msystems Terminates its Agreement with Samsung

KFAR SABA, Israel -- April 6, 2006 -- msystems™ (Nasdaq: FLSH) today announced that it has just terminated its December 2003 agreement with Samsung Electronics Co., Ltd. due to Samsung’s failure to abide by its supply commitments under the terms of the agreement.

Under the terms of the terminated agreement, the Company had granted a license to its patents to Samsung in return for license fees and secured capacity of NAND flash memory at favorable terms. As a result of the termination of the agreement, all licenses granted to Samsung, as well as Samsung’s obligation to provide secured capacity and pay license fees to msystems, have expired.

The Company firmly believes in its ability to secure the flash supply needed to facilitate its continued growth.

About msystems
msystems has been transforming raw flash material into smarter storage solutions since 1989. From embedded flash drives deployed in millions of mobile handsets to U3 USB smart drives designed for leading global brands, msystems creates, develops, manufactures and markets smart personal storage solutions for a myriad of applications targeting high growth markets. msystems’ product lines include:

mDrive (formerly DiskOnKey®) U3 USB smart drives for personal, portable computing
mDOC embedded flash drives for mobile handsets and consumer electronics devices
mSIM MegaSIM® series high-density SIM cards and mSIM M.MAR® series SIM cards and highly secure cards (available both from msystems and its subsidiary Microelectronica)
mCard, high-quality memory cards for mobile handsets and digital cameras
mTrust (formerly Xkey®) end-to-end enterprise access, control and management solution for USB flash drives and other removable media
mSSD (formerly FFD™) rugged solid state disks for mission-critical applications
mModule (formerly DiskOnChip® modular family) modular flash storage for embedded systems
mSafe (formerly SuperMAP® family) secure hardware and software crypto cores