<PAGE>


                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q



                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         FOR THE QUARTERLY PERIOD ENDED
                                  JUNE 30, 2000


                         COMMISSION FILE NUMBER: 0-30391

                             MEDIS TECHNOLOGIES LTD.
             (Exact Name of Registrant as Specified in its Charter)

         DELAWARE                                                13-3669062
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification Number)

                                805 THIRD AVENUE
                            NEW YORK, NEW YORK 10022
              (Address of Principal Executive Offices and Zip Code)

                                 (212) 935-8484
              (Registrant's Telephone Number, Including Area Code)

         CHECK WHETHER THE REGISTRANT: (1) FILED ALL REPORTS REQUIRED TO BE
FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE
PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED
TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR
THE PAST 90 DAYS. YES |X| NO | |

         The number of shares of Common Stock, par value $.01 per share,
outstanding as of August 14, 2000 was 16,811,789.


                                       1
<PAGE>


                             MEDIS TECHNOLOGIES LTD.

                               INDEX TO FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 2000


PART I.  FINANCIAL INFORMATION                                      Page Number
                                                                    -----------


Item 1.  Condensed Consolidated Financial Statements


            Condensed Consolidated Balance Sheets
            December 31, 1999 and June 30, 2000 (Unaudited)                  3


            Condensed Consolidated Statements of Operations (Unaudited)
            Three and six months ended June 30, 1999 and 2000                4


            Condensed Consolidated Statements of Cash Flows (Unaudited)
            Six months ended June 30, 1999 and 2000                          5


            Notes to Condensed Consolidated Financial Statements
            (Unaudited)                                                    6-9


Item 2.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations                          9-12


Item 3.      Quantitative and Qualitative Disclosures About Market Risk     13



PART II.  OTHER INFORMATION


Item 1.      Legal Proceedings                                              14


Item 2.      Changes in Securities and Use of Proceeds                      14


Item 4.      Submission of Matters to a Vote of Security Holders            14


Item 6.      Exhibits and Reports on Form 8-K                               15



                                       2
<PAGE>




                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>


                                                             DECEMBER 31, 1999        JUNE 30, 2000
                                                             -----------------      ---------------
                         ASSETS                                     (1)                (UNAUDITED)
<S>                                                          <C>                    <C>

Current assets
    Cash and cash equivalents                                       $   1,842,000      $   6,054,000
    Accounts receivable - other                                            58,000             82,000
    Prepaid expenses                                                      101,000            123,000
                                                                    -------------      -------------

         Total current assets                                           2,001,000          6,259,000

Property and equipment, net                                               983,000            959,000
Intangible assets, net                                                  7,242,000         88,416,000
                                                                    -------------      -------------

                                                                    $  10,226,000      $  95,634,000
                                                                    =============      =============

                     LIABILITIES AND
                  STOCKHOLDERS' EQUITY

Current liabilities
    Current portion of long-term debt and short-term
      credit                                                        $      86,000      $      11,000
    Accounts payable                                                      102,000            185,000
    Accrued expenses                                                      730,000            873,000
                                                                    -------------      -------------

         Total current liabilities                                        918,000          1,069,000

Long-term debt, excluding current maturities                               11,000              7,000

Other long-term liabilities                                               109,000            150,000
                                                                    -------------      -------------

                                                                        1,038,000          1,226,000

Minority interest in subsidiary                                           627,000                 --

Commitments and contingencies

Stockholders' equity
    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 16,762,289 issued
      and outstanding, at December 31, 1999, and
      June 30, 2000, respectively                                         100,000            168,000
    Additional paid-in capital                                         32,450,000        129,378,000
    Accumulated deficit                                               (23,615,000)       (32,965,000)
    Deferred compensation costs                                          (374,000)        (2,173,000)
                                                                    -------------      -------------

                                                                        8,561,000         94,408,000
                                                                    -------------      -------------

                                                                    $  10,226,000      $  95,634,000
                                                                    =============      =============
</TABLE>



The accompanying notes are an integral part of these statements

(1) derived from audited financial statements



                                       3
<PAGE>



                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                  \         THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                                 JUNE 30,                       JUNE 30,
                                                                        ----------------------------    --------------------------
                                                                             1999           2000            1999           2000
                                                                        ------------    ------------    ------------    ------------
<S>                                                                     <C>             <C>             <C>             <C>

