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Neah Power Systems Will Compete for Department of Defense Wearable Power Prize

August 7, 2007

BOTHELL, Wash. Neah Power Systems, Inc. (OTCBB:NPWS – News), a developer of fuel cells for military applications, notebook computers and portable electronic devices, intends to enter the Wearable Power Competition sponsored by Department of Defense (DoD) Research & Engineering.

According to Frost and Sullivan, U.S. demand for batteries in military and aerospace applications should grow from $929.9 million in 2002 to $1,221.6 million by 2009. A recent study by experts at Pacific Northwest National Laboratory in Richland, WA indicated a typical soldier carries five electronic devices and that number could rise to eight or nine over the next decade. Ultra portable sustainable energy sources are crucial to the safety and operations of war fighters as current batteries require frequent recharging, are inefficient in both cost and performance, and are too heavy.

The goal of the competition is to develop a superior portable power system for U.S. soldiers in the form of a wearable power system that lasts at least four days and cuts the weight of the energy source to four kilograms or less, half of that of current batteries.

“Fuel cells are a viable energy source and replacement for today’s standard disposable batteries.” said Paul Abramowitz, CEO of Neah Power Systems, “Our goal is to leverage our fuel cells technology to design the longest lasting and lightest system prototype for the war fighters; therefore, entering this competition is a natural next step. Neah Power Systems remains on track for delivering our 10-Watt fuel cell prototype by the end of the third quarter.”

Neah Power Systems is developing a series of fully self-contained fuel cells for military application. The company’s 10-Watt prototype, expected to be completed by the end of the third quarter, will be capable of producing 10 Watts of power and will have the same footprint as the standard disposable BA-5590 battery widely used in the military today. The Enhanced 10-Watt prototype, expected by year end, will use enhanced materials needed for the 45-Watt prototype. The 45-Watt prototype, which is expected to be completed in 2008, will be capable of producing 45 Watts of peak power and have 300 Watt-hours capability at 20 Watts average operating power.

The DoD “Wearable Power Competition” electric power system will be required to

Operate continuously for 96 hours,
Weigh four kilograms or less – including energy source and attachments,
Attach to a garment, most likely a vest, and
Provide 20 Watts average electric power for 96 hours with peak operation up to 200 Watts.

Submission registrations are due by November 30, 2007, and competitors are to submit the notice of intent to compete and system description by June 2008. The prototype demonstrations are planned to be held in fall 2008 at a location to be announced later.

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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