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Power Air Corporation Fuel Cell Technology
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Power Air Signs Agreement with Blue Chip Conglomerate to Commercialize and Launch the First Indoor & Outdoor Generator that Uses PWAC's Zinc Air Fuel Cell

PWAC to Pioneer Billion Dollar Market for Indoor Generators

Indoor Generators, 1st Target Market Offers Substantial Revenue and Growth

With a first-mover advantage, the stage is set for Power Air Corporation (OTC-BB: PWAC; http://www.poweraircorp.com) to become a leader in the billion dollar market for back-up power generators. The fuel cell market is forecast to exceed US $16 billion in total sales by 2011 (Allied Business Intelligence). The commercialization of PWAC's Zinc Air Fuel Cell (“ZAFC”) is on the horizon. Power Air could very well become a household name, just as Honda has become via the popularity of its gasoline generators.

Power Air's announcement on June 15 of its Original Equipment Manufacture (OEM) collaboration agreement with Schrader Bridgeport International is a block buster development for PWAC shareholders because it is an implicit endorsement of the Company's technology. For shareholders, it exemplifies PWAC's ability to (1) execute a smart business plan, and (2) introduce a zero-emission, durable, light-weight fuel cell that could be embraced by the masses.

Collaboration agreement to commercialize PWAC's Zinc Air Fuel Cell (ZAFC) generator has explosive growth potential: Schrader Bridgeport International will collaborate on the specifications, design, alpha and beta prototype build and test, field trial program, co-branding, and commercial launch of the target product, which is a cost-effective, refuelable backup generator that can operate indoors, safely, silently, efficiently, and emissions-free, with extended run capability.

Executing a commercialization strategy with an OEM that has a Blue Chip Pedigree: Schrader-Bridgeport is the world's largest designer and manufacturer of integrated pneumatic and fluid control solutions, and is a wholly owned subsidiary of Tomkins plc, a world-class global engineering and manufacturing group with market and technical leadership across its two business groups: Industrial & Automotive and Building Products. Tomkins plc has 132 manufacturing facilities around the world and recorded sales of $5.9 billion dollars in 2005, http://www.tomkins.co.uk.

Management's commercialization strategy is brilliant: leave large scale manufacturing for the mass consumer market to the OEMs. In so doing, PWAC can substantially limit risk and gain better revenue traction through licensing revenues. By targeting OEMs to license, market and co-develop back-up generator products, Power Air is fast tracking its ability to earn substantial revenue. The OEMs know the industry and what consumers will buy. They have the distribution channels in place. Power Air is leveraging this knowledge, expertise and marketing infrastructure to penetrate the very markets that the OEMs already dominate.

Power Air joins ZESTec: The OEM announcement quickly followed news that Power Air's has joined the Zinc Energy Storage Technology Consortium ("ZESTec"). ZESTec promotes the application and market development for all types of zinc based energy storage systems for a range of end uses from automotive to portable power, for consumer and business use. Membership of the ZESTec consortium includes Zinc Producers (Falconbridge, TeckCominco, Grillo, Industrias Penoles, Umicore and Zinifex) and Zinc Energy System Manufacturers (eVionyx, PowerZinc, SCPS and Power Air Corporation).

Power Air's fuel cell has numerous commercial applications, such as portable power packs, emergency generators, back-up power for telecom and utility sites, and UPS (uninterruptible power supply) for buildings, data centers, and server rooms. Alternatively, Auxiliary Power Units ("APU's") for RV's, trucks, boats and other light transportation vehicles can also benefit from the ZAFC. The unique technology and low manufacturing cost will compete with incumbent generator and battery products, internal combustion engines (generators) and with conventional fuel cells.

The timing for Power Air is absolutely right! PWAC is now geared-up to capitalize on the commercialization of a revolutionary breakthrough in fuel cell technology. Power Air's easily portable fuel cell based generator is ready for widespread, global adoption. The indoor generator is a new concept that is the prefect power source for burgeoning mass markets like the gulf states, where it can protect people and property during hurricanes, the Caribbean, where power outages are frequent, or developing countries, where electricity infrastructure is inadequate or virtually nonexistent.

