Nano-Proprietary, Inc. Announces Continuation of Joint Development Agreement with Prominent Sporting Goods Manufacturer

Austin , TX , December 18, 2006 - Nano-Proprietary, Inc. (OTC BB: NNPP), through its subsidiary, Applied Nanotech, Inc. (ANI), today announced that has entered into a follow-on agreement with one of the most advanced sporting goods companies in the world. Following successful completion of the initial program which developed improved base materials using composites, the companies have now moved to the next phase to integrate these improved materials into the manufacturing process. The sporting goods manufacturer will continue to fund the project, which may take up to one year.

The initial program (See press release of September 8, 2005) involved three distinct projects involving different areas. As manufacturing processes are finalized for these separate areas, we expect to enter into license and technology transfer agreements for each area.

"Nano-Composite materials have the potential to yield fundamental improvements in the performance of sporting good equipment," said Tom Bijou, Chief Executive Officer of Nano-Proprietary, Inc. "The effort required to formulate, test and to begin to integrate these materials into the manufacturing process has been significant. Although not yet ready for volume production and mass market sales, we and our partner are making steady progress toward that goal."