August 7, 2008

MTS Announces Financial Results for the Three and Six Month Periods Ended June 30, 2008

RA'ANANA, Israel, August 7 /PRNewswire-FirstCall/ -- MTS - Mer Telemanagement Solutions Ltd. (Nasdaq Capital Market: MTSL), a global provider of business support systems (BSS) for comprehensive telecommunication management and customer care & billing (CC&B) solutions, today announced its financial results for the three and six month periods ended June 30, 2008.

Revenues for the second quarter of 2008 were $2.4 million, compared with $2.5 million for the same quarter last year. The Company's operating loss declined to $113,000 in the second quarter of 2008 compared to an operating loss of $2.7 million for the second quarter of 2007. Revenues for the six month period ended June 30, 2008 were $4.8 million, compared with $5.0 million for the comparable period in 2007.

Net loss for the second quarter was $156,000 or ($0.02) per diluted share, compared with a net loss of $2.8 million or ($0.49) per diluted share in the second quarter of 2007. This decrease in our loss was mainly attributable to a $2.3 million impairment of goodwill and other intangible assets that the Company recorded during the second quarter of 2007 and due to our focus on reducing the Company's operating expenses. Net income for the six months ended June 30, 2008 quarter was $183,000 or $0.03 per diluted share, compared with a net loss of $3.4 million or ($0.59) per diluted share in the comparable period in 2007.

The Company ended the second quarter with approximately $1.3 million in cash and cash equivalents, including marketable securities.

"Even though the economic environment has entered a period of slowdown and the decline in the exchange rate between the US dollar and other major currencies has negatively affected our profit and loss statement, we were able to maintain our level of revenues and decrease our operating expenses significantly," said Eytan Bar, CEO of MTS. "We believe that we are on the right track to achieve improved operating results."

"We are committed to closely monitoring our operating expenses and reducing our overall costs as well as achieving revenue growth," continued Mr. Bar. "The Company has strengthened its main financial indicators and we intend to focus on our search for new opportunities and on expanding our core business," concluded Mr. Bar.

About MTS

Mer Telemanagement Solutions Ltd. (MTS) is a worldwide provider of innovative solutions for comprehensive telecommunications expense management (TEM) used by enterprises, and for business support systems (BSS) used by information and telecommunication service providers. Since 1984, MTS Telecommunications' expense management solutions have been used by thousands of enterprises and organizations to ensure that their telecommunication services are acquired, provisioned, and invoiced correctly. In addition, the MTS's Application Suite has provided customers with a unified view of telecommunication usage, proactive budget control, personal call management, employee cost awareness and more.

MTS's solutions for Information and Telecommunication Service Providers are used worldwide by wireless and wireline service providers for interconnect billing, partner revenue management and for charging and invoicing their customers. MTS has pre-configured solutions to support emerging carriers of focused solutions (e.g. IPTV, VoIP, MVNO) to rapidly install a full-featured and scaleable solution. MTS's unique technology reduces integration risks and lessens revenue leakage by using the very same system to manage retail and wholesale business as well as supporting multiple business units. Total cost of ownership (TCO) is reduced by providing web-based customer self-care and provisioning.

Headquartered in Israel, MTS markets its solutions through wholly owned subsidiaries in the United States, Hong Kong, The Netherlands, and Brazil, as well as through OEM partnerships with Siemens, Phillips, NEC and other vendors. MTS shares are traded on the NASDAQ Capital Market (symbol MTSL). For more information please visit the MTS web site:

Forward-Looking and Cautionary Statements

Certain matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties including, but not limited to, risks in product development plans and schedules, rapid technological change, changes and delays in product approval and introduction, customer acceptance of new products, the impact of competitive products and pricing, market acceptance, the lengthy sales cycle, proprietary rights of the Company and its competitors, risk of operations in Israel, government regulations, dependence on third parties to manufacture products, general economic conditions and other risk factors detailed in the Company's filings with the United States Securities and Exchange Commission.

