Neah Power Systems Issues Letter to Shareholders: Part Two


BOTHELL, Wash., Aug. 12, 2009 (GLOBE NEWSWIRE) -- The following is a letter to shareholders from Chris D'Couto Ph.D., Chief Executive Officer & President of Neah Power Systems (OTCBB:NPWZ).

As discussed yesterday, this part of my Letter deals with our marketing and product strategy.

Just how revolutionary are the Neah developments?

We believe that the Neah fuel cell is a very compelling, differentiated product. The technologies at Neah are, in our view, unique and innovative, and patent protected. Previous investors in the company include Intel Capital, Novellus Systems, Frazier Technology Ventures, Castile Ventures, etc. The company has been awarded grants from National Institute of Science and Technology / Advanced Technology Program, and most recently the Office of Naval Research. A total of > $35M has been invested into the company's developmental efforts. Over the course of this last year while reducing the company burn rate, Neah has completed prototype development, implemented manufacturing partnerships, and entered agreements with customers to put products on the market.

Is Neah a fuel cell company?

Originally, Neah was a fuel cell development company; however, as Neah transitions from development to commercialization, our market research indicates that the company can build around its differentiated fuel cell technology to provide the most dynamic renewable energy solutions to the market place. Market research indicates that the demand for hybrid, renewable energy solutions spans individual and corporate consumers globally and across all walks of life. We believe that the new integrated solutions could provide energy at competitive, profitable prices, while making a meaningful and positive difference towards addressing broader environmental issues. Neah will continue to evaluate other world class, renewable energy products for its product portfolio.

What is unique about Neah technology for energy storage?

Neah's value proposition for portable power direct methanol fuel cells is precisely applicable for energy storage applications. Neah believes that the ability to use silicon wafers, up to twelve inches in diameter, leverage mainstream semiconductor processing, and use of foundries to manufacture Neah's product gives significant advantages over the competition.

What are the markets that Neah is focusing on?

Neah plans to serve the range of industrial, military and consumer markets that are available to us. We believe that the energy storage and generation markets are also large market opportunities that can be competitively served by our technology. The company is adopting a staggered market entry strategy of initially pursuing specialized markets like the anaerobic (non-air breathing) markets where there is limited competition. Examples include the EKO Vehicle and Hobie Cat relationships. These early market entries allow the company to scale up the technology, validate the supply chain that Neah has in place, and use those experiences to pursue the larger consumer markets for phones, computers, and other consumer devices.

Is Neah focused on markets in India only?

No. India has shown a great deal of interest and we have a number of potentially large agreements in place there. India is a growth opportunity, since the quality of its electrical grid is sub-par and a large number of people do not have access to reliable power, and this creates a large and growing customer base. Lessons learned here can be implemented in other developing countries as well. While India is very important, Neah retains a global focus.

How is the SolCool integration progressing?

The integration is progressing smoothly. SolCool has a product that Neah can continue to ship, and bringing Neah expertise to bear allows us to grow SolCool. SolCool and Neah have synergies that will give the combined entity some positive accretion. It is great for Neah to have cash flow and the additional infrastructure.

What are the synergies from the SolCool?

The SolCool Energy Management System will form the backbone for integrated renewable energy solutions (Hybrid Electric Renewable Micro - Energy System -- HERMES) which Neah recently announced. Neah expects the existing SolCool worldwide qualified distribution channel to allow us to introduce new renewable energy solutions to the marketplace more quickly. The combined entity can drive this rapid adoption, implement the necessary ERP (enterprise resource planning) systems, and form the building blocks for a world class company.

Can you give us a sense of the team at Neah?

Currently, Neah has a lean, core-competence-based team of employees, management and Board of Directors. Dr. Tsali Cross, the VP of Engineering, is leading the effort at showcasing Neah's technology for customer applications; Mr. Kenth Pedersen is leading the sales and business channel development; Mr. Stephen Wilson, along with BOD support, is working on the capital structure and financial reporting, the implementation of cost and financial accounting systems, and Sarbanes Oxley compliance; and Mr. Mark Walsh is leading the SolCool product adoption. Additionally, Neah continues to work on building presentations and communication vehicles to dialogue with institutional and retail investors and supporters.

What is the status of the second contract with ONR?

This contract requires completion of a demonstrator system by mid-September 2009. We had initially renegotiated this contract to give the ONR significantly more than what was requested. Even with this increased charter of deliverables, we believe we will meet and exceed all the deliverables on time and within budget for completion of this contract. We will continue to have dialogue with the ONR and other branches of the military.

Once again, thank you for your continued support of Neah Power and the management team at the company.

Sincerely,

Chris D'Couto

Chief Executive Officer & President

About Neah Power

Neah Power Systems, Inc. (OTCBB:NPWZ) is developing long-lasting, efficient and safe power solutions for the military and for portable electronic devices. Neah uses a unique, patented, silicon-based design for its micro fuel cells that enable higher power densities, lower cost and compact form-factors. The company's micro fuel cell system can run in aerobic and anaerobic modes. Neah believes that the technology can also be used for energy storage and generation. Further company information can be found at www.neahpower.com.

Forward-Looking Statements

Certain of the statements contained herein may be, within the meaning of the federal securities laws, "forward-looking statements," which are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. See Neah Power System's Form 10-KSB for the fiscal year ended September 30, 2008 for a discussion of such risks, uncertainties and other factors. These forward-looking statements are based on management's expectations as of the date hereof, and the company does not undertake any responsibility to update any of these statements in the future.



            

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