,000
Long-term debt, excluding current maturities (Note G).......       11,000            --
Accrued severance pay.......................................      109,000       224,000
                                                              ===========   ===========
                                                                1,038,000     1,060,000
Minority interest in subsidiary.............................      627,000            --
Commitments and contingencies (Note I)
Stockholders' equity (Note H)
  Preferred stock, $.01 par value; 10,000 shares authorized;
    none issued.............................................
  Common stock, $.01 par value; 25,000,000 shares
    authorized; 9,988,619 and 16,830,991 shares issued and
    outstanding, at December 31, 1999 and 2000,
    respectively............................................      100,000       168,000
  Additional paid-in capital................................   32,450,000   136,819,000
  Accumulated deficit.......................................  (23,615,000)  (49,078,000)
  Deferred compensation costs...............................     (374,000)   (1,767,000)
                                                              -----------   -----------
    Total shareholders' equity..............................    8,561,000    86,142,000
                                                              -----------   -----------
    Total liabilities and shareholders' equity..............  $10,226,000   $87,202,000
                                                              ===========   ===========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-4
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                               (IN U.S. DOLLARS)

<Table>
<Caption>
                                                                Year ended December 31,
                                                        ----------------------------------------
                                                           1998          1999           2000
                                                        -----------   -----------   ------------
<S>                                                     <C>           <C>           <C>
Sales.................................................  $     8,000   $        --   $         --
Cost of sales.........................................        3,000            --             --
  Gross profit........................................        5,000            --             --

Operating expenses
  Research and development costs, net.................    1,646,000     2,749,000      4,493,000
  Selling, general and administrative expenses........    1,399,000     2,467,000      5,405,000
  Amortization of intangible assets...................    2,445,000     2,574,000     13,668,000
                                                        -----------   -----------   ------------
    Total operating expenses..........................    5,490,000     7,790,000     23,566,000
                                                        -----------   -----------   ------------
    Loss from operations..............................   (5,485,000)   (7,790,000)   (23,566,000)

Other income (expenses)
  Interest and other income...........................       63,000       150,000        214,000
  Interest expense....................................     (101,000)      (22,000)       (13,000)
                                                        -----------   -----------   ------------
                                                            (38,000)      128,000        201,000
                                                        -----------   -----------   ------------

    Loss before minority interest.....................   (5,523,000)   (7,662,000)   (23,365,000)
Minority interest in loss of subsidiary...............    1,105,000     1,697,000        873,000
                                                        -----------   -----------   ------------
    NET LOSS..........................................   (4,418,000)   (5,965,000)   (22,492,000)
Value of warrants issued to exercising stockholders...           --            --     (2,971,000)
                                                        -----------   -----------   ------------
    Net loss attributable to common stockholders......  $(4,418,000)  $(5,965,000)  $(25,463,000)
                                                        ===========   ===========   ============
Basic and diluted net loss per share..................  $      (.52)  $      (.61)  $      (1.79)
                                                        ===========   ===========   ============
Weighted-average shares used in computing basic and
  diluted net loss per share..........................    8,581,774     9,807,101     14,238,104
                                                        ===========   ===========   ============
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-5
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                               (IN U.S. DOLLARS)

<Table>
<Caption>
                                        COMMON STOCK         ADDITIONAL                     DEFERRED         TOTAL
                                    ---------------------     PAID-IN      ACCUMULATED    COMPENSATION   STOCKHOLDERS'
                                      SHARES      AMOUNT      CAPITAL        DEFICIT         COSTS          EQUITY
                                    ----------   --------   ------------   ------------   ------------   -------------
<S>                                 <C>          <C>        <C>            <C>            <C>            <C>
Balance at January 1, 1998........   8,257,613   $ 83,000   $ 24,527,000   $(13,232,000)  $        --     $11,378,000

Net loss..........................          --         --             --     (4,418,000)           --      (4,418,000)
Issuance of common stock..........   1,150,002     11,000      4,589,000                                    4,600,000
Compensation expense..............          --         --          9,000             --            --           9,000
Increase attributable to changes
  in a subsidiary's shares
  outstanding.....................          --         --      1,549,000             --            --       1,549,000
Minority share of an investment in
  a subsidiary....................          --         --       (712,000)            --            --        (712,000)
                                    ----------   --------   ------------   ------------   -----------     -----------
Balance at December 31, 1998......   9,407,615     94,000     29,962,000    (17,650,000)           --      12,406,000

  Net loss........................          --         --             --     (5,965,000)           --      (5,965,000)
Issuance of common stock..........     581,004      6,000      2,318,000             --            --       2,324,000
Stock options granted to employees
  and directors...................          --         --        435,000             --      (435,000)             --
Amortization of deferred
  compensation....................          --         --             --             --        61,000          61,000
Increase attributable to changes
  in a subsidiary's shares
  outstanding.....................          --         --        344,000             --            --         344,000
Minority share of an investment in
  a subsidiary....................          --         --       (609,000)            --            --        (609,000)
                                    ----------   --------   ------------   ------------   -----------     -----------
  Balance at December 31, 1999....   9,988,619    100,000     32,450,000    (23,615,000)     (374,000)      8,561,000

  Net loss........................          --         --             --    (22,492,000)           --     (22,492,000)
Issuance of common stock..........   1,598,811     16,000      7,742,000             --            --       7,758,000
Issuance of common stock in
  exchange for minority interest
  in a subsidiary.................   5,243,561     52,000     88,946,000             --            --      88,998,000
Stock options granted to employees
  and directors...................          --         --      2,629,000             --    (2,629,000)             --
Amortization of deferred
  compensation....................          --         --             --             --     1,236,000       1,236,000
Stock options and warrants granted
  to consultants..................          --         --      1,892,000             --            --       1,892,000
Value of warrants issued to
  exercising stockholders.........          --         --      2,971,000     (2,971,000)           --              --
Increase attributable to equity
  transactions of a subsidiary....          --         --        189,000             --            --         189,000
                                    ----------   --------   ------------   ------------   -----------     -----------
BALANCE AT DECEMBER 31, 2000......  16,830,991   $168,000   $136,819,000   $(49,078,000)  $(1,767,000)    $86,142,000
                                    ==========   ========   ============   ============   ===========     ===========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-6
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                               (IN U.S. DOLLARS)

<Table>
<Caption>
                                                                      Year ended December 31,
                                                              ----------------------------------------
                                                                 1998          1999           2000
                                                              -----------   -----------   ------------
<S>                                                           <C>           <C>           <C>
Cash flows from operating activities
  Net loss..................................................  $(4,418,000)  $(5,965,000)  $(22,492,000)
  Adjustments to reconcile net loss to net cash used in
    operating activities
    Depreciation............................................      132,000       388,000        363,000
    Amortization of intangible assets.......................    2,445,000     2,574,000     13,668,000
    Changes in accrued severance payable....................       33,000        48,000        115,000
    Losses of minority interest.............................   (1,105,000)   (1,697,000)      (873,000)
    Non-cash compensation expense...........................       61,000       187,000      3,229,000
    Non-cash settlement costs...............................           --       437,000             --
    Loss (gain) from sale of property and equipment.........       10,000         5,000         (2,000)
    Charge of inventory to research and development
      expense...............................................           --       255,000             --
    Write-off of acquired in-process research and
      development...........................................           --       117,000        884,000
    Changes in operating assets and liabilities
      Accounts receivable--other............................       21,000         8,000       (170,000)
      Inventory.............................................      113,000       (47,000)            --
      Prepaid expenses and other current assets.............      (43,000)      (12,000)      (144,000)
      Accounts payable......................................      (42,000)      (11,000)        37,000
      Accrued expenses and other current liabilities........      134,000       351,000        (33,000)
                                                              -----------   -----------   ------------
        Net cash used in operating activities...............   (2,659,000)   (3,362,000)    (5,418,000)
                                                              -----------   -----------   ------------
Cash flows from investing activities
  Capital expenditures......................................     (134,000)     (330,000)      (487,000)
  Sale of securities and short-term deposits................           --       500,000             --
  Proceeds from disposition of property and equipment.......       17,000        11,000         64,000
  Purchases of short-term deposits..........................     (500,000)           --             --
  Acquisition by a subsidiary of additional shares of a
    majority-owned subsidiary...............................           --      (115,000)      (320,000)
  Acquisition of shares of a majority-owned subsidiary......           --      (138,000)      (398,000)
                                                              -----------   -----------   ------------
        Net cash used in investing activities...............     (617,000)      (72,000)    (1,141,000)
                                                              -----------   -----------   ------------
Cash flows from financing activities
  Repayment of long-term debt...............................     (342,000)     (195,000)       (97,000)
  Proceeds from long-term debt..............................       45,000            --             --
  Proceeds from issuance of common stock and exercise of
    stock options of a majority-owned subsidiary............    1,350,000            --        336,000
  Proceeds from issuance of common stock....................    4,600,000     2,324,000      7,758,000
  Proceeds from (repayments of) short-term credit...........        6,000        (8,000)            --
  Direct costs of exchange of shares........................           --            --       (395,000)
                                                              -----------   -----------   ------------
        Net cash provided by financing activities...........    5,659,000     2,121,000      7,602,000
                                                              -----------   -----------   ------------
        NET INCREASE (DECREASE) IN CASH AND CASH
        EQUIVALENTS.........................................    2,383,000    (1,313,000)     1,043,000
Cash and cash equivalents at beginning of year..............      772,000     3,155,000      1,842,000
                                                              -----------   -----------   ------------
Cash and cash equivalents at end of year....................  $ 3,155,000   $ 1,842,000   $  2,885,000
                                                              ===========   ===========   ============
</Table>

                                      F-7
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                               (IN U.S. DOLLARS)

<Table>
<Caption>
                                                                 Year ended December 31,
                                                           ------------------------------------
                                                              1998         1999        2000
                                                           -----------   --------   -----------
<S>                                                        <C>           <C>        <C>
Supplemental disclosures of cash flow information:
  Cash paid during the year for
    Interest.............................................  $   305,000   $ 12,000   $    13,000
    Income taxes.........................................  $     4,000   $  7,000   $     2,000
  Non-cash investing and financing activities:
    Acquisition of minority interest through exchange of
      shares (see Note C), comprised of the following:...  $        --   $     --   $89,393,000
      Goodwill...........................................                           $81,867,000
      Acquired technology assets.........................                           $ 6,071,000
      In-process research and development................                           $   561,000
      Value of net tangible assets acquired..............                           $   894,000
    Decrease in long-term debt through the issuance of
      common stock.......................................  $   650,000   $     --   $        --
    Value of warrants issued to exercising stockholders
      (See Note H-1).....................................  $        --   $     --   $ 2,971,000
    Decrease in inventory through increase in fixed
      assets.............................................  $   429,000   $197,000   $        --
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-8
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1999 AND 2000

NOTE A--NATURE OF BUSINESS AND GENERAL MATTERS

    Medis Technologies Ltd. ("MTL"), a Delaware corporation, is a holding
company, which through its wholly-owned subsidiary, Medis El Ltd. ("Medis El"),
engages in research and development of technology products to license, sell, or
enter into joint ventures with large corporations. The Company's primary focus
is the development and commercialization of direct liquid methanol (DLM) fuel
cells and the refueling cartridges for such fuel cells, for use in portable
electronic devices using as their power source rechargeable or disposable
batteries including cell phones, personal digital assistants (PDAs), laptop
computers and certain military devices The Company's other technologies, which
are in various stages of development, include highly electrically conductive
polymers, the CellScan, the toroidal compressor and internal combustion engine,
stirling cycle linear system, direct current regulating device, reciprocating
electrical machine.

