SecProbe.io

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Mail Stop 3561

      							August 18, 2005

Mr. Douglas Baker
Vice President and Chief Financial Officer
Nano-Proprietary, Inc.
3006 Longhorn Boulevard
Suite 107
Austin, TX  78758

	Re:	Nano-Proprietary, Inc.
      Form 10-K for Fiscal Year Ended December 31, 2004
		Filed April 27, 2005

		Form 10-Q for Fiscal Quarter Ended June 30, 2005
		File No. 1-11602

Dear Mr. Baker:

      We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your documents.  Where indicated, we think you should
revise your documents in response to these comments.  If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary.  Please be as detailed
as
necessary in your explanation.  In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure.  After reviewing this information, we may or may not
raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Form 10-K/A for the Year Ended December 31, 2004, filed April 27,
2005

Notes to the Consolidated Financial Statements, page 24

Note 2.  Summary of Significant Accounting Policies, page 24

Revenue Recognition

1. Tell us, citing the appropriate accounting literature, your
basis
for recognizing reimbursements under agreements to perform
research
and development for others as revenue.  Indicate how much of the
revenue recognized in 2004, 2003 and 2002 was generated by these
research and development agreements.

2. Further, on page 24 you state that you recognize revenue on
research contracts when it is earned pursuant to the terms of the
contract.  Please tell about the terms of such contracts,  and
citing
the appropriate accounting literature the persuasive evidence that
you rely upon in your determination to recognize revenue in
accordance with these contracts.

3. Referring to research and development projects performed for
third
parties, please tell us if you are required to repay the funding
agent for any portion of the funds received if the project fails.
If
you are required to repay the funding agent for any portion,
please
tell us how you account for this liability.

Rule 13a-14(a) Certifications

4. We note that you incorporate the certifications required by
Rule
13a-14(a) by reference to your Form 10-K filed March 7, 2005.  You
are required to provide revised certifications in your amendment.
Please amend your Form 10-K/A to include revised certifications
per
Item 601(b)(31) of Regulation S-K.

Section 1350 Certifications

5. Further, amend to include revised Section 1350 certifications.

Form 10-Q for the Quarter Ended June 30, 2005

Item 4.  Controls and Procedures, page 13

6. We note your disclosure that "...we conducted an evaluation of
the
effectiveness of the design and operation of our disclosure
controls
and procedures, as defined in Rules 13a-14(c) and 15d-14(c) under
the
Securities and Exchange Act of 1934, within 90 days of the filing
date of this report "(the Evaluation Date").  Please note that
filings after August 14, 2003 must comply with the disclosure
requirements of revised Item 307.  That is, you must disclose the
conclusion of your certifying officers regarding the effectiveness
of
your disclosure controls and procedures as of the end of the
period
covered by the report, based upon the evaluation of these controls
and procedures.  Please confirm for us supplementally that, if
true,
your certifying officers concluded that your disclosure controls
and
procedures were effective as of the end of the period covered by
this
report.

7. We note your disclosure that "there were no significant changes
in
our internal controls over financial reporting or in other factors
that could significantly affect these controls subsequent to the
Evaluation Date."  Item 308(c) of Regulation S-K requires the
disclosure of any change in your internal control over financial
reporting identified in connection with an evaluation thereof that
occurred during your last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, your
internal
control over financial reporting.  Please confirm for us
supplementally that there was no change in your internal control
over
financial reporting that occurred during the quarter ended June
30,
2005 that has materially affected, or is reasonably likely to
materially affect, your internal control over financial reporting.
In future filings, provide the disclosure required by Item 308(c)
of
Regulation S-K.

      *    *    *    *

As appropriate, please amend your filing and respond to these
comments within 10 business days or tell us when you will provide
us
with a response.  You may wish to provide us with marked copies of
the amendment to expedite our review.  Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested information.  Detailed cover letters
greatly
facilitate our review.  Please understand that we may have
additional
comments after reviewing your amendment and responses to our
comments.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision.  Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filings; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comments on your filings.

      You may contact Christine Bashaw, Staff Accountant, at (202)
551-3363 or Ivette Leon, Assistant Chief Accountant, at (202) 551-
3351 if you have questions regarding comments on the financial
statements and related matters.  Please contact me at (202) 551-
3810
with any other questions.

								Sincerely,

								Larry Spirgel
								Assistant Director
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Mr. Douglas Baker
Nano-Proprietary
August 18, 2005
Page 4

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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