NANO-PROPRIETARY, INC. RECEIVES HOMELAND SECURITY CONTRACT FOR CARGO SHIPPING CONTAINER SENSOR

September 12, 2006 - Austin, Texas-based Nano-Proprietary, Inc. (OTC BB: NNPP), announced that its subsidiary, Applied Nanotech, Inc. (ANI), has been awarded an SBIR Phase I contract for the development of a “Dual Sensor Module for Human Detection” from the Homeland Security Advanced Research Project Agency (HSARPA). The amount of the contract is approximately $100,000. Applied Nanotech will design, develop and demonstrate a high reliability, low cost, low power chemical sensor to detect humans hiding in cargo shipping containers with the ability to operate in the harsh shipping environment

Humans hiding in shipping containers can be a serious threat to our homeland security. A reliable detection system to identify the presence of individuals in cargo shipping containers is required to reduce this threat. ANI will develop a sensor system that will monitor and detect human presence in a shipping container in real time. The sensor detection system will continually monitor for the presence of individuals from the moment that the container is sealed until it is released at its final destination. It is estimated that 9 to 11 million shipping containers enter the U.S. each year, and that in excess of 40 million cargo shipping containers are in use world wide. Additionally, the ANI developed sensor technology is adaptable to multiple modes of transportation such as trucking, air cargo and rail shipping.

“We are pleased that we have been awarded a Phase I SBIR contract by the Department of Homeland Security. We are honored to be able to contribute to the important project of making cargo transport safer and more secure,” said Dan Burck, Chief Executive Officer of Nano-Proprietary Inc. “ Our sensor technology has the ability to enable carriers, shippers and law enforcement agencies to screen containers throughout their movement in real-time.”

Using its advanced GMOS™ sensing technology, ANI will develop a sensor system with the highest protection probabilities and with low false alarms rates. The advanced design will have a small compact size, be wireless enabled, have minimal power requirements, and be able to withstand the rigors of harsh maritime shipping in a wide range of environmental conditions, such as extreme temperature ranges, thermal shock, humidity, and physical handling shock electromagnetic interference.

“This represents yet another important application for our sensor technology,” said Dr. Zvi Yaniv, President and CEO of ANI. “We are extremely pleased with this additional contract which validates our sensor technology platforms and our expanding sensor line of business.

ABOUT NANO-PROPRIETARY, INC.

Nano-Proprietary, Inc. is a holding company consisting of two wholly-owned operating subsidiaries. Applied Nanotech Inc. is a premier research and commercialization organization dedicated to developing applications for nanotechnology with an extremely strong positions in the fields of electron emission applications from carbon film/nanotubes, sensors, functionalized nanomaterials, and nanoelectronics. Electronic Billboard Technology, Inc. (EBT) possesses technology related to electronic digitized sign technology. The Companies have over 200 patents or patents pending. Nano-Proprietary's business model is to license its technology to partners that will manufacture and distribute products using the technology. Nano-Proprietary's website is www.nano-proprietary.com.