    Since inception, the Company has incurred operating losses and has used cash
in its operations. Accordingly, the Company has relied on external financing,
principally through the sale of its stock, to fund its research and development
activities. The Company believes this dependence will continue unless it is able
to successfully develop and market its technologies. On December 29, 2000, the
Company entered into a $5,000,000 revolving credit line loan agreement with a
bank. The loan agreement, which bears interest on the outstanding balances based
on either the LIBOR or Prime Rate and terminates on December 28, 2002, is
collateralized by all cash and other assets on deposits with the bank at any
time and the mortgage and assignment of certain leases owned by a partnership in
which the Company's chairman and chief executive officer and its president and
treasurer are partners. The Company believes its cash resources together with
financing available by the line of credit will be sufficient to meet the
Company's needs at least through December 31, 2001.

NOTE B--SIGNIFICANT ACCOUNTING POLICIES

    1. PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of MTL and its
wholly-owned and majority-owned subsidiaries from their dates of acquisition
(collectively, the "Company"). All significant intercompany transactions and
balances have been eliminated. Minority interest represents the minority
shareholders' proportionate share in the equity or income of Medis El prior to
the completion of the Company's exchange offer of June5, 2000 (see Note C).

    2. CASH AND CASH EQUIVALENTS

    Cash and cash equivalents consist of cash, certificates of deposit, money
market funds and highly liquid investments with an original maturity of three
months or less. As of December 31, 1999 and 2000, cash and cash equivalents
included $211,000, and $67,951, respectively, of balances denominated in Israeli
currency ("NIS").

    3. RESEARCH AND DEVELOPMENT COSTS

    Research and development costs are charged to operations as incurred. Grants
received by Medis El from the State of Israel related to CellScan and Neuritor
research and development and contractual participation were offset against
research and development costs.

                                      F-9
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE B--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    4. REVENUE RECOGNITION

    Revenue from sales is recognized upon delivery of product to the customer.

    5. WARRANTY COSTS

    The Company grants a one-year warranty on products sold and provides for
estimated warranty costs.

    6. USE OF ESTIMATES

    In preparing the Company's financial statements in conformity with generally
accepted accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

    7. FAIR VALUE OF FINANCIAL INSTRUMENTS

    Based on borrowing rates currently available to the Company for bank loans
with similar terms and maturities, the fair value of the Company's long-term
debt at December 31, 1999 approximates the carrying value. Furthermore, the
carrying value of all other financial instruments potentially subject to
valuation risk (principally consisting of cash and cash equivalents) also
approximates fair value.

    8. TRANSLATION OF FOREIGN CURRENCIES

    The financial statements of the Company and its subsidiaries have been
prepared in U.S. dollars, as the dollar is the Company's functional currency.

    Non-dollar transactions and balances were remeasured into dollars in
accordance with Statement of Financial Accounting Standards No. 52 ("SFAS
No. 52"), "Foreign Currency Translation."

    9. PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost (net of investment grants from the
state of Israel). Depreciation is provided on the straight-line basis over the
estimated useful lives of such assets. Leasehold improvements are amortized over
the lives of the respective leases or useful lives of the improvements,
whichever is shorter.

    The annual depreciation rates are as follows:

<Table>
<Caption>
                                                              ANNUAL RATES
                                                              ------------
<S>                                                           <C>
Machinery and equipment.....................................    10% - 33%
Computers...................................................    20% - 33%
Furniture and office equipment..............................     7% - 15%
Vehicles....................................................          15%
</Table>

                                      F-10
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE B--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    10. STOCK-BASED COMPENSATION

    The Company has adopted Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"). As
permitted under SFAS No. 123, the Company has elected to follow Accounting
Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued to
Employees", and related interpretations in accounting for its employee stock
options. The Company has provided the necessary pro forma disclosure as if the
fair value method had been applied (see Note H). Under APB No. 25, when the
exercise price of employee stock options equals or exceeds the market price of
the underlying stock on the date of grant, no compensation expense is recorded.
However, with respect to options granted to other than employees or directors,
the Company records expense equal to the fair value of the option, as required
by SFAS No. 123. To the extent that compensation expense is recognized with
respect to stock options issued to employees or directors, such expense is
amortized over the vesting period of such options.

    11. INTANGIBLE ASSETS, LONG-LIVED ASSETS AND IMPAIRMENT OF LONG-LIVED ASSETS

    Intangible assets, consisting of acquired technology assets and goodwill,
are being amortized on a straight-line basis over three and five year periods,
respectively. The Company assesses long-lived assets, including intangibles, for
impairment in accordance with the Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to Be Disposed Of," by comparing the carrying value to future
undiscounted cash flows. To the extent that there is an impairment, analysis is
performed based on several criteria, including, but not limited to, management's
plan for future operations, recent operational results and discounted
operational cash flows to determine the impairment amount. Management reviewed
all long-lived assets and goodwill and determined that no impairment existed at
December 31, 2000 and 1999.

    12. NET LOSS PER SHARE

    The Company computes net loss per share in accordance with Statement of
Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings Per Share."
Under the provisions of SFAS No. 128, basic net loss per share is computed by
dividing the net loss for the period by the weighted-average number of common
shares outstanding during the period. Diluted net loss per share is computed by
dividing the net loss for the period by the weighted-average number of common
and common equivalent shares outstanding during the period. However, as the
Company generated net losses in all periods presented, common equivalent shares,
composed of incremental common shares issuable upon the exercise of warrants and
stock options, are not reflected in diluted net loss per share because such
shares are antidilutive.

    13. OTHER COMPREHENSIVE INCOME

    Effective January 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 130 ("SFAS No. 130"), "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for reporting
comprehensive income and its components in financial statements. Other
comprehensive income, as defined, includes all changes in equity during a period
from non-owner sources. To date, the Company has not had any material
transactions that are required to be reported as other comprehensive income.

                                      F-11
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE B--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    14. SEGMENT INFORMATION

    Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131 ("SFAS No. 131"), "Disclosures About Segments of an
Enterprise and Related Information," which establishes standards for the way
companies report information about operating segments in annual financial
statements. It also establishes standards for related disclosures about products
and services, geographic areas and major customers. The Company has determined
that it does not have any separately reportable business segments, but does
operate in two geographic areas, the United States and Israel.

    15. INCOME TAXES

    Deferred income taxes are provided for differences between financial
statement and income tax basis of assets and liabilities using enacted tax rates
in effect in the years in which the differences are expected to reverse. The
Company provides a valuation allowance on net deferred tax assets when it is
more likely than not that such assets will not be realized.

    16. RECENT PRONOUNCEMENTS

    In September 1998, the FASB issued Statement of Financial Accounting
Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and
Hedging Activities," which defines derivatives, requires that all derivatives be
carried at fair value, and provides for hedge accounting when certain conditions
are met. The company will adopt the provisions of SFAS No. 133, as amended by
SFAS 138, on January 1, 2001. The adoption of this statement will have no
material impact on the Company's financial position or results of operations.

NOTE C--EXCHANGE OFFER AND ACQUISITION OF MINORITY INTERESTS

    On April 24, 2000, MTL commenced an offer for the approximately 36% of Medis
El it did not already beneficially own, offering 1.37 of its shares of common
stock for each ordinary share tendered (the "Exchange Offer"). The consummation
of the Exchange Offer depended upon enough ordinary shares of Medis El being
tendered in the Exchange Offer such that the Company would beneficially own at
least 80% of Medis El's ordinary shares after completion of the Exchange Offer.
At the expiration of the offer on June 5, 2000, shareholders of Medis El
tendered an aggregate of 3,643,241 ordinary shares, giving MTL ownership of
approximately 98% of Medis El's outstanding ordinary shares. The remaining
182,669 shares passed to MTL by operation of Israeli law upon the expiration of
the exchange offer. In accordance with APB 16 and EITF 99-12, the Company
accounted for the exchange using the purchase method and used as the measurement
date May 25, 2000, which is the date that the number of shares tendered by Medis
El shareholders would have provided the Company with ownership of 80% of Medis
El's ordinary shares had the Exchange Offer closed on that day. The Company used
the market price of Medis El's ordinary shares for determining the purchase
price as such shares were publicly traded on The Nasdaq SmallCap Market at the
time of the Exchange Offer and, therefore, were more clearly evident of the fair
value of the transaction than the Company's common stock, which was not publicly
traded at such time. Accordingly, the Company calculated the purchase price of
the 3,825,910 shares and 184,000 options of Medis El not owned by it based on
the market price of Medis El ordinary shares. Such purchase price was
$89,393,000. The Company

                                      F-12
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE C--EXCHANGE OFFER AND ACQUISITION OF MINORITY INTERESTS (CONTINUED)
allocated the excess of purchase price over net assets acquired to goodwill
($81,867,000), CellScan technology assets ($6,071,000) and in-process research
and development for the fuel cells, stirling cycle and toroidal engine projects,
which was charged to research and development expense on the acquisition date
($561,000). Such allocation was based on a valuation using the cost method,
which represents the fair value of the assets underlying each project.

    The following describes the valuable elements, the fair value assigned and
the stage of development or significant target date for the CellScan, fuel
cells, stirling cycle and toroidal engine projects, at or around the closing of
the Exchange Offer:

    CELLSCAN.  The valuable elements of the CellScan project were: (i) unique
technology allowing for non-invasive repetitive examination and monitoring of
thousands of living cells; (ii) proprietary scientific, technological and
engineering knowledge; (iii) patents; (iv) scientific, technological and
engineering know-how; and (v) drawings and designs. The fair value assigned to
the CellScan project was approximately $16,800,000, of which $6,071,000, or 36%,
represented the portion acquired in the Exchange Offer. The CellScan was in late
stages of development with a short expected time and small expected investment
to completion and accordingly was allocated as acquired technology assets.

    FUEL CELLS.  The valuable elements of the fuel cell project were: (i) the
expectation of fuel cells, utilizing the Company's highly electrically
conductive polymers, which are expected to be long lasting, more efficient and
cost less than traditional fuel cells; (ii) fundamental innovation supported by
a substantial degree of proprietary scientific, technical and engineering
knowledge; (iii) patents pending; and (iv) drawings and designs. The fair value
assigned to the fuel cell project was approximately $500,000. The Company
expected to reach full technical feasibility by the end of 2000. The expected
aggregate cost of completion was not projected.

    STIRLING CYCLE.  The valuable elements of the stirling cycle project were:
(i) the expectation of a refrigeration and air-conditioning system that would
provide greater efficiency than current systems, which would result in lower
average consumption and reduced emissions that are believed to be harmful;
(ii) proprietary scientific, technical and engineering knowledge;
(iii) patents; and (iv) drawings and designs. The fair value assigned to the
stirling cycle project was approximately $600,000. At the time of the Exchange
Offer, this project was in progress. Expected aggregate costs of completion were
not projected at that time.

    TOROIDAL ENGINE.  The valuable elements of the toroidal engine projects
were: (i) the expectation of an engine that would be more efficient than an
internal combustion or diesel engine, have reduced fuel consumption, have
reduced pollution and have lower manufacturing costs; (ii) proprietary
scientific, technical and engineering knowledge; (iii) patents; and
(iv) drawings and designs. The fair value assigned to the toroidal engine
product was approximately $400,000. At the time of the Exchange Offer, this
project was in progress. Expected aggregate costs of completion were not
projected at that time.

