The Notes are secured by a Stock Interest and Pledge Agreement for all the shares of our wholly-owned subsidiary Neah Power Systems, Inc., a Washington corporation, which also executed a Security Interest Agreement granting the buyers of the Notes a security interest in substantially all of its assets including pending and issued patents. In addition, our president Paul Abramowitz and largest stockholder Summit Trading Ltd. pledged an aggregate of 3 million shares of our common stock to further secure the debt. As consideration for the financing described herein, the Company issued the buyers an aggregate of 500,000 shares of NPWS common stock.

Neah Power President Paul Abramowitz stated: "We are extremely pleased with the support we have received from our investors. They know the importance of recognizing innovative power solutions for today and tomorrow's market. This financing offers additional flexibility in continuing to progress towards to a final breadboard prototype of our micro fuel cell using patented, silicon-based design which should provide longer-lasting, efficient and safe power solutions for numerous portable electronic devices. We look forward to completing our next round of funding and providing further updates as developments surrounding these efforts unfold."

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 http://www.neahpower.com and in the reports that we file with the Securities and Exchange Commission, which are accessible at www.sec.gov.