Sales                                                                    $              $               $               $
                                                                        ------------    ------------    ------------    -----------

Cost of sales                                                                      -               -               -             -

           Gross profit                                                           --              --              --            --

Operating expenses
    Research and development costs, net                                      872,000       1,804,000       1,256,000      2,585,000
    Selling, general and administrative                                      457,000       1,016,000         785,000      1,846,000
    expenses
    Amortization of intangible assets                                        612,000       2,360,000       1,223,000      2,973,000
                                                                        ------------    ------------    ------------    -----------

         Total operating expenses                                          1,941,000       5,180,000       3,264,000      7,404,000
                                                                        ------------    ------------    ------------    -----------

         Loss from operations                                             (1,941,000)     (5,180,000)     (3,264,000)    (7,404,000)

Other income (expenses)
    Interest and other income                                                 48,000          34,000          76,000         74,000
    Interest expense                                                          (8,000)         (3,000)        (11,000)        (6,000)
                                                                        ------------    ------------    ------------   ------------

                                                                              40,000          31,000          65,000         68,000
                                                                        ------------    ------------    ------------   ------------


         Loss before minority interest                                    (1,901,000)     (5,149,000)     (3,199,000)    (7,336,000)


Minority interest in loss of subsidiary                                      418,000         391,000         686,000        873,000
                                                                        ------------    ------------    ------------   ------------

         NET LOSS                                                       $ (1,483,000)   $ (4,758,000)   $ (2,513,000)  $ (6,463,000)

Value of warrants issued                                                $          -    $ (2,887,000)   $          -   $ (2,887,000)
                                                                        ------------    ------------    ------------   ------------

          Net loss attributable to common
           shareholders                                                 $ (1,483,000)   $ (7,645,000)   $ (2,513,000)  $ (9,350,000)
                                                                        ------------    ------------    ------------   ------------

Basic and diluted net loss per share                                    $       (.15)   $       (.59)       $ (. 26)   $       (.80)
                                                                        ============    ============    ============   ============


Weighted-average shares outstanding                                        9,816,531      12,882,874       9,642,059     11,656,112
                                                                        ============    ============    ============   ============

</TABLE>

        The accompanying notes are an integral part of these statements.



                                       4
<PAGE>



                                 MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES
                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                                       SIX MONTHS ENDED JUNE 30,
                                                                                                    ------------------------------
                                                                                                        1999              2000
                                                                                                    ------------      ------------
<S>                                                                                                 <C>               <C>

Cash flows from operating activities
   Net loss                                                                                          $ (2,513,000)     $ (6,463,000)
   Adjustments to reconcile net loss to net
       cash used in operating activities
       Depreciation                                                                                       186,000           182,000
       Amortization of intangible assets                                                                1,223,000         2,973,000
       Changes in other long-term liabilities                                                              17,000            41,000
       Losses of minority interest                                                                       (686,000)         (873,000)
       Charge of inventory to research and development expense                                            255,000                --
       Compensation expense                                                                                63,000           584,000
       Write-off of acquired in-process research and
         development                                                                                           --           885,000
       Changes in operating assets and liabilities
         Accounts receivable - other                                                                      (19,000)          (24,000)
         Inventory                                                                                        (47,000)               --
         Prepaid expenses                                                                                (129,000)          (22,000)
         Accounts payable                                                                                  31,000            83,000
         Accrued expenses                                                                                 214,000            33,000
                                                                                                     ------------      ------------

           Net cash used in operating activities                                                       (1,405,000)       (2,601,000)
                                                                                                     ------------      ------------

Cash flows from investing activities
   Purchase of property and equipment                                                                    (171,000)         (180,000)
   Sale of securities and short-term deposits                                                             500,000                --
   Proceeds from sale of property and equipment                                                                --            22,000
   Acquisition by Medis El of shares of More Energy Ltd.                                                       --          (320,000)
   Acquisition of shares of Medis El                                                                           --          (289,000)
                                                                                                     ------------      ------------
           Net cash provided by (used in)
               investing activities                                                                       329,000          (767,000)
                                                                                                      ------------      ------------

