PRESS RELEASES

CES POST MORTEM: HERE COMES THE “RUN-TIME GAP”
New Video and Mobile Applications will Use More Power than is Available in Current Battery Technology

MOUNTAIN VIEW, CA – January 11, 2006 – In follow up to this year’s record-breaking International Consumer Electronics Show (CES) which concluded last week in Las Vegas, NV, the CEO of PolyFuel Inc. today noted that the explosion of new mobile device applications shown there – particularly those featuring downloaded or broadcast video – will speed the market’s recognition of a looming “run-time gap.” That is, current mobile power sources such as the batteries that power cell phones are not adequate to view feature-length movies and hour-long TV shows without recharging or replacement “mid show.”

“We are very excited about the new mobile applications that we saw introduced at CES,” said Jim Balcom, CEO of PolyFuel. “Downloading TV shows to portable entertainment devices and cell phones is rapidly gaining in popularity and signals new, broader uses of such devices. But these are extremely ‘power hungry’ applications whose demands exceed the run times available from today’s battery technology. Consumer surprise and disappointment at limited run times on their new devices might dampen the growth of what are, to many observers, the new ‘killer applications’.”

Balcom, whose company works with the world’s leading consumer electronics companies to provide key technology for fuel cells, explained that video uses the most power of any application. “For years, cell phone, PDA, and laptop PC makers – and more recently MP3 OEMs – have worked aggressively to find ways to optimize power usage on their devices, including sophisticated power management circuits, and new battery technology. But video is the most power-intensive application you can think of; it requires that the processor, screen and audio drivers run ‘wide-open’ the whole time, and often wireless data communications are running simultaneously, throughout the whole viewing experience.”

According to Balcom, even the most advanced battery technologies available today are unable to adequately meet emerging portable power needs. Although the gap between portable power needs and actual portable power availability, called the “run-time gap,” has been discussed for some time in countries like Japan and Korea where applications such as broadcast TV to cell phones are already commercially available, it is virtually unknown in North America, particularly the U.S. Balcom believes consumers are in for a big surprise.

“Japanese consumers spend a significant portion of their lives commuting on public transportation,” said Balcom, “and continuously utilize their mobile devices for entertainment, information, and personal contact while en route. They call these applications ‘power eaters’. Well, get ready, everybody; the power eaters are now here.”

Balcom reports that a typical assessment among PolyFuel’s customers – who include many of the world’s leading consumer electronics, battery, and fuel-cell manufacturers – is that a consumer’s daily mobile power requirement in 2007 will be at least four times what the best-available batteries can deliver today, and 2-1/2 times greater than experts believe batteries will ever deliver. “As a mature technology, batteries are essentially tapped out,” said Balcom. This sentiment has been echoed by several industry analysts, Balcom said.

Because of the run-time gap, original equipment manufacturers (OEMs), battery manufacturers, and others have been intently focused on readying small form factor fuel cells to augment batteries in upcoming devices. Such fuel cells, which use small, refillable or replaceable cartridges of methanol fuel, are on the verge of delivering the necessary continuous power levels that video- and wireless-intensive applications in particular require. They will offer essentially continuous run times as replacement cartridges or refills are easily carried in briefcase, pocket or purse. The International Civil Aviation Organization (ICAO) recently weighed in, voting to allow methanol fuel cell cartridges and fuel cells to be carried aboard and operated on commercial aircraft.

“The headlines later this year will be all about the run-time gap, as the early adopters start burning up the Internet with their hands-on experiences,” predicts Balcom. “The big story at CES in 2007 and 2008 – will be all of the portable fuel cells that have emerged to close that gap.”

About PolyFuel

PolyFuel is a world leader in engineered membranes that provide significantly improved performance in fuel cells for portable electronic and automotive applications. The state of the art of fuel cells is essentially that of the membrane, and PolyFuel’s best in class, hydrocarbon-based membranes enable a new generation of fuel cells that for the first time can deliver on the long-awaited promise of clean, long-running, and cost-effective portable power.

PolyFuel has an unmatched capability to rapidly translate the system-level requirements of fuel cell designers and manufacturers into engineered polymer nano-architectures. Such capability – based on PolyFuel’s over 150 combined years of fuel cell experience, world-class polymer nano-architects, and a fundamental patent position covering more than 15 different inventions – also makes PolyFuel an essential development partner and supplier to any company seeking to advance the state of the art in fuel cells. Polymer electrolyte fuel cells built with PolyFuel membranes can be smaller, lighter, longer-running, more efficient, less expensive and more robust than those made with other membrane materials.

PolyFuel’s target customers are the world’s leading portable fuel cell system developers. Of the 17 such customers currently engaged, 11 are divisions of household brand name consumer electronics manufacturers, and fifteen of the seventeen are now testing or have tested PolyFuel’s fuel cell membrane material. Of the 15, eleven have completed their evaluation testing and all eleven have gone on to purchase PolyFuel’s membrane products. Five of the largest Japanese and Korean consumer electronics companies now rank PolyFuel’s membrane as the best portable fuel cell membrane available in the world today. NEC and SANYO Electric are the first companies that have publicly disclosed they are using PolyFuel’s membranes.

PolyFuel was spun out of SRI International (formerly Stanford Research Institute) in 1999, after 14 years of applied membrane research. The company is based in Mountain View, California, and is publicly listed on the AIM stock exchange in London.

Editors’ note: All trademarks and registered trademarks are those of their respective companies.

Additional background information is available at www.roeder-johnson.com.

This news release may contain forward-looking statements, including with respect to the development of the fuel cell market. Readers are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and commercialization of potential products. Actual results may differ materially from the results anticipated in these forward-looking statements.

PolyFuel securities have not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States or to U.S. persons (within the meaning of Regulation S under the Securities Act) unless the securities are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available. Hedging transaction involving any such securities may not be conducted unless in compliance with the Securities Act.