    In accordance with the above, the fuel cells, stirling cycle and toroidal
engine projects were allocated as in-process research and development and
charged to research and development expense. The aggregate charge of $561,000
represents the 36% portion of the aggregate fair value of such projects acquired
in the Exchange Offer.

                                      F-13
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE C--EXCHANGE OFFER AND ACQUISITION OF MINORITY INTERESTS (CONTINUED)
    The Company amortizes the acquired technology assets over their remaining
useful lives of three years and the goodwill over five years. During the year
ended December 31, 2000, the Company recorded amortization expense aggregating
approximately $11,013,000 related to this transaction. The following unaudited
pro-forma information gives effect to the Exchange Offer as if it had occurred
at the beginning of each of the periods presented:

<Table>
<Caption>
                                                               YEAR ENDED DECEMBER 31,
                                                      ------------------------------------------
                                                          1998           1999           2000
                                                      ------------   ------------   ------------
<S>                                                   <C>            <C>            <C>
Net loss............................................  $(24,481,000)  $(26,620,000)  $(30,749,000)
Net loss attributable to common shareholders........  $(24,481,000)  $(26,620,000)  $(33,720,000)
Net loss per common share...........................  $      (1.77)  $      (1.77)  $      (2.07)
</Table>

    On February 23, 2000, Medis El issued to MTL 107,759 ordinary shares for
aggregate cash consideration of $2,500,000. The Company accounted for the
acquisition using the purchase method. The Company allocated the excess of the
purchase price over net assets acquired to goodwill ($810,000) and CellScan
technology assets ($99,000). The Company intends to amortize the acquired
technology assets over their remaining useful lives of three years and the
goodwill over five years.

    During the year ended December 31, 2000, the Company purchased an aggregate
of 60,000 shares of Medis El from the designee of an Argentinean company,
pursuant to the terms of a settlement agreement entered into in November 1999
("November Settlement"). On June 8, 2000, the Company commenced an action
entitled Medis Technologies Ltd. v. Cellscan Argentina, S.A., in the Supreme
Court of the State of New York, County of New York, upon CellScan Argentina's
refusal to transfer 18,000 of such shares. The June 8, 2000 action alleged that
the failure to transfer the 18,000 shares was a material breach of the November
Settlement. In August 2000, the parties entered into a stipulation and order of
settlement (the "Stipulation"), dismissing with prejudice the action. Pursuant
to the Stipulation, the Company purchased the remaining 18,000 shares pursuant
to the terms of the November Settlement and granted certain "piggy-back"
registration rights to Cellscan Argentina with respect to 30,000 shares of the
Company's common stock underlying warrants issued to Cellscan Argentina pursuant
to the November Settlement. The Company paid aggregate cash consideration of
approximately $398,000 in exchange for the 60,000 ordinary shares of Medis El.
The excess of purchase price over net assets acquired on these acquisitions was
approximately $383,000, which was allocated to CellScan technology assets
($92,000), in-process R&D for the Fuel Cell, Stirling Cycle and Toroidal Engine
Projects ($4,000), and goodwill ($287,000).

    During the year ended December 31, 1999, the Company purchased an aggregate
of 24,500 shares (or approximately 0.24%) of Medis El on the open market (i.e.,
from the minority shareholders). These purchases were treated as an acquisition
of minority interest of the Company. The excess of purchase price over net
assets acquired was approximately $139,000, which was allocated to CellScan
technology assets ($37,000), in-process R&D for the Fuel Cell and Stirling Cycle
Projects ($3,000), and goodwill ($99,000).

    At December 31, 1999, MTL owned 100% of the common stock of Medis Inc.,
which in turn owned 5,925,000 shares, or 56.49%, of Medis El. Additionally, MTL
owned 742,681 shares of Medis El, or an additional 7.08%. The minority
shareholders (including public shareholders) owned 36.43% of Medis El's common
stock.

                                      F-14
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE C--EXCHANGE OFFER AND ACQUISITION OF MINORITY INTERESTS (CONTINUED)
    Through December 15, 1997, MTL owned 60% of Medis Inc. while Israel Aircraft
Industries Ltd. ("IAI") owned 40% of Medis Inc. Through a shareholders'
agreement in effect during that time, control of Medis Inc. was shared as the
board of directors of Medis Inc. and Medis El each consisted of six directors,
of which three were designated by MTL and three were designated by IAI. As
neither party had control of Medis Inc., MTL had accounted for its investment in
Medis Inc. (and therefore Medis El) under the equity method of accounting.

    As of December 15, 1997, MTL acquired IAI's 40% interest in Medis Inc., for
aggregate consideration of 3,600,457 shares of MTL stock. As this was an
acquisition of a minority interest, the Company accounted for this transaction
using purchase accounting. The purchase price was valued based on the value of
Medis Inc.'s investment in Medis El, using the quoted market price of Medis El
shares as of December 15, 1997. The aggregate purchase price was valued at
$13,125,000. Acquired intangible technology assets, consisting primarily of
patents, know-how and other technology-related assets, aggregated $2,975,000, of
which $2,814,000 related to the CellScan technology. Goodwill, which represented
the excess of the purchase price over the value of the acquired tangible and
intangible technology assets, aggregated $9,252,000. Intangible assets,
including goodwill, are being amortized over a five-year period. The operations
of Medis Inc. and Medis El are included in results of operations of the Company
from the date of acquisition.

    From January to June 2000, Medis El purchased an additional 11.5% of the
outstanding shares of More Energy Ltd., giving Medis El a 93% interest in such
company, for an aggregate purchase price of $320,000. Medis El accounted for
these acquisitions of minority interests using purchase accounting. The excess
of purchase price over the book value of the net assets acquired aggregated
$320,000. This excess purchase price was allocated to in-process research and
development and, therefore, was charged to research and development costs as of
the dates of the acquisitions. Additionally, In November 2000, the Company
purchased an option for the remaining 7% of the outstanding shares of More
Energy held by its general manager and director, at an exercise price of 1,714
shares of the Company's common stock for each More Energy share, aggregating to
a total of 120,000 shares of the Company's common stock. The purchase price of
the option is $500,000, which the Company is required to pay no later than
April 15, 2001 or the option expires.. The Company paid an additional $10,000
upon execution of the option agreement as consideration for the right to pay the
purchase price until April 15, 2001. The company paid an additional $10,000 to
extend the option until July 31, 2001. The option is for 48 months and provides
for a maximum exercise as to 25% of the shares in each of the four 12 month
periods following the date of the agreement--with any unexercised amount being
carried over to the following twelve month period.

NOTE D--INVENTORIES

    On June 30, 1999, the Company charged its inventory of cell carriers and
antigens and Neuritors, a technology that the Company is no longer developing or
selling, aggregating $255,000 to research and development expense.

                                      F-15
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE E--PROPERTY AND EQUIPMENT, NET

    Property and equipment consists of the following:

<Table>
<Caption>
                                                                   December 31,
                                                              -----------------------
                                                                 1999         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
Machinery and equipment.....................................  $1,106,000   $1,329,000
Computers...................................................     187,000      224,000
Furniture and office equipment..............................      94,000      109,000
Vehicles....................................................     154,000      145,000
Land........................................................          --      110,000
Leasehold improvements......................................     300,000      186,000
                                                              ----------   ----------
                                                               1,841,000    2,103,000

Less accumulated depreciation...............................     858,000    1,058,000
                                                              ----------   ----------
Property and equipment, net.................................  $  983,000   $1,045,000
                                                              ==========   ==========
</Table>

    Machinery and equipment at December 31, 1999 and 2000 includes 9 and 10
CellScan machines, in the amounts of $711,000 and $796,000, respectively, with
accumulated depreciation of $209,000 and $431,000, respectively. Such machines
are classified as property and equipment, as the Company uses its CellScans as a
marketing and research and development tool to demonstrate and promote the
CellScan technology and to develop new research applications. Depreciation
expense on such machines is classified as research and development expense.

NOTE F--INTANGIBLE ASSETS, NET

    Intangible assets consist of the following:

<Table>
<Caption>
                                                                   December 31,
                                                            --------------------------
                                                               1999           2000
                                                            -----------   ------------
<S>                                                         <C>           <C>
CellScan technology assets................................  $ 2,851,000   $  9,113,000
Goodwill..................................................    9,351,000     92,314,000
                                                             12,202,000    101,427,000
Accumulated amortization..................................    4,960,000     18,628,000
                                                            -----------   ------------
                                                            $ 7,242,000   $ 82,799,000
                                                            ===========   ============
</Table>

    During 1999, the Company charged the remaining unamortized balance of
acquired technology assets relating to the Neuritor (or an additional $128,000)
to amortization of intangible assets. Such amount represents the write-off of an
impaired technology assets.

                                      F-16
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE G--LONG-TERM DEBT

    Long-term debt consists of the following:

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                              ---------------------
                                                                 1999        2000
                                                              ----------   --------
<S>                                                           <C>          <C>
Bank debt--Israel...........................................  $   97,000   $     --
Less current portion........................................     (86,000)        --
                                                              ----------   --------
                                                              $   11,000   $     --
                                                              ==========   ========
</Table>

    Bank Debt--Israel represents Medis El's borrowings of bank loans that are
linked to the dollar, which bore interest at the LIBOR plus 2.4% to 2.6% per
annum and were guaranteed by the State of Israel. Such loans, which were
paid-off in full during the year ended December 31, 2000, were collateralized by
a floating lien on all of the assets of Medis El.

NOTE H--STOCKHOLDERS' EQUITY

    1. MEDIS TECHNOLOGIES LTD. COMMON STOCK

    Each stockholder is entitled to one vote for each share of common stock
owned by that stockholder on all matters properly submitted to the stockholders
for their vote. Stockholders owning or controlling more than 50% of the shares
can elect all of the directors. Subject to the dividend rights of holders of
preferred stock, if any, holders of common stock are entitled to receive
dividends when, as and if declared by the board of directors out of funds
legally available for this purpose. In the event of liquidation, dissolution or
winding up, the holders of common stock are entitled to receive on a pro rata
basis any assets remaining available for distribution after payment of
liabilities and after provision has been made for payment of liquidation
preferences to all holders of preferred stock. Holders of common stock have no
conversion or redemption provisions or preemptive or other subscription rights.

    In March 1998, the Company offered its existing stockholders the opportunity
to acquire 216,667 units at a price of $12 per unit, each unit consisting of
three shares of MTL common stock and one warrant to purchase one share of MTL
common stock at an exercise price of $5.00 per share. In June 1998, 181,426
units were issued to existing stockholders for approximately $2,177,000.

    In November 1998, the Company offered an additional 176,908 units with the
same terms and conditions as the units mentioned above. The proceeds of this
offering were approximately $2,123,000. In December 1998, the Company sold an
additional 25,000 units with the same terms and conditions as mentioned above.
The aggregate proceeds were $300,000.

    During the year ended December 31, 1999, the Company issued an aggregate of
193,668 units (of which 25,000 were to IAI) with the same terms as those issued
in 1998. Proceeds from such issuances aggregated approximately $2,324,000. The
purpose of the issuance of such units was to generate additional cash to
purchase shares of Medis El in order to fund the research and development
activities of Medis El and for the Company's working capital.

    In January and February 2000, the Company completed a private placement of
units, each unit consisting of 66,000 shares of its common stock and 25,000
warrants (of which one unit was purchased by IAI). Each warrant is exercisable
into one share of common stock and has an exercise price of $5.75 per share. An
aggregate of 637,000 shares and 240,833 warrants were issued for aggregate cash
proceeds of approximately $2,895,000.

