PRESS RELEASES

POLYFUEL, INC. SECURES $18.4 MILLION FINANCING
$18.4 Million Funding Round Positions PolyFuel for Portable Fuel Cell Market Launch

Mountain View, CA – July 6, 2004 – PolyFuel, Inc., the world leader in membrane technology for portable fuel cells, today announced it has closed an $18.4 million, third round of funding, bringing total investment in the 5-year-old startup to approximately $40 million. This round, led by CDP Capital - Private Equity includes existing investors Mayfield, Ventures West, Technology Partners, Intel Capital, and Chrysalix Energy as well as new investors Conduit Ventures Limited, KTB Ventures, Hotung Venture Partners, Yasuda Enterprise Development, and BiNEXT, a part of the Daesung Group.

Portable fuel cells, which have the potential to become the next power source for mobile electronic devices such as portable computers or cell phones, depend upon a sophisticated membrane that permits methanol - a type of alcohol used for fuel - to interact with water and air to produce electricity. PolyFuel has established itself as the technology leader for this type of membrane, and the PolyFuel membrane is being used in pilot fuel cell development projects at OEMs and fuel cell manufacturers around the world. The proceeds from this round are expected to enable PolyFuel to support its customers through their initial test market phases and into early stages of commercial production.

"With the growing trend toward more sophisticated power-hungry mobile devices, the short run time, the limited energy density, and the long recharging time of today's battery technology are of major concern to device manufacturers, as well as to consumers," said Sara Bradford, industry manager, power supplies and batteries group, at Frost & Sullivan. "Portable fuel cells, utilizing lightweight, hot-swappable cartridges of methanol fuel, are seen as the long term solution to this critical power problem."

According to Luc Charron, senior partner, CDP Capital - Private Equity, PolyFuel is in a leading position in its market. "The PolyFuel membrane is, quite simply, a critical enabling technology for portable, direct methanol fuel cells [DMFC]." Charron reported that PolyFuel has made numerous breakthroughs in material science, chemistry, and energy technologies that have resulted in a DMFC membrane that, he says, "uniquely enables OEMs and fuel cell manufacturers to produce the smallest, lightest, lowest cost, and longest lasting portable power supplies."

"PolyFuel has established a tremendous market momentum," commented Grant Heidrich, partner emeritus at Mayfield. "Based upon the quality of its technology, the company has grown its pilot base by over 400% in the past year, to where nearly every serious player in the portable fuel cell market is evaluating the PolyFuel membrane for use in their fuel cells. In addition, the company's portfolio of intellectual property - in both portable and hydrogen fuel cell technology -- is dramatic. We believe that PolyFuel can become one of those rare companies that can define an entire industry." According to Heidrich, PolyFuel has over 140 years of combined fuel cell experience and has filed applications for 15 patents.

"The fuel cell industry is just emerging," said Jim Balcom, PolyFuel's president and CEO. "Our company is not only focused on bringing the world's best fuel cell membrane technology into the market, but also on working within the industry to help lead the technology development and market evolution."

According to ABI Research, the portable fuel cell market is expected to grow to 120 million units by 2012, including powering 13% of the world's laptop computers. As a consequence, portable fuel cells are actively being developed by companies such as NEC, Toshiba, Fujitsu, Hitachi, Samsung, MTI, and Smart Fuel Cells. In addition, BIC, Duracell, Energizer, and Tokai plan to manufacture and market replaceable fuel cartridges for portable fuel cells.

Noting the heavy participation of Asian companies in leading the portable fuel cell market, Balcom added: "The presence in this round of a number of Japanese, Korean, and Taiwanese investors is quite significant and they will play an important role in PolyFuel's future."

PolyFuel has sufficient pilot scale manufacturing capacity to satisfy its customers' initial product launch plans next year. PolyFuel is qualifying manufacturing partners to meet customers' high volume launch plans for 2006.

About PolyFuel

PolyFuel is the world leader in portable fuel cell membrane technology. With the increasing trend to mobility in electronics and consumer devices, portable fuel cells offer the promise of longer run times, lighter weight, and increased user convenience over the best-available battery technology.

The heart of the portable fuel cell is its membrane, a sophisticated material that allows water and methanol - the fuel of choice for such applications - to combine to generate electricity. The efficiency of a fuel cell, and thus its run time, is almost entirely dependent upon the characteristics of this membrane. As a result of over 140 combined years of fuel cell experience, and fundamental patent applications covering 15 different inventions, PolyFuel has developed direct methanol fuel cell (DMFC) membrane technology that allows portable fuel cells to be smaller, lighter, quieter, less expensive and more robust than systems made with competing membrane materials.

PolyFuel was spun out of SRI International (formerly Stanford Research Institute) in 1999, after 14 years of applied membrane research. In addition to its portable fuel cell membrane technology, the company has leading edge, hydrogen fuel cell membrane technology, for automotive and other applications, as well as world-class fuel cell systems technology. The company is based in Mountain View, California, and is privately held. Investors include Mayfield, Ventures West, CDP Capital - Private Equity, Technology Partners, Intel Capital, Chrysalix Energy, Conduit Ventures, KTB Ventures, Hotung Venture Partners, Yasuda Enterprise Development, and BiNEXT, a part of the Daesung Group.