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Neah Power Streamlines Operations
Company to Focus on First Military Applications, Reduce Operating Costs

January 17, 2008

BOTHELL, Wash.-Neah Power Systems, Inc. (OTCBB:NPWS)a leading developer of fuel cells for military application and portable electronic devices, announced it is streamlining operations to focus on its Office of Naval Research agreement and continued development of a commercial liquid electrolyte prototype for military applications. By focusing on these opportunities, the Company will significantly reduce monthly expenditures.

"With the completion of the prototype, our next step is to focus on our first product line - fuel cells that can operate in environments without a ready air supply to provide oxygen, a unique Neah Power capability," said Dan Rosen, Executive Chairman of Neah Power. "As a result, we are realigning our staff accordingly. Having demonstrated the closed loop prototype in September 2007, the Company will now focus on bringing this product to market quickly." "Having demonstrated the feasibility of the closed loop system, Neah's focus will be on business development, engineering optimization, reliability, quality, and implementation of a manufacturing strategy," said Dr. Chris D'Couto, COO of Neah Power. "To align around these goals, focus the company around the system, and streamline operations, Neah will align its headcount and costs to match current expectations. This will position the company to focus on the ongoing development and productization of components funded by the Office of Naval Research, which is central to the success of the closed loop system."

About Neah Po?er Systems

Neah Power Systems, Inc. is a leading developer of fuel cells for military applications, notebook computers and portable electronic devices. The company's patented, porous silicon-based design will provide long-lasting, efficient and safe power solutions. As an emerging leader in fuel cell technology, Neah Power's products will allow users to extend the operating time of 10 to 100 watt devices multiple times beyond that of conventional batteries. Further company information can be found at our website: www.neahpower.com.

Forward Looking Statements

Except for statements of historical fact, the matters discussed in this press release are forward looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond the company's control that may cause actual results to differ materially from stated expectations. These risk factors include, among others, limited operating history, research and prototype delays, difficulties in developing and commercializing new technologies, and additional risk factors as discussed in the reports filed by the company with the Securities and Exchange Commission, which are available on its website at: http://www.sec.gov.

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