<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
                               SEPTEMBER 30, 2001

                         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 November 13, 2001 was 17,532,779.


<Page>


                             MEDIS TECHNOLOGIES LTD.

                               INDEX TO FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001

<Table>
<Caption>

PART I. FINANCIAL INFORMATION                                                               Page Number
                                                                                            -----------
<S>                                                                                              <C>
Item 1. Condensed Consolidated Financial Statements

                  Condensed Consolidated Balance Sheets as of
                  December 31, 2000 and September 30, 2001 (Unaudited)                           1

                  Condensed Consolidated Statements of Operations (Unaudited)
                  for the three and nine months ended September 30, 2000 and 2001                2

                  Condensed Consolidated Statements of Cash Flows (Unaudited)
                  for the nine months ended September 30, 2000 and 2001                          3-4

                  Notes to Condensed Consolidated Financial Statements (Unaudited)               5-8

Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                            8-13

Item 3.           Quantitative and Qualitative Disclosures About Market Risk                     13-14


PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds                                                14
</Table>

<Page>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  -FINANCIAL STATEMENTS

                    MEDIS TECHNOLOGIES LTD. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>

                                                       DECEMBER 31, 2000    SEPTEMBER 30, 2001
                                                       -----------------    ------------------
                                                                                  (UNAUDITED)
<S>                                                        <C>                   <C>
                         ASSETS

Current assets
    Cash and cash equivalents                              $   2,885,000         $   7,672,000
    Accounts receivable - other                                  228,000               156,000
    Prepaid expenses and other current assets                    245,000               235,000
                                                           -------------         -------------

         Total current assets                                  3,358,000             8,063,000

Property and equipment, net                                    1,045,000             1,341,000
Intangible assets, net                                        82,799,000            66,950,000
Other assets                                                          --               520,000
                                                           -------------         -------------

         Total assets                                      $  87,202,000         $  76,874,000
                                                           =============         =============

                     LIABILITIES AND
                  SHAREHOLDERS' EQUITY

Current liabilities
    Accounts payable                                       $     139,000         $     199,000
    Accrued expenses and other current liabilities               697,000               673,000
                                                           -------------         -------------
         Total current liabilities                               836,000               872,000

Accrued severance pay                                            224,000               261,000
                                                           -------------         -------------

         Total liabilities                                     1,060,000             1,133,000


Commitments and contingencies

Shareholders' equity
    Preferred stock, $.01 par value; 10,000 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                           168,000               175,000
    Additional paid-in capital                               136,819,000           147,358,000
    Accumulated deficit                                      (49,078,000)          (71,420,000)
    Deferred compensation costs                               (1,767,000)             (372,000)
                                                           -------------         -------------

                                                              86,142,000            75,741,000
                                                           -------------         -------------

         Total liabilities and shareholders' equity        $  87,202,000         $  76,874,000
                                                           =============         =============
</Table>


The accompanying notes are an integral part of these statements.


                                       1
<Page>


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

<Table>
<Caption>

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

      Cost of sales                                                  --                --                --                --
                                                           ------------      ------------      ------------      ------------
                 Gross profit                                        --                --                --                --

      Operating expenses
          Research and development costs, net                   992,000           919,000         3,564,000         2,877,000
          Selling, general and administrative expenses        2,089,000         1,198,000         4,010,000         3,720,000
          Amortization of intangible assets                   5,276,000         5,279,000         8,310,000        15,849,000
                                                           ------------      ------------      ------------      ------------

               Total operating expenses                       8,357,000         7,396,000        15,884,000        22,446,000
                                                           ------------      ------------      ------------      ------------

               Loss from operations                          (8,357,000)       (7,396,000)      (15,884,000)      (22,446,000)

      Other income (expenses)
          Interest and other income                              81,000            74,000           155,000           144,000
          Interest and other expense                             (3,000)          (12,000)           (9,000)          (40,000)
                                                           ------------      ------------      ------------      ------------

                                                                 78,000            62,000           146,000           104,000
                                                           ------------      ------------      ------------      ------------

               Loss before minority interest                 (8,279,000)       (7,334,000)      (15,738,000)      (22,342,000)


