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Executives

Adam Prior - Equity Group Investor Relations

Jose Mejia - President and Chief Executive Officer

Analysts

Mark Miller - Banc of America

Harold Weber - Smith Barney

Arthur Gray - Curry & Company

Larry Valero

Tom Leach - Preakness Hills

Kent Holden - Amfund

Stephen Bartholow - Carret Asset Management

Virginia Treshernet

Tim Marsek - Sandler Capital

Medis Technologies, Ltd. (OTC:MDTL) Q3 2008 Earnings Call November 10, 2008 11:00 AM ET

Operator

Good day everyone and welcome to the Medis Technologies Third Quarter 2008 Earnings Call. (Operator Instructions). I will now turn the conference over to Mr. Adam Prior of the Equity Group. Please go ahead sir.

Adam Prior - Equity Group Investor Relations

Thank you. Good morning everyone and thanks for joining us. Before we begin, I would like to remind everyone that this conference call may contain forward-looking statements which are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. In some cases you can identify these forward-looking statements by words such as may, will, should, expect, plan, target, anticipate, believe, estimate, predict, potential or continue or the negative of those words or other comparable words.

These forward-looking statements are subject to risks and uncertainties, factors that could cause the actual results to differ materially from these forward-looking statements include but are not limited to general business conditions in the industries in which Medis competes or intends to competes, actual consumer demand for it’s products, availability or financing, Medis’s success in building relationships with strategic partners and obtaining orders from its strategic partners, the price and continuity of supply of component parts used in it’s products and other risk details from time to time in Medis’s filings with the Securities and Exchange Commission, including its quarterly report on Form 10-Q and Annual Report on Form 10-K.

These documents contain and identify other important factors that could cause actual results to differ materially from those contained in Medis’s projections are forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date on which they are made. Medis assumes no obligation to update or alter its forward-looking statements made in this conference call or any in periodic reports filed by Medis under the Securities and Exchange Act of 1934 whether as a result of new information, future events or otherwise, except as otherwise required by applicable Federal Securities Laws.

I’d now like to turn the call over to Jose Mejia, CEO of Medis Technologies. Please go ahead.

Jose Mejia – President and Chief Executive Officer

Thank you, Adam. I appreciate it, and good morning to everybody. This report for the third quarter marks the company’s transition from a development company to an operating business, as we begin making and selling our initial power pack products in earnest. This is a traditional turning point for companies that have developed breakthrough technologies and are ready to take them to market. I am extremely enthusiastic about the potential for our products and our technology to provide power solutions in a broad range of applications.

Medis Technologies to me, represent where the future is going. I am reminded by my involvement in the data networking world and then the wireless and optical technologies, all of which have completely changed the way the world communicates. I believe Medis’s scientists and their knowledge of these new ways of generating portable power and energy is among no others in the world and they have the patents to prove it. All of this and experiencing the Israel R&D center and the facilities in Ireland shaped my decision to join Medis as the CEO.

I particularly recognize the enormous opportunity for our Company to satisfy an important need in the mobile communication space. Our energy-producing technology enables continuity of communication for both business and social users under the conditions that we believe other power alternatives cannot match.

Our family of fuel cell products, our Power Pack and our Emergency Kits provide the energy to power hand held devices whether in normal circumstances or in critical situations like hurricanes, earthquakes, terrorist attacks or other natural or man-made emergencies where access to the power grid is interrupted or not available. This is a capability that is extremely important for business users who need to maintain commerce-related communications.

At the same time, we provide continuity of power for social communication among a broad range of hand held device users, such as the younger people, who have adopted texting as a fundamental form of social communication or those who will use our products for uninterrupted internet for music and video away from the constraints of walls and batteries.

Our products can also assure parents of continued communication with their children even in remote locations where power is otherwise inaccessible. Our products provide peace of mind to the enterprise and its employees, you never have to worry about charging any device or battery. Our solution is instant, clean, does not over-heat, is eco-friendly and it always there when squeezed.

The company began setting the stage for its transition in the last quarter by entering into a distribution relationship with Xentris in beginning to supply Power Packs to a limited number of Best Buy and Best Buy Mobile stores in the East Coast. We also began establishing relationships with other major distributors and retail and internet outlets. During the fourth quarter, which is already upon us, we began reflecting some of those deliveries and we expect the ramping up of revenue through the first quarter of 2009.