Cash flows from financing activities
   Repayment of long-term debt                                                                            (98,000)          (83,000)
   Proceeds from exercise of stock options - Medis El                                                          --           336,000
   Proceeds from issuance of common stock                                                               2,091,000         7,323,000
   Proceeds of short-term credit                                                                           14,000             4,000
                                                                                                     ------------      ------------

           Net cash provided by financing activities                                                    2,007,000         7,580,000
                                                                                                     ------------      ------------

           Net increase in cash and cash equivalents                                                      931,000         4,212,000

Cash and cash equivalents at beginning of period                                                        3,155,000         1,842,000
                                                                                                     ------------      ------------
Cash and cash equivalents at end of period                                                           $  4,086,000      $  6,054,000
                                                                                                     ============      ============

Supplemental disclosures of cash flow information:
    Cash paid during the period for
       Interest                                                                                      $     12,000      $      7,000
       Income taxes                                                                                  $      4,000      $      4,000

    Non-cash investing and financing activities:
       Grant of stock options to employees                                                           $         --      $  2,185,000
       Decrease in inventory through increase in fixed assets                                        $    197,000      $         --
    Acquisition of minority interest through exchange of shares                                      $         --      $ 85,224,000
    Acquisition of Medis El shares through increase in accrued liabilities                           $         --      $    110,000
    Value of warrants issued to exercising warrantholders                                            $         --      $  2,887,000

</TABLE>

The accompanying notes are an integral part of these statements

                                       5

<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., a Delaware corporation ("MTL" or the
"Company"), is a holding company, which through its wholly-owned indirect
subsidiary, Medis El Ltd. ("Medis El"), engages in research and development
activities. The Company currently indirectly owns, in whole or in part, a number
of different technologies in various stages of development. Its strategy is to
become a greenhouse for the development of technology products to license, sell,
or enter into joint ventures with large corporations. The Company's technologies
include the CellScan, fuel cells, the toroidal internal combustion engine and
compressor, stirling cycle linear system, reciprocating electric machine, direct
current regulating device and water technologies.

         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, 1999 and related notes included in
the Company's Registration Statement, as amended, on Form S-1 filed with the
Securities and Exchange Commission (Registration No. 333-83945). Information in
the accompanying condensed consolidated financial statements for the three and
six months ended June 30, 1999 and 2000 is unaudited. The condensed consolidated
financial statements as of June 30, 2000 and for the three and six months ended
June 30, 1999 and 2000 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 June 30, 1999 and
2000 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 six months ended June 30, 2000 are not necessarily
indicative of the results to be expected for the entire year.

         Certain reclassifications have been made to the 1999 financial
statements to conform to the current year presentation.

NOTE B - CERTAIN TRANSACTIONS

    1.   ISSUANCE OF COMMON STOCK - In January and February 2000, the Company
         completed a private placement of units of its common stock, each unit
         consisting of 66,000 shares of its common stock and 25,000 warrants.
         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. The Company also issued common stock in June
         2000 pursuant to the exercise of warrants (see note B-10).


    2.   EXERCISES OF MEDIS EL STOCK OPTIONS - During January and February 2000,
         employees, including certain officers and a director of Medis El,
         exercised options to purchase an aggregate of 66,100 ordinary shares
         of Medis El stock. Such exercise generated aggregate cash proceeds
         to Medis El of approximately $336,000.

    3.   ACQUISITION BY MEDIS EL OF MINORITY INTEREST IN MORE ENERGY LTD. - In
         January 2000, Medis El purchased an additional 5% of its majority-owned
         subsidiary, More Energy Ltd. ("More Energy"), for an aggregate purchase
         price of $75,000. Furthermore, in April 2000, Medis El


                                       7
<PAGE>

         entered into an agreement to purchase an additional 6.5% of More Energy
         for an aggregate purchase price of $245,000, which was paid in April
         and June 2000. 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. More Energy is developing
         fuel cell technology. Medis El currently owns a 93% interest in More
         Energy.

    4.   INVESTMENT IN MEDIS EL - On February 23, 2000, Medis El issued an
         additional 107,759 of its ordinary shares to the Company for a capital
         contribution of $2,500,000.

