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| TEXAS                           | 76-0273345                           |
|---------------------------------|--------------------------------------|
| (State or other jurisdiction of | (I.R.S. Employer Identification No.) |
| incorporation or organization)  |                                 |
|                            |                                 |

| 3006 Longhorn Blvd., Suite 107           |       |
|------------------------------------------|------------|
| Austin, Texas                            | 78758      |
| (Address of principal executive offices) | (Zip Code) |

| (512) 339-5020                                       |
|------------------------------------------------------|
| (Registrant's telephone number, including area code) |

| x |   Yes |   | o |   No |   |
|---|-----------------|--------|---|----------------|--------|

|   | o | Yes |   | o | No |
|--------|---|-----|--------|---|----|

|   | o | Yes |   | x | No |
|--------|---|-----|--------|---|----|

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| Part I.  Financial Information | Page                                                                                                                |
|-------------------------------------|---------------------------------------------------------------------------------------------------------------------|
|                                |                                                                                                                |   |   |
|                                | Item 1.  Financial Statements                                                                                  |   |
|                                |                                                                                                                |   |   |
|                                |                                                                                                                | Consolidated Balance Sheets--March 31, 2010 and December 31, 2009 | 3 |
|                                |                                                                                                                |   |   |
|                                |                                                                                                                | Consolidated Statements of Operations--Three Months Ended March 31, 2010 and 2009 | 4 |
|                                |                                                                                                                |   |   |
|                                |                                                                                                                | Consolidated Statements of Cash Flows--Three Months Ended March 31, 2010 and 2009 | 5 |
|                                |                                                                                                                |   |   |
|                                |                                                                                                                | Notes to Consolidated Financial Statements | 6 |
|                                |                                                                                                                |   |   |
|                                | Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations | 8 |
|                                |                                                                                                                |   |   |
|                                | Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                       | 12 |
|                                |                                                                                                                |   |   |
|                                | Item 4.Controls and Procedures                                                                                      | 12 |
|                                |                                                                                                                |   |   |
| Part II.  Other Information    |                                                                                                                |
|                                |                                                                                                                |   |   |
|                                | Item 1. Legal Proceedings                                                                                           | 13 |
|                                |                                                                                                                |   |   |
|                                | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                 | 13 |
|                                |                                                                                                                |   |
|                                | Item 6.  Exhibits                                                                                              | 13 |
|                                |                                                                                                                |   |   |
| Signatures                          | 14                                                                                                                  |

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| ASSETS                                                                                                                                                                                                                                                                                                                                                     |   | (Unaudited)March 31,2010 |         |    | December 31,2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------------|---------|------------------|--------|
| Current assets:                                                                                                                                                                                                                                                                                                                                            |   |                     |         |    |             |   |
| Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                  |   | $                        | 1,726,317    |    |             | $      | 286,971 |   |
| Accounts receivable, trade – net of allowance for doubtful accounts                                                                                                                                                                                                                                                                                  |   |                     | 313,478      |    |             |   | 249,164 |   |
| Prepaid expenses and other current assets                                                                                                                                                                                                                                                                                                                  |   |                     | 113,078      |    |             |   | 67,340 |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
|                 Total current assets                                                                                                                                                                                                                                            |   |                     | 2,152,873    |    |             |   | 603,475 |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
| Property and equipment, net                                                                                                                                                                                                                                                                                                                                |   |                     | 255,467      |    |             |   | 267,008 |   |
| Other assets                                                                                                                                                                                                                                                                                                                                               |   |                     | 22,884       |    |             |   | 22,884 |   |
|                 Total assets                                                                                                                                                                                                                                                    |   | $                        | 2,431,224    |    |             | $      | 893,367 |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
| Current liabilities:                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
| Accounts payable                                                                                                                                                                                                                                                                                                                                           |   | $                        | 1,017,504    |    |             | $      | 952,679 |   |
| Obligations under capital lease                                                                                                                                                                                                                                                                                                                            |   |                     | 22,648       |    |             |   | 21,939 |   |
| Accrued liabilities                                                                                                                                                                                                                                                                                                                                        |   |                     | 321,480      |    |             |   | 482,629 |   |
| Deposits and deferred revenue                                                                                                                                                                                                                                                                                                                              |   |                     | 341,818      |    |             |   | 310,000 |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
|                 Total current liabilities                                                                                                                                                                                                                                       |   |                     | 1,703,450    |    |             |   | 1,767,247 |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
| Obligations under capital lease, long-term                                                                                                                                                                                                                                                                                                                 |   |                     | 25,189       |    |             |   | 31,124 |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
| Convertible notes payable                                                                                                                                                                                                                                                                                                                                  |   |                     | 1,480,814    |    |             |   | 165,834 |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
| Total Liabilities                                                                                                                                                                                                                                                                                                                                          |   |                     | 3,209,453    |    |             |   | 1,964,205 |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
| Commitments and contingencies                                                                                                                                                                                                                                                                                                                              |   |                     | –      |    |             |   | – |   |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
| Stockholders' equity:                                                                                                                                                                                                                                                                                                                                      |   |                     |         |    |             |   |   |   |
|       Preferred stock, $1.00 par value, 2,000,000 shares authorized;            No shares issued and outstanding                                                                                                                                                      |   |                     | –      |    |             |   | – |   |
|      Common stock, $.00l par value, 120,000,000 shares authorized,            108, 573,133 and 107,473,133 shares issued and outstanding at            March 31, 2010 and December 31, 2009, respectively |   |                     | 108,573      |    |             |   | 107,473 |   |
| Additional paid-in capital                                                                                                                                                                                                                                                                                                                                 |   |                     | 110,380,447  |    |             |   | 109,518,998 |   |
| Accumulated deficit                                                                                                                                                                                                                                                                                                                                        |   |                     | (111,267,249 | )       |             |   | (110,697,309 | ) |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
|                 Total stockholders' equity (deficit)                                                                                                                                                                                                                            |   |                     | (778,229     | )  |             |   | (1,070,838 | )  |
|                                                                                                                                                                                                                                                                                                                                                       |   |                     |         |    |             |   |   |   |
|                 Total liabilities and stockholders' equity (deficit)                                                                                                                                                                                                            |   | $                        | 2,431,224    |    |             | $      | 893,367 |   |

