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Neah Power Announces Completion of First Stage of Development Contract with Danfoss Group Global

August 14, 2006

Seattle, WA—Neah Power Systems, Inc., a Nevada corporation (Pink Sheets:NPWS), announced today the completion of stage one of a three-stage development program in collaboration with Danfoss Group Global (Nordborg, Denmark).

The development program will generate low-cost, miniaturized, systems components for Neah’s silicon based Direct Methanol Fuel Cell technology. Stage one of the program related to the feasibility of production of pump and valve components. Further development stages will lead to the shipment of complete fluid control systems units to Neah in late 2006.

“Completion of this phase gives us further confidence that cost-effective construction of our fuel cell system is possible,” stated John Drewery, Executive Vice President of Engineering at Neah Power Systems. “We believe that the components being developed at Danfoss will be competitive in terms of both size and cost providing Neah with significant competitive advantages. This is a major milestone on our path to delivery of working self-contained fuel cell prototypes in fall 2006,” he concluded.

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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