    5.   OPTION GRANTS - 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 the 1999 Stock Option Plan to employees, including
         an officer, director, and a consultant of the Company and to Medis El
         employees and consultants. The options, which may be exercised at $5.00
         per share, vest after two years and expire after four years. Deferred
         compensation of approximately $6,505,000, which will be charged to
         expense ratably over the vesting period, was recorded for such options.
         During the six months ended June 30, 2000, compensation expense of
         approximately $355,000 was recorded relating to such options. In June
         2000, the Board of Directors of the Company granted, under the 1999
         Stock Option Plan, options to purchase 100,000 shares of common stock
         to its Chairman and Chief Executive Officer and options to purchase
         100,000 shares of common stock to its President and Treasurer. Such
         stock options issued do not vest until June 15, 2001, and may be
         exercised at a price of $16.42 per share until June 15, 2002. Deferred
         compensation of approximately $716,000, which was recorded during the
         six months ended June 30, 2000, will be charged to expense over the
         vesting period. Approximately $30,000 of such expense was charged to
         operations during the six months ended June 30, 2000.

    6.   AGREEMENT WITH PERUVIAN COMPANY - In April and May 2000, pursuant to
         the terms of a June 1999 agreement, as supplemented, with a Peruvian
         company, the Company transferred payments aggregating $110,000 to such
         Peruvian company for the repurchase of a CellScan machine.

    7.   ADDITIONAL OPTIONS ON TECHNOLOGY - Medis El has an option to
         purchase an additional 50% interest for aggregate consideration of
         $60,000, in a company that owns a patent and related applications to
         one of its technologies. Medis El currently owns 25% of such Company.
         The option, which was scheduled to expire on June 30, 2000, was
         extended through October 31, 2000.

    8.   PURCHASE OF SHARES OF MEDIS EL - During the six months ended June
         30, 2000, the Company repurchased or exercised its right to repurchase,
         pursuant to the terms of a settlement agreement entered into in
         November 1999 ("November Settlement") with an Argentinean company, an
         aggregate of 60,000 shares of Medis El from the designee of such
         Argentinean company. The Company paid aggregate cash consideration of
         approximately $289,000 in exchange for 45,000 shares of Medis El of
         which 42,000 shares were tendered to the Company. The Company recorded
         a liability of $110,000 which represents the purchase price of 15,000
         shares of Medis El shares pursuant to the November Settlement. The
         Company recorded approximately $379,000 of intangible assets and
         goodwill and $4,000 of acquired in-process research and development
         costs arising from these transactions during the six months ended
         June 30, 2000. 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 the
         remaining 18,000 shares pursuant to the option provision was a material
         breach of the settlement agreement.


                                       8
<PAGE>


    9.   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 207,169 shares passed to the Company by operation of Israeli
         law upon the expiration of the exchange offer. The Company accounted
         for the exchange using the purchase method. The Company calculated the
         purchase price of the 3,850,410 shares of Medis El not owned by it
         based on the market price of Medis El ordinary shares. Such purchase
         price was $85,224,000. The company allocated the excess of purchase
         price over net assets acquired to goodwill ($77,697,000), acquired
         technology assets ($6,071,000) and in-process research and development,
         which was charged to research and development expense on the
         acquisition date ($561,000). 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 three and six months
         ended June 30, 2000, the Company recorded amortization expense
         aggregating approximately $1,732,000 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:

                                              Six months ended  Six months ended
                                                 June 30, 1999     June 30, 2000
                                              -----------------  ---------------

              Net loss                           $12,541,000      $14,946,000
              Net loss attributable to common
                 shareholders                    $12,541,000      $17,833,000

              Net loss per common share          $      (.84)     $      (1.12)

              The pro forma data is for informational purposes only and may not
         necessarily reflect results of operations had the Exchange Offer
         occurred on the above dates.

    10.  EXERCISE AND ISSUANCE OF WARRANTS AND ISSUANCE OF COMMON STOCK - In
         June 2000, the Company issued 859,544 shares of its common stock and
         429,778 warrants (the "June Warrants") upon exercise of existing
         warrants for an aggregate exercise price of approximately $4,428,000.
         The June Warrants were issued as an inducement to the Company's
         existing warrant holders to exercise such warrants, at the rate of one
         June Warrant issued, exercisable at $16.42 per share until June 15,
         2002, for every two existing warrants exercised. The Company estimated
         the value of the June Warrants and warrants issued in July 2000
         pursuant to the same offering, in the aggregate, to be $2,887,000 (See
         Note C-3).