The slowing economy is certainly a concern because it promises to severely impact consumer spending. However, the health of the mobile communication devices marketplace seems sustainable. The devices have become essential social and business tools and the popularity of the iPhone and ever more sophisticated smart phones from RIM with the BlackBerry, Nokia, HTC making smart phones for Google and smart phones from other manufacturers, leads us to believe there is a solid market for a portable generator of electricity, particularly one that can extend continuity of service, both in terms of time and geography. In addition, our initial Power Pack is more efficient and less expensive than the next best solution in the marketplace today.

We believe that smart phone users, particularly in the very important enterprise market, will continue to need and purchase our products to assure uninterrupted commerce. We believe that the emerging markets where grid-based power sources are limited will find the ability of our fuel cell Power Pack to create energy without dependence upon a wall plug extremely compelling. We are confident that as consumers begin to learn about our energy producing technology and its ability to provide continuity of service. They will realize that our Power Pack is something they must have and it is not merely a nice to have item.

Our goal is to make the Medis 24/7 fuel cell power generating capability, the leading technology for healthy people when they are stranded. This will make our technology needed for people all over the world, whether you are preparing for a hurricane, a tornado, a snow storm or as a number of blackouts intensify due to the aging energy infrastructure in countries like ours.

Our portable power generators provide instant energy and as the Wall Street Journal pointed out recently, if they make it, they will buy it. People, Medis Technologies is making it. The goal of providing peace of mind and being the source of energy, when you are in need is an ambitious one, but it is a goal we will work on achieving as we begin to build our distribution network. After so many years of effort, we finally have the formula and our initial products and applications are capable of helping us deliver on our goals.

Finally, we intend to raise additional funds during the next few months to continue the range of activities essential to transforming Medis into a successful operating business. While it is clear that we are operating in a very difficult financial environment, we do believe that a successful program of placing and selling our products and a more focused and connected executive team with a clear, concise and unified vision will be critical in allowing us to overcome any obstacles.

In conclusion, I would like to address the priorities, I have said based upon my analysis of our company and the best way to seize the opportunities before us. As I said, I was drawn to the opportunity here at Medis to manage the transition from the developer of a breakthrough technology to an operating company that supplies commercial products and solutions all over the world. To accomplish this, I will focus initially on three critical areas.

First, building and aligning the right team of people. We need to assemble people with the skills to create and execute a vision for this company that understands the power and the value of our technology and that can translate it simply into functionality that taps its full potential.

Second, we need to focus on sales execution. We have to generate orders and deliver on them. We have got to provide topnotch support and service to our customers.

Third, we have to strengthen our image, our branding and our marketing and communicate a clear vision of who we are and what we have by strategically placing a significant focus on the use of advertising, public relations and investor relations techniques.

In the next three months, you will see our company take significant actions in these three areas. We intend to create and communicate a clear vision of this company and we will work to deliver on what we promise. There is no question that this company must focus on delivering and over-delivering. We intend to overcome the old legacy and the old perceptions. We are optimistic; we have the products and the applications, we have the technology and the patents. We will have the focus and the talent. The public will start to know, who we are and we hope they will connect with a breakthrough of our instant portable energy generators and enjoy the experience of truly being empowered.

In additional it is critical that we get people to recognize that we have a revolutionary energy technology. We, Medis, our scientists have succeeded where others have been trying to succeed for many, many years with far more resources than us. With all of those resources, they have been unable to succeed. We have the technology that people need. And our products are safer for the environment than other competing products available in the market. We’re going to delver that technology to the world to make people’s life better. And in the process, our investors and business partners will share in this success.

In the few weeks that I have been focused on my new role at Medis, I have learned a great deal about the technology and possibilities that lie ahead of us. I do not have all the answers formulated yet but we’re working on them. We are committed to working full time for your interest. We are committed to communicating with you about our progress. We are confident that we can successfully transform Medis.

I want to thank you for the opportunity to meet this company on your behalf. And I invite you to join us in what we hope will be a fun, exciting and transformational journey. Thank you very much. Adam?

I think we’re going to start the Q&A. So, operator kind of look at the list and since, I see there is the lot of people. Is it normal to have this many people.

Adam Prior - Equity Group Investor Relations

Okay, alright. operator, I think we’ll start.

Question-and-Answer Session

Operator

(Operator Instructions). And your first question will come from the line of Mark Miller.

Mark Miller - Banc of America

Hi, Jose.

Jose Mejia

Hello, Mark, how are you?

Mark Miller - Banc of America

Pretty good. Just a question, you mentioned that your third priority was strengthening your image and the like. And I’m sure you’re aware of the problems you have with the lack of credibility on the part of the company doing what it said it was going to accomplish. Could you address a few of the things that you did not achieve in past year or so? What happened with HP? What happened with wearable Power Pack, et cetera? Thanks.

