NANO-PROPRIETARY, INC. AND MITSUI & CO. LTD ANNOUNCE STRATEGIC
ALLIANCE TO COMMERCIALIZE CARBON NANOTUBE TECHNOLOGY

May 18, 2006 - Austin, Texas-based Nano-Proprietary, Inc. (OTC BB: NNPP), through its subsidiary, Applied Nanotech, Inc. (ANI), announced a strategic alliance with Mitsui & Co. Ltd of Japan for the development of nanotechnology businesses. The companies will work together to develop and license products based on ANI’s extensive intellectual property patent portfolio and research capabilities, combined with Mitsui’s worldwide business network. The main objective of these product development efforts will be to facilitate and establish pilot lines for a future manufacturing base in Japan.
The initial focus of the strategic alliance will be to identify and consummate prospective licensing and manufacturing partnerships to facilitate the commercialization of carbon nanotube (CNT) field emission technologies/products and related businesses. Mitsui will use it’s extensive business relationships to identify pilot line candidates in Japan. The scope of the agreement may be expanded to other territories based on mutual agreement between the Parties.
As part of the agreement Applied Nanotech’s development team will work with Mitsui’s wholly-owned subsidiary Bussan Nanotech Research Institute Inc. a preeminent nanotechnology R&D organization. The main development effort will be based on market driven applications of technology through the prototype, pilot line and commercialization stages.
"We are honored to be a part of this strategic alliance. The alliance provides a unique opportunity to combine ANI’s innovative technology with Mitsui & Co Ltd’s resources and international corporate partners," said Dr. Zvi Yaniv, CEO of Applied Nanotech. "The individual companies will collectively work on leading technology developments and product commercialization for our mutual benefit. This agreement is a testimony to the strength of ANI’s extensive intellectual property and it’s commercial market value."
The alliance is structured to allow Nano-Proprietary and Mitsui & Co Ltd to contribute their individual expertise, leveraging their respective technology and corporate resources to develop nanotechnology enabled products. Working together, we will identify, define, and set the agenda, ensuring that these promising technologies proceed rapidly to commercialization.

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.