Dear Fellow Shareholder,

This is an appropriate time to report to you on the meetings that our
team had during these past few weeks with mobile operators in the
United States, Great Britain, Germany and France and what we learned
from those meetings. The operators we met have a combined subscriber
base of over 270 million people. In this letter I'd like to discuss
the characteristics of the Power Packs that we demonstrated; the
recognized need for our Power Pack product and the absence of any
competition; and the plans for moving forward to achieve sales of
Power Packs to these mobile operators.

The Power Pack

The Power Pack that was demonstrated at the meetings was a fully
functional model. It was smaller and lighter than the Power Packs
demonstrated at our conference on March 16th, showing the operators
that we are well along the path to the expected size and weight of our
mass production Power Pack product. This product has the power
management system, that enables our product to work with a broad array
of portable electronic devices, and the DC-to-DC converter both in the
form of an ASIC (Application Specific Integrated Circuit) attached to
it. As we advised the operators, in July 2005, we plan to provide them
with Power Packs that are about twenty five percent smaller than this
one with an ASIC that will be separate from the Power Pack. In the
final, mass production Power Pack product, the ASIC is planned to be
replaced by a chip the size of a fingernail attached to the adjustable
cord.

The Power Packs operated successfully, powering every device that we
were given. They did so in every orientation and with no discernible
heat. In one case, the operator had mechanically emptied a cell phone
battery and asked to see the Power Pack performance. The Power Pack
immediately started the cell phone; allowing it to dial out and in
less than 90 minutes of charging had filled three of the five bars
showing battery power. In another case, to the operator's surprise,
the Power Pack charged a new, heavy power cell phone and video device
not yet on the market, delivering a level of power well beyond their
expectations.

The Market Need - The Absence of Competition

The discussions with the mobile operators bore out our own views,
which I have previously presented to you, regarding the market need
for a power source to augment the power available from current and
future portable electronic devices.  We learned that every one of the
operators is striving to increase Average Revenue Per User (ARPU). It
is very costly in advertising expenditures and phone subsidies for the
operators to add each new subscriber; and in order to increase their
revenues and earnings they are trying to increase each subscriber's
use of the device. The way they seek to do this is to add more and
more capabilities to the cell phones and create more convergent
devices. The markets in Europe are well ahead of those in the US, just
as the markets in Japan are ahead of Europe with respect to the
capabilities and uses of the portable devices. In Japan and Europe,
more and more devices are 3G with expanded capabilities such as video,
music, TV games, conferencing and expanded internet use, well beyond
just using the phones for communications. The US operators are just
beginning to offer their subscribers these capabilities. All of the
operators recognize that those capabilities require more battery life
to satisfy their customers. Particularly, this is the case of the
"enterprise market" where the customers' employees are using the
devices many hours a day to get and transmit information.

To put this in a concrete context let me note that one of the
operators showed our team a product they intend to offer for use in
video conferencing which has a battery life of only one-half hour per
charge. In Japan, cell phone batteries frequently last only 40 minutes
before requiring recharging, which explains why Tokyo has charging
kiosks in the street where people pay to charge their devices.
Similarly, in London you can charge your phone at a cost of around
$4.00 for fifteen minutes in a charging booth, and a company in New
York City has been offering charging services at a cost of 50 cents
per minute.

Significantly, we also learned from these mobile operators that they
have seen nothing from any battery manufacturers that would solve
their power problems and that Medis is the only company that has
approached them with a working product capable of powering their
devices. They also told us that they would be averse to offering
their customers any product having a high concentration of methanol
because of the flammable nature of methanol and the fact that it
cannot be used in an airplane cabin.

The Plans for Moving Forward

Every mobile operator our team met evinced an interest in moving
forward with us on a program that would have as its endgame their
purchase of Power Packs from us. Our objective now, as quickly as we
can, is to move towards agreements with those operators with the aim
of getting orders from them for sales of the Power Packs. Under these
agreements, we would provide the operators with opportunities to test
our Power Pack products in their laboratories, and work with them to
showcase the Power Packs within their companies and to their large,
enterprise customers.

At the same time, we are reaching out to other mobile operators whom
we did not previously contact, in Asia, South America, the Middle East
and other parts of Europe to engage them in a similar process of
viewing our Power Packs and starting down the path of becoming our
customers. All of these intense trips are not easy and on behalf of
all of us shareholders, I want to thank our team for their efforts and
commitment to our sales program.

Currently, we are reviewing the various bids and different approaches
of potential contract manufacturers. We intend to select a contract
manufacturer in May 2005 which we will announce at that time.

Finally, be assured that every member of the Medis team is fully
dedicated to the success of our company and the realization of the
values to which we aspire.

Sincerely,
Robert K. Lifton
Chairman & CEO