Worldwide License to Patented Fuel Cell Technology: As the holders of an exclusive worldwide license to the patented Zinc Air Fuel Cell (ZAFC) technology --which California's prestigious Lawrence Livermore National Laboratory spent in excess of USD $8 million to develop-- Power Air is commercializing a line of generators for the lucrative back-up power market, which it has been demonstrating to numerous Zinc producers and OEM blue chip partners. By partnering up with OEM's, the Company will avoid duplicating costly, already existing OEM manufacturing, distribution service and support infrastructures, and will focus on cost reduction and improvement of the core technology offering.

Power Air is focused on engineering and achieving new advances in back-up power generation and storage. Power Air's fuel cell is a silent, scalable, zero-emission energy alternative that is poised to penetrate the fast growing commercial markets for traditional and indoor back-up generators; markets that tally revenues in the billions annually. More recently, Power Air's largest shareholders --Power Air Dynamics Ltd. ("PADL") and Power Air Technologies ("PAT") -- invested a further US $5.0 million to bring the ZAFC to the prototype level.

US $16 Billion Market: Allied Business Intelligence reports that the Fuel Cell market will exceed US $16 billion in total sales by 2011, achieving a compound annual growth rate (CAGR) of 51% from 2005-2011. Power Air is positioned to grab a substantial percentage of this market, by diligently pursuing commercial applications that will allow the Company to rapidly generate substantial revenue. To this end, Power Air has identified and targeted numerous opportunities in the portable, stationary, light mobility, and light transportation markets for fuel cells.

Focus and execution: Where other fuel cell companies have stumbled, Power Air is purposefully executing a growth strategy that targets a mass consumer market. On this note, two former Ballard Power Systems managers, Mr. Donald Ceci and Mr. Andrew Turnbull have joined Power Air. Power Air has set its sights on a substantial revenue opportunity: the market for traditional, outdoor generators, and an emerging, growth market for indoor back-up power units.

First to Market Application: Generator Replacements. While the traditional generator market opportunities are immense, it is the half billion potential indoor sites that are the "blue-sky", blockbuster opportunity for Power Air's ZAFC technology.

Power Air is targeting the back-up power market because the fuel cell's green characteristics make it the ideal technology for the next generation of back-up power systems. Worldwide, the size of the in-door generator market is staggering: if the Company captures just one percent of an approximate several hundred million potential indoor generator sites, it stands to sell several million units. Notably, these figures do not include an estimate of the potential market for indoor generator sites (homes, condos and apartments), which can readily use a back-up power source that is emission-less, easily portable and silent. The potential size of the indoor power generator market in hurricane prone locales like Florida, Louisiana, Texas and the Caribbean alone is very lucrative!

Power outages are becoming more frequent and widespread. Apartment and home occupants are regularly inconvenienced and often put in dangerous situations due to power outages caused by storms and technical failures. Residents and businesses are forced to cope with no lights, no heat, no information, spoiled food, and no working appliances for hours, days or even weeks at a time. Back-up generators that run on diesel, natural gas or gasoline are the current solution. However, these types of generators cannot be situated indoors because they are loud, toxic (pollute), and heavy.

Licensing OEMs to Manufacture the ZAFC, a Prudent Business Development Strategy: As evidenced by the collaboration agreement with Schrader Bridgeport International, PWAC is initially focusing its resources on generator replacement products. Accordingly, PWAC will license its exclusive technology to original equipment manufacturers (OEMs) that serve those markets.

Management's strategy is brilliant: leave large scale manufacturing to the OEMs and, thereby, limit risk and gain better revenue traction through licensing revenues. By targeting OEMs to license, market and co-develop back-up generator products, Power Air is fast tracking its ability to earn substantial revenue. The OEMs know the industry and what consumers will buy. Power Air is leveraging this knowledge and expertise to penetrate the very markets that the OEMs already dominate.

To complete its commercialization strategy, Power Air will seek collaboration agreements that support OEM systems integration, product development, codes & standards, testing, siting activities. PWAC will participate with OEMs in end-user field trials. PWAC will establish fuel cell manufacturing capability and support the OEM's in the distribution and service of the end-user products.

The first Power Air ZAFC-based product will be provided to OEM's for integration into a Portable Emergency Generator ("PEG") designed for back-up or stand-alone use. Power Air intends to address the "sweet spot" (over 70%) of the traditional generator market - with units ranging from 600 Watts to 6.6 kW. These units are expected to also meet the back-up power needs of most (if not all) of the initial demand for indoor generators.