                                      F-17
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE H--STOCKHOLDERS' EQUITY (CONTINUED)
    In June 2000, the Company issued 5,243,561 shares of its common stock
(including 1,712,500 to IAI) in connection with the Exchange Offer.

    In June 2000, the Company issued 859,544 shares of its common stock and
429,781 warrants (the "June Warrants") (including 50,0000 shares and 25,000
warrants to IAI) upon exercise of existing warrants for an aggregate exercise
price of approximately $4,441,000. The June Warrants were issued as an
inducement to the Company's existing warrant holders to exercise their
respective then outstanding warrants, at the rate of one June Warrant for every
two then outstanding warrants exercised. The June Warrants are exercisable at
$16.42 per share until June 15, 2002. The Company estimated the fair value of
the June Warrants to be $2,887,000 using the Black-Scholes option pricing model.
Such warrants were accounted for as a preferred dividend. In July 2000, the
Company issued an additional 19,500 shares of its common stock and 9,750
warrants pursuant to the same offering for an aggregate exercise price of
approximately $98,000. The Company estimated the value of such warrants issued
in July 2000 to be $84,000 using the Black-Scholes option pricing model. Such
warrants were accounted for as a preferred dividend. Also in July 2000, the
Company issued an additional 33,000 shares of its common stock upon the exercise
of a like number of then outstanding warrants, for an aggregate exercise price
of approximately $165,000.

    In October 2000, warrant holders exercised warrants to purchase 8,667 shares
of the Company's common stock, for an aggregate exercise price of approximately
$142,000. Also in October 2000, certain officers of the Company's exercised
options to purchase a total of 41,100 shares of the Company's common stock, for
an aggregate exercise price of approximately $16,900. Such options, which were
contemplated as part of the Exchange Offer (see Note C) were issued in
October 1999 in substitution for certain options to purchase ordinary shares of
Medis El held by such officers (See Note H-3)

    2.   MEDIS TECHNOLOGIES LTD. WARRANTS

    MTL warrants outstanding are summarized below:

<Table>
<Caption>
                                                                             WEIGHTED-
                                                                          AVERAGE EXERCISE
                                                               SHARES          PRICE
                                                              ---------   ----------------
<S>                                                           <C>         <C>
Balance at January 1, 1998..................................    489,525        $ 5.00
Granted.....................................................    533,334        $ 5.00
Cancelled...................................................    (11,762)       $ 5.00
                                                              ---------
Balance at December 31, 1998................................  1,011,097
Granted.....................................................    193,668        $ 5.00
                                                              ---------
Balance at December 31, 1999................................  1,204,765        $ 5.00
Granted.....................................................    946,976        $13.90
Exercised...................................................   (920,711)       $ 5.26
                                                              ---------
BALANCE AT DECEMBER 31, 2000................................  1,231,030        $11.65
                                                              =========
</Table>

    In March 1998, as consideration for providing guarantees on Company debt,
the Company granted warrants to purchase an aggregate of 100,000 shares of the
Company's common stock exercisable at $5.00 per share to two officers.
Additionally, during 1998, warrants to purchase 50,000 shares of the Company's
common stock were issued to a non employee consultant. The Company recorded
approximately $9,000 of compensation expense relating to the above grants, which
represented

                                      F-18
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE H--STOCKHOLDERS' EQUITY (CONTINUED)
management's estimate of the fair value of such warrants. The fair value of such
warrants was estimated using a Black-Scholes model with the following
assumptions: a 5% risk-free interest rate and 0% volatility (since the Company
was not a public company at the time), 0% dividend yield and an expected life of
1-2 years.

    On June 8, 1999, the Company extended the expiration date of its outstanding
warrants which were scheduled to expire on January 1, 2000, June 30, 2000 and
December 31, 2000 through June 30, 2002. In connection with such modification,
the Company recorded an additional $41,000 of compensation expense during the
year ended December 31, 1999, relating to the above warrants that were issued to
employees in exchange for guarantees and to the consultant. The fair value of
such warrants was estimated using a Black-Scholes model with the following
assumptions: a 5% risk-free interest rate; 0% dividend yield, expected life of
1-2 years, 0% volatility (since the Company is not a public company at the
time).

    On July 15, 2000, the Company issued a five-year warrant, which vests
immediately, to purchase an aggregate of 100,000 shares of common stock at an
exercise price of $20.48 per share, as payment under the terms of a June 12,
2000 agreement with CIBC World Markets Corp. ("CIBC") for capital markets and
financial and strategic advisory services. Also, on October 15, 2000, pursuant
to the terms of said agreement, the Company issued a five-year warrant to
purchase 50,000 shares of common stock at an exercise price of $20.62 per share.
The agreement, which commenced on July 15, 2000 (the "Commencement Date") and
was subsequently amended, has a term of one year and may be terminated by either
party upon 30 days written notice. Additionally, if the Company requests CIBC to
pursue a financing transaction, an additional fee would be paid based on a
schedule included in such agreement. The Company has estimated the fair value of
such warrants issued on July 15, 2000 and October 15, 2000 to be $581,000 and
$257,000, respectively, and has recorded approximately $652,000 as expense
during year ended December 31, 2000 related to such warrants. The Company
accounted for such warrants in accordance with SFAS 123 and estimated their fair
value using the Black-Scholes option pricing model.

    On July 12, 2000, the Company issued warrants to purchase an aggregate of
25,000 shares of its common stock to each of the three members of its corporate
advisory board, which the Company appointed on the same date to assist it with
its business strategy and to build relationships with third parties to assist in
the development of its technologies. The warrants may be exercised at $20.00 per
share, vest immediately and expire after three years. The Company has estimated
the fair value of such warrants to be $526,000 and has recorded this amount as
expense during the year ended December 31, 2000. The Company accounted for such
warrants in accordance with SFAS 123 and estimated their fair value using the
Black-Scholes option pricing model.

    See Note H-1 for discussion of warrants issued in connection with the
issuance of the Company's common stock.

    3.   MEDIS TECHNOLOGIES LTD. STOCK OPTIONS

    On July 13, 1999, the Company's Board of Directors approved the 1999 Stock
Option Plan, and reserved 1,000,000 shares of common stock for issuance as stock
options or stock appreciation rights pursuant to the plan. The plan provides for
the issuance of both incentive and nonqualified stock options. On October 11,
2000, the Company's Board of directors increased the number of shares of its

                                      F-19
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE H--STOCKHOLDERS' EQUITY (CONTINUED)
common stock reserved under the 1999 Stock Option Plan to 2,000,000, subject to
stockholder approval.

    On November 2, 1999, the Company granted to officers and a consultant of the
Company options to purchase 450,000 shares of common stock at $2.93 per share,
which is the Company's good faith determination of 80% of the fair market value
on the date of grant. Such options have a four-year life, and vest after two
years. In August 2000, the consultant became an officer of the Company. During
the year ended December 31, 2000 the Company recorded expense of approximately
$1,023,000 relating to such options.

    On February 21, 2000, the Board of Directors of the Company granted options
to purchase an aggregate of 165,000 shares of common stock under its 1999 Stock
Option Plan to employees, officers and consultants of the Company. The options,
which may be exercised at $5.00 per share, vest after two years and expire after
four years. Deferred compensation of approximately $1,468,000, which will be
charged to expense ratably over the vesting period, was recorded for such
options issued to employees and officers. As of December 31, 2000, the Company
estimates the fair value of such options issued to consultants to be
approximately $527,000. During the year ended December 31, 2000, compensation
expense of approximately $612,000 was recorded relating to such options granted
to employees and compensation expense of approximately $220,000 was recorded
relating to such options granted to consultants. In June 2000, the Company
cancelled options issued to consultants to purchase an aggregate of 8,000 shares
of common stock. The Company accounted for those options issued to employees and
officers in accordance with APB 25 and those issued to consultants in accordance
with SFAS 123 using the Black-Scholes option pricing model to estimate their
fair value.

    In October 2000, as contemplated as part of the Exchange Offer (See
Note C), the Board of Directors of the Company granted under its 1999 Stock
Option Plan options to purchase 41,100 shares of common stock to certain
officers of the Company, in substitution for certain options to purchase
ordinary shares of Medis El held by such officers. Such options, which are
vested and have an exercise price of $.410, were on terms consistent with the
Exchange Offer. Accordingly, new options to purchase 1.37 shares of the
Company's common stock were granted for each option to purchase an ordinary
share of Medis El held by such officer. Additionally, in October 2000, the Board
of Directors of the Company granted under its 1999 Stock Option Plan options to
purchase 68,500 shares of common stock to its chairman and chief executive
officer in substitution for certain additional options to purchase ordinary
shares of Medis El granted to such officer prior to the Exchange Offer. Such
options, which are vested and have an exercise price of $5.26, were also granted
on terms consistent with the Exchange Offer. Since such options were vested,
their fair value was included in the Exchange Offer purchase price and accounted
for in accordance with APB 16.

    On October 15, 2000, the Board of Directors of the Company granted, under
the 1999 Stock Option Plan, options to purchase 200,000 shares of common stock
to certain officers of the Company. Such stock options vest on June 15, 2001,
and may be exercised at a price of $16.42 per share until June 15, 2002.
Deferred compensation of approximately $366,000, which will be charged to
expense ratably over the vesting period, was recorded for such options. During
the year ended December 31, 2000, compensation expense of approximately $114,000
was recorded relating to such options. Also on October 15, 2000, the Board of
Directors of the Company granted, under the 1999 Stock Option Plan, options to
purchase 10,000 shares of common stock to each of the two new members of its
Board of Directors. These options vest on September 1, 2002 and may be exercised
at $20.50 until September 1,

                                      F-20
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE H--STOCKHOLDERS' EQUITY (CONTINUED)
2004. Since the exercise price of the options was greater than the market price
of the Company's common stock on the date of the grant, under the intrinsic
value method of accounting for stock options, neither deferred compensation nor
compensation expense was recorded relating to such options.

    On December 22, 2000, the Board of Directors of the Company granted, under
the 1999 Stock Option Plan, options to purchase 500,000 shares of common stock
to certain officers of the Company. Such stock options vest on December 22, 2002
and may be exercised at a price of $16.42 per share until December 22, 2004.
Since the exercise price of the option was equal to the market price of the
Company's common stock on the date of the grant, under the intrinsic value
method of accounting for stock options, neither deferred compensation nor
compensation expense was recorded relating to such options.

    During the years ended December 31, 1999 and 2000, the chief executive
officer of the Company received options to purchase 100,000 shares of the
Company's common stock and 200,000 shares of the Company's common stock,
respectively, in his capacity as a director. Such options were accounted for in
accordance with APB 25.