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

               NET LOSS                                    $ (8,279,000)       (7,334,000)     $(14,865,000)      (22,342,000)

      Value of warrants issued                             $    (84,000)               --      $ (2,971,000)               --
                                                           ------------      ------------      ------------      ------------

               Net loss attributable to common
                 shareholders                              $ (8,363,000)     $ (7,334,000)     $(17,836,000)     $(22,342,000)
                                                           ------------      ------------      ------------      ------------

      Basic and diluted net loss per share                 $       (.50)     $       (.42)     $      (1.33)     $      (1.30)
                                                           ============      ============      ============      ============

       Weighted-average shares used in
       computing basic and diluted net loss per share        16,771,767        17,499,832        13,369,245        17,140,828
                                                           ============      ============      ============      ============
</Table>

      The accompanying notes are an integral part of these statements.
      *See note B-9


                                       2
<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>


                                       3
<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>







The accompanying notes are an integral part of these statements

*See note B-9


                                       4
<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 Company's Annual Report on Form 10-K. 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.

            The condensed consolidated balance sheet as of December 31, 2000 has
been derived from the audited financial statements at that date but does not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements.

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. The Company accounted for the exchange using the purchase
            method. The Company calculated the purchase price of the 3,825,910
            shares, as well as options to 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. Based on an independent
            appraisal, the Company allocated the excess of purchase price over
            net assets acquired to goodwill ($81,867,000), acquired technology
            assets ($6,071,000) and in-process research and development, which
            was charged to research and development expense on the acquisition
            date


                                       5
<Page>


            ($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 $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
            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,


                                       6
<Page>


            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.

      6.    OPTION GRANTS - In July 2001, the Board of Directors of the Company
            granted options to purchase an aggregate of 163,700 shares of common
            stock under its 1999 Stock Option Plan, as amended, as follows:

            o     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.

            o     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.

            o     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.

            Also in August 2001, the Company granted options to its executive
            vice president to purchase an aggregate of 100,000 shares of the
            Company's common stock, exercisable 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.

      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
            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. Such options
            were included in the Exchange Offer purchase price, and,
            accordingly, the Company did not record any compensation expense
            during the nine months ended September 30, 2001 related to such
            options.

      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. The Company estimates the value
            of such warrants to be approximately $34,000 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


                                       7
<Page>


            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 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. The Company is currently evaluating the effect of the adoption
            of FAS 141 and FAS 142 on its consolidated financial statements.

      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 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.

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


                                       8
<Page>


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 Annual Report on Form 10-K for the fiscal year ended December 31, 2000, 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 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 AND THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2000

            We sustained net losses of $22,342,000 and $7,334,000 during the
nine and three months ended September 30, 2001, respectively, compared to
$14,865,000 and $8,279,000 during the nine and three months ended September 30,
2000, respectively. 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. The decrease in the net loss during the three months ended September 30,
2001 compared to the same period in 2000 can primarily be attributed to lower
selling, general and administrative expenses due to decreased compensation
expense related to the issuance of


                                       9
<Page>


stock options and warrants.

            Research and development costs amounted to $2,877,000 and $919,000
for the nine and three months ended September 30, 2001, respectively, compared
to $3,564,000 and $992,000 during the nine and three months ended September 30,
2000, respectively. 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 not incurred during the nine months ended September 30,
2001, 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 not
incurred during the nine months ended September 30, 2001, 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 an increase in spending on fuel cell technologies during the nine
months ended September 31, 2001 compared to the same period in 2000. Research
and development costs incurred during the three months ended September 30, 2001
compared to the same period in 2000 were lower primarily as a result of
decreased costs relating to the CellScan and the stirling cycle system and
toroidal technologies, somewhat offset by increases costs relating to fuel cell
technologies. The research and development activity for the periods presented
include:

            o     FUEL CELL TECHNOLOGIES. We incurred costs relating to our fuel
                  cell technologies of approximately $1,112,000 and $399,000
                  during the nine and three month periods ended September 30,
                  2001, respectively, compared to costs of approximately
                  $1,000,000 and $229,000 during the nine and three month
                  periods ended September 30, 2000, respectively. 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. Without the effects of such charges
                  the increase in costs relating to 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. The increase for the
                  three months ended September 30, 2001 compared to the same
                  period in 2000 can be attributed an increase in resources
                  being devoted to More Energy for the development of our fuel
                  cell technologies.