Taking a Closer Look at Power Air's Zinc Air Fuel Cell

Technologically innovative and environmentally green: Power Air's fuel cell uses zinc, a non-toxic, safe to handle and readily available source of fuel. Fully charged, Power Air's fuel cell is a reserve power source that can sit for lengthy periods unused and can produce power when needed. The inexpensive and scalable ZAFC is perfect for indoor use because it is a zero-emission, durable, light-weight fuel cell that operates silently and effectively.

How the ZAFC works: The ZAFC is a silent, zero-emission alternative for power generation that takes advantage of a chemical reaction between zinc and oxygen.

Oxygen from the air combines with Zinc in an electrolytic solution, releasing electrons which are captured at the Cathode to create electricity. The ZAFC single unit consists of an overlying hopper connected by conduits to an electrochemical cell. Electrolyte flows upwards through the patented cell design to remove waste heat and reaction by-products. The hoppers may be refuelled by flowing a slurry of zinc particles and electrolyte in channels above the cells. ZAFC hopper & cell size and configuration can be customized to meet OEM end-user product requirements.

Power Air's core ZAFC technology generates electricity with zinc oxide as a by product. In operation, the fuel cell consumes all of the zinc; and is quiet, providing stable electrical energy with zero emissions. The residual zinc oxide can be recycled by using electrolysis and then reformed into zinc pellets.

Power Air's Zinc Air Fuel Cell has numerous competitive advantages over conventional fuel cells. Hydrogen fuel cells (PEM: polymer electrolyte membrane) which are costly to produce and operate, as the fuel (hydrogen -- an explosive, flammable, compressed gas) is difficult to distribute, store and site. By comparison, the ZAFC's fuel is not compressed and is readily available, thereby reducing distribution and storage issues. The ZAFC also has lower cost components than conventional PEM fuel cells, including cathode catalysts, and anode current collectors.

Power Air's Target $250 per Kilo Watt vs. Competitor Fuel Cell Cost is Significantly Lower: Power Air's target cost of less than US $250 per Kilo Watt is substantially lower than conventional fuel cells and present market requirements. To compete with incumbent technologies, Power Air's target market applications are estimated to have a commercialization cost requirement of less than US $1500 per KW and mass market cost requirement of less than US $500 per KW. Importantly, management is confident that the company can better these requirements by a wide margin, and deliver the technology for US $250 per KW.

Demonstration Power Module – ZAFC 600

The ZAFC system is compelling because it delivers an extremely high energy density ('solid electricity') and the open circuit voltage (1.6 V) is substantially greater than that of the hydrogen fuel cell.

Power Air's technology has additional advantages over batteries and internal combustion engines. The inexpensive, scalable ZAFC is suitable for indoor use as opposed to toxic combustion engines because it is a zero-emission, durable, light-weight fuel cell that operates silently and effectively. The ZAFC has no need for a fuel reformer. Because zinc 'fuel' is generated electrically the ZAFC does not contribute to aerial pollution. ZAFC's can be quickly refuelled by an exchange of electrolyte and/or the addition of zinc, which compares favourably to the much slower electric recharge required by batteries.

Not only can Power Air's fuel solution allow for continuous operation with the possibility of refuelling under load, the spent fuel, electrolyte saturated with zinc oxide or zincate, can be recycled for production of new fuel and fresh electrolyte. Furthermore, ZAFC's are environmentally friendly with no hazardous emissions and, thus, meet stringent standards. The ZAFC has been independently tested under USABC test protocols by the Argonne National Laboratory.

Highlights of Zinc Air Fuel Cell include:

• The ZAFC costs less to operate than current technologies in use;
• Zero emissions;
• Suitable for indoor use; non toxic;
• Spent fuel is recyclable;
• No Fire / Explosive Hazard with the ZAFC;
• Existing infrastructure can be used for refuelling the ZAFC;

Fuel Cells United States & Canada Welcomes Power Air Corporation to Membership: Power Air Corporation joined Fuel Cells Canada, a non-profit, national industry association whose mission it is to accelerate Canada's world-leading fuel cell industry. FCC is the prime source of services and support to Canadian corporations, educational institutions and business alliances promoting, developing, demonstrating, and deploying fuel cell and related products and services in Canada. Power Air's membership at Fuel Cells Canada gives the Company access to the prime source of services and support in Canada for developing and promoting fuel cell technologies, products and services. In addition to facilitating demonstration projects for Power Air, to test and perfect pre-commercial fuel cell technologies, FCC is involved in the development of regulations, standards and codes that support the safe and widespread application of fuel cell products. Power Air Corporation has also recently announced that it has joined the US Fuel Cell Council ("USFCC").