    11.  CONSULTING AGREEMENT - In June 2000, the Company entered into an
         agreement with CIBC World Markets Corp. ("CIBC") for capital markets
         and financial and strategic advisory services. The agreement commenced
         on July 15, 2000, has a term of one year and may be terminated by
         either party with 30 days written notice. The Company will pay CIBC
         during the term of the agreement five-year common stock warrants to
         purchase an aggregate of 250,000 shares of common stock, with an
         exercise price to be calculated based on the 30 day average closing
         price preceding delivery of the warrants. If the Company requests CIBC
         to pursue a financing transaction, an additional fee would be paid
         based on a schedule included in the agreement.

                                       9
<PAGE>

NOTE C - SUBSEQUENT EVENTS

    1.   APPOINTMENT OF ADVISORY BOARD - In July 2000, the Company appointed
         a corporate advisory board to assist it with its business strategy and
         to build relationships with third parties to assist in the development
         of its technologies. The advisory board is initially comprised of three
         individuals. As of July 12, 2000, the Company issued warrants to
         purchase an aggregate of 25,000 shares of its common stock to each of
         the members of the advisory board.

    2.   In July 2000, an existing warrantholder exercised warrants to
         purchase 30,000 shares of common stock for an aggregate exercise price
         of $150,000.

    3.   In July 2000, warrants to purchase 19,500 shares of the Company's
         common stock were exercised pursuant to the same offer to
         warrantholders described in Note B-10, for aggregate proceeds of
         $99,500. The Company issued an additional 9,750 warrants pursuant to
         such exercise.

    4.   In August 2000, the Company entered into a stipulation and order of
         settlement with Cellscan Argentina dismissing with prejudice MEDIS
         TECHNOLOGIES LTD. V. CELLSCAN ARGENTINA, S.A., which requires Cellscan
         Argentina to tender to the Company 18,000 shares of Medis El for
         aggregate cash consideration of $130,000. In return, the Company
         granted certain "piggy-back" registration rights to Cellscan Argentina
         with respect to shares underlying warrants issued to Cellscan Argentina
         pursuant to the November Settlement.

    5.   As of July 15, 2000, the Company issued warrants to purchase 100,000
         shares of common stock to CIBC (See Note B-11).

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. 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

                                       10
<PAGE>




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

         Some of the information in this quarterly report contains
forward-looking statements that involve substantial risks and uncertainties. You
can identify these statements by forward-looking words such as "may," "will,"
"expect," "anticipate," "believe," "estimate," and "continue" or similar words.
You should read statements that contain these words carefully because they:

    o    discuss our future expectations;
    o    contain projections of our future results of operations or of our
         financial condition; or
    o    state other "forward-looking" information.

         We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
accurately predict or over which we have no control. The risk factors listed in
our most recent registration statement, as well as any cautionary language in
this quarterly report, provide examples of risks, uncertainties and events that
may cause our actual results to differ materially from the expectations we
describe in our forward-looking statements. You should be aware that the
occurrence of the events described in these risk factors and elsewhere in this
quarterly report could have a material adverse effect on our business, operating
results and financial condition.

INTRODUCTION

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

RESULTS OF OPERATIONS

         From our inception in April 1992 through June 30, 2000, we have
generated a cumulative net loss of $32,965,000. We expect to incur additional
operating losses during the remainder of 2000 and perhaps beyond, principally as
a result of our continuing anticipated research and development costs, and due
to anticipated limited sales of our technologies. We do not expect to
substantially increase in the future our research and development expenses
beyond current levels until we are able to generate revenues or receive funds
from third parties for research and development. If our funds continue to
decrease due to our current spending levels and we are unable to generate
revenues or receive funds from third parties for research and development, we
expect to curtail development of one or more technologies. Furthermore, for so
long as our technologies remain in the development or testing phase, we do not
expect our selling, general and administrative expenses to increase
substantially from historical levels. 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 our revenues.