    The Company's option activity and options outstanding are summarized as
follows:

<Table>
<Caption>
                                                                       OPTIONS
                                                             ----------------------------
                                                                         WEIGHTED AVERAGE
                                                              SHARES      EXERCISE PRICE
                                                             ---------   ----------------
<S>                                                          <C>         <C>
Options outstanding at January 1, 1999.....................         --            --
  Granted..................................................    450,000        $ 2.93
                                                             ---------        ------
Options outstanding at December 31, 1999...................    450,000          2.93
  Granted..................................................    994,600         11.71
  Exercised................................................    (41,100)         0.41
  Cancelled or forfeited...................................     (8,000)         5.00
                                                             ---------        ------
OPTIONS OUTSTANDING AT DECEMBER 31, 2000...................  1,395,500        $ 9.25
                                                             =========        ======
EXERCISABLE................................................     68,500        $ 5.26
                                                             =========        ======
</Table>
<Table>
<Caption>
                                                OPTIONS OUTSTANDING
                        --------------------------------------------------------------------
      EXERCISE           NUMBER OUTSTANDING         WEIGHTED AVERAGE        WEIGHTED AVERAGE
        PRICE           AT DECEMBER 31, 2000   REMAINING CONTRACTUAL LIFE   EXERCISE PRICES
---------------------   --------------------   --------------------------   ----------------
<S>                     <C>                    <C>                          <C>
        $2.93                    450,000                  2.82                   $ 2.93
       5-5.26                    225,500                  2.18                     5.08
        13.5                     500,000                  3.98                     13.5
        16.42                    200,000                  1.79                    16.42
        20.5                      20,000                  3.66                     20.5
                               ---------
                               1,395,500
                               =========

<Caption>
                                 OPTIONS EXERCISABLE
                       ----------------------------------------
      EXERCISE         NUMBER OUTSTANDING AT   WEIGHTED AVERAGE
        PRICE            DECEMBER 31, 2000     EXERCISE PRICES
---------------------  ---------------------   ----------------
<S>                    <C>                     <C>
        $2.93                      --                  --
       5-5.26                  68,500                5.26
        13.5                       --                  --
        16.42                      --                  --
        20.5                       --                  --
                               ------
                               68,500
                               ======
</Table>

                                      F-21
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE H--STOCKHOLDERS' EQUITY (CONTINUED)

    As of December 31, 2000, 555,400 options were available for grant pursuant
to the plan. Compensation costs charged to operations which the Company recorded
for options granted to employees and directors at exercise prices below the fair
market value at the date of grant and for options granted to consultants
aggregated $3,229,000 in 2000. Deferred compensation for employee and director
stock options was determined by calculating the difference between the exercise
price and the fair market value of such options on the date of grant. The
deferred compensation is charged to operations ratably over the vesting period
of such options. Compensation expense for options granted to consultant was
estimated using a Black-Scholes Option Valuation model and the assumptions are
disclosed in Note H-6.

    See Note H-6 for discussion of pro forma effects of applying SFAS No. 123 to
these employee stock options.

    4. MEDIS EL

    The following table reconciles the gains recognized by the Company through
transactions in Medis El stock:

<Table>
<Caption>
                                                          YEAR ENDED DECEMBER 31,
                                                      --------------------------------
                                                         1998        1999       2000
                                                      ----------   --------   --------
<S>                                                   <C>          <C>        <C>
Gain on Medis El private placement..................  $  796,000   $     --   $     --
Gain on Medis El's issuance of shares to CellScan
  Argentina for settlement of litigation............          --    268,000         --
Gain on exchange of shares of Medis El owned by
  Medis Inc. for the Company's outstanding debt.....     540,000         --         --
Gain on exercises of Medis El stock options.........      37,000     76,000    189,000
Contribution of interest payment to Medis El........     176,000         --         --
                                                      ----------   --------   --------
  Amount reflected in statement of stockholders'
    equity..........................................  $1,549,000   $344,000   $189,000
                                                      ==========   ========   ========
</Table>

    5. MEDIS EL SHARE OPTION PLAN

    In October 1993, the Board of Directors of Medis El adopted a share option
plan (the "Share Option Plan") pursuant to which 500,000 shares were reserved
for issuance upon the exercise of options to be granted to key employees and
consultants of Medis El. The Share Option Plan is administered by the Board of
Directors, which designates the quantities, dates and prices of the options
granted. Unless otherwise determined by the Board of Directors, the exercise
price of options will be the market price of the Ordinary Shares on the date of
grant. As of June 5, 2000 (the date of the completion of the Exchange Offer),
Medis El no longer granted options under its share Option Plan.

    Options granted under the Share Option Plan will expire after a four-year
period, but will be exercisable only after the second anniversary of the grant
date and then only if the option holder is still an employee or consultant of
Medis El.

    On May 3, 1998, the Board of Directors of Medis El granted options to
purchase Medis El's shares under the Share Option Plan adopted in October 1993
(see details of issuance below). Pursuant to the grant, certain employees, a
director, and a consultant of Medis El received 119,000 options (of

                                      F-22
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE H--STOCKHOLDERS' EQUITY (CONTINUED)
which 50,000 were granted to a director) which are convertible into shares on a
one-to-one ratio at $7.20, which was 80% of the market price on the date of the
grant ($9.00).

    On November 4, 1998, the Board of Directors of Medis El granted options to
purchase Medis El's shares under the Share Option Plan adopted in October 1993
(see details of issuance below). Pursuant to the grant, the executive
vice-president of Medis El received 30,000 options, which are convertible into
shares on a one-to-one ratio at $6.00. The market price on the date of the grant
was $7.188.

    During 1999, the Board of Directors of Medis El extended the expiration date
of the options issued on February 14, 1994 for an additional one-year period
until February 14, 2000. The extension pertains only to options held by persons
who were in the employ of Medis El on the date the extension was adopted.

    During the year ended December 31, 1999, Medis El issued an additional
56,150 shares upon exercise of stock options by employees.

    In January and February 2000, certain employees and a director of Medis El,
exercised options to purchase an aggregate of 66,100 ordinary shares of Medis
El. Such exercise generated aggregate cash proceeds to Medis El of approximately
$336,000. The Company recorded a credit of approximately $189,000 to additional
paid in capital, representing the increase in Medis El's book value attributable
to the Company from the exercise of the options.

    The following table summarizes Medis El's option plan activity for the three
years ended December 31, 2000:

<Table>
<Caption>
                                                             NUMBER OF   WEIGHTED AVERAGE
                                                              OPTIONS     EXERCISE PRICE
                                                             ---------   ----------------
<S>                                                          <C>         <C>
Balance at January 1, 1998.................................   235,750         $3.12
Granted....................................................   196,400          7.07
Exercised..................................................   (29,650)         0.66
Cancelled..................................................   (87,950)         7.42
                                                              -------         -----
Balance at December 31, 1998...............................   314,550          4.61
Granted....................................................    43,600          7.42
Exercised..................................................   (56,150)         0.56
Cancelled..................................................   (46,900)         7.42
                                                              -------         -----
BALANCE AT DECEMBER 31, 1999...............................   255,100          5.47
                                                              =======         =====
Granted....................................................        --            --
Exercised..................................................   (66,100)         5.09
Cancelled or forfeited.....................................   (45,000)         1.30
                                                              -------         -----
BALANCE AT DECEMBER 31, 2000...............................   144,000         $6.95
                                                              =======         =====
</Table>

                                      F-23
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE H--STOCKHOLDERS' EQUITY (CONTINUED)
<Table>
<Caption>
                                                OPTIONS OUTSTANDING
                        --------------------------------------------------------------------
      EXERCISE           NUMBER OUTSTANDING         WEIGHTED AVERAGE        WEIGHTED AVERAGE
        PRICE           AT DECEMBER 31, 2000   REMAINING CONTRACTUAL LIFE   EXERCISE PRICES
---------------------   --------------------   --------------------------   ----------------
<S>                     <C>                    <C>                          <C>
        $6.0                     30,000                   1.81                    $6.0
         7.2                    114,000                   1.47                     7.2
                                -------                   ----                    ----
                                144,000
                                =======                   ====                    ====

<Caption>
                                 OPTIONS EXERCISABLE
                       ----------------------------------------
      EXERCISE         NUMBER OUTSTANDING AT   WEIGHTED AVERAGE
        PRICE            DECEMBER 31, 2000     EXERCISE PRICES
---------------------  ---------------------   ----------------
<S>                    <C>                     <C>
        $6.0                   30,000                $6.0
         7.2                  114,000                 7.2
                              -------                ----
                              144,000
                              =======                ====
</Table>

    Compensation costs charged to operations which Medis El recorded for Medis
El stock options granted below the fair market value at the date of grant were
$23,000, $126,000 and $65,000 in 1998, 1999 and 2000, respectively. Compensation
expense was determined by calculating the difference between the exercise price
and the fair market value of such options on the date of grant. The expense is
charged to operations over the vesting period of such options.

    6. EFFECT OF SFAS NO. 123 ON MEDIS EL SHARE OPTIONS AND ON THE COMPANY'S
     OPTIONS

    Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its and Medis El's stock options under the fair value method of
that Statement. The fair value for these options was estimated at the date of
grant using a Black-Scholes Option Valuation model with the following
weighted-average assumptions:

<Table>
<Caption>
                                            MEDIS EL   MEDIS EL     MTL      MEDIS EL     MTL
                                            OPTIONS    OPTIONS    OPTIONS    OPTIONS    OPTIONS
                                              1998       1999       1999       2000       2000
                                            --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>
Dividend yield............................       0%         0%         0%         0%         0%
Risk-free interest rate...................    5.00%      6.00%      5.40%      6.00%      6.00%
Expected life in years after vesting
  period..................................     1-2        1-2          2        1-2        1-2
Volatility................................      10%        40%       0.0%        95%        95%
</Table>

    The Black-Scholes option valuation model was developed for use in estimating
the fair value of the traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions, including the expected stock price volatility.
Because the Company's and Medis El's stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimates, in
management's opinion, existing models do not necessarily provide a reliable
single measure of the fair value of its stock options.

                                      F-24
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE H--STOCKHOLDERS' EQUITY (CONTINUED)
    For purposes of pro forma disclosure, the estimated fair value of the
options is amortized as an expense over the vesting period of the options. The
Company's pro forma information is as follows:

<Table>
<Caption>
                                                        Year ended December 31,
                                                ----------------------------------------
                                                   1998          1999           2000
                                                -----------   -----------   ------------
<S>                                             <C>           <C>           <C>
Net loss for the year as reported.............  $(4,418,000)  $(5,965,000)  $(22,492,000)
Pro forma net loss............................   (4,592,000)   (6,002,000)   (22,811,000)
Net loss attributable to common
  shareholders................................   (4,418,000)   (5,965,000)   (25,463,000)
Pro forma net loss attributable to common
  shareholders................................   (4,592,000)   (6,002,000)   (25,782,000)
Net loss per share as reported................         (.52)         (.61)         (1.79)
Pro forma net loss per share..................         (.54)         (.61)         (1.81)
</Table>

    The weighted average fair value of MTL options granted during the years
ended December 31, 1999 and 2000 was $4.91 and $9.67, respectively.

    The weighted average fair value of Medis El options granted during the years
ended December 31, 1998, and 1999 was $1.89 and $0.96, respectively. Medis El
did not grant any options during the year ended December 31, 2000.

    The total compensation expense for employees included in the pro forma
information for 1998, 1999 and 2000 is $174,000, $138,000 and $1,491,000,
respectively.

NOTE I--COMMITMENTS AND CONTINGENCIES

    1.  CELLSCAN LICENSE--Medis El acquired the rights to the CellScan in
August 1992 by assignment from IAI of a license from Bar Ilan University to IAI.
Medis El paid IAI $1,000,000 in consideration of the assignment of the license
and for certain tooling and equipment. The license is a perpetual worldwide
license to develop, manufacture and sell the CellScan, and to sublicense the
right to manufacture and sell the device. The license includes all rights to the
University's CellScan patents, know-how and inventions including any
subsequently acquired, and all improvements thereto. Medis El is obligated to
pay the University a royalty for a twenty-year period beginning in 1995. For the
first ten years, the royalty is at the rate of 6.5% of proceeds of sales (after
deducting sales commissions and other customary charges) and 4.5% on any fees
received from granting territorial rights. The royalty for the second ten-year
period is 3.5% on all revenues whether from sales or fees. In addition to such
royalty payments, the Company is required to grant $100,000 to the University
during the first year that the Company's after-tax profits exceed $300,000. No
royalties were required to be paid during the three years ended December 31,
2000.

