IAI is Israel's largest aerospace company and a world leader in developing and selling UAV Systems. 

The contract provides for two phases of activity. 

The first phase, which covers a six-month period, provides for Medis to develop a demonstration system which would pass functionality tests and which can be demonstrated to be redesignable to achieve the weight (6 kilograms) goals of the final system. 

The first phase is funded by IAI paying Medis $400,000. Upon the successful completion of the first phase, the second phase would require IAI to pay Medis approximately $1,500,000 to complete the development and would have an 18-month schedule. 

During the first phase of the contract and conditioned on minimum purchase requirements thereafter, IAI will be granted exclusivity with respect to large fuel cells for unmanned vehicles. 

The contract with IAI will be carried out by Medis as the prime contractor together with its strategic partner, Oy Hydrocell of Finland, as the main subcontractor.

"We are particularly pleased with this purchase contract from IAI," said Robert K. Lifton, Chairman & CEO of Medis Technologies. "IAI is a world leader in UAV Systems, having sold many and various such systems to the Israel Defense Forces and to many other defense forces around the world. Once development is completed, we expect that IAI will begin ordering the new fuel cells from Medis for future UAV systems. We see this also as a vote of confidence from a major shareholder of Medis. This is an important milestone in our strategic goal to develop larger fuel cells for military applications and emergency stand-by use for homes and offices, as we recently announced. Now that we are starting the commercialization of our 24/7 Power Pack product, Medis' substantial research and development resources and infrastructure can be applied to our next generation products and to the new larger fuel cell systems which we envision developing."

Medis Technologies' primary focus is on direct liquid fuel cell technology. Its business strategy is to sell its products to end users through retail outlets, service providers and to the military and other markets. Medis has also developed the CellScan with many potential applications relating to disease diagnostics and chemo sensitivity. Additionally, Medis' product pipeline includes other technologies, in varying stages of development.