iQ POWER and City of Gwangju Sign MOU to Base a Production Plant in This South Korean High-Tech Capital

MUNICH, Germany and GWANGJU, Korea, May 11, 2005 -- The South Korean high-tech metropolis of Gwangju, iQ Power AG (OTCBB: IQPOF) and the Korean iQ POWER Asia Inc. signed a joint memorandum of understanding (MOU) on Monday of this week. The agreement calls for iQ POWER Asia Inc. to build and base a production plant in this major Korean urban center. The manufacturing and sales of electrical energy storage systems for the expanding Korean automobile industry are to take place in Gwangju. iQ POWER Asia Inc. will provide the capital needed for establishing the plant.

The Gwangju local government is supporting this endeavor as a part of its progressive industrial-basing policy and will afford iQ POWER Asia Inc. attractive and comprehensive assistance and support in infrastructure and administration. Among other things, the city will undertake utmost efforts to make a completely developed industrial area of some 35,000 square meters available to iQ POWER Asia Inc. free of charge.

"The city of Gwangju will do the best it can to support the iQ POWER company in reaching its goals. I will be giving the matter my personal attention," emphasized Kwang-Tae Park, the city's lord mayor, during the signing ceremonies for this joint agreement in Munich.

"We are convinced that in selecting the city of Gwangju as the production site, we have found the ideal location in Korea for making our first steps in the Asian market," said Tae Soo Lee, Managing Director of iQ POWER Asia Inc. Gwangju is a modern city of 1.4 million people with an excellent geographic location and infrastructure. It is home to one of Kia Motors' production sites with an annual output of more than 350,000 cars, ramping up to half a million units in 2006. The city is also a center of leading electronics and consumer-goods producers enjoying ambitious growth rates and tremendous investments on the part of the local municipal government.

iQ POWER Asia Inc. was founded in December of last year and will be structured as a 40/60 joint venture between iQ Power AG and a Korean consortium. The purpose of this new company is the production and marketing of innovative electrical energy storage systems for the Asian auto industry. The basis for this is the technology that iQ Power developed in creating the "MagiQ", the world's first microelectronically controlled auto battery. This technology is provided to the company under a licensing agreement.

iQ Power AG afforded a first-tier Swiss institutional investor an option until 1 July 2005 to acquire a stock package of between 1.7 million and a maximum two million shares at a price of 35 euro cents each as a means of funding its $880,000 share of the joint company.

About iQ Power AG

Headquartered in Zug/Switzerland, iQ Power AG specializes in the development and marketing of intelligent systems solutions for electrical energy management (Smart Energy Management, SEM) in the power and wiring systems of automobiles and other forms of transportation. Among the company's many achievements was the world's first software-managed, intelligent car battery. iQ Power AG is a publicly listed stock corporation, whose shares are traded on the Nasdaq OTCBB (IQPOF), over the counter on the Frankfurt and Berlin Stock Exchanges, as well as on XETRA (IQPB, WKN: A0DQVL). - Please visit www.iqpower.com.

    
    Further Information: Peter E. Braun
    President of the iQ Power AG Board of Directors 
    TEL: +49-089-61-44-83-10
    FAX: +49-089-61-44-83-40 
    E-Mail: peter.braun@iqpower.com

Further Information: Peter E. Braun, President of the iQ Power AG Board of Directors, TEL: +49-089-61-44-83-10, FAX: +49-089-61-44-83-40, E-Mail: peter.braun@iqpower.com