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999 AND
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999

         We sustained net losses of $6,463,000 and $4,758,000 during the six and
three months ended June 30, 2000, respectively, compared to $2,513,000 and
$1,483,000 during the six and three months ended June 30, 1999, respectively.
The increases in net losses can primarily be attributed to increases in
amortization of intangible assets acquired, research and development costs and
selling, general and administrative expenses.

                                       11
<PAGE>


         Research and development costs increased to $2,585,000 and $1,804,000
for the six and three months ended June 30, 2000, respectively, as compared to
$1,256,000 and $872,000 during the six and three months ended June 30, 1999,
respectively. The increases in both periods can be largely attributed to
increased research and development activity pertaining to:

         o        the further refinement of the CellScan, in which we incurred
                  costs of approximately $1,126,000 and $641,000 during the six
                  and three months ended June 30, 2000, respectively, compared
                  to approximately $840,000 and $553,000 in the same periods of
                  1999;

         o        development of the fuel cell technology, in which we incurred
                  costs of approximately $770,000 and $627,000 during the six
                  and three months ended June 30, 2000, respectively. This
                  includes expenditures aggregating $320,000 and $270,000 during
                  the six and three months ended June 30, 2000, respectively, to
                  acquire additional interests in Medis El's majority owned
                  subsidiary, More Energy, which represents acquired in-process
                  research and development, and an allocation of the write-off
                  of acquired in-process research and development in connection
                  with the exchange offer to fuel cell technologies of
                  approximately $182,000. This is compared to costs incurred
                  during the six and three months ended June 30, 1999 of
                  approximately $96,000 and $58,000; and

         o        development of the toroidal engine, in which we incurred costs
                  of approximately $282,000 and $233,000 during the six months
                  and three months ended June 30, 2000, including an allocation
                  of the write-off of acquired in-process research and
                  development in connection with the exchange offer to the
                  toroidal engine of approximately $151,000. This is compared to
                  cost incurred of approximately $96,000 and $43,000 during the
                  six months and three ended June 30, 1999.

Additionally, during the six months ended June 30, 1999, we recorded as a credit
to research and development expense a payment of $200,000 received during the
first quarter of 1999 under a December 1998 technology development agreement
with The Coca-Cola Company.

         Selling, general and administrative expenses for the six and three
months ended June 30, 2000 amounted to approximately $1,846,000 and $1,016,000,
respectively, compared to approximately $785,000 and $457,000 for the six and
three months ended June 30, 1999. These increases can be primarily attributed to
additional legal, accounting and related fees relating to our registration and
tender offer in April 2000 for the approximately 36% of Medis El's outstanding
ordinary shares not owned by us, as well as non-cash charges related to stock
options and higher personnel costs.

         Amortization of intangible assets amounted to $2,973,000 and $2,360,000
during the six and three months ended June 30, 2000, compared to
$1,223,000 and $612,000 for the six and three months ended June 30, 1999.
These increase were primarily the result of amortization expense of
approximately $1,732,000 during each of the six and three month periods relating
to goodwill approximating $77,697,000 and acquired technology assets
approximating $6,071,000 acquired upon the consummation of the exchange offer.
Shareholders of Medis El tendered an aggregate of 3,643,241 ordinary shares,
giving us ownership of approximately 98% of Medis El's outstanding ordinary
shares. The remaining 207,169 ordinary shares passed to us by operation of
Israeli law upon the expiration of the 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 substitute
for net income (loss), cash flow from operations or other consolidated income
(loss) or cash flow data or as a measure of our profitability or liquidity.
Items excluded for 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.

         The computation of EBITDA for the six and three months ended June
30, 2000 and 1999 is set forth in the table below:

<TABLE>
<CAPTION>

                                        Six Months Ended              Three Months Ended
                                             June 30                        June 30
                                      1999            2000            1999          2000
                                   -----------     -----------    -----------    -----------
<S>                                <C>             <C>            <C>            <C>
Net Loss attributable to
   common shareholders             ($2,513,000)    ($9,350,000)   ($1,483,000)   ($7,645,000)
Add: Value of warrants issued               --       2,887,000             --      2,887,000
Add: Interest Expense                   11,000           6,000          8,000          3,000
Less: Interest Income                  (76,000)        (74,000)       (48,000)       (34,000)
Add: Amortization                    1,223,000       2,973,000        612,000      2,360,000
Add Depreciation                       186,000         182,000        101,000         90,000
                                   -----------     -----------    -----------    -----------
    EBITDA                         ($1,169,000)    ($3,376,000)     ($810,000)   ($2,339,000)
                                   ===========     ===========    ===========    ===========

</TABLE>

         EBITDA for the six months ended June 30, 2000 and 1999 includes
non-cash equity based compensation of $584,000 and $63,000, respectively.

