BOTHELL, Wash.--Neah Power Systems, Inc. (OTCBB: NPWS), a leading developer of fuel cells for military application and portable electronic devices, announced it is streamlining operations to focus on its Office of Naval Research agreement and continued development of a commercial liquid electrolyte prototype for military applications. By focusing on these opportunities, the Company will significantly reduce monthly expenditures.

“With the completion of the prototype, our next step is to focus on our first product line—fuel cells that can operate in environments without a ready air supply to provide oxygen, a unique Neah Power capability,” said Dan Rosen, Executive Chairman of Neah Power. “As a result, we are realigning our staff accordingly. Having demonstrated the closed loop prototype in September 2007, the Company will now focus on bringing this product to market quickly.”

“Having demonstrated the feasibility of the closed loop system, Neah’s focus will be on business development, engineering optimization, reliability, quality, and implementation of a manufacturing strategy,” said Dr. Chris D’Couto, COO of Neah Power. “To align around these goals, focus the company around the system, and streamline operations, Neah will align its headcount and costs to match current expectations. This will position the company to focus on the ongoing development and productization of components funded by the Office of Naval Research, which is central to the success of the closed loop system.”

About Neah Power

Neah Power Systems, Inc. is a leading developer of fuel cells for military applications, notebook computers and portable electronic devices. The company's patented, porous silicon-based design will provide long-lasting, efficient and safe power solutions. As an emerging leader in fuel cell technology, Neah Power's products will allow users to extend the operating time of 10 to 100 watt devices multiple times beyond that of conventional batteries.

The company’s working micro fuel cell prototype, which was demonstrated on September 28, 2007, runs as a closed-loop system without requiring air as an oxidant. As Neah Power pursues the broader military market for fuel cells, it will leverage this characteristic unique to its porous silicon technology to pursue these anaerobic applications, addressing a market whose needs are currently not being met.

The military market for fuel cell is estimated to exceed $2.5B in 2012 according to the research report: “Micro Power Sources, Opportunities from Fuel Cells and Batteries for Mobile Applications”, prepared by NanoMarkets. Neah Power is the only company that is using porous silicon to pursue this market opportunity. Porous silicon has the advantage of being able to be manufactured into fuel cells using the processing capability of the silicon industry.

Further company information can be found at www.neahpower.com.