    2.  NEURITOR LICENSE--In consideration of grants by the State of Israel,
Medis El is obligated to pay royalties for a license from Imexco General Ltd.
("Imexco"), for which assignment Medis El paid $500,000. An additional sum of
$125,000 was paid in December 1995. In 1996, Medis El relinquished its exclusive
right to market the Neuritor in consideration of relief of its obligation to pay
minimum royalties. Medis El has to pay Imexco royalties at rates ranging from 2%
to 7% of the revenue generated by the sale of the Neuritor.

                                      F-25
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE I--COMMITMENTS AND CONTINGENCIES (CONTINUED)

    3.  OTHER ROYALTIES--In consideration of grants by the State of Israel,
Medis El is obligated to pay royalties of 3% of sales of products developed with
funds provided by the State of Israel until the dollar-linked amount equal to
the grant payments received by Medis El is repaid in full. All grants received
from the State of Israel related to the CellScan and Neuritor technologies.
Total grants received, net of royalties paid as of December 31, 2000, aggregate
$2,601,000, which includes those received by IAI relating to such technologies
of $805,000. No royalties were required to be paid during the three years ended
December 31, 2000.

    4.  LEASE COMMITMENTS--MTL's office space is provided to MTL for an annual
rental fee of approximately $72,000, by a company which is controlled by the
chairman and chief executive officer and the president and treasurer of MTL.

    Medis El is committed under leases at three locations for office space,
laboratory and manufacturing facilities, as well as its pilot production plant.
Its corporate headquarters and technology center facility leases, which have
terms until November and December 2001 and two one-year options on a portion of
the facility, provide for annual aggregate rental of approximately $164,000. Its
manufacturing facility lease has an initial term until December 31, 2001, a
two-year option extending to December 31, 2003, and provides for an annual
aggregate rental of approximately $27,000. Additionally, its pilot production
plant lease has an initial term until December 31, 2001, three one-year options
extending to December 31, 2004, and provides for an annual aggregate rental of
approximately $12,000.

    5.  AGREEMENT WITH PERUVIAN COMPANY--In April and May 2000, the Company
transferred payments aggregating $110,000 to a Peruvian company ("Peru") for the
repurchase of a CellScan machine. In June 1999, Medis El reached an agreement
with Peru which owned a CellScan machine, whereby, in consideration of Medis El
upgrading the CellScan system at its cost, Peru relinquished any future claims
against Medis El, except for an option to require Medis El to repurchase the
CellScan system for $100,000. Such option expired on January 14, 2000. In
February 2000, Medis El granted Peru a new option to require Medis El to
repurchase the CellScan machine for $110,000 which was exercised by Peru, via a
letter dated February 23, 2000.

    SETTLEMENT OF LITIGATION--Pursuant to a settlement agreement dated
November 22, 1999 dismissing with prejudice an action pending in the Supreme
Court of the State of New York, County of New York, entitled CellScan Argentina,
S.A. v. Medis El Ltd., et. al., the Company commenced in January 2000 pursuant
to a put/call provision in the settlement agreement, the purchase of 3,000 of
Medis El's ordinary shares per week from a designee of the plaintiff, initially
at $6.00 per share, and increasing by $.50 per share every month thereafter
beginning March 1, 2000. Pursuant to the settlement agreement, the Company
exercised its right to repurchase 60,000 of such shares, of which 18,000 shares
Cellscan Argentina refused to transfer. Consequently, on June 8, 2000, the
Company commenced an action entitled Medis Technologies Ltd. v. Cellscan
Argentina, S.A., in the Supreme Court of the State of New York, County of New
York, alleging that Cellscan Argentina's refusal to transfer to the Company
18,000 of such shares pursuant to the put/call provision was a material breach
of the settlement agreement.

    In August 2000, the Company entered into a stipulation and order of
settlement with Cellscan Argentina dismissing the action with prejudice, which
requires Cellscan Argentina to comply with the terms of the original settlement
agreement and sell to the Company 18,000 shares of Medis El for

                                      F-26
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE I--COMMITMENTS AND CONTINGENCIES (CONTINUED)
payment of $109,000. As part of the stipulation, the Company substituted for the
ordinary shares of Medis El underlying warrants originally granted to CellScan
Agrentina pursuant to the original settlement agreement, the common stock of the
Company at the same exchange rate as shares of stock in the exchange offer. The
Company granted certain "piggy-back" registration rights to Cellscan Argentina
with respect to such shares of the Company's common stock underlying these
warrants.

NOTE J--RELATED PARTY TRANSACTIONS

    1.  INSURANCE--Medis El is presently included as an additional insured party
on IAI's product, casualty, and third party liability coverage. During the year
ended December 31, 2000, IAI charged Medis El approximately $5,000 for insurance
premiums, and Medis El charged IAI approximately $64,000 relating to property
loss insurance claims.

NOTE K--INCOME TAXES

    The following represents the components of the Company's pre-tax losses for
each of the three years in the period ended December 31, 2000.

<Table>
<Caption>
                                                        Year ended December 31,
                                                ----------------------------------------
                                                   1998          1999           2000
                                                -----------   -----------   ------------
<S>                                             <C>           <C>           <C>
Domestic......................................  $(2,556,000)  $(3,001,000)  $(17,245,000)
Foreign.......................................   (1,862,000)   (2,964,000)    (5,247,000)
                                                -----------   -----------   ------------
                                                $(4,418,000)  $(5,965,000)  $(22,492,000)
                                                ===========   ===========   ============
</Table>

    The Company files a consolidated Federal income tax return, which includes
MTL, Medis Inc., and CDS. At December 31, 2000, the Company has a net operating
loss ("NOL") carryforward for United States Federal income tax purposes of
approximately $5,299,000, expiring through 2020.

    Pursuant to United States Federal income tax regulations, the Company's
ability to utilize this NOL may be limited due to changes in ownership, as
defined in the Internal Revenue Code.

    The Company, through Medis El, has net operating losses, for Israeli tax
purposes, aggregating approximately $28,847,000, which, pursuant to Israeli tax
law, do not expire.

    Deferred income tax assets arising mainly from NOL carryforwards have been
reduced to zero through a valuation allowance. The Company continually reviews
the adequacy of the valuation allowance and will recognize deferred tax assets
only if a reassessment indicates that it is more likely than not that the
benefits will be realized.

    Medis El is an Israeli corporation and is subject to income taxes under the
relevant Israeli tax law. Medis El has been issued a certificate of approval as
an "Approved Enterprise," which allows Medis El to have lower tax rates under
Israeli tax law. Such rates include a corporate tax on income derived from
Approved Enterprise activities at a rate of 20% and a tax rate on distributed
dividends of 15%. These benefits may be in force through at least 2006.

    No tax expense has been recorded in the financial statements of the Company,
as the Company has a loss in the current year, in each tax-paying jurisdiction.

                                      F-27
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE K--INCOME TAXES (CONTINUED)
    Temporary differences that give rise to deferred tax assets are as follows

<Table>
<Caption>
                                                                   December 31,
                                                           ----------------------------
                                                               1999           2000
                                                           ------------   -------------
<S>                                                        <C>            <C>
Net operating loss carryforwards--United States..........  $  1,964,000   $   2,221,000
Net operating loss carryforwards--Israel.................     8,496,000      10,385,000
Other....................................................       (82,000)     (1,447,000)
                                                           ------------   -------------
                                                             10,378,000      11,159,000
Valuation allowance......................................   (10,378,000)    (11,159,000)
                                                           ------------   -------------
  Deferred tax assets, net of valuation Allowance........  $         --   $          --
                                                           ============   =============
</Table>

    A reconciliation of the income tax benefit computed at the United States
Federal statutory rate to the amounts provided in the financial statements is as
follows:

<Table>
<Caption>
                                                         Year ended December 31,
                                                 ----------------------------------------
                                                    1998          1999           2000
                                                 -----------   -----------   ------------
<S>                                              <C>           <C>           <C>
Income tax benefit computed at
  Federal statutory rate (34%).................  $(1,502,000)  $(2,028,000)  $ (7,647,000)
Other..........................................      261,000       415,000       (105,000)
Effect of permanent differences................      831,000       875,000      4,842,000
Valuation allowance............................      410,000       738,000      2,910,000
                                                 -----------   -----------   ------------
                                                 $        --   $        --   $         --
                                                 ===========   ===========   ============
</Table>

NOTE L--INFORMATION ABOUT GEOGRAPHIC AREAS

    The following lists the long-lived assets held in the Company's country of
domicile and in all foreign countries:

<Table>
<Caption>
                                                                   December 31,
                                                             -------------------------
                                                                1999          2000
                                                             ----------   ------------
<S>                                                          <C>          <C>
United States..............................................  $       --   $         --
Israel
  Property and equipment, net..............................     983,000      1,045,000
  Intangible assets, net...................................   7,242,000     82,799,000
                                                             ----------   ------------
                                                             $8,225,000   $ 83,844,000
                                                             ==========   ============
</Table>

                                      F-28
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE M--CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED)

<Table>
<Caption>
QUARTER ENDED                                 MARCH 31       JUNE 30     SEPTEMBER 30   DECEMBER 31
-------------                                -----------   -----------   ------------   -----------
<S>                                          <C>           <C>           <C>            <C>
Fiscal 2000
Loss from operations
  As originally reported...................  $(2,224,000)  $(5,637,000)  $(8,312,000)   $(7,682,000)
  Effect of correction (*).................      164,000       170,000       (45,000)            --
                                             -----------   -----------   -----------    -----------
  As restated..............................  $(2,060,000)  $(5,467,000)  $(8,357,000)   $(7,682,000)
                                             -----------   -----------   -----------    -----------
Loss before minority interest
  As originally reported...................  $(2,187,000)  $(5,606,000)  $(8,234,000)   $(7,627,000)
  Effect of correction (*).................      164,000       170,000       (45,000)            --
                                             -----------   -----------   -----------    -----------
  As restated..............................  $(2,023,000)  $(5,436,000)  $(8,279,000)   $(7,627,000)
                                             -----------   -----------   -----------    -----------
Net Loss
  As originally reported...................  $(1,705,000)  $(5,215,000)  $(8,234,000)   $(7,627,000)
  Effect of correction (*).................      164,000       170,000       (45,000)            --
                                             -----------   -----------   -----------    -----------
  As restated..............................  $(1,541,000)  $(5,045,000)  $(8,279,000)   $(7,627,000)
                                             -----------   -----------   -----------    -----------
Net loss attributable to common stockhoders
  As originally reported...................  $(1,705,000)  $(8,102,000)  $(8,318,000)   $(7,627,000)
  Effect of correction (*).................      164,000       170,000       (45,000)            --
                                             -----------   -----------   -----------    -----------
  As restated..............................  $(1,541,000)  $(7,932,000)  $(8,363,000)   $(7,627,000)
Basic and diluted net loss per share
  As originally reported...................  $      (.16)  $      (.63)  $      (.50)   $      (.45)
  Effect of correction (*).................          .01           .01            --             --
                                             ===========   ===========   ===========    ===========
  As restated..............................  $      (.15)  $      (.62)  $      (.50)   $      (.45)
                                             ===========   ===========   ===========    ===========
Weighted-average shares used in computing
  basic and diluted net loss per share.....   10,429,000    12,869,226    16,771,767     16,825,794
                                             ===========   ===========   ===========    ===========
</Table>

------------------------

(*) Represents certain transactions incurred during the year that were adjusted
    at year end (mainly issuance costs in connection with the exchange offer
    that is reflected as a reduction of equity rather than an expense).