Jose Mejia

Thank you, Mark. I appreciate the question. Look unfortunately, I can’t really talk to the issues that may have occurred here in the past year. I can share with you that I know the image needs to be transformed, that we need to focus on over delivering. There is a very simple thing about under committing and over delivering that I believe is a very important thing for us going forward. I think we need to make sure that people trust us, that our investors trust us. That when we say the word, we deliver on that word. I think that one of the minor things you may have noticed, recently for example, as I actually stopped a lot of the public relation announcements that we used to do partially because I want to talk to you guys and share with you guys results after they’re done. We want to focus on results. We want to focus on results because they will build back our trust and our creditability. We want to focus on bringing the right talent, as you see good talent that you can trust and feel great about coming into the company; you’re going to feel better about your investment.

Mark Miller - Banc of America

Okay. Can you tell us is there anything still there with HP?

Jose Mejia

There are conversations taking place with HP, yes.

Mark Miller - Banc of America

Yeah. Okay.

Jose Mejia

That’s all I can say to you.

Mark Miller - Banc of America

And can you tell us what happened with the Wearable Power Pack, why did you guys not make the cut?

Jose Mejia

Are you telling about the defense?

Mark Miller - Banc of America

Yes, the Department of Defense competition.

Jose Mejia

Oh, that’s a great question. In fact, let me just share this with you. In fact, I’m actually trying to find out through our legal group. If I can post on our website the top three winners for the Department of Defense contest. And, the first thing I’d like to ask everyone on this call, if I’m able to do this legally, and if I’m not, make sure to come and see me because I’ll let you see them. All I want to do is show you the pictures and there’s a sign that says that picture says that it’s better than a thousands words. The pictures of these three in comparison to ours its like, are you kidding me? There’s like no comparison. Just to give you an example, the first prize won by a very well known company --

Mark Miller - Banc of America

That’s public knowledge. The winners are all published on the DoD website.

Jose Mejia

I think, what you do is, you just got to focus on the specs. We tried to build a product in my mind that was a complete product that was able to be used very quickly, not a product that could be developed in three or five years, as the others did. And, I’ll be more than glad Mark, to sit with you and we can look at those pictures and I can tell you by my experience, how long do you think a product that has a milk jug on the back of a soldier to have methanol can be taken from that level of an idea to be actually volume manufactured. And for sure, it is not months, it is years. If you look at ours it is simple, it is the size a VHS cassette. It is easier to carry. I have got that set of pictures to me gives my team and gives our scientists tremendous pumpness and excitement about our future. And that’s all I can share you with at this point in time.

Mark Miller - Banc of America

Okay. I’ll let you take some other call, But, I’ll give you a call.

Jose Mejia

Stop by or let me know where you are. I’ll be more than glad to sit down with you and we can spend as much time as you want, I love to get to know you.

Mark Miller - Banc of America

Okay. Great, thanks.

Jose Mejia

Thank you.

Operator

Your next question will come from the line of Harold Weber with Smith Barney.

Jose Mejia

Hello Harold, how are you.

Harold Weber - Smith Barney

Hello Jose, hi. Could you explain -- I didn’t really hear much speaking about the product being put into the marketplace now. Can you talk about that where its going to be that I know,, in a best buy, mobile store, stuff like that. How much stuff we’re going to have out there over the next let’s month or so that people can buy and see and use?

Jose Mejia

So, this is a tricky question, as you will know, right. We are in a public company setting and if I tell you numbers, its pretty easy for people to assume that I’m creating expectations. But, here is what I can share with you --

Harold Weber - Smith Barney

An idea. We’ve been waiting for this already for a long time, the product is coming, it’s coming, it’s out there, you’re going to see it soon, now’s the time.

Jose Mejia

I understand your concern and I understand why you’re worried, I can tell you this much there is shipments taking place. We are working closely with Xentris and Best Buy to follow their line of direction and where they want us to send the product, that is the final decision on which stores and where they want to sell them is always our customers’ decision. I could not comment on that, the product will be in earnest, some time in the next few weeks, you will see it. We will have a lot of hopeful advertisement that you will connect with and we’ll give you a sense of the product is available. That’s the best I can share with you, and if you want more specifics, again, just tell me where you are and I’ll be more than glad to connect with you.