            o     CELLSCAN. The refinement of the next generation CellScan
                  system, in which we incurred costs of approximately $1,229,000
                  and $347,000 during nine and three month periods ended
                  September 30, 2001, respectively, compared to costs of
                  approximately $1,653,000 and $577,000 during the nine and
                  three month periods ended September 30, 2000, respectively.
                  The reduction in costs incurred during the nine and three
                  month periods 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.

            o     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 and $172,000 during nine and three month periods
                  ended September 30, 2001,


                                       10
<Page>


                  respectively, compared to costs of approximately $879,000 and
                  $213,000 during the nine and three month periods ended
                  September 30, 2000, respectively. 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 and three
months ended September 30, 2001 amounted to approximately $3,720,000 and
$1,198,000 respectively, compared to approximately $4,010,000 and $2,089,000 for
the nine and three 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 and $491,000 for the nine and three month periods ended September 30,
2001, respectively, compared to 2,674,000 and $1,633,000 during same periods in
2000, somewhat offset by increases in salary and related costs and other
expenses.

            Amortization of intangible assets amounted to $15,849,000 and
$5,279,000 during the nine and three months ended September 30, 2001, compared
to $8,310,000 and $5,276,000 for the nine and three 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 in
June 2000.

            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.

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

<Table>
<Caption>

                                          Three Months Ended                    Nine Months Ended
                                             September 30,                        September 30,
                                    ------------------------------      ------------------------------

                                        2000               2001               2000               2001
                                        ----               ----               ----               ----
<S>                                 <C>               <C>               <C>               <C>
Net Loss attributable to common
     shareholders                   $ (8,363,000)     ($ 7,334,000)     $(17,836,000)     $(22,342,000)
Add: value of warrants issued             84,000                --         2,971,000                --
Add: interest expense                      3,000            12,000             9,000            36,000
Less: interest income                    (81,000)          (74,000)         (155,000)         (144,000)
Add: amortization                      5,276,000         5,279,000         8,310,000        15,849,000
Add: depreciation                        100,000           117,000           282,000           330,000
                                    ------------      ------------      ------------      ------------
     EBITDA                         $ (2,981,000)     $ (2,000,000)     $ (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 and $491,000 for the nine and three months ended September 30, 2001,
respectively, and $2,674,000 and $1,633,000 for the nine and three months ended
September 30, 2000, respectively.


                                       11
<Page>

            Changes in the loss before interest, taxes, depreciation, and
amortization, for the nine and three months ended September 30, 2001 as compared
to same periods in the prior year occurred primarily due to 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 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 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 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:

            o     the progress of research and development programs;
            o     the status of our technologies; and
            o     the level of resources that we devote to the development of
                  our technologies, patents, marketing and sales capabilities.


                                       12
<Page>


            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 estimate that approximately $8,000,000 to $10,000,000 will be
needed to construct a pilot plant for our fuel cell technologies. We are seeking
potential partners to jointly develop such a plant.

            Management expects that, as of September 30, 2001, our available
funds, including our unused $5,000,000 revolving credit line, are sufficient to
support our operating activities for at least 23 months. Beyond such time, we
will require capital infusions 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 sufficient funds from the planned private sale of our
securities or 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.


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, 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 invests 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
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.


                                       13
<Page>


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 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

            In July 2001, an existing warrantholder exercised
warrants to purchase 10,275 shares of our common stock, for an aggregate
exercise price of $38,000.

            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.


                                       14
<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

                                             MEDIS TECHNOLOGIES LTD.

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

                                             By:  /s/ ISRAEL FISHER
                                                ---------------------------
                                                      Israel Fisher
                                                      Vice President-Finance
                                                      (Principal Financial and
                                                      Accounting Officer)


Date: November 13, 2001






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