Audit Committee Charter

Purpose
The Audit Committee (the “Committee”) will assist the Board of Directors (the “Board”) of Medis Technologies Ltd. (the “Company”) in fulfilling its oversight responsibilities. The Committee will oversee the accounting and financial reporting processes of the Company and the audits of the Company's financial statements. In performing its duties, the Committee will maintain effective working relationships with the Board, management, the internal auditors, if any, and the independent accountants.

Membership
The Committee will consist of at least three Directors. The Board shall determine the size of the Committee, appoint its members and fill any vacancies that may occur. Each member of the Committee shall meet the independence and financial literacy requirements of The Nasdaq Stock Market, Inc. and applicable federal law. The members of the Committee may be removed and/or replaced by the Board at any time. Each year, the Board shall determine which members of the Committee are "audit committee financial experts" as defined by the Securities and Exchange Commission (the "SEC").

Organization
The Committee will meet at least four times each year, or more frequently as circumstances require. A Committee member will be appointed by the Board to serve as the Chair of the Committee. The Chair of the Committee may call a Committee meeting whenever deemed necessary. The Chair of the Committee will develop, in consultation with management when appropriate, the Committee agenda. The Committee may ask members of management or others to attend meetings and may request any information it deems relevant from management.
A quorum of the Committee consists of a majority of its members. All actions of the Committee must be approved by a majority vote of the members present, unless there are only two members present, in which case such actions require a unanimous vote..

General Responsibilities
In carrying out its responsibilities, the Committee shall:

1. Maintain open communications with the internal auditors, the independent accountants, management and the Board.
2. . Report Committee actions to the full Board and make appropriate recommendations.
3. In its discretion, conduct or authorize investigations into matters within its scope of responsibility and, if the Committee deems appropriate, retain independent counsel, accountants and other advisers to assist in the conduct of any such investigations. The Committee shall have sole authority to approve related fees and retention terms of such advisers.
4. Meet with the Company’s independent accountants and management in executive sessions to discuss any matters the Committee or these persons or groups believe should be discussed privately.
5. Review and reassess the adequacy of the Committee's charter annually. The Chair of the Committee shall have primary responsibility for such review and reassessment and shall cause the results of such review and reassessment to be recorded in the minutes of the Committee.
6. Review the interim financial statements with management and the independent accountants prior to the filing of the Company’s Quarterly Reports on Form 10-Q. Also, the Committee shall discuss the results of the quarterly review and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards. The Chair of the Committee may represent the entire Committee for the purposes of this review.
7. Review with management and the independent auditors the financial statements to be included in the Company’s Annual Report on Form 10-K, including their judgment about the quality, not just acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. Also, the Committee shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards.
8. Recommend to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K.
9. Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection or application of accounting principles, any major issues as to the adequacy of the Company’s internal controls and any special steps adopted in light of material control deficiencies.
10. Prepare the report of the Committee required by the rules of the SEC to be included in the Company’s annual proxy statement.
11. Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
12. Review and discuss with management and the independent accountants (a) any material financial or non-financial arrangements of the Company that do not appear on the financial statements of the Company and (b) any related party transactions (as defined in the rules of the SEC).
13. Review periodically with the Company’s counsel any legal and regulatory matters that may have a material effect on the Company’s financial statements.
14. Perform such other responsibilities and take such other actions as may be required to be performed by the audit committee of the board of directors of a public company under applicable law, regulations or rules of The Nasdaq Stock Market.

Responsibilities Regarding the Engagement of the Independent Accountants and the Appointment of the Internal Auditor
In carrying out its responsibilities, the Committee shall:

1. Be directly responsible for the appointment, compensation, retention and oversight of the work of the independent accountants (including resolution of disagreements between management and the independent accountants regarding financial reporting), and have the sole authority, where appropriate, to replace the independent accountants. The independent accountants shall report directly to the Committee.
2. Review and pre-approve all audit services and all permissible non-audit services to be performed by the independent accountants. The Committee may delegate the authority to grant pre-approvals to one or more designated members of the Committee, with any such pre-approval reported to the Committee at its next regularly scheduled meeting.
3. Review and concur in the appointment, replacement, reassignment or dismissal of the director of internal audit.
4. Ensure receipt from the independent accountants of a formal written statement delineating all relationships between such independent accountants and the Company or any other relationships that may adversely affect their independence, and, based on such review, shall assess their independence consistent with Independence Standards Board 1. The Committee shall actively engage in a dialogue with the independent accountants with respect to any disclosed relationships or services that may impact their objectivity and independence and take, or recommend that the Board take, appropriate action to oversee the independence of the independent accountants.
5. On an annual basis, review the experience and qualifications of key members of the independent accountants and the independent accountant’s quality control procedures.

Responsibilities for Reviewing Internal Audits, the Annual External Audit and the Review of Financial Statements
In carrying out its responsibilities, the Committee shall:

1. Request the independent accountants to confirm that they are accountable directly to the Committee and that they will provide the Committee with timely analyses of significant financial reporting and internal control issues.
2. Review with management significant risks and exposures identified by management and management’s steps to minimize them.
3. Review the scope of the internal and external audits with the Chief Financial Officer and the independent accountants.
4. Review with management, the independent accountants and the Chief Financial Officer:
   (a) The Company’s internal controls, including computerized information system controls and security.
   (b) Any significant findings and recommendations made by the independent accountants or internal auditors.
5. After the completion of the annual audit examination, review with management and the independent accountants:
   (a) The Company’s annual financial statements and related footnotes.
   (b) The independent accountants’ audit of and report on the financial statements.
   (c) The qualitative judgments about the appropriateness and acceptability of accounting principles, including areas where there are alternative accounting policies that could be employed, financial disclosures and underlying estimates.
   (d) Any significant difficulties or disputes with management encountered during the course of the audit.
   (e) Any other matters about the audit procedures or findings that Generally Accepted Accounting Standards require the independent accountants to discuss with the Committee.
6. Review with management:
   (a) Any difficulties the internal auditor encountered while conducting audits, including any restrictions on the scope of their work or access to required information.
   (b) Any changes to the planned scope of the internal audit plan that the Committee thinks advisable.
   (c) The internal audit department’s budget and staffing.