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|                                                                       |   | For  the Three Months EndedMarch 31, |        |
|----------------------------------------------------------------------------|--------|-------------------------------------------|-------------|
|                                                                       |   | 2010                                      |        |   | 2009 |   |
| Revenues                                                                   |   |                                      |        |   |   |   |
| Government contracts                                                       |   | $                                         | 620,793     |   |   | $ | 551,184 |   |
| Contract research                                                          |   |                                      | 379,711     |   |   |   | 260,000 |   |
| Other                                                                      |   |                                      | 9,132       |   |   |   | 13,341 |   |
|           Total revenues |   |                                      | 1,009,636   |   |   |   | 824,525 |   |
|                                                                       |   |                                      |        |   |   |   |   |   |
| Research and development                                                   |   |                                      | 977,680     |   |   |   | 928,148 |   |
| Selling, general and administrative expenses                               |   |                                      | 555,499     |   |   |   | 733,843 |   |
|                                                                       |   |                                      |        |   |   |   |   |   |
| Operating costs and expenses                                               |   |                                      | 1,533,179   |   |   |   | 1,661,991 |   |
|                                                                       |   |                                      |        |   |   |   |   |   |
| Gain on sale of intellectual property and other assets                     |   |                                      | 2,732       |   |   |   | 6,000 |   |
|                                                                       |   |                                      |        |   |   |   |   |   |
| Loss from operations                                                       |   |                                      | (520,811    | ) |   |   | (831,466 | ) |
|                                                                       |   |                                      |        |   |   |   |   |   |
| Other income (expense), net                                                |   |                                      |        |   |   |   |   |   |
| Interest expense                                                           |   |                                      | (49,391     | ) |   |   | (2,785 | ) |
| Interest income                                                            |   |                                      | 262         |   |   |   | 1,137 |   |
|                                                                       |   |                                      |        |   |   |   |   |   |
|  Loss before taxes                                                    |   |                                      | (569,940    | ) |   |   | (833,114 | ) |
|                                                                       |   |                                      |        |   |   |   |   |   |
|  Provision for taxes                                                  |   |                                      | –     |   |   |   | – |   |
|                                                                       |   |                                      |        |   |   |   |   |   |
| Net loss                                                                   |   | $                                         | (569,940    | ) |   | $ | (833,114 | ) |
| Loss per share                                                             |   |                                      |        |   |   |   |   |   |
|                                                                       |   |                                      |        |   |   |   |   |   |
| Basic and Diluted                                                     |   | $                                         | (0.01       | ) |   | $ | (0.01 | ) |
| Weighted average shares outstanding                                        |   |                                      |        |   |   |   |   |   |
|                                                                       |   |                                      |        |   |   |   |   |   |
| Basic and Diluted                                                     |   |                                      | 107,861,704 |   |   |   | 107,395,216 |   |

