November 12, 2008

MTS Announces Financial Results for the Three and Nine Month Periods Ended September 30, 2008

RA'ANANA, Israel, November 12 /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 nine month periods ended September 30, 2008.

Revenues for the third quarter of 2008 were $2.1 million, compared with $2.2 million for the same quarter last year. The Company's operating loss declined to $224,000 in the third quarter of 2008 compared to an operating loss of $1.5 million for the third quarter of 2007. Revenues for the nine month period ended September 30, 2008 were $6.9 million, compared with $7.1 million for the comparable period in 2007.

Net loss for the third quarter was $222,000 or ($0.03) per diluted share, compared with a net loss of $1.7 million or ($0.29) per diluted share in the third quarter of 2007. This decrease was mainly attributable to the Company's focus on reducing its operating expenses. Net loss for the nine months ended September 30, 2008 quarter was $39,000 or ($0.01) per diluted share, compared with a net loss of $5.1 million or ($0.88) per diluted share in the comparable period in 2007.

The Company ended the third quarter with approximately $1.6 million in cash and cash equivalents, including marketable securities. During the third quarter of 2008 the company had a positive operating cash flow of $268,000 compared to a negative operating cash flow of $291,000 in the third quarter of 2007.

"MTS made a significant change in the last 12 months by implementing its restructuring plan, focusing mainly on reducing the Company's operating expenses and selling its non-core assets for which significant synergies or added values no longer exist. The results of this process are reflected in the financial statements of the Company" said Eytan Bar, CEO of MTS. "Even though the economic environment has entered a period of slowdown and the fluctuations in the exchange rate between the US dollar and other major currencies has negatively affected our profit and loss statement, we were able to decrease our operating expenses significantly and achieve improved financial 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 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                                                        September   December                                                        30, 2008   31, 2007                                                       Unaudited    Audited    ASSETS    CURRENT ASSETS:   Cash and cash equivalents                             $ 1,441    $ 1,437   Marketable securities                                     205        169   Trade receivables (net of allowance for bad debt   of $ 716 and 882 as of September 30, 2008 and   December 31, 2007, respectively)                        1,016      1,172   Unbilled receivables                                        -        129   Other accounts receivable and prepaid expenses            284        544   Other investments                                           -        221   Inventories                                                80         66    Total current assets                                    3,026      3,738    LONG- TERM ASSETS:   Severance pay fund                                        764        730   Other accounts receivables                                 41          3   Deferred income taxes                                     123        123    Total long-term assets                                    928        856    PROPERTY AND EQUIPMENT, NET                               201        283    OTHER ASSETS:   Goodwill                                                2,796      2,796   Other intangible assets, net                              660        805    Total other assets                                      3,456      3,601    Total assets                                          $ 7,611    $ 8,478                       CONSOLIDATED BALANCE SHEETS                     U.S. dollars in thousands                                                         September    December                                                        30, 2008    31, 2007                                                       Unaudited     Audited    LIABILITIES AND SHAREHOLDERS' EQUITY    CURRENT LIABILITIES:   Short term bank credit and current maturities of   bank loan                                                $ 24       $ 606   Trade payables                                            337         447   Other liabilities and accrued expenses                  2,142       3,309   Deferred revenues                                       1,405       1,390    Total current liabilities                               3,908       5,752    LONG-TERM LIABILITIES - accrued severance pay           1,175       1,157    SHAREHOLDERS' EQUITY:   Share capital -   Ordinary shares of NIS 0.01 par value -   Authorized: 12,000,000 shares at September 30,   2008 and December 31, 2007; Issued: 6,754,136 at   September 30, 2008 and 5,784,645 at December 31,   2007; Outstanding: 6,743,336 at September 30,   2008 and 5,773,845 at December 31, 2007.                   20          17   Additional paid-in capital                             17,214      16,201   Treasury shares (10,800 Ordinary shares)                 (29)        (29)   Accumulated other comprehensive income                    (6)          12   Accumulated deficit                                  (14,671)    (14,632)    Total shareholders' equity                              2,528       1,569    Total liabilities and shareholders' equity            $ 7,611     $ 8,478                      CONSOLIDATED STATEMENTS OF OPERATIONS                         U.S. dollars in thousands                    (except share and per share data)                                     Nine months ended     Three months ended                                     September 30,          September 30,                                    2008      2007        2008       2007                                       Unaudited              Unaudited    Revenues:   Products sales                $ 4,097   $ 4,463     $ 1,179    $ 1,393   Services                        2,776     2,675         871        794    Total revenues                  6,873     7,138       2,050      2,187    Cost of revenues:   Products sales                    959     1,474         236        618   Services                          574       697         241        172    Total cost of revenues          1,533     2,171         477        790    Gross profit                    5,340     4,967       1,573      1,397    Operating expenses:   Research and development        2,114     2,093         702        645   Selling and marketing           1,346     2,650         330      1,011   General and administrative      2,242     2,712         765      1,193   Impairment of goodwill and   other intangible assets             -     2,312           -          -    Total operating expenses        5,702     9,767       1,797      2,849    Operating loss                  (362)   (4,800)       (224)    (1,452)   Financial income   (expenses), net                  (59)      (31)           2       (18)   Capital gain on sale of   other investment                  382         -           -          -    Income (loss) before taxes   on income                        (39)   (4,831)       (222)    (1,470)   Taxes on income                     -         -           -          -    Income (loss) before equity   in earnings of affiliate         (39)   (4,831)       (222)    (1,470)   Equity in earnings (loss)   of affiliate                        -     (232)           -      (206)    Net income (loss)              $ (39) $ (5,063)     $ (222)  $ (1,676)    Net income (loss) per   share:   Basic and diluted net   income (loss) per Ordinary   share                        $ (0.01)  $ (0.88)    $ (0.03)   $ (0.29)    Weighted average number of   Ordinary shares used in   computing basic and diluted   net income (loss) per share 6,408,881 5,773,845   6,523,845  5,773,845      Contacts:   Company:   Alon Mualem   CFO   Tel: +972-9-762-1733   Email: [email protected]  

MTS-MER Telemanagement Solutions Ltd

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