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Neah Power Systems Announces Second Quarter 2007 Results

August 21, 2007

BOTHELL, Wash. (BUSINESS WIRE) Neah Power Systems, Inc. (OTCBB:NPWS – News), a developer of fuel cells for military applications, notebook computers and portable electronic devices, today announced financial results for the second quarter and six months ended June 30, 2007.

“In the second quarter, we made continued progress towards our 10-Watt fuel cell prototype, which we anticipate will be completed by September 30th,” stated Daniel Rosen, Executive Chairman of Neah Power Systems. “In July, we finalized our contract with the Office of Naval Research in the amount of approximately $1.4 million. Neah Power anticipates generating operating revenues from this contract in the third quarter. We remain excited about the technological and revenue potential of our technology and look forward to bringing the benefits our fuel cells delivers to the military, our initial target market.”

There were no revenues for the three and six months ended June 30, 2006 and 2007. Net loss for the second quarter of 2007 was $1.9 million, or $0.02 per share, compared to net loss for the second quarter of 2006 of $1.8 million, or $0.02 per share. Net loss for the six months ended June 30, 2007 was $4.3 million, or $0.04 per share, compared to $3.4 million, or $0.06 per share for the six months ended June 30, 2006.

Neah Power Systems had $1.9 million in cash and cash equivalents at June 30, 2007.

Recent Corporate Highlights

Finalized in July a contract award from the Office of Naval Research entitled “Design of High Power Density Direct Methanol Fuel Cell Stack Utilizing Porous Silicon Electrodes” in the amount of approximately $1.4 million. Based on the 2006 Department of Defense budget appropriation, the contract has a 12-month period of performance and revenue will be collected based on cost reimbursements.
Appointed Steven T. Mayer to the company’s Technical Advisory Board in July. Mayer serves as Principal Engineer and Director of New Product Development at Novellus Systems, Inc. and holds over 50 issued US patents. Neah Power Systems’ four-person Technical Advisory Board is comprised of internationally renowned scientists with expertise ranging from electrochemistry to physics.
Entered the Wearable Power Competition, sponsored by Department of Defense Research & Engineering, in August. 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 reduces the weight of the energy source to four kilograms or less, half of that of current batteries.
Appointed Daniel Rosen executive chairman. Rosen will act as primary company spokesperson and liaison to the investment community.

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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