                                      F-29
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 2000

NOTE M--CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)

<Table>
<Caption>
QUARTER ENDED                                 MARCH 31       JUNE 30     SEPTEMBER 30   DECEMBER 31
-------------                                -----------   -----------   ------------   -----------
<S>                                          <C>           <C>           <C>            <C>
Fiscal 1999
Loss from operations.......................  $(1,323,000)  $(1,941,000)  $(1,882,000)   $(2,644,000)
Loss before minority interest..............  $(1,298,000)  $(1,901,000)  $(1,845,000)   $(2,618,000)
Net Loss...................................  $(1,030,000)  $(1,483,000)  $(1,498,000)   $(1,954,000)
Net loss attributable to common
  stockholders.............................  $(1,030,000)  $(1,483,000)  $(1,498,000)   $(1,954,000)
Basic and diluted net loss per share.......  $      (.11)  $      (.15)  $      (.15)   $      (.20)
                                             -----------   -----------   -----------    -----------
Weighted-average shares used in computing
  basic and diluted net loss per share.....    9,465,649     9,816,531     9,949,165      9,988,619
                                             ===========   ===========   ===========    ===========
</Table>

                        ********************************

                                      F-30
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                              SEPTEMBER 30, 2001
                                                              ------------------
                                                                 (UNAUDITED)
<S>                                                           <C>
                           ASSETS
Current assets..............................................
  Cash and cash equivalents.................................     $  7,672,000
  Accounts receivable--other................................          156,000
  Prepaid expenses and other current assets.................          235,000
                                                                 ------------
    Total current assets....................................        8,063,000
Property and equipment, net.................................        1,341,000
Intangible assets, net......................................       66,950,000
Other assets................................................          520,000
                                                                 ------------
    Total assets............................................     $ 76,874,000
                                                                 ============
                      LIABILITIES AND
                    SHAREHOLDERS' EQUITY
Current liabilities.........................................
  Accounts payable..........................................     $    199,000
  Accrued expenses and other current liabilities............          673,000
                                                                 ------------
    Total current liabilities...............................          872,000

Accrued severance pay.......................................          261,000
                                                                 ------------
    Total liabilities.......................................        1,133,000

Commitments and contingencies

Shareholders' equity
  Preferred stock, $.01 par value; 1000 shares authorized;
    none issued.............................................               --
  Common stock, $.01 par value; 25,000,000 shares
    authorized; 16,830,991 and 17,501,954 issued and
    outstanding, at December 31, 2000, and September 30,
    2001, respectively......................................          175,000
  Additional paid-in capital................................      147,358,000
  Accumulated deficit.......................................      (71,420,000)
  Deferred compensations costs..............................         (372,000)
    Total shareholders' equity..............................       75,741,000
                                                                 ------------
    Total liabilities and shareholders' equity..............     $ 76,874,000
                                                                 ============
</Table>

        The accompanying notes are an integral part of these statements.

                                      F-31
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                  (UNAUDITED)

<Table>
<Caption>
                                                                   NINE MONTHS ENDED
                                                                     SEPTEMBER 30,
                                                              ---------------------------
                                                                 2000*           2001
                                                              ------------   ------------
<S>                                                           <C>            <C>
Sales.......................................................  $         --   $         --

Cost of sales...............................................            --             --
                                                              ------------   ------------

      Gross profit..........................................            --             --

Operating expenses

  Research and development costs, net.......................     3,564,000      2,877,000

  Selling, general and administrative expenses..............     4,010,000      3,720,000

  Amortization of intangible assets.........................     8,310,000     15,849,000
                                                              ------------   ------------

      Total operating expenses..............................    15,884,000     22,446,000
                                                              ------------   ------------

      Loss from operations..................................   (15,884,000)   (22,446,000)

Other income (expenses)

  Interest and other income.................................       155,000        144,000

  Interest and other expense................................        (9,000)       (40,000)
                                                              ------------   ------------

                                                                   146,000        104,000
                                                              ------------   ------------

      Loss before minority interest.........................   (15,738,000)   (22,342,000)

Minority interest in loss of subsidiary.....................       873,000             --
                                                              ------------   ------------

      NET LOSS..............................................  $(14,865,000)   (22,342,000)

Value of warrants issued....................................  $ (2,971,000)            --
                                                              ------------   ------------

      Net loss attributable to common shareholders..........  $(17,836,000)  $(22,342,000)
                                                              ------------   ------------

Basic and diluted net loss per share........................  $      (1.33)  $      (1.30)
                                                              ============   ============

Weighted-average shares used in computing basic and diluted
  net loss per share........................................    13,369,245     17,140,828
                                                              ============   ============
</Table>

------------------------

*   See note B-9

        The accompanying notes are an integral part of these statements.

                                      F-32
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (UNAUDITED)

<Table>
<Caption>
                                                                   NINE MONTHS ENDED
                                                                     SEPTEMBER 30,
                                                              ---------------------------
                                                                 2000*           2001
                                                              ------------   ------------
<S>                                                           <C>            <C>
Cash flows from operating activities
  Net loss..................................................  $(14,865,000)  $(22,342,000)
  Adjustments to reconcile net loss to net cash used in
    operating activities
    Depreciation............................................       282,000        330,000
    Amortization of intangible assets.......................     8,310,000     15,849,000
    Changes in accrued severance pay........................        52,000         37,000
    Losses of minority interest.............................      (873,000)            --
    Non-cash compensation expense...........................     2,674,000      1,663,000
    Write-off of acquired in-process research and
      development...........................................       885,000             --
    Loss from sale of property and equipment................            --          4,000
    Changes in operating assets and liabilities
      Accounts receivable--other............................       (22,000)        72,000
      Prepaid expenses and other current assets.............       (60,000)        10,000
      Accounts payable......................................        35,000         60,000
      Accrued expenses and other current liabilities........        54,000        (24,000)
                                                              ------------   ------------
        Net cash used in operating activities...............    (3,528,000)    (4,341,000)
                                                              ------------   ------------
Cash flows from investing activities
  Purchase of property and equipment........................      (230,000)      (655,000)
  Proceeds from disposition of property and equipment.......        22,000         25,000
  Acquisition by a subsidiary of additional shares of a
    majority-owned subsidiary...............................      (320,000)            --
  Acquisition of option to acquire shares of a
    majority-owned subsidiary...............................            --       (520,000)
  Acquisition of shares of a majority-owned subsidiary......      (398,000)            --
                                                              ------------   ------------
        Net cash used in investing activities...............      (926,000)    (1,150,000)
                                                              ------------   ------------
Cash flows from financing activities
  Repayment of long-term debt...............................       (97,000)            --
  Proceeds from exercise of stock options of a
    majority-owned subsidiary...............................       336,000             --
  Proceeds from issuance of common stock, net...............     7,598,000     10,278,000
  Direct costs of exchange of shares........................      (395,000)
  Proceeds of short-term credit.............................         3,000             --
                                                              ------------   ------------
        Net cash provided by financing activities...........     7,445,000     10,278,000
                                                              ------------   ------------
        Net increase in cash and cash equivalents...........     2,991,000      4,787,000
Cash and cash equivalents at beginning of period............     1,842,000      2,885,000
                                                              ------------   ------------
Cash and cash equivalents at end of period..................  $  4,833,000   $  7,672,000
                                                              ============   ============
</Table>

                                      F-33
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES

          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                  (UNAUDITED)

<Table>
<Caption>
                                                                  NINE MONTHS ENDED
                                                                    SEPTEMBER 30,
                                                              --------------------------
                                                                 2000*            2001
                                                              -----------       --------
<S>                                                           <C>               <C>
Supplemental disclosures of cash flow information:
  Cash paid during the period for
    Interest................................................  $    10,000       $10,000
    Income taxes............................................  $     5,000       $46,000
  Non-cash investing and financing activities:
      Grant of stock options to employees...................  $ 1,938,000       $    --
    Acquisition of minority interest through exchange of
      shares................................................  $89,393,000       $    --
    Value of warrants issued to exercising warrantholders...  $ 2,971,000       $    --
</Table>

------------------------

*   See note B-9

        The accompanying notes are an integral part of these statements

                                      F-34
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A--NATURE OF OPERATIONS AND BASIS OF PRESENTATION

    Medis Technologies Ltd. (the "Company"), a Delaware corporation, is a
holding company which, through its wholly-owned subsidiary, Medis El Ltd.
("Medis El"), engages in research and development of technology products to
license, sell, or enter into joint ventures with large corporations. The
Company's primary focus is the development and commercialization of direct
liquid ethanol/methanol (DLE/M) fuel cells and attendant refueling cartridges
for use in portable electronic devices which currently use rechargeable or
disposable batteries as their power source. These devices include cell phones,
personal digital assistants, laptop computers and certain military devices. The
Company's other technologies which it is looking to exploit, in various stages
of development, include highly electrically conductive polymers, the CellScan,
toroidal compressor and internal combustion engine, stirling cycle linear system
and reciprocating electrical machine.

    The accompanying condensed consolidated financial statements should be read
in conjunction with the following notes and with the consolidated financial
statements for the year ended December 31, 2000 and related notes included in
the prospectus of which these financial statements form a part. The condensed
consolidated financial statements as of September 30, 2001 and for the three and
nine months ended September 30, 2000 and 2001 are unaudited and have been
prepared in accordance with generally accepted accounting principles applicable
to interim financial information and the rules and regulations promulgated by
the Securities and Exchange Commission. Accordingly, such condensed consolidated
financial statements do not include all of the information and footnote
disclosures required in annual financial statements. In the opinion of the
Company's management, the September 30, 2000 and 2001 unaudited condensed
consolidated interim financial statements include all adjustments, consisting of
normal recurring adjustments necessary for a fair presentation of such condensed
consolidated financial statements. The results of operations for the three and
nine months ended September 30, 2001 are not necessarily indicative of the
results to be expected for the entire year.

    INTANGIBLE ASSETS, LONG-LIVED ASSETS AND IMPAIRMENT OF LONG-LIVED
ASSETS.  Intangible assets, consisting of acquired technology assets and
goodwill, are being amortized on a straight-line basis over three and five year
periods, respectively. The Company assesses long-lived assets, including
intangibles, for impairment in accordance with the Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of," by comparing the carrying value
to future undiscounted cash flows. To the extent that there is an impairment,
analysis is performed based on several criteria, including, but not limited to,
management's plan for future operations, recent operational results and
discounted operational cash flows to determine the impairment amount. Management
reviewed all long-lived assets and goodwill and determined that no impairment
existed at September 30, 2001.

