Digital Power Reports Financial Results for the First Quarter Ended March 31, 2008

Friday, May 16, 2008 General News
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FREMONT, Calif., May 15 Digital PowerCorporation (Amex: DPW) (herein "Digital Power") today announced its financialresults for the first quarter ended March 31, 2008.

Digital Power reported revenue of $3,169,000 for the quarter ended March31, 2008, an increase of 15.6% from $2,742,000 for the same quarter last year.An operating loss of $165,000 for the first quarter of 2008 was reported,compared to an operating profit of $25,000 for the same quarter last year.Digital Power reported a net loss for the three months ended March 3l, 2008 of$161,000 compared to a net profit of $41,000 for the three months ended March31, 2007.

Commenting on the results, Ben-Zion Diamant, Interim President and CEOstated, "Our first quarter results were significantly impacted by the costsassociated with the severance agreement of the former CEO. Absent theseone-time charges of $189,000, the Company would have reported a profit. Whileall of these expenses were recognized in our first quarter, it should be notedthat the actual cash effect will take place over the balance of the year."

Continuing on other matters, Mr. Diamant said, "We are pleased to reportthat the voluntary disclosure which the company filed with the US Departmentof State regarding possible violations of the International Traffic in ArmsRegulations ("ITAR") with respect to defense business, was closed withoutaction by the US Department of on April 22, 2008. No fines were assessed. TheCompany has also applied for registration as a "Broker" and a "Manufacturerand Exporter" of Defense Articles/Defense Services with the U.S. Department ofState under the ITAR. Upon approval, the Company will be well positioned tofurther penetrate this important market segment as a direct military articlevendor and through its strategic alliance with Telkoor, its largeststockholder."

Digital Power designs, develops, manufactures, markets, sells anddistributes switching power supplies to industrial, telecommunication, datacommunication, medical, and military industries. Digital Power's headquartersare located at 41324 Christy Street, Fremont, California, 94538-3158; phonenumber 510-657-2635.

The foregoing contains forward-looking statements regarding future eventsor results within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, as amended,including statements concerning the significant large-scale projects recentlywon by the Company and their impact on the business. Such forward-lookingstatements are not guarantees of future performance and are subject to risksand uncertainties and that actual events or results may differ materially fromthose anticipated events or results expressly implied by such forward lookingstatements. The Company disclaims any current intention to update itsforward-looking statements and the estimates and assumptions within them, atany time for any reason. In particular, such forward looking statements arebased upon assumptions about future conditions that could prove to beinaccurate including, but not limited to, that (a) the Company will be able tolower its production costs and market conditions are improving in DigitalPower's industry (b) the inability to complete sales, or possible delays indeployment, of products under certain large scale projects due to inability tocomplete or possible delays in completing the legal and commercial terms forsuch projects, project delays or cancellations; and (c) the inability tocomplete or possible delays in completing certain research and developmentefforts required for certain large-scale projects. Other factors that couldcause actual events or results to differ materially from those contained inthe "forward looking statements" are included in the Company's filings withthe U.S. Securities and Exchange Commission (the "SEC") including, but notlimited to, the Company's For

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