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|                                                                                          |   | For the Three Months EndedMarch 31, |      |
|-----------------------------------------------------------------------------------------------|--------|------------------------------------------|-----------|
|                                                                                          |   | 2010                                     |      |   | 2009 |   |
| Cash flows from operating activities:                                                         |   |                                     |      |   |   |   |
|  Net loss                                                                                |   | $                                        | (569,940  | ) |   | $ | (833,114 | ) |
| Adjustments to reconcile net loss to net                                                      |   |                                     |      |   |   |   |   |   |
| Cash provided by (used in) operating activities:                                              |   |                                     |      |   |   |   |   |   |
| Depreciation and amortization expense                                                         |   |                                     | 16,216    |   |   |   | 18,090 |   |
| Amortization of discount on debt                                                              |   |                                     | 28,730    |   |   |   | — |   |
| Stock based compensation expense                                                              |   |                                     | 22,799    |   |   |   | 78,125 |   |
| Changes in assets and liabilities:                                                            |   |                                     |      |   |   |   |   |   |
| Accounts receivable, trade                                                                    |   |                                     | (64,314   | ) |   |   | 381,990 |   |
| Prepaid expenses and other assets                                                             |   |                                     | (45,738   | ) |   |   | 69,213 |   |
| Accounts payable and accrued liabilities                                                      |   |                                     | 149,676   |   |   |   | 137,424 |   |
| Deposits and deferred revenue                                                                 |   |                                     | 31,818    |   |   |   | 265,405 |   |
|                                                                                          |   |                                     |      |   |   |   |   |   |
| Total adjustments                                                                             |   |                                     | 139,187   |   |   |   | 950,247 |   |
|                                                                                          |   |                                     |      |   |   |   |   |   |
| Net cash provided by (used in) operating activities                                           |   |                                     | (430,753  | ) |   |   | 117,133 |   |
|                                                                                          |   |                                     |      |   |   |   |   |   |
| Cash flows from investing activities:                                                         |   |                                     |      |   |   |   |   |   |
| Capital expenditures                                                                          |   |                                     | (4,675    | ) |   |   | (458 | ) |
|        Net cash used in investing activities               |   |                                     | (4,675    | ) |   |   | (458 | ) |
|                                                                                          |   |                                     |      |   |   |   |   |   |
| Cash flows from financing activities:                                                         |   |                                     |      |   |   |   |   |   |
| Proceeds from issuance of common stock                                                        |   |                                     | 200,000   |   |   |   | — |   |
| Proceeds from long-term debt                                                                  |   |                                     | 1,680,000 |   |   |   | — |   |
| Repayment of capital lease obligations                                                        |   |                                     | (5,226    | ) |   |   | (9,184 | ) |
|                                                                                          |   |                                     |      |   |   |   |   |   |
|        Net cash provided by (used by) financing activities |   |                                     | 1,874,774 |   |   |   | (9,184 | ) |
|                                                                                          |   |                                     |      |   |   |   |   |   |
| Net increase in cash and cash equivalents                                                     |   |                                     | 1,439,346 |   |   |   | 107,491 |   |
|                                                                                          |   |                                     |      |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                                |   |                                     | 286,971   |   |   |   | 710,111 |   |
|                                                                                          |   |                                     |      |   |   |   |   |   |
| Cash and cash equivalents, end of period                                                      |   | $                                        | 1,726,317 |   |   | $ | 817,602 |   |

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| 1.  | Basis of Presentation |
|----------|-----------------------|

| 2.  | Supplemental Cash Flow Information |
|----------|------------------------------------|

| 3.  | Notes Payable and Long-Term Debt |
|----------|----------------------------------|

| 4.  | Stockholders’ Equity |
|----------|----------------------------|

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| 5.  | Share-Based Payments |
|----------|----------------------|

| 6.  | Contingencies |
|----------|---------------|

| 7.  | Business Segments |
|----------|-------------------|

|                                            |   | ANI         |                  | EBT               |    | All Other     |   | Total       |
|-------------------------------------------------|--------|-------------|-----------------------|-------------------|---------|---------------|--------|-------------|
| 2010                                            |   |        |                  |              |    |          |   |        |
|                                            |   |        |                  |              |    |          |   |        |
| Revenue                                         |   | $      | 1,009,636   |              | $  |  -  |   | $           |  -  |   | $  | 1,009,636  |
|                                            |   |        |                  |              |    |          |   |        |
| Profit (Loss)                                   |   | (384,963)   |                  | (571)   |    | (184,406)     |   | (569,940)   |
|                                            |   |        |                  |              |    |          |   |        |
| Expenditures for                                |   |        |                  |              |    |          |   |        |
|      long-lived assets |   | 4,675  |                  | -            |    | -        |   | 4,675  |
|                                            |   |        |                  |              |    |          |   |        |
| 2009                                            |   |        |                  |              |    |          |   |        |
|                                            |   |        |                  |              |    |          |   |        |
| Revenue                                         |   | $      | 824,525     |              | $  |  -  |   | $           |  -  |   | $  | 824,525  |
|                                            |   |        |                  |              |    |          |   |        |
| Profit (Loss)                                   |   | (553,448)   |                  | 5,459   |    | (285,125)     |   | (833,114)   |
|                                            |   |        |                  |              |    |          |   |        |
| Expenditures for                                |   |        |                  |              |    |          |   |        |
|      long-lived assets |   | 458    |                  | -            |    | -        |   | 458    |

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|                                                 | APPLIED NANOTECH HOLDINGS, INC.(Registrant)                                                                                                                                                                                                                                                                                                                                            |
|------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                 |                                                                                                                                                                                                                                                                                                                                                                                   |
| Date:     May 3, 2010  |                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                 |  /s/ Douglas P. Baker                                 Douglas P. BakerChief Executive Officer, Chief Financial Officer(Principal Executive Officer, Principal FinancialOfficer, and Principal Accounting Officer) |

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| Exhibit |                                                     |
|---------|----------------------------------------------------------|
|    |                                                     |
| 11      | Computation of (Loss) Per Common Share                   |
|    |                                                     |
| 31.1    | Rule 13a-14(a)/15d-14(a) Certificate of Douglas P. Baker |
|    |                                                     |
| 32.1    | Section 1350 Certificate of Douglas P. Baker             |

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