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Neah Power Provides Yearly Review

January 12, 2007

SEATTLE—(BUSINESS WIRE)—Neah Power Systems, Inc., a Nevada corporation (Pink Sheets:NPWS – News), is pleased to provide a Fiscal 2006 year end business and technology review to address key areas of advancements for its micro fuel cell development and corporate milestones.

“2006 has been a year of significant achievement and excellent execution for Neah. We strengthened our design partner relationships, expanded our Intellectual Property portfolio, enhanced our current product process and effectively achieved development milestones,” said Paul Abramowitz, Neah’s President & CEO. “In addition to our operational and research achievements, a Porous Silicon-based Direct Methanol Fuel Cell research and development program is included in the Fiscal Year 2007 Department of Defense Appropriations Bill, we became a fully reporting public company, received $2.3 million funding in March, and an additional funding of $1.55 million last month.”

Since 1999, the Company has been focusing its efforts on developing a potential breakthrough in technology for a direct methanol, micro fuel cells using a patented technology based on porous silicon aimed at providing longer-lasting power solutions for mobile electronic devices and other advanced electronics products. Results from these efforts have secured nine U.S. patents, two of which were issued in October of 2006 and one in January 2007, one foreign patent, and eight U.S. patent applications as well as eleven foreign patent applications.

“As anticipated, we completed key project objectives, both internally and through collaboration and engineering services contracts. This year proved that we are not only focused on securing our IP interests but also in collaborating with industry partners that can assist us in our endeavor to create a superior micro fuel cell, and working with firms that can secure relationships that foster and support our vision,” continued Abramowitz. The following highlights outline key relationships and collaborative arrangements in Fiscal 2006;

Entered into contract with Apex Strategies, Inc., a management consulting firm specializing in government initiatives, to support and assist Neah in identifying and obtaining government contracts.
Joined the Mobile PC Extended Battery Life Working Group (“EBL WG”). Founded by Intel Corporation in 2002, EBL WG is an industry organization focusing on the achievement of all-day battery life in mobile PC platforms.
Entered into agreement with Danfoss Group Global of Denmark, one of Denmark’s largest industrial groups, to research fluid control and disposable fluid cartridge technology for portable fuel cells relating to the behavior of fluids at the microscale level used in Neah’s silicon-based fuel cell technology. After successfully completing Phases 1 & 2 of the development program, the Company is now defining the definitive goals and objectives for the third and final Phase of testing. Phase one of the program related to the feasibility of production of pump and valve components; and, Phase two related to miniaturized pump and valve components suitable for the conditions of operation of Neah’s forthcoming fuel cell systems, and also a cartridge disconnect system allowing fuel cartridges to be conveniently attached to and detached from the fuel cell power unit.

“Through collaboration agreements, the Company has successfully improved among other things, its catalyst coatings and gas-liquid handling media. These components will be tested on a ‘breadboard prototype’ that will contain all the necessary components needed by a fuel cell, such as miniature pumps and valves, to supply the required fuels. In addition we are on track to complete a BA5590 prototype by the end of March,” continued Abramowitz. Among the many other development achievements, the following were reported throughout Fiscal 2006;

Neah’s fuel cells have consistently demonstrated power densities equal or greater than 100 mW/cm2 in both single cells and 8-cell stacks at room temperature, which Neah believes to be the industry standard.
In July 2006, the Company announced its intention to further research the increase of cell stacks to obtain more power for its prototype from 8 to 16 cell. As announced on December 5, 2006, this research led to initial tests on the use of 16 cell stack architecture and is anticipated to be included in Neah’s fuel cell prototype development program, along with single cell and 8 cell stack architectures.
Expanded and strengthened approach for achieving key industry milestones in terms of offering higher energy yields in a smaller package and at lower anticipated overall manufacturing costs, by utilizing the uniformly available 200mm Si wafers along with current fuel cell design process that focuses on 100mm Si wafers.

Going into 2007, the Company looks forward to:

Continuing the development of its porous silicon-based direct methanol fuel cell technology in order to provide a long-lasting, efficient and safe power solution for portable electronic devices
Delivering BA5590 prototypes for initial military testing
Aiming to achieve breakthrough performance of its porous silicon-based fuel cell by enabling an improvement of 2-3 times in energy storage capacity versus today’s rechargeable batteries
Continue the development of a BA-5590 form factor fuel cell
Creating a micro fuel cell that is lighter in weight and the same form factor size as the current lithium-ion PC battery
Closing on its principal funding
Present its technology to the fuel cell sector through various industry tradeshows and conferences in the coming months.

About Neah Power Systems

Neah Power Systems is a micro fuel cell development company using a patented, silicon-based design to provide long-lasting, efficient and safe power solutions for portable electronic devices, including notebook PCs and other power-hungry computer, entertainment, and communications products. As an emerging leader in fuel cell technology and design, Neah Power Systems believes that its products will allow users to extend the operating time of their devices multiple times beyond that of conventional batteries. Key investors include Alta Partners, Frazier Technology Ventures, Castile Ventures, WestAM and Intel Capital. Neah Power Systems is headquartered just outside of Seattle in Bothell, Washington. Further company information can be found at our Website www.neahpower.com and in the reports that we file with the Securities and Exchange Commission, which are accessible at www.sec.gov.

Statements in this press release that are not statements of historical or current fact constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes,” “belief,” “expects”, “intends”, “anticipates”, “will”, or “plans” to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company’’s reports and registration statements filed with the Securities and Exchange Commission.

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