"Power Air joins an elite group of fuel cell producers, major fuel cell suppliers, automakers, universities, fuel cell customers, fuel and energy suppliers, government agencies, and trade associations, who are all dedicated to commercialization of fuel cells in the United States."

John Goodman, President of the USFCC. "We welcome the new perspective that Power Air will bring to the USFCC based on their unique technology." Bob Rose, USFCC Executive Director, adds, "President Bush has set a national goal of replacing more than 75% of US oil imports by 2025. America is on the verge of breakthroughs in advanced energy technologies. Fuel cells can be powered using a number of alternative fuel sources. Zinc is abundant worldwide and has many properties which make it an attractive fuel solution".

The USFCC is an industry association dedicated to fostering the commercialization of fuel cells in the United States. USFCC members include the world's leading fuel cell developers, manufacturers, suppliers and customers. The US Fuel Cell Council provides its members with an opportunity to help shape the programs, policies and practices needed to successfully commercialize fuel cell energy technology.

Experienced Management Team
Industry Insiders: The driving force behind every successful company is the management team. Exceptional teams make good things happen. Power Air has attracted some major talent from "inside" the Fuel Cell industry. This team has a broad array of specialized skills that includes marketing expertise, financing, and experience with product commercialization, thereby allowing the Company to properly and fully execute an ambitious but prudent growth strategy.

Power Air's managers have know-how gained from decades of hands-on experience, including the credibility that comes from past success, and coveted skills relevant to the operation of new, advanced fuel cell technologies. The following bios are a synopsis of the quality of personnel at the helm:

Remy Kozak, President & CEO, originally joined the Company as its Vice President of Corporate Development in September 2005. Mr. Kozak was previously "Entrepreneur in Residence" at iWorldGroup, a telecommunications incubator in Europe from 2001 to 2003 where he held the positions of COO and then CTO of various businesses. Prior to that Mr. Kozak founded and was a partner in ARK eXecutives, a European interim management firm, where he contributed to the development and expansion of several businesses in interim roles including COO and VP Finance. Prior to ARK, Mr. Kozak worked for several years as a senior director with Global One Telecommunications, SA in Brussels where he built up and managed the Planning, Strategy and Finance departments for the Internet and Global Accounts divisions. Remy holds an M.B.A. from the University of British Columbia, and a B.A.Sc. in Electrical Engineering from Simon Fraser University.

Mr. H. Dean Haley, Chairman and COO, is the founder of HDH Group, LLC, a technology acquisition and development company, based in New York. For the past five years, Mr. Haley was a Division Vice President of Orange and Rockland Utilities, Inc. in New York and was the founder and President of Compass Resources, Inc.. A former Bechtel executive, Mr. Haley has recently focused on acquiring and developing new technologies offering products and services to the power and energy industries.

Mr. Donald Ceci, VP Sales and Marketing, has 20+ years experience managing sales/marketing activities for high technology companies including IBM, Philips, Comdisco, Ricoh, and, most recently, Ballard Power Systems, Inc. Mr. Ceci joined Ballard in 2001 and, as the Director of Sales, was responsible for building the Sales and Service Organizations required to bring Transportation and Power Generation fuel cell based products to market. His experience and focus are Business Plan & Distribution Development/Implementation, Business and Partner Development, Revenue Growth, and North American/International sales team management.

Mr. Andrew Turnbull, Director of Engineering, recently joined Power Air from Xantrex Power, a public power electronics company listed on Toronto, where he was Program Manager responsible for leading multi-functional teams from product development to product launch. Prior to Xantrex, Mr. Turnbull worked for seven years at Ballard Power Systems as Program Manager for Power Generation products. Mr. Turnbull headed a team that developed fuel cell products, including back-up power products, targeting the power generation industry. He has 18 years of engineering and product development experience in various industries including power electronics, fuel cell, oil and gas, and power generation. Mr. Turnbull holds a Bachelor of Applied Science in Electrical Engineering from Queen's University. His focus is to lead the OEM Product Development Program.

