REGISTRATION RIGHTS AGREEMENT



         Registration  Rights  Agreement,  dated as of  February  14, 2004 (this

"Agreement"),  by and among Advance Nanotech,  Inc., a Colorado corporation (the

"Company"), and the Purchasers (as defined below).





                              W I T N E S S E T H :



         WHEREAS, the Company is offering (the "Offering") an aggregate of up to

One Million,  Seven Hundred Thousand (1,700,000) shares of its Common Stock, par

value  $0.001 per share  (the  "Common  Stock")  and up to Eight  Hundred  Fifty

Thousand (850,000) of its stock purchase warrants (the "Warrants"), each Warrant

to purchase one share of the Common Stock (each such share underlying a Warrant,

a "Warrant  Share")  (the  securities  offered in the Offering  being  sometimes

hereinafter referred to as (the "Securities"),  in each case subject to an up to

10% overallotment at the Company's sole discretion;



         WHEREAS, the Company desires to issue and sell to the persons listed on

Schedule  A,  attached  hereto  (each  a  "Purchaser,"  and  collectively,   the

"Purchasers"),  the Securities as set forth in one or more  Securities  Purchase

Agreements  entered  into or to be entered  into by and  between the Company and

each Purchaser (the "Securities Purchase Agreement");



         WHEREAS,  the  Company  and the  Purchasers  have  entered or will have

entered into a Securities Purchase Agreement;



         WHEREAS,  it is a  condition  precedent  to  the  consummation  of  the

transactions  contemplated by the Securities Purchase Agreement that the Company

provide for the rights set forth in this Agreement; and



         WHEREAS,  certain terms used in this Agreement are defined in Section 3

hereof.



         NOW,  THEREFORE,  in  consideration  of the foregoing  premises and the

mutual covenants and agreements  hereinafter  contained,  and for other good and

valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby

acknowledged,  intending to be legally bound, the parties hereto hereby agree as

follows:



         1. REGISTRATION RIGHTS



                  1.1  REQUIRED   REGISTRATION.   The  Company   shall  use  its

reasonable best efforts to accomplish the following:



                            (x)  prepare  and  file  a  "REQUIRED   REGISTRATION

STATEMENT" (as such term is hereafter

defined) with the SEC by the date (the "REQUIRED FILING DATE") which is not more

than sixty (60) days after the first date to occur (the "COMMENCEMENT  DATE") of

the  following  dates:  the Final  Closing  Date (as such term is defined in the

Securities Purchase  Agreement) or the termination of the Offering,  if there is

no Final Closing Date; and



                            (y)   cause   either   of   the    following    (the

"EFFECTIVENESS ACTIONS") to occur by a date

(the  "REQUIRED  EFFECTIVENESS  DATE")  which is not more than one  hundred  and

twenty (120) days after the Commencement  Date: (A) cause the SEC to declare the

Required  Registration  Statement  to be  effective  or  (B)  cause  the  SEC to

communicate to the Company, orally or in writing, that the Required Registration

Statement will not be reviewed or that the  Commission  has no further  comments

thereupon, whereupon the Company shall cause the Required Registration Statement

to be effective.



The failure of the Company to file a Required  Registration  Statement  prior to

the Required  Filing Date,  or to cause either of the  Effectiveness  Actions to

occur  prior  to the  Required  Effectiveness  Date,  shall  be  deemed  to be a



<PAGE>



"NON-REGISTRATION  EVENT".  As  used  in  this  Agreement,  the  term  "REQUIRED

REGISTRATION  STATEMENT" shall mean a registration statement on Form SB-1 or any

successor  form,  or any other form selected by the Company that is available to

it under  the  Securities  Act  which  conforms  with all  applicable  rules and

regulations,  with respect to all the Registrable Securities  beneficially owned

by the  Purchasers  following  the final Closing (as such term is defined in the

Securities Purchase Agreement) to permit the offer and re-sale from time to time

of such  Registrable  Securities in accordance  with the methods of distribution

provided by the Purchasers.



         The Company and the Purchasers  agree that the  Purchasers  will suffer

damages if a Non-Registration Event occurs, and that it would not be feasible to

ascertain  the  extent  of  such  damages  with  precision.  Accordingly,  if  a

Non-Registration Event should occur, then for each thirty (30) day period during

the pendency of such  Non-Registration  Event, the Company shall deliver to each

Purchaser,  as liquidated  damages,  an amount equal to one and one-half percent

(1.5%)  of the  aggregate  Purchase  Price  (as  such  term  is  defined  in the

Securities  Purchase  Agreement)  paid by such Purchaser for Securities (as such

term is defined in the Securities Purchase  Agreement),  with such payment being

pro-rated  for any  Non-Registration  Event of less than thirty (30) days.  Each

such payment is  hereinafter  referred to as a  "NON-REGISTRATION  EVENT PENALTY

PAYMENT".  Notwithstanding  the  foregoing,  in no event  shall the  Company  be

obligated to pay more than one  Non-Registration  Event  Penalty  Payment to the

same  Purchaser  in respect of a  substantively  concurrent  failure to perform;

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