         Increases in loss before interest, taxes, depreciation, and
amortization, for the six and three months ended June 30, 2000 as compared to
the prior year occurred due to increases in research and development costs,
and selling, general and administrative expenses for the reasons discussed
earlier in this section.

LIQUIDITY AND CAPITAL RESOURCES

         We have historically financed our operations primarily through the
proceeds of investor equity financing, long-term bank loans, grants 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.


                                       12
<PAGE>


         In 1999, we issued a total of 581,004 shares of our common stock and
warrant to purchase 193,668 shares of common stock for an aggregate of
$2,324,000. The proceeds of such offerings were used:

         o        for research and development projects with respect to our
                  products and technologies; and

         o        for selling, general and administrative expenses.

         In 2000, as of June 30, 2000, we issued a total of 1,496,544 shares of
our common stock and warrants to purchase 670,611 shares of common stock for
aggregate proceeds of approximately 7,323,000. Furthermore, in July 2000, we
issued a total of 49,500 shares of our common stock and warrants to purchase
9,750 shares of our common stock for an aggregate of $249,500. 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, 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 are similarly being 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, either
through exercise of stock options or otherwise, as we intend
that all future financings of Medis El will be effected through us.

         For the six months ended June 30, 2000, we used cash of $2,601,000 in
connection with our operating activities, as compared to $1,405,000 for the six
months ended June 30, 2000. The increase was primarily attributable to increases
in research and development and selling general and administrative expenses
during the period, for the reasons discussed above.

         For the six months ended June 30, 2000, we used $767,000 of cash in our
investing activities, compared to $329,000 being provided from investing
activities during the six months ended June 30, 1999. During the six months
ended June 30, 2000 the cash used in investing activities was due to purchases
of shares of Medis El and More Energy not owned by us aggregating $609,000 and
purchases of property and equipment of $180,000, offset by proceeds from
disposals of fixed assets of $22,000. During the six months ended June 30, 1999,
the cash provided from investing activities was due principally to the maturity
of a short-term investment of $500,000, offset by purchases of property and
equipment of $171,000.

         For the six months ended June 30, 2000, we had cash provided by
financing activities of $7,580,000 compared to $2,007,000 for the six months
ended June 30, 1999. The increase was due to an increase in funds raised from
private placements of our securities and the exercise of our outstanding
warrants which aggregated $7,323,000 for the six months ended June 30, 2000, as
compared to $2,091,000 for the six months ended June 30, 1999. Cash provided
from financing activities during the six months ended June 30, 2000 also
included proceeds of $336,000 from the exercise of Medis El stock options, of
which there were none during the six months ended June 30, 1999.

         As of June 30, 2000, we had approximately $6,054,000 in cash and cash
equivalents. Our working capital and capital requirements at any given time
depend upon numerous factors, including, but not limited to:

         o        the progress of research and development programs;

         o        the status of our technologies;

         o        the results of pre-clinical testing and clinical trials;


                                       13
<PAGE>


         o        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.

         Management expects that our present funds are sufficient to support our
present activities for at least 12 months. Beyond such time, we will require
capital infusions of cash from investors, whether private investors or through
companies or other organizations assisting in the development of our
technologies, to continue our operations. To the extent we are unable to acquire
additional funds, we will curtail research and development of one or more
technologies until such time as we acquire additional funds.


