Nano-Proprietary, Inc. Awarded Homeland Security Contract for Sensor Network Design Tool

Nano-Proprietary, Inc. (OTCBB: NNPP) announced that its subsidiary, Applied Nanotech, Inc. (ANI), has been awarded an SBIR Phase I contract for the development of a "Sensor Network Design Tool" from the Homeland Security Advanced Research Project Agency (HSARPA). The amount of the contract is approximately $100,000. Applied Nanotech will collaborate with Lagus Applied Technology, Inc. "LAT" to develop and demonstrate a Sensor Network Design Tool "SNDT" for the optimal, rapid, and verifiable deployment of chemical and biological sensors.

Accelerating global hostility has increased the risk of chemical and biological weapon attacks in regions of high human density such as office buildings, transportation hubs, theaters, and arenas. HSARPA, as part of its role in developing and deploying chemical and biological detectors and countermeasures, is seeking a comprehensive system that is effective, yet does not require expert operators. This Sensor Network Design Tool is expected to be a comprehensive system used to designate where to install chemical and biological sensors in existing or substantially completed buildings.

"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."

In the first phase of the project, ANI will demonstrate a small scale proof-of-concept of its SNDT methodology and integrate it into LAT's proprietary "CB_Protect" software. This proof of concept will then be used to assess a simple existing structure and to design a chemical and biological sensor network.

The "CB_Protect" software tool, a Windows-based application, was specifically developed and designed for the US Government by LAT, but the market for this tool is easily expandable to include the much larger private sector," said Dr. Richard Grot, Vice President and Senior Scientist at LAT. "We look forward to assisting ANI in the development of the SNDT and see great benefits in its future application."

"I believe the sensor business is one of the most exciting market areas available to us," said Nano-Proprietary CEO, Tom Bijou. "We have seen a lot of media attention focused on the electron emission / display side of the business, but the sensor market is huge, growing, and in need of breakthrough technology. This industry may represent our largest single potential opportunity in the years ahead."

ACKNOWLEDGEMENT OF SPONSORSHIP

Applied Nanotech, Inc. acknowledges that the project for "Sensor Network Design Tool" is sponsored by Homeland Security Advanced Research Project Agency as set forth in the schedule of contract. The content of the information does not necessarily reflect the position or policy of the Government and no official endorsement should be implied.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties concerning Nano-Proprietary's business, products, and financial results. Actual results may differ materially from the results predicted. More information about potential risk factors that could affect our business, products, and financial results are included in Nano-Proprietary's annual report on Form 10-K for the fiscal year ended December 31, 2006, and in reports subsequently filed by Nano-Proprietary with the Securities and Exchange Commission ("SEC"). All documents are available through the SEC's Electronic Data Gathering Analysis and Retrieval System (EDGAR) at www.sec.gov or from Nano-Proprietary's website listed below. Nano-Proprietary hereby disclaims any obligation to publicly update the information provided above, including forward-looking statements, to reflect subsequent events or circumstances.

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 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 website is www.nano-proprietary.com.

ABOUT LAGUS APPLIED TECHNOLOGY, INC.

LAT was formed in 1990 to offer to the commercial public the extensive knowledge of airflow, ventilation, contaminant migration, and indoor air quality that existed in the R&D community, but which had not been widely disseminated to the commercial world. LAT offers this expertise in (1) measurement instrumentation (2) on-site simulation testing and (3) computer modeling. LAT is the only company in the US (and perhaps the world) for which tracer gas instrumentation and tracer gas measurement service is its primary business. More information on LAT can be found at www.tracergas.com.