NOTE B--CERTAIN TRANSACTIONS

    1.  EXCHANGE OFFER--On April 24, 2000, the Company commenced an offer for
the approximately 36% of Medis El it did not already beneficially own, offering
1.37 of its shares of common stock for each ordinary share tendered (the
"Exchange Offer"). At the expiration of the offer on June 5, 2000, shareholders
of Medis El tendered an aggregate of 3,643,241 ordinary shares, giving the
Company ownership of approximately 98% of Medis El's outstanding ordinary
shares. The remaining 182,669 shares passed to the Company by operation of
Israeli law upon the expiration of the Exchange Offer. In accordance with
APB 16, the Company accounted for the exchange using the purchase method.
Accordingly, the Company calculated the purchase price of the 3,825,910 shares,
as well as options to

                                      F-35
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

NOTE B--CERTAIN TRANSACTIONS (CONTINUED)
purchase an additional 184,000 shares of Medis El, based on the market price of
Medis El ordinary shares. Such purchase price was $89,393,000. The Company
allocated the excess of purchase price over net assets acquired to goodwill
($81,867,000), CellScan technology assets ($6,071,000) and in-process research
and development for the fuel cells, stirling cycle and toroidal engine projects,
which was charged to research and development expense on the acquisition date
($561,000). The Company is amortizing the acquired technology assets over their
remaining useful lives of three years and the goodwill over five years. During
the three and nine months ended September 30, 2001, the Company recorded
amortization expense aggregating approximately $4,599,000 and $13,798,000
respectively, related to this transaction. The following pro-forma information
gives effect to the Exchange Offer as if it had occurred at the beginning of the
nine month period ended September 30, 2000:

<Table>
<Caption>
                                                                 NINE MONTHS
                                                                    ENDED
                                                              SEPTEMBER 30, 2000
                                                              ------------------
<S>                                                           <C>
Net loss....................................................     $(23,204,000)
Net loss attributable to common shareholders................     $(26,175,000)
Net loss per common share...................................     $      (1.62)
</Table>

    2.  OPTION TO ACQUIRE REMAINING INTEREST IN SUBSIDIARY--The Company has an
option expiring in November 2004 to acquire the remaining 7% of the outstanding
shares of More Energy Ltd., a subsidiary of Medis El, held by its general
manager and director, for 120,000 shares of the Company's common stock. The
purchase price of the option, which was paid in full in June 2001, was $520,000.
Subject to a termination provision, the Company has the right to exercise the
option to acquire a maximum of 25% of More Energy's shares in each of the four
12 month periods following the date of the agreement, with any unexercised
amount being carried over to the following twelve month period until the
expiration of the option in November 2004.

    3.  ISSUANCE OF COMMON STOCK AND WARRANTS--In May and June 2001, the Company
sold in private placements to accredited investors an aggregate of 660,688
units, each unit consisting of one share of the Company's common stock and a
warrant to purchase one share of common stock, at a price of $16.00 per unit,
for aggregate gross proceeds of approximately $10,571,000. Issuance costs
aggregated approximately $331,000. Warrants issued with 413,500 units have an
exercise price of $18.00 per share and warrants issued with 247,188 units have
an exercise price of $19.00 per share. All of such warrants are exercisable for
two years from their respective issue date. The Company's chief executive
officer and its president each purchased 15,625 units and Israel Aircraft
Industries Ltd., the Company's largest stockholder, purchased 12,500 units.

    Additionally, in July 2001, an existing warrantholder exercised warrants to
purchase 10,275 shares of the Company's common stock, for an aggregate exercise
price of approximately $38,000.

    4.  FUEL CELL TECHNOLOGY COOPERATION AGREEMENTS--In April 2001, the Company
entered into a mutually exclusive agreement with General Dynamics Government
Systems Corporation, a unit of General Dynamics Corporation ("GD"), to develop
and market fuel cells and fuel cell-powered portable electronic devices for the
United States Department of Defense (the "DOD"). As part of such agreement,
among other things, GD agreed to market the Company's fuel cell products to the
DOD.

    In February 2001, the Company entered into a Cooperation Agreement with
Sagem SA ("Sagem"), a leading European manufacturer of sophisticated electronics
systems and equipment, to jointly develop

                                      F-36
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

NOTE B--CERTAIN TRANSACTIONS (CONTINUED)
a product to power cell phones and other portable electronic devices
manufactured by Sagem using the Company's fuel cell technologies.

    5.  APPOINTMENT TO ADVISORY BOARD--In July 2001, the Company appointed a new
member to its Advisory Board. Upon such appointment, the Company issued to the
new member a warrant to purchase an aggregate of 25,000 shares of its common
stock. The warrant vested upon issuance, expires in July 2003, and has an
exercise price of $20.00 per share. The Company estimates the value of such
warrant to be approximately $48,000 and has recorded this amount as expense
during the nine months ended September 30, 2001. The Company accounted for such
warrants in accordance with SFAS 123 and estimated their fair value using the
Black-Scholes option pricing model.

    6.  OPTION GRANTS--In July 2001, the Board of Directors of the Company
granted options to purchase an aggregate of 263,700 shares of common stock under
its 1999 Stock Option Plan, as amended, as follows:

    - Options to its chief executive officer to purchase an aggregate of 75,000
      shares of the Company's common stock, exerciseable at $10.50 per share
      (the market price on the date of the grant). The options vest after two
      years and expire after four years.

    - Options to its president to purchase an aggregate of 75,000 shares of the
      Company's common stock, exerciseable at $10.50 per share (the market price
      on the date of the grant). The options vest after two years and expire
      after four years.

    - Options to its executive vice president to purchase an aggregate of
      100,000 shares of the Company's common stock, exerciseable at $5.16 per
      share (the market price on the date of the grant). The options vest after
      two years and expire after four years.

    - Options to a director to purchase an aggregate of 13,700 shares of the
      Company's common stock, exerciseable at $.4106 per share. The options
      vested upon issuance and expire after one year. The Company estimates the
      value of such options to be approximately $138,000 and has recorded this
      amount as compensation expense during the nine months ended September 30,
      2001.

    In August 2001, the Company granted options to purchase an aggregate of
36,000 shares of its common stock under its 1999 Stock Option Plan, as amended,
to employees and a consultant of More Energy. Such options are exercisable at
$6.75 per share (the market price on the date of the grant), vest after two
years and expire after four years. The Company estimates the value of such
options issued to the consultant to be approximately $8,000 and has recorded
this amount as expense during the nine months ended September 30, 2001.

    The Company accounted for those options issued to employees and officers in
accordance with APB 25 and those issued to consultants in accordance with
SFAS 123 using the Black-Scholes option pricing model to estimate their fair
value.

    7.  SUBSTITUTION OF OPTIONS--As contemplated as part of the Exchange Offer,
the Company sought and, in July 2001, received approval from the Israeli tax
authorities to substitute outstanding Medis El stock options held by employees
of Medis El prior to the Exchange Offer for options to purchase shares of the
Company's common stock. Consequently, the Company issued options to purchase
128,780 shares of its common stock (including 109,600 and 13,700 to its
executive vice president and its vice president--finance, respectively) in
substitution of outstanding options to purchase 94,000 ordinary

                                      F-37
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

NOTE B--CERTAIN TRANSACTIONS (CONTINUED)
shares of Medis El. The ratio of 1.37 used to determine the number of shares
underlying such options of the Company to be issued was the same exchange ratio
used in the Exchange Offer. Since such options were vested, their fair value was
included in the Exchange Offer purchase price and accounted for in accordance
with ABP 16.

    8.  ISSUANCE OF WARRANTS--In July 2001, the Company issued warrants to
purchase an aggregate of 18,000 shares of its common stock pursuant to the terms
of existing consulting agreements with third parties. The warrants vested upon
issuance, expire in June 2002, and have an exercise price of $20.00 per share.
In accordance with SFAS 123, the Company estimates the value of such warrants to
be approximately $34,000, using the Black-Scholes option pricing model, and has
recorded this amount as expense during the nine months ended September 30, 2001.

    9.  ADJUSTMENT OF PRIOR YEAR'S QUARTERLY FINANCIAL STATEMENTS--Certain
transactions incurred during the year ended December 31, 2000 were adjusted at
year end. These adjustments were made to reflect direct costs incurred in
connection with the Exchange Offer as a reduction of equity rather than as an
expense and to reflect as goodwill, rather than as a charge to shareholders'
equity, the excess of the purchase price over fair value of net assets acquired
in a purchase of shares from Medis El. The effect of such adjustments on the
Company's financial statements is a decrease in the net loss of approximately
$289,000 for the nine months ended September 30, 2000 and an increase in the net
loss of approximately $45,000 for the three months ended September 30, 2000.

    10.  RECENT PRONOUNCEMENTS--In July 2001, the Financial Accounting Standards
Board issued Statements of Financial Accounting Standards No. 141, "Business
Combinations" ("SFAS 141") and No. 142, "Goodwill and Other Intangible Assets"
("SFAS 142"). SFAS 141 requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method. Under SFAS 142,
goodwill and intangible assets with indefinite lives are no longer amortized but
are reviewed annually (or more frequently if impairment indicators arise) for
impairment. All other intangible assets will continue to be amortized over their
estimated useful lives. The amortization provisions of SFAS 142 apply to
goodwill and intangible assets acquired after June 30, 2001. With respect to
goodwill and intangible assets acquired prior to July 1, 2001, the Company is
required to adopt SFAS 142 effective January 1, 2002. The Company is currently
evaluating the effect the adoption of FAS 141 and FAS 142 will have on its
consolidated financial statements. In this connection, the Company is currently
assessing its reporting units. Once the reporting units will be established, the
Company will use the two-steps approach to assess its goodwill. In the first
step, the Company will compare the estimated fair value of each reporting unit
that houses goodwill to the carrying amount of the units' assets and
liabilities, including its goodwill. If the fair value of the reporting unit is
below its carrying amount, then the second step of the impairment test is
performed, in which the current fair value of the units' assets and liabilities
will determine the current implied fair value of the units' goodwill. In
addition, the Company will reassess the classifications of its intangible
assets, including goodwill, previously recorded in connection with earlier
purchase acquisitions, as well as their useful lives.

    11.  REVOLVING CREDIT LINE--As of September 30, 2001 the Company had
available to it the entire $5 million of credit under its December 29, 2000
revolving credit line loan agreement with Fleet National Bank, which to date it
has not drawn upon. The loan agreement, which bears interest on the outstanding
balances based on either the LIBOR or Prime Rate and terminates on December 28,
2002, is collateralized by all cash and other assets on deposit with the bank at
any time and an assignment of certain leases owned by a partnership in which the
Company's chief executive officer and its president

                                      F-38
<Page>
                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

NOTE B--CERTAIN TRANSACTIONS (CONTINUED)
are partners. Deferred loan costs relating to the revolving credit line as of
September 30, 2001 amounted to approximately $43,000.

    12.  REGISTRATION STATEMENT--On July 17, 2001, the Company's Registration
Statement on Form S-3, as amended (Registration No. 333-63874), was declared
effective by the Securities and Exchange Commission, registering an aggregate of
1,362,476 shares of the Company's common stock and common stock underlying
warrants held by certain stockholders of the Company, including shares of common
stock and common stock underlying warrants issued in private placements in May
and June 2001(see Note B-3).

NOTE C--SUBSEQUENT EVENTS

    In October and November 2001, an existing warrantholder exercised warrants
to purchase 30,825 shares of the Company's common stock, for an aggregate
exercise price of approximately $113,000.

NOTE D--LIQUIDITY

    Since inception, the Company has incurred operating losses and has used cash
in its operations. Accordingly, the Company has relied on financing activities,
principally the sale of its stock, to fund its research and development
activities and operations. The Company believes this dependence will continue
unless it is able to successfully develop and market its technologies. However,
there can be no assurance that the Company will be able to continue to obtain
financing or successfully develop and market its technologies.

                                      F-39
<Page>
                            MEDIS TECHNOLOGIES LTD.

</TEXT>
</DOCUMENT>