                                       14
<PAGE>


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

DISCLOSURE ABOUT MARKET RISK

IMPACT OF INFLATION AND DEVALUATION ON RESULTS OF OPERATIONS, LIABILITIES AND
ASSETS

         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. Consideration for virtually all sales and Medis El's bank loans
are 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, Medis El currently invests its
liquid funds in both dollar-linked and Shekel 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. However, since the institution of the
Israeli Economic Program in 1985, inflation, while continuing, has been
significantly reduced and the rate of devaluation has been substantially
diminished. During 1989 and 1990, the dollar declined in value relative to major
world currencies. Because governmental policies in Israel linked exchange rates
to a weighted basket of foreign currencies of Israel's major trading partners,
the exchange rate between the NIS and the dollar remained relatively stable
during this period. However, Israel effected devaluations of the NIS against the
dollar as follows:

                                            1991              11.5%
                                            1992              21.1
                                            1993               8.0
                                            1994               1.1
                                            1995               3.9
                                            1996               3.7
                                            1997               8.8
                                            1998              17.6
                                            1999             (0.17)

During the three years ended December 31, 1991 and the four years ended December
31, 1996, the rate of inflation in Israel exceeded the rate of devaluation of
the NIS against the dollar, but in 1998, 1997 and 1992, the rate of devaluation
of the NIS against the dollar exceeded the rate of inflation in Israel. In 1999,
the rate of Israeli inflation was 1.3% and the NIS appreciated by .17% against
the dollar.

IMPACT OF POLITICAL AND ECONOMIC CONDITIONS

         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.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         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.,
we commenced in January 2000 pursuant to a put/call

                                       15
<PAGE>

provision in the settlement agreement, the repurchase 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, we exercised our right to
repurchase 60,000 of such shares. Cellscan Argentina refused to transfer 18,000
of such shares. Consequently, on June 8, 2000, we 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 18,000 of such shares to us pursuant to the put/call
provision was a material breach of the settlement agreement.

         In August 2000, we entered into a stipulation and order of
settlement with Cellscan Argentina dismissing the action with prejudice,
which requires Cellscan Argentina to tender to us 18,000 shares of Medis El
for aggregate cash proceeds of $130,000. In return, we granted certain
"piggy-back" registration rights to Cellscan Argentina with respect to shares
of our common stock underlying warrants owned by Cellscan Argentina.

         We are not otherwise party to any material litigation, and we are not
aware of any threatened litigation that would have a material adverse effect on
us or our business.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         In June 2000, we issued 859,544 shares of our common stock and
429,778 warrants, exercisable at $16.42 per share until June 15, 2002, upon
exercise of existing warrants. Our net proceeds from the exercise of the
existing warrants was approximately $4,428,000. Also in June 2000, we issued
options under our 1999 stock option plan to purchase 100,000 shares of our
common stock to each of our chief executive officer and our president,
exercisable beginning June 15, 2001 at $16.42 per share until June 15, 2002.

         In July 2000, we issued 19,500 shares of our common stock and 9,750
warrants, exercisable at $16.42 per share until June 15, 2002, pursuant to
the same offer described above. Our net proceeds from the exercise of the
existing warrants was approximately $99,500. Also in July 2000, we issued
30,000 shares of our common stock upon exercise of warrants for an aggregate
exercise price of $150,000. We also issued warrants to purchase an aggregate
of 100,000 shares of our common stock pursuant to a consulting agreement,
exercisable at $20.44 per share until July 14, 2001, and warrants to
purchase an aggregate of 25,000 shares of our common stock to each member of
our advisory board, exercisable at $20.00 per share until July 11, 2003.

         Exemption from registration under the Securities Act of 1933, as
amended, in connection with the foregoing transactions, is claimed under Section
4(2) of the Securities Act as a transaction by the issuer not involving a public
offering. Each certificate evidencing such shares of common stock bears an
appropriate restrictive legend and "stop transfer" orders are maintained on our
stock transfer records. None of these sales involved participation by an
underwriter or a broker-dealer.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits:

         27.1 Financial Data Schedule

         (b) Reports on Form 8-K:

         None.


                                       16
<PAGE>




                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized




                                                      /s/  ROBERT K. LIFTON
                                                      --------------------------
                                                       Robert K. Lifton
                                                       Chairman and Chief
                                                       Executive Officer


                                                       /s/  ISRAEL FISHER
                                                       -------------------------
                                                       Israel Fisher
                                                       Vice President Finance
                                                       (Principal Financial and
                                                       Accounting Officer)
Date: August 14, 2000


                                       17