The University of Michigan Advanced Dynamics Research Group (ADRG) was the ancestor organization of Nanite Systems. It was founded with a grant from ARPA in 1971 to help pursue novel applications for fundamental research that might prove useful to the military during the height of the Cold War, a need made altogether more urgent following the first Soviet manned moon landing in 1970. Focuses of the ADRG included the development of autonomous vehicles, military spacecraft, and next-generation infantry weapons and equipment. Most ADRG research programs were classified as top secret, and notoriously the organization operated far away from campus, being headquartered in Marquette.

During its early years, members of the ADRG tended to describe their group as a sort of "Wonderland," emphasizing the immense optimism within the group that their labors would bear significant fruits. By 1978 however, pessimism was the norm; many inventions had failed to produce something useful, funding was dwindling, and an increasing number of researchers were poached by other national labs and companies. DARPA grants had dried up in the mid-seventies following a general chill on investment in artificial intelligence research, forcing the group to privatize, operating on loans. The lab was unable to continue operation within two years, and ultimate closure and liquidation began in late 1980, to be completed in the Spring of the following year.