Harold Weber - Smith Barney

Are we going to have some other independent distribution as we have talked about in the past and that these other --

Jose Mejia

Absolutely, in fact, I learned a long time ago that having a single source for any thing, it’s always not a good thing, though so trust me it is, it’s huge on my big list of to do. I’m working very hard on making sure that I have got new sales channels, that I work on focusing the sales team. I’ve had lots of conversations with the current sales team about focus, get two or three and close them. And then, getting addition players to help us distribute the products. I’m moving as fastest as possible I can, it’s all I can say to you. Seven days a week, many-many hours, okay.

Harold Weber - Smith Barney

Are you guys possibly maybe getting some of these outside places to review the product? There’s been other products talked about in the papers recently and we haven’t been mentioned recently. Possibly you can get them to review the product that would help.

Jose Mejia

We will do that in fact, I know that we sent a lot of product recently and we actually have been on a few articles, one of the things that you will see me improve significantly is communicating with all of you not just quarterly, so I would like to find a way.

Harold Weber - Smith Barney

I think it would be very meaningful and worthy.

Jose Mejia

That’s right. I’ll try to find a way to share with all of you every time articles come out, every time somebody new talks about our product etcetera. I will find a way to communicate that with all of you with a lot more frequency than you get today, okay.

Harold Weber - Smith Barney

E-mail lists seem to have been working okay.

Jose Mejia

Yes. Again that’s a nice, I really do appreciate how long all of you have waited and I’m working very heard on delivery. I’m very hard on getting a great team of people that you feel you can trust. I’m working very hard on making sure that we execute on the sales. And what I can say to you and it’s what I feel great about is we have a product and a technology that’s working. I mean, if you put this Power Pack and connect it to a flashlight, it will give you light for 10 consecutive days. That is two months of light if you use it normally four hours a day. When has anybody out there have had a problem with their electricity going out or hurricanes or volcanoes or whatever it is and gone and looked and gotten a flashlight and it worked? 99% of the time, the darn thing doesn’t work. The batteries are not there, our product doesn’t have to be charged. It works today. It finally works. This is what makes me excited about our future. I really honestly get how what our image is like. I am going to work like hell in the next 60 to 90 days to change it. I started the process. You will see me actively with the rest of the team working on doing it, not just for you, but for the customers who are going to buy this stuff. But, we have some great stuff. It really is great.

Harold Weber - Smith Barney

I still believe that, and that’s why I’m still here, unfortunately. But now, the bottom line, as you say, the thing works….

Jose Mejia

Absolutely

Harold Weber - Smith Barney

We got to get it out there so people can see it over the next 30 days, then we can build on this.

Jose Mejia

I am working hard on all of that, I appreciate your question and again please let me know if there is way I can connect with you, I like to become your friend and make sure that I --

Harold Weber - Smith Barney

I certainly do. And, well Andy knows me and I’ve been involved a long time.

Jose Mejia

Thank you, very much.

Harold Weber - Smith Barney

You can reach me any time, thank you.

Jose Mejia

No problem, I appreciate your question. Thank you.

Operator

Your next question will come from the line of Arthur Gray with Curry & Company.

Jose Mejia

Hello Arthur, how are you?

Arthur Gray - Curry & Company

Fine, I like forward to meeting with you tomorrow afternoon.

Jose Mejia

Oh, me to.

Arthur Gray - Curry & Company

And the mean time and in between time, the two things I want to ask to you. Number one, Hewlett Packard has come up with 24 hour computer that is powered for 24 hour computer. I wonder what do you know about it and how will that affect us in any way shape or form?

Jose Mejia

Well, I have not heard that to be completely honest with you. I like to see it, I like to see it actually working. Regardless I believe, we don’t yet have a solution for laptops or PCs, we are working on that and its in the list of all the potential applications our technology has. This brings an interesting point that I’ll share with everybody. And it raised s some interest in challenges for this company, when you look at the technology we have, I kind of compare to its formula. It’s like the Coca Cola Company has a formula, making the formula wasn’t easy, as otherwise everybody would make the formula. Or if you think about our current formula, how many years or how many times people have talked about fuel cells. I mean it’s like a 100 years and nobody has come up with a formula.

What’s cool is we have formula and we know that formula works. So, now the next set of questions that are very strategic for us is that where do we go with our formula. Now by default we focused initiall, and this was a decision prior to me making and coming on, these very small portable generators of electricity. But, the key question is do we go into defense and the soldiers, do we go into the automobile, do we go into house, do we go into a laptop. We have all these number of possibility, its actually exciting, its huge. But, I’ve also learned number one, we go to make sure we’re focused, focus is huge. If you don’t focus what you end up doing is being like a bird that goes and touches every flower and doesn’t it really get anything done. You got to focus. I don’t believe as a company, we’re focused enough.