Mr. Don Prest, Chief Financial Officer, is a Chartered Accountant in Canada and a Certified Public Accountant in the United States. Mr. Prest has twenty-one years of experience in the international business consulting and North American tax, accounting and assurance services. Mr. Prest is auditor for over 100 Canadian and US listed public companies and is a Managing Partner of Manning Elliott Chartered Accountants located in Vancouver, British Columbia, Canada.

The Executive Team is overseen by several independent Directors including:

Mr. Stephen Harrison, Director, has over twenty-four years of experience in the financial services and accounting fields. He was until recently an Australian director for one of the world's largest fund management and private investment banking groups and was previously Chairman of the Australian Investment Committee for that banking group. In addition, he has held the position of sole Australian Director for the Australian subsidiary of Sanford C. Bernstein, a large US based fund manager. Mr. Harrison holds a number of other directorships and senior management positions with companies across Australia.

Mr. William J. Potter, Director, prior to establishing Ridgewood in1989, was Managing Director for International Investment Banking at Prudential-Bache Securities Inc.. He was also Director of Prudential-Bache Securities Canada Ltd. and had additional responsibility for mining and forestry as well as specific geographic responsibility for Canada and the Australasian region. Prior experience includes several years at senior levels at Barclays Bank PLC, Toronto Dominion Bank and White Weld & Co., Inc...

Mr. Potter, a Canadian national, graduated from Colgate University (A.B.) and the Harvard Business School (M.B.A.), with further legal training in Canada and the United Kingdom. He currently serves as Finance Committee Chairman and director of the National Foreign Trade Council. He is also a director of Impulsora del Fondo Mexico, S.A. de C.V., First Australia Fund, First Australia Prime Income Fund Inc., First Australia Prime Income Investment Company Limited (Canada), First Commonwealth Fund, Battery Technologies Inc., CompuFlex Inc., and Alexandria Bancorp. He has served as an international advisor to Ladenburg Thalman International Ltd., as consultant to Guardian Capital Group, Ltd. and as a consultant to a number of emerging companies and resource projects.

Mr. Paul Brock, Director, has over 20 years of international business experience in start-up and operation of public and private applied science technology companies. He is the President and Chairman of a publicly traded company on the TSX-Venture Exchange Inc., as well as its subsidiaries in Canada, the United States, China, and Singapore. Mr. Brock also runs several private business ventures. He has experience in public company management and reporting, investor relations, and financing.

Global Fuel Cell Supply/Demand Dynamics, A Growth Industry: In the midst an oil crisis, Power Air is a distinct market opportunity. Power Air has entered into one of the fastest growing sectors of the modern economy. As oil prices hover at or near all time highs, the drive to commercialize Power Air's fuel cell could not come at a better time. After almost 100 years of excess supply of electrical and fossil fuel energy, modern economies are struggling with the limitations of the current supply of energy combined with surging demand for new sources of energy.

As oil supplies dwindle, its time for the World's leading economies to abandon their reliance on fossil fuels. In fact, alternatives have to be found and utilized if global economic expansion is to continue. As most motorists know, a major supply gap has already developed in the oil/gasoline market; one that will continue to keep oil and gas prices high.

The global fuel cell market is just one segment of a growing industry which is developing rapidly to meet the ever increasing global demand for energy. The ZAFC technology provides reliable power in a time of increased security risks, extreme weather conditions, and an aging energy infrastructure.

Market Growth Forecast Global Fuel Cell Market Value World Market:
2004 to 2013 (Source: Allied Business Intelligence Inc.)

Summary:

Power Air is entering the lucrative back-up generator market and is about to change the way power is produced and delivered to businesses and homes throughout the world. With technology developed at the world-renowned Lawrence Livermore National Laboratory ("LLNL") in California, an experienced management team is rapidly moving their fuel cell into the commercialization phase.

Power Air's patented technology offers a competitively priced, superior environmental and non-hazardous solution to internal combustion engines (generators), conventional battery power sources and other fuel cell technologies. With significant competitive advantages over current power alternatives in the portable, stationary, light mobility and light transportation markets, Power Air is poised to take the fuel cell market by storm -- a global market that is expected to witness compounded annual growth in excess of 50% to 2011.

A relatively small number of free trading shares coupled with debt free capitalization, create an investment situation that has the potential to appreciate quickly, given any number of possible business development catalysts. In short, the timing for tech savvy investors is ideal, as Power Air's industry experienced management team is now clearly focused on the lucrative commercialization phase.

StocksJournal / June , 2006

Investor Relations:
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