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Department Of Defense Appropriations Bill Includes $3 Million Funding For Neah's Fuel Cell Technology

June 26, 2006

Seattle, WA - June 26, 2006 - Neah Power Systems, Inc., a Nevada corporation (Pink Sheets: NPWS.PK), today announced that $3 million for the Porous Silicon-based Direct Methanol Fuel Cell research and development project has been included in the House version of the Fiscal Year 2007 Department of Defense Appropriations Bill.

This funding would support Neah Power’s continued development of silicon-based fuel cell technology for portable military applications and devices, such as man-pack radio systems carried by soldiers. Final funding for this project will be determined in a House/Senate conference later this year.

"Our military and first responders deserve better portable power capabilities than batteries can provide. We at Neah Power believe that our unique, patented, silicon-based fuel cell can be an answer to their needs,” said Dan Rosen, Ph.D. Chairman of Neah Power Systems. "The project that was included in the DOD Appropriations Bill strengthens our ability to develop better, longer-lasting, portable power solutions for both military and homeland security personnel at the earliest possible date.

The US military has a demonstrated need for portable, lightweight, long-lasting power sources to operate all types of electronic equipment in the field. Through an innovative approach, Neah is developing a 45 watt, porous silicon-based micro fuel cell which can operate military electronic equipment and will be packaged in a size no larger than the military's BA-5590 battery which is currently used in portable electric power applications. Neah's innovative fuel cell will also provide two to three times the power of the military's BA-5590. This level of performance can greatly increase effectiveness and survivability as well as having the potential for overall cost savings of tens of millions of dollars per year because replacement fuel cartridges are a fraction of the cost of extra batteries.

Neah recently announced that it is extending its product line to include "closed loop" fuel cell systems for military and homeland security sensor applications that require long-term, continuous power in a configuration that does not interact with the environment.

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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