Arthur Gray - Curry & Company

And that brings up my second question which is how soon will you need financing and how big a financing will you have to have?

Jose Mejia

Well, I intend, I believe we will have to, as I mentioned in the report, we’ll have to go and get the funding. We intend to do that in the next few months. I don’t yet have the specifics of what may be the most appropriate number, I’m starting to get that in place in my mind and with the team. And just stay tuned, I’ll be more than glad to talk in more detail with you separately on that topic. But yes I will be going for money and will be going for money soon.

Arthur Gray - Curry & Company

Right.

Jose Mejia

Okay, the key point and I want to move it to the next question. I don’t want to be rude to you, but it’s to the next person to ask the question. But, the key point is; look I have to focus with the team on those three things I shared with all of you earlier. And those three, if we can get those three things done, now think about this. One, we’ve got shipments going this quarter, if we can close on the deliveries and the revenues, if we can get the right team of people, that people look at, that people see, that read their experience and their knowledge and you can trust. If we can strengthen the image and get people to know that we have a portable powerful generator of electricity that will work anytime and its eco-friendly and it doesn’t overheat and its here now. If we do all of those things our probability of making of sure we do the right things going forward and getting the stuff we need including funding will be significantly improved.

And with that I’ll like to again thank you for your questions, and move to the next person.

Operator

(Operator Instructions). And your next question will come from the line of Larry Valero.

Jose Mejia

Larry Valero, how are you doing Larry?

Larry Valero

Good. I wanted to know if our suppliers can supply the 4-watt power cord at this point in volume?

Jose Mejia

We have supplier that can provide the product and can provide it volume.

Larry Valero

Because when I was reading a report from an analyst recently, it was indicating that would not be able to be delivered until the first quarter of 2009?

Jose Mejia

Well, I would love you to tell that analyst to make sure to call me and we can connect. But, we are in fact shipping that today.

Larry Valero

So, in other words we are no longer waiting for any portion of our products to be able to be able to be supplied. If we had orders we would able to fullfill them?

Jose Mejia

Yes.

Larry Valero

Okay, thank you very much.

Jose Mejia

Thank you.

Operator

Your next question will come from the line of Tom Leach with Preakness Hills.

Jose Mejia

Hello Tom, this is Jose how are you.

Tom Leach - Preakness Hills

Good Jose. Let’s come back to financing because it’s a critical part of where you stand. Without the money on the balance sheet, all your plans are tough to accomplish. Just, first thing, we didn’t get a cash flow statement and we didn’t get a 10-Q before the call, What was the cash burn this quarter?

Jose Mejia

You will get the cash burn out of the 10-Q, as filed. It will be there soon. We’re working very hard -- I’m answering your question, Tom, please hold on a second. We will work very hard and I am working very hard on making sure the burn rate is what it needs to be. Given that I’ve been here three weeks, trust me, it s a key focus of mine. Cash is an issue for everybody nowadays, whether you are a private company or public company, or even an individual. I will reflect just on a point that a friend of mine shared with me not long ago and his name is Vinny. And he said, do you have a cash problem? And I said to him, Vinny, it seems to me that I’ve had a cash problem since I was born and I’ve been working on it ever since. So once again, all I can say to you, and you guys can all do the numbers, is that we will focus on delivery. We will focus on selling as much as the emergency kit and the portable power generators we have, which we currently have available, are ready to go. We are getting the orders and are shipping the products. We will focus on great talent. We will focus on sales execution, and we will focus on making sure that we have the money necessary to get our image back where it needs to be. That’s all I can share with you at this point in time. Thank you very much. Next question.

Operator

The next question will come from the line of Kent Holden with AmFund.

Jose Mejia

Hello Kent, how are you?

Kent Holden - Amfund

Just fine, thank you congratulation on the new position.

Jose Mejia

Thank you.

Kent Holden - Amfund

I was curious, in the third quarter, were there sales?

Jose Mejia

In the third quarter there were no revenues, no.

Kent Holden - Amfund

Okay. Was there cost of goods sold?

Jose Mejia

Yes.

Kent Holden - Amfund

How much was that?

Jose Mejia

It will be in the -- let’s see. Michael, did we have cost of revenues?

Unidentified Speaker

Well, Jose what we had is, we had depreciation and other production and facility costs?

Jose Mejia

Yeah that’s right I remember that.