   CONSOLIDATED BALANCE SHEETS   U.S. dollars in thousands                                                    June 30,   December 31,                                                        2008           2007                                                   Unaudited        Audited    ASSETS    CURRENT ASSETS:   Cash and cash equivalents                         $ 1,065        $ 1,437   Marketable securities                                 221            169   Trade receivables (net of allowance for bad debt   of $ 720 as of June 30, 2008 and $ 882 as of   December 31, 2007)                                  1,320          1,172   Unbilled receivables                                  117            129   Other accounts receivable and prepaid expenses        246            544   Other investments                                       -            221   Inventories                                            76             66    Total current assets                                3,045          3,738    LONG- TERM ASSETS:   Severance pay fund                                    776            730   Other investments                                      44              3   Deferred income taxes                                 123            123    Total long-term assets                                943            856    PROPERTY AND EQUIPMENT, NET                           236            283    OTHER ASSETS:   Goodwill                                            2,796          2,796   Other intangible assets, net                          708            805    Total other assets                                  3,504          3,601    Total assets                                      $ 7,728        $ 8,478      CONSOLIDATED BALANCE SHEETS   U.S. dollars in thousands                                                     June 30,  December 31,                                                         2008          2007                                                    Unaudited       Audited    LIABILITIES AND SHAREHOLDERS' EQUITY    CURRENT LIABILITIES:   Short term bank credit and current maturities of   bank loan                                            $ 119         $ 606   Trade payables                                         277           447   Accrued expenses and other liabilities               2,358         3,309   Deferred revenues                                    1,247         1,390    Total current liabilities                            4,001         5,752    LONG-TERM LIABILITIES - accrued severance pay        1,189         1,157    SHAREHOLDERS' EQUITY:   Share capital -   Ordinary shares of NIS 0.01 par value - Authorized:   12,000,000 shares at December 31, 2007 and June 30,   2008; Issued: 5,784,645 at December 31, 2007 and   6,534,645 at June 30, 2008; Outstanding: 5,773,845   at December 31, 2007 and 6,523,845 at June 30,   2008.                                                   19            17   Additional paid-in capital                          16,964        16,201   Treasury shares (10,800 Ordinary shares)               (29)          (29)   Accumulated other comprehensive income                  33            12   Accumulated deficit                                (14,449)      (14,632)    Total shareholders' equity                           2,538         1,569    Total liabilities and shareholders' equity         $ 7,728       $ 8,478      CONSOLIDATED STATEMENTS OF OPERATIONS   U.S. dollars in thousands (except share and per share   data)                                 Six months ended       Three months ended                                 June 30,               June 30,                                  2008      2007         2008      2007                                   Unaudited              Unaudited    Revenues:   Products sales             $ 2,918   $ 3,070      $ 1,391   $ 1,553   Services                     1,905     1,881        1,024       952    Total revenues               4,823     4,951        2,415     2,505    Cost of revenues:   Products sales                 723       856          327       467   Services                       333       525          203       286    Total cost of revenues       1,056     1,381          530       753    Gross profit                 3,767     3,570        1,885     1,752    Operating expenses:   Research and development     1,412     1,448          688       562   Selling and marketing        1,016     1,639          482       803   General and   administrative               1,477     1,519          828       821   Impairment of goodwill   and other intangible   assets                           -     2,312            -     2,312    Total operating expenses     3,905     6,918        1,998     4,498    Operating loss                (138)   (3,348)        (113)   (2,746)   Financial income   (expenses), net                (61)      (13)         (43)        2   Capital gain on sale of   other investment               382         -            -         -    Income (loss) before   taxes on income                183    (3,361)        (156)   (2,744)   Taxes on income                  -         -            -         -    Income (loss) before   equity in earnings of   affiliate                      183    (3,361)        (156)   (2,744)   Equity in earnings of   affiliate                        -       (26)            -      (58)    Net income (loss)            $ 183 $  (3,387)      $ (156) $ (2,802)    Net income (loss) per   share:   Basic and diluted net   income (loss) per   Ordinary share              $ 0.03   $ (0.59)     $ (0.02)  $ (0.49)    Weighted average number   of Ordinary shares used   in computing basic and   diluted net income   (loss) per share         6,350,768 5,773,845    6,523,845 5,773,845      Contacts:   Company:   Alon Mualem   CFO   Tel: +972-9-762-1733   Email: [email protected]  

Mer Telemanagement Solutions Ltd.

CONTACT: Contacts: Company: Alon Mualem, CFO, Tel: +972-9-762-1733,Email: [email protected]