Kent Holden - Amfund

So, you are not breaking it out ex-depreciation?

Jose Mejia

No.

Kent Holden - Amfund

Okay. And then have you decided how much capital you are going to try to raise?

Jose Mejia

I mentioned earlier that I’m in the process of understanding that and making sure that I have a clear view of what the right number is. So, answer to the question is not yet but I have to decide in hours.

Kent Holden - Amfund

Okay, thank you very much.

Operator

Your next question will come from the line of Stephen Bartholow with Carret Asset Management.

Jose Mejia

Hello Stephen, how are you?

Stephen Bartholow - Carret Asset Management

Good morning.

Jose Mejia

Good morning.

Stephen Bartholow - Carret Asset Management

The question has already been answered and that was third quarter sales. Bbut I was also curious as to, since the relationship with Best Buy has been in place, and there were units shipped and sold through Best Buy, why is it that revenue was not reported for the third quarter? Can you give us some color as to how many units have been shipped to Best Buy and sold and reordered? And, the part two would be, since you have got the line in Ireland going and the four-watt capability, what about the various sizable backlog that you have in place? What is the sense of drawing down some of that backlog after all this time?

Jose Mejia

Yes, so, there are a couple of things. The first one is that, we did make a few thousand shipments of products in the third quarter. But as you would know we have to make sure that we follow revenue recognition types of rules. And we’re in the middle of making sure that we’re looking and understand that. As I indicated in the report that I mentioned earlier, those shipments are part of the fourth quarter. And we’ll report whatever needs to be reported when I talk about the fourth quarter.

I know that there is a backlog and I think you mean more the inventory associated that we may have. Here is what I can say to you; I’ve talked with the team about making sure that we have something that I call a sell what do we have program in place. And you will see us taking action and it’s already happening. I’m trying to ensure that we sell what we have as soon as possible. By experience and you can all go and check that experience out, one of my biggest things throughout my career has been getting rid of inventory. And I focus big time on it. I want to know where it is, how much is there, why is it there, how many days of supply do we have at every point? What are the yields? Those are all questions that I am in the middle of finalizing. And what I can also say to you is I’m focusing the team on selling what we have and selling it until it’s possible. That actually should help us in terms of some of the objectives we have in the short term. So, that’s what I can comment on that question.

Stephen Bartholow - Carret Asset Management

There is the rather sizable backlog was with ASC. And I guess it’s not really a real order until you have the ability to ship that much or there is a proven sell-through in place. Help me understand as to why there is not a more aggressive push to try to realize some of the ASC backlog that’s in place now?

Jose Mejia

I think there is actually a pretty heavy duty focused on it. I don’t know who you may have been speaking with. But, if you would talk to me, you would know that I’ve actually met with the people there at ASC and we are working very hard and very rapidly and trying to push that. And so, I want to make sure that we sell-through. I think it’s important for the company to incur sell-through. And that’s what we’re focusing on. Okay?

Stephen Bartholow - Carret Asset Management

Thank you.

Jose Mejia

Thank you. Next question?

Operator

Your next question will come from the line of Virginia Treshernet.

Jose Mejia

Hello, Virginia, how are you?

Virginia Treshernet

I’m very well, congratulations and lots of luck.

Jose Mejia

Thank you.

Virginia Treshernet

My question is; I’m a little disappointed why the medic power pack fuel cells didn’t win the competition that they were asked to?

Jose Mejia

Yeah, let me just say to you and again this is Jose just kind of speaking aloud, I obviously came in after the fact. But, the first thing, I want to reinforce, I would just so wish you all would see the pictures. It would make a huge world of difference in this discussion, because it wouldn’t just be Jose telling you this. But first and foremost I have an insight on what I believe may have happened. My sense is the Department of Defense or this group in the Department of Defense provides a set of specs. And most people follow those set of specs. In my opinion, we tried to focus on getting a product that worked, not necessarily only on the specs. So, in my opinion to be completely honest and if you see the pictures, you will see why I say this. I believe we probably over-engineered and got a cool product out there and so that may have not helped our cause and that sounds weird but it is one conclusion I would draw.

The second thing that I would draw on it is that this has given us a tremendous amount of experience on this. When we show this to people in the military that we know and we actually showed this to the right sources because let us keep in mind something else. The people in the Department of Defense with all due respect to them that were doing this are not necessarily the people that buy product. We want to go after the people that buy product. Let me just say to you, my focus and I appreciate that I am new and you guys and I have not met enough, but my focus is sell to who can give me money. And I tell the sales team, all of those calls are cool just don’t talk to me until I see the money. So, with the military it’s like a big company, I worked in big companies, whether it is an HP or a Lucent or at Ford any of these places. They are a ton of different organizations and functions, a ton of them and so what happens, you could go talk to many of these functions but each of these functions work in with a different clock. By that I mean, if you work with an IP group, they may be working with a clock that moves in months and years, versus if you worked with the people that are actually doing the product management and selling, they may be working on a quarterly clock.

We have to focus with the military in the US and abroad and we currently have conversations with other countries regarding this including the US. In fact, you all should know, before I had this call I actually had a thirty minute conversation on this particular product on the military with some potential source in the US. The thing about it is, we are growing our focus on selling this, selling it into the right place, getting people to see it and ensure that we are partnering with people that help us sell it and get the dollars. And that is all I can share at this moment. But I will try my best, in fact if Steve is listening, Steve is our legal on support, and we could just accelerate whether I can actually post those pictures. I just want to post the pictures and let you see ours versus theirs, night and day.

So, thank you for the question. It is a passionate one for me but it actually gave me a lot of energy because when you see it, you will be able to sell this and sell it sooner than when you see the others, you know that it is going to take them years before they have a product that can actually be used by a soldier. It’s just night and day. So our objective is can we go after the special ops groups. You know the special ops groups, those guys that go first into the war zone, that go first into any place where that is dangerous, why? Because those guys usually use the latest and greatest technologies. Those are the guys we got to go after. If we first go after the army, I don’t know, I don’t know how many of you have seen the stuff the army uses. A lot of it has been around for years. They are not necessarily into the latest and greatest technology. We want to go after those that are using the greatest and latest so that they can put us in a great branding perception space. And, I really will be focusing the team on that. I have recently, I won’t tell you who yet, but I have recently brought in someone who is very involved in the US military and in the Navy and very well involved and he’s going to help us more, so we are working it.

Thank you for the call, next question?

Operator

Your next question will come from the line of Tim Marsek with Sandler Capital.

Tim Marsek - Sandler Capital

Hi guys. Thanks for taking my question.

Jose Mejia

How are you doing, Tim?

Tim Marsek - Sandler Capital

Good, good. I just had a question, I was trying to look at how I should think about the sales cycle as you and as you guys do go into a time when you will be increasing your sales and really putting a push on there. And it sounds like you’ll be slowing down on production. How should we think about the cash burn in relation to recent quarters, should it be substantially different or materially different since it’s a different type of strategy now? Thanks.

Jose Mejia

Thank you. That’s a great question and what I’ll say to you is I want to make sure I focus big time on those three things I mentioned to all of you earlier. We will and have already started changing the burn rate. There is no doubt that I’m working expensively with my team on changing the allocation of those dollars, how those dollars get spent and what we do with them. What we’re going to do with them is; first, make sure that I execute on sales. What that mean? I have the proper demand and supply plan. I have the proper logistics, the proper transportation; I have done right analysis on how to get that product from Ireland to the final source of consumption. I do that with the least amount of money. That hole is the hole that we needed to fill, that we needed to get or done and it had not been done.

We needed to focus on making sure that we executed on the orders. One thing is getting all the orders we can. So, the first item is get the sales team focused on getting orders and orders I can see the dollars with. Two, get the sales operations team, which now we have , but didn’t have, to focus on making sure that the product can go from Ireland to its final destination with the least amount of money. And it can be delivered when we tell the customer we’re going to deliver it. And it can be delivered in a way, where all the peoples come together rather than separate, that’s huge.

Third item, as we do that, it changes image. We have a product and a technology no one has. And people have been trying to do it for ever. And this is powerful, it is powerful to see something that creates electricity instead of storing electricity, to see something that is eco-friendly and green instead of something that destroys the environment. To see something that doesn’t overheat and is easy to carry around.

Now I’ll say to you, I want to change the image that you guys have so that, if I commit to something we deliver and you see us doing that, that’s why I stopped public relation announcement. I don’t want to say what I’m going to do. I’m not going to tell you what we did, I’m going to talk and often share with you where we were at. How things are coming along, I’d like to do that often, I’m not going to wait for quarterly calls. The process of the burn rate is one that concerns me, it concerns everybody. When I was at IBM in the ‘80s it concerned me. When I was in Bay Networks in early ‘90s it’s concerned me, in Nortell, in Lucent, it’s like as I said to you, it’s almost like I seem to have always have to worry about cash.

Now on the other side, one thing that you should all feel good about is that I’m worried about cash. I should be worried about cash even when I have billions of dollars of cash because that’s going to make sure that cash gets used it gets focused and it gets prioritzed properly. But we have a product and a technology that can go, I was in Michigan not long ago, I went there to be on advisory board meeting at the College of Engineering. And, in there the focus was renewable energy, energy in the next 10 to 15 years. And there were conversations around the aging of all of our infrastructure, the fact that there has not been an energy policy for this country for years. The fact that that infrastructure is going to go under, that there is going to more blackouts. But they’re trying to figure out how to get people to utilize electricity less and managing more. And in my mind you know what I was thinking? Oh my gosh, I could get those little Power Packs in every home and maybe have them use their lamps with the Power Pack. And maybe have the flashlight every time there is a snowstorm and who wouldn’t buy this thing? And so, I’ve got to be even more and more excited. I see the potential; I know you do because you stick with us. We will work on making you proud, I am working all hours everyday, I’m using and leveraging anybody I know.

Trust me, its not about me, I want to be humble, I want to listen, I want to use anybody who can help us. This is the story that needs to be told, the world doesn’t know it. This is a story that needs to be known, the world doesn’t know it. This is a story that has some value; the world has to know it. And it all starts with great talent. I got to focus on making sure to have great talent; people that we are proud of, that are strategic and that can also get their hands dirty and deliver.

We have to focus on making sure we bring every darn sales there is and we that just don’t go after 1000, but we go after 10 and closure. And we have to focus on making sure customers and you see us as partners. People who deserve to be around because they have to act together, they have the story, they have an image, and they’re going to carry it through. You will see us making this image impact in the next 60 days. You will see us, it will be different. I hope for you, that you see this call as different.

So, I’d really appreciate you bringing that question, I obviously got overly excited and I apologize. But you can also see that I’m just so pumped by its possibility. I don’t want to worry, I don’t want it to come across in a different way, but I believe the cash will come to those who have the right story, who can show a product, who have the right talent, who can show that we’re starting to ship and sell, we are shipping, we are shipping. Anyway, I’ll take one more question, and I appreciate once again everybody calling in and listening. And please know, I really would love to get to know you. I will love to hear your thoughts. I will love your help. I’m here to listen and I’m here to make it right. One more question operator.

Operator

Okay. And the next question will come from the line of Harold Weber with Smith Barney.

Jose Mejia

Okay. Hello, Harold, how are you?

Harold Weber - Smith Barney

I just, not to give you hard time, but I just feel it’s important. Everybody is listening to the call, a lot of people really want to believe that this going to workout now finally. Whether you realize it or not since the talke, stock in this bucket has gone to the toilet here. And I think it would be worthy for you to say, yes, we want to raise money but we are not going to do it indiscriminately and we are going to dilute the hell out of the company to do so. And I think that’s it important because as people hear you say this, the stock has been trampled --

Jose Mejia

We are grateful…

Harold Weber - Smith Barney

Based on you being here, being a highly competent person who has got the right enthusiasm and the right view and vision of what the company should be. And that’s exactly not what’s happening, because of the volume that were in indicates anybody who says they need money, that’s it; they’re ready to flush you down the toilet. And I think it would be very meaningful if you to say the people that we still have some money, but not on left legs, and we are not going to dilute the company into the toilet in the next 90 days to get this going?

Jose Mejia

You are totally right, and I will say it, we are not going to do a crazy thing in raising funds. We’re going to raise funds in a startup manner; we have something that has great value. We’re going to make sure that that this place succeeds. And where there is plenty of opportunities for figuring out how to do it. And I think that if people read what I may have said incorrectly, they’ve reading incorrectly. You need to bet on the future, you need to bet on the fact that we are shipping product. We have a product, we have a technology that works. Never has this company being able to say that, never has this company being able to say that. So thank you for bringing that up, I really appreciate it.

Harold Weber - Smith Barney

And that you got money to operate.

Jose Mejia

I do, I have money to operate and I have money to make these three things that I told you about, I have money to do it. I don’t have to go get money for that. Okay.

Harold Weber - Smith Barney

Thank you.

Jose Mejia

I appreciate. Thank you for pushing me on that. Alright, I think we’re done. I appreciate everybody calling in. And I’ll talk with you all soon. And I’ll see you again in a call in next quarter.

Operator

Ladies and gentlemen this concludes our conference for today. Thank you all for participating and have a nice day. All parties may now disconnect.

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Source: Medis Technologies Ltd. Q